Part 2: Personal Finance, Personal Responsibility, and You

Going to do a follow-up to yesterday’s post, which addresses some of the finer points and nuances of the discussion yesterday.

The Credit Card

Part 1: Why credit cards suxxor.
Part 2 (this post): Details, details, details.

I strongly encourage you to read yesterday’s post before diving in to this one. I would recap it, but hey, that’s what the link /\ up there is for.

Why not get your Robin Hood-on?

Basically, the idea is: if I’m not profitable to credit card companies, why not simply continue what I’m doing and give the profits earned in cash back away?

And its a good question, but here’s why not:

- Retailer Fees: When I use an AMEX or VISA at any store worldwide, instantly the credit card company take a cut of the profit, which gets split between the credit card company, the data processor, and every other middleman out there. This ranges typically between 2 and 4% in the US, depending on the card (more on AMEX, less on VISA). Ironically, this makes perfect sense to me, as its a sustainable business model that processing and payment companies can use, and everyone profits. Well, everyone except the retailer. You see, that 2 to 4% obviously goes directly against the company’s net profit margin, and is just part of life given the prevalence of debit and credit cards now. In essence, when you use such cards, you’re drawing money out of your own community that had you used cash, would have remained (this is of course, dependent on the type of retailer).

- Ill Gotten Gains: Using money obtained by oppression to give away in the name of good doesn’t really work. It’s horribly inefficient, as in the end the person I’m trying to steal from (credit card co.) comes out way ahead than either myself or the recipient of my gifts. As noble as Robin Hood was, I’m not gonna try and emulate his leetness.

- Leverage: If I continue to use a credit card, my buying patterns are very clear to the cc company as well as the retailers I buy from. To be more clear, companies know that if I’m going to buy something, they better offer credit cards processing at their store. The higher the percent of the population that does this, the higher the cc companies can charge retailers for the ability to process their given card. I’m not too big a fan of this for aforementioned reasons, so… cash it is.

Re: Overkill

Depending on who you ask, dumping all of creditcard-dom and as much of debit card-dom as possible just because they pwn their customers may seem alittle extreme. I mean, if you go looking for bad stuff companies do, won’t you always find it in every industry if you look hard enough?

It’s probably true that you would find bad stuff in nearly every major company out there. And just cause its out there doesn’t mean I’m going to go looking for it. But when one specific segment of the marketplace tries every possible trick out there, every underhanded thing they can try, and a suitable alternative (read: cash) exists… why bother with it? There’s oodles of places you can look for the evidence, and if you have any affinity for personal finance at all, you hear about such evidence one way or another, every single month.

If there was no other way to make payments for the majority of purchases than credit cards and the alternative was a Luddite existence, I’d give pause to my actions. But if all I’m giving up is a cash back reward of a couple hundred dollars a year… oh well. I’d like the couple hundred dollars, but I’d also like not to profit from other peoples hard times.

As you might have noticed, I like writing about personal finance stuff, as it relates to faith. Thanks for reading.

FL: Woman tries to light a Walgreens on fire after receiving incorrect change - hm.