If you’ve been participating in this hobby long enough, you probably noticed one running theme: Use your credit card for everything. If you don’t, you are leaving miles and points on the table. I have stressed that fact many times. But is it really always the best advice? As with everything in life, the answer is not quite so simple.
This post on Miles Abound claims that you should always pay cash for everything and do manufactured spending to meet minimum spending requirements on the new cards. The author says that people tend to overspend when dealing with readily available credit.
It’s so much easier to pull out plastic and worry about paying it off later than to part with cold hard cash. There are a few studies to back up this argument.
Actually, I agree with pretty much everything in the post. I have read those studies myself a while back and believe them to be correct. I have also said the same thing in my post on meeting the minimum spending requirements and cautioned people on biting more than they can chew when it comes to sign-up bonuses.
In fact, I know I spend more with credit cards than I would with cash. Surprised? I am fairly disciplined when it comes to finances, but I wouldn’t delude myself into thinking that somehow I have superior powers to resist the call of the plastic.
That said, I will not be switching to cash and doing manufactured spending for minimum spend. Here are my reasons:
1) I like the convenience of credit cards. Also, we live in an area with higher than average crime rate. If someone snatched my purse in Walmart parking lot, I would hate to lose a lot of cash.
2) I do a lot of my shopping online. No need to explain further.
3) Possibilities for m/s in my area are very limited. Besides, there is a fee involved. Sure, it’s only 1 percent, but still.
4) Manufactured spend is risky. Yes, the risk is minimal, but I would hate to take that chance and potentially burn my bridges with a bank like Chase.
5) My husband is the spender and he would not agree to use cash. This one is out of my control!
Image courtesy of stockimages at FreeDigitalPhotos.net
Continuing with this week’s theme, here is Cheapblackgal.
So what I’m trying to say is that I will continue using my limited spending exclusively toward sign-up bonuses, at least for now. I am not opposed to buying a few prepaid cards here and there and have done it before, but it will be an exception rather than the rule.
However, it is an interesting argument and I recommend you read the mentioned post. A word of caution: While the post didn’t contain any offensive language last time I checked, knowing Phil, he could spice it up just to mess with me. Go there at your own risk!
I’ve always said that if you have a hard time controlling your spending, this hobby isn’t for you. If you are in debt, you should focus on getting rid of it first, change your way of thinking and doing things, and only then go after sign-up bonuses. There are several decent financial websites that could help you.
I’m not a huge fan of Dave Ramsey because I find his methods a bit simplistic. Not to mention, he advocates never using credit cards. However, there is no denying that there is a method to his madness, and many people find his approach very helpful and easy to implement.
For the more advanced financial advice seeker, Mr Money Mustache can provide an enlightening read. One caveat: I’ve actually stopped reading it because he drops f-bombs on a semi-regular basis. However, there is no denying that the author is an original, out-of-the-box thinker and non-conformist.
Readers, what other websites would you add to that list?
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Leana is the owner and founder of Miles For Family. She enjoys beach vacations and visiting her family in Europe. Originally from Belarus, Leana resides in central Florida with her husband and two children.