Anyone here NOT use credit cards?

[CopperTex]

For as long as I can remember, we have put all our expenses on a credit card for the rewards and never carried a balance. We earn around $2k/year in rewards, but since we both run small businesses the cash flow becomes confusing - I never really know how much we have or how much we have spent until the end of the month when I categorize everything in Quicken. I fantasize about just having three checking accounts - one for each business, and one personal for a clear cash flow, easy budgeting, etc. but those rewards keep reeling me in. I know rewards cards are thought of as a smart idea around here but I'm wondering if anyone lives strictly on cash for simplicity sake?

[kpd905]

Could you get a different card for each business?  The Chase Ink card normally offers a $500 sign up bonus for $5000 spend.  It seems like having separate cards would keep everything organized without losing out on the rewards.

[MDM]

Or download your credit card transactions more frequently into Quicken?  Easier to do with some cards than others.  E.g., Chase Freedom is particularly easy.

[Jags4186]

I've thought about it but I can't say no to a free vacation a year. My SO and I get about 2k/yr each and get to go on fancy pants vacations for free.

[DesireeD]

   I do not use any credit, card or otherwise. My husband has a mortgage on the house that he got before me, but other then that... No credit! It makes me too paranoid. What if something happens and I can't pay? The house will be paid off in 4 years, and we have enough in our investment accounts if we lost our jobs and needed to pay it off.
   I know there are benefits to credit churning, but it takes balls bigger then mine.

[Retired To Win]

... I know rewards cards are thought of as a smart idea around here but I'm wondering if anyone lives strictly on cash for simplicity sake?

Not me.  I keep 26 credit cards for a whole variety of reasons.  But (right) I keep them all at a zero balance.  ;D

[choppingwood]

I've used cash for the last ten years+ for all my spending. That way I am clear on what I am spending and when I am finished with something (like a major trip) or the month, I am finished with it. Though I do have some travel points, they don't in any way shape my spending.

I do often travel differently now, and that has meant some really amazing and different experiences than I would have had in the past. B&bs on the West Coast, a Zodiac tour of Haida Gw'aai villages full of totem poles, a luxury educational tour of Morocco, renting cottages rather than hotels on Kauai and Maui. I think I have had a closer experience of the places I am travelling to and more people contact.There is an adjustment to the mechanics of it, but it is rarely a problem.

Coming into retirement, with what be my last steady income, I have got a credit card again. But after a few months with it, my spending is going to stay with cash. Just paid by cheque for having my roof re-shingled.

It is widely criticized on MMM, but it feels more independent and the spending is under better control for me personally.

[milesdividendmd]

The economic problem with using cash only is that you are paying an effective 1 or 2% tax to subsidize the merchant credit card fees, and the user rewards that are built into the cost of the sale.

That being said, if you have a problem with impulse control and spend more when you pay with credit, or are unable to pay off your credit card bill each month, then a 1% tax is a bargain!

Also peace of mind is ubderrated, so if CC usage makes you uncomfortable, it's probably not worth it....

I obviously have made it a habit to churn, earn, and burn. To each his own!

[MsPeacock]

I have three that have balances due to legal bills from last year. I am paying them off. Otherwise I do not use credit cards. The only time I have used credit cards in the past 10 or 15 years was to deal w/ the unfortunately high legal bills for my divorce and my total lack of cash money at the same time.

I use a debit card.

Once the balances are gone I'll look into reward cards and putting all my expenses on a card (I did use rewards cards when possible for the legal stuff - got 5 nights w/ my kids for free at the Waldorf Astoria in NYC and had a great trip). I do like the idea of getting travel bonuses and such, but right now my focus is on just doing away w/ the cards.

[CopperTex]

Could you get a different card for each business?  The Chase Ink card normally offers a $500 sign up bonus for $5000 spend.  It seems like having separate cards would keep everything organized without losing out on the rewards.

I actually have that card already. I had tried setting up the finances with one credit card and one checking account for each business and one credit card and checking account for personal and that was a pain in the ass. Our finances are all over the place so much more so that someone that receives a steady salary each month. I am trying to find a solution that is super simple and straight forward, but am afraid that will come at the cost of losing the rewards. I should probably mention that the rewards game makes me feel a little owned by the credit card companies. Like I'm jumping through hoops for these corporations and I like the idea of freedom from that.

[I'm a red panda]

I could never switch to cash "for simplicity".  When I have cash, it disappears quickly. I often have no idea where it went or what I bought.

It is much harder for me to pull out plastic knowing I'll have to answer to that expense again.  Credit cards track what you spend on. Seeing a long list at the end of the month to remind you... that is what keeps me from spending excessively. 

Cash- no one will ever know...  there is no accountability. It is WAY too easy to spend.


The rewards on a credit card are nice too.

[Blonde Lawyer]

What about using Mint? That shows real time balances for all of your credit and checking accounts.  I think you could add your business and personal ones together if you wanted.  It also lets you program reminders and upcoming bills.  Once you "train" it, it will know these things already. Makes my budgeting/cash flow so much easier.  I don't run a business but my husband fairly frequently has to front work expenses on our credit card and get reimbursed at the end of the month.  This helps me keep track of everything and makes sure no money just gets absorbed where it shouldn't.

[klystomane]

Could you get a different card for each business?  The Chase Ink card normally offers a $500 sign up bonus for $5000 spend.  It seems like having separate cards would keep everything organized without losing out on the rewards.

I actually have that card already. I had tried setting up the finances with one credit card and one checking account for each business and one credit card and checking account for personal and that was a pain in the ass. Our finances are all over the place so much more so that someone that receives a steady salary each month. I am trying to find a solution that is super simple and straight forward, but am afraid that will come at the cost of losing the rewards. I should probably mention that the rewards game makes me feel a little owned by the credit card companies. Like I'm jumping through hoops for these corporations and I like the idea of freedom from that.

Use two different banks?

[iamlittlehedgehog]

For the time being DH and I are choosing to not use credit cards. Emergencies are what got us here in the first place and they kept providing a crutch. So until we have a decent emergency fund built up we are are not using them. We just paid off his and are closing the account. I know there is the argument that hurts the credit score but at this time there is time that is best decision for us. Eventually I would like to open another with decent rewards for the travel benefits.

[NewReality]

I've got one that I never use and sits at $0. I can't think why I'd ever use it short of some kind of emergency situation.

Although I'm sure there is some money to be made churning cards/rewards, I don't do enough purchasing and keeping up with all the fine print doesn't seem worthwhile.

[superheropunk]

So it sounds like you want to continue to use the credit cards for the rewards but have a challenge because you don't know how much you spent until the end of the month. Here is what I do with my credit cards. I enter the transactions immediately (or really soon after the transaction) into my software so I feel the impact rather than wait till I get the bill.

[Jags4186]

I've got one that I never use and sits at $0. I can't think why I'd ever use it short of some kind of emergency situation.

Although I'm sure there is some money to be made churning cards/rewards, I don't do enough purchasing and keeping up with all the fine print doesn't seem worthwhile.

I challenge you and everyone to seriously consider churning.  Unless you are making big big big bucks, its hard to beat the hourly rate of churning credit cards.  Those $400+ signup bonuses can be had with as little as 1 hours worth of work over a weekend with a cost of under $40.  $360 after tax income for 1 hour (or less!) of work...just too good to pass up.

[mohawkbrah]

i use the credit card as a buffer between paydays, only because i invest all my income  currently as soon as i get it and i don't like having money not earning anything in a bank account

[I'm a red panda]

So it sounds like you want to continue to use the credit cards for the rewards but have a challenge because you don't know how much you spent until the end of the month. Here is what I do with my credit cards. I enter the transactions immediately (or really soon after the transaction) into my software so I feel the impact rather than wait till I get the bill.

If someone is on this forum, they presumably have internet access. Every single credit card I have has a website where I can see transactions post, very near real time.

Then I don't even have to remember to enter it into a software (which is way too much effort for me.)

[Dicey]

Not me, baby! I'm all about the points and/or rebates. Hell, I look for things to charge.

I don't use either so I can't say for sure, but perhaps something like Mint or YNAB would work? The last thing I would do is switch to all cash. As someone who has successfully defended an IRS audit, I'm all about the back-up documentation that CC's provide.

[Retired To Win]

...As someone who had successfully defended an IRS audit, I'm all about the back-up documentation that CC's provide.

Hell's bells! There's another reason to keep my 26 credit cards that I had not spelled out!

[choppingwood]

The economic problem with using cash only is that you are paying an effective 1 or 2% tax to subsidize the merchant credit card fees, and the user rewards that are built into the cost of the sale.

Yes, though I am seeing more merchants charging extra for high-end purchases using a card. The accommodation on my rental in Maui in March charged 2% to use a credit card.

That being said, if you have a problem with impulse control and spend more when you pay with credit, or are unable to pay off your credit card bill each month, then a 1% tax is a bargain!

Indeed. Another factor is whether the points are causing you to incur expenses you wouldn't otherwise have. I know many enthusiastic points gatherers who have a lot of airfare and/or hotels rooms paid for with points, but are spending a lot on the incidentals (and some of the non-incidentals) related to these trips. These are trips they might not justify without the points. This couldn't happen to a mustachian, of course....

I obviously have made it a habit to churn, earn, and burn. To each his own!

Absolutely! Though if I am sitting beside you on a flight and I paid for my flight and you didn't, at least buy me a drink. Because chances are I helped pay for your flight.:D

[milesdividendmd]

The economic problem with using cash only is that you are paying an effective 1 or 2% tax to subsidize the merchant credit card fees, and the user rewards that are built into the cost of the sale.

Yes, though I am seeing more merchants charging extra for high-end purchases using a card. The accommodation on my rental in Maui in March charged 2% to use a credit card.

That being said, if you have a problem with impulse control and spend more when you pay with credit, or are unable to pay off your credit card bill each month, then a 1% tax is a bargain!

Indeed. Another factor is whether the points are causing you to incur expenses you wouldn't otherwise have. I know many enthusiastic points gatherers who have a lot of airfare and/or hotels rooms paid for with points, but are spending a lot on the incidentals (and some of the non-incidentals) related to these trips. These are trips they might not justify without the points. This couldn't happen to a mustachian, of course....

I obviously have made it a habit to churn, earn, and burn. To each his own!

Absolutely! Though if I am sitting beside you on a flight and I paid for my flight and you didn't, at least buy me a drink. Because chances are I helped pay for your flight.:D

Deal.

(Even though I never buy booze on flights.)

I'll make an exception for you!

[choppingwood]

The economic problem with using cash only is that you are paying an effective 1 or 2% tax to subsidize the merchant credit card fees, and the user rewards that are built into the cost of the sale.

Yes, though I am seeing more merchants charging extra for high-end purchases using a card. The accommodation on my rental in Maui in March charged 2% to use a credit card.

That being said, if you have a problem with impulse control and spend more when you pay with credit, or are unable to pay off your credit card bill each month, then a 1% tax is a bargain!

Indeed. Another factor is whether the points are causing you to incur expenses you wouldn't otherwise have. I know many enthusiastic points gatherers who have a lot of airfare and/or hotels rooms paid for with points, but are spending a lot on the incidentals (and some of the non-incidentals) related to these trips. These are trips they might not justify without the points. This couldn't happen to a mustachian, of course....

I obviously have made it a habit to churn, earn, and burn. To each his own!

Absolutely! Though if I am sitting beside you on a flight and I paid for my flight and you didn't, at least buy me a drink. Because chances are I helped pay for your flight.:D

Deal.

(Even though I never buy booze on flights.)

I'll make an exception for you!

lol. Or you could bring extra snacks from home....

[FIRE me]

I could never switch to cash "for simplicity".  When I have cash, it disappears quickly. I often have no idea where it went or what I bought.

It is much harder for me to pull out plastic knowing I'll have to answer to that expense again.  Credit cards track what you spend on. Seeing a long list at the end of the month to remind you... that is what keeps me from spending excessively. 

Cash- no one will ever know...  there is no accountability. It is WAY too easy to spend.

Wow, exact opposite for me. Plastic is too easy. Buy now pay later. When I pay cash, I think about how long I had to work to make that money.

[climbgirl]

I try and put every transaction on a credit card to max the cashback - it annoys me when I'm not able to pay for things on card! 

I'm envious of you all in the US with the massive range of card rewards.  The EU have decided to cut the transaction charges that retailers have to pay card companies and as a result, a lot of the good reward and cashback cards are starting to cut the benefits. Very hard to find good reward cards in the UK now.

[banjarian]

Another vote for the accountability involved in keeping credit cards. I use mint.com, which I highly recommend, to track all my balances & spending. I use credit cards for almost everything, but I check the balance every week or so, and categorize all my purchases so I can track where my money is going.

I also pay the credit cards off multiple times each month, especially if I've just made a big purchase. (I'm plowing through student loans right now, and my financing company allows me to make extra payments by credit card. Every couple weeks, I make a $1k payment, and then a couple days later, go pay off that credit card. $10 a pop in points for doing it that way!) I keep a few different cards - one is my oldest account, so I keep it for credit score purposes. It gets a single charge every month, and is set to auto-pay in full. Then I have the card I get most of my points on, and then finally, the ol' Amazon card, for Amazon points.

Mint makes it so easy to see where my money is going, and it provides a great snapshot of all my investments & other balances, too. The only way I would ever give up credit cards is if I suddenly found myself with a real spending problem (unlikely, lol) or if I needed to get rid of my paper trail, haha.

[Sibley]

I recently switched to paying for everything with a cash back cc rather than my debit. The monthly bills are still running through the checking account, but I want to give myself some time to adjust before I try to change anymore. So far so good. I also use Quicken to track everything and I've set it up so I can import everything (checking, cc) and just rename things.

A note for the OP and others with businesses - unless your business is really small ($40k or less revenue per year In my mind, and definitely if you have payroll), you should have a very clear line between personal and business. Keep everything separate, and possibly even different banks. When you "pay yourself" from the business, you'll have a check or transfer as a record. As an accountant, I've heard many horror stories of people co-mingling who got into a lot of trouble one way or another.

I'm well aware that keeping everything separate is a hassle and more work. Do it anyway, because dealing with the problems that can result is way worse, both in time and money.

[Much Fishing to Do]

Yes, you are jumping through some hoops to earn the rewards, but making money always seems to come with that, and it seems minimal to me.

I would use a cc for the protections alone (big difference in effort needed between trying to get money back from something and challenging a cc purchase).

I don't think I spend any differently between CC and debit card and cash, I'm well aware its all hard earned money disappearing.  At least with the cc or db card I can track better than with cash.

I don't disagree with even Dave Ramsey's hard rejection of CCs, but that's to an audience where you can do more damage with a CC than with your checkbook, once you're past that point there is little you can do to protect yourself from yourself.

My business cash flow is crazy extreme swings, which is why its completely separated from my personal spending (monthly spending is deposited from a savings account with a couple years expenses, business profits refill the savings account occasionally and extra goes directly to investments).  So the money to pay off the credit card expenses are sitting in the checking account each month anyway, and using the CC gives me just one point a month look and confirm the money is there (the day before the CC payment in full is automatically made).

[m0nk3y]

After getting into a LOT of CC debt as a college student and the years following, my wife and I each have one. Hers is secured (re-building her credit after paying off debts years ago) and I have one AMEX for emergencies and auto rentals, her balance varies (I tend to leave a small balance on hers, between 5$ and 75$) and mine is paid off monthly. After almost 2 years, her credit is doing much better and she will soon move back to no card. For us, the open-ended spending was once a massive problem and we're very reluctant to get that temptation again. That said, I am considering the cash back/pay immediately option after over 8 years with no carried balance, but who knows- may be too mentally screwed up over the past.