You want to go where?

What Kokobuddy said:


MaximumSisu's response:

Kokobuddy actually never says anything about his/her own spending practices. Kokobuddy cites a study which attempts to demonstrate what the rest of humanity does (at least American humanity), and it is a valuable lesson for many people to learn, given how debt-ridden much of American society is.

It does not mean that you can't be either an exception to this tendency (or outside of it, if your handle is an indication of your nationality). It all depends on your natural tendency towards spending.

Like you, my purchases remain the same no matter what method of payment I use, and I use a credit card like a charge card (pay off in full every month). I know this by empirical evidence, because I have spent time in places where my credit cards didn't work - it didn't change my spending habits. That doesn't mean that I question the general truth of Kokobuddy's advice. I just recognize that it doesn't apply to me.

That sai, we shouldn't read too much into the study. The McDonald's study doesn't take into account the differing nature of the clientele. Some of those who pay cash do so because they are too poor to have debit/credit cards. These people are going to be more frugal because they are poor, not because of their method of payment. This may also apply to some who use debit cards - they don't have adequate income to qualify for a credit card.

realjd

Correlation =/= causation. I don't usually carry much cash and am more likely to use it for smaller transactions. The transaction size determines whether I pay cash or credit, not the other way around.

TennisPro

Good ol' Amex SPG. One of the few cards I'll pay the annual fee for.

KoKoBuddy

I know, I know. You're not affected by marketing. Nobody is. All those billions of dollars spent on marketing every year by corporations are a total waste of time because everyone is too smart to fall for the gimmicks, right?

Look, credit card companies aren't run by idiots. They give out miles and cash back and hotel points fully knowing all of it and then some it will be made up on the back end by people spending more than they otherwise wold without the "perks".

You may think your purchases don't vary, but subconsciously your brain is always shouting SPEND MORE SPEND MORE SO WE GET MORE MILES. And assuming you're human, chances are at least on some occasions you spend more than you otherwise would too. There' still no free lunch out there. no matter how hard we keep looking for it.

thatsajoke

I guess my wife doesn't take advantage of some deals (like the AA 100,000 CC offer) because of bad past experiences (even more than a decade old) with that particular airline/hotel.

You want to go where?

1. Slight correction to your statement in the first paragraph. The point isn't that you spend more overall, it is that of what you spend, you spend more of it using their card. They also hope that you will carry balance (which is where they really make their money), not the transaction fees they collect from stores.

2. Your second statement, however, is false, because it is based on the assumption that all humans are the same, that their 'subconscious' all shouts the same things at them, and that they have the same level of willpower to resist that 'subconscious'. The fact that a subset (perhaps a large subset) of people spend more when they use their credit cards than when they pay cash does not mean that all do. The fallacy in your argument is that because the CC companies do this because enough people's behavior is motivated by their incentive for it to provide value to them to continue the practice is your assumption that therefore all people's behavior is influenced in the same manner.

3. In my case, there really is no difference in my spending when I use cash or credit card. I never carry a balance on my credit cards. I primarily use them for the convenience and safety of not carrying too much cash, and would use the card to the same extent whether or not it gave miles, with one notable exception. When I moved to a large enough house for a grand piano, I paid for it using credit cards rather than a check, so that I could get the miles. However, I still paid the bill when it came in and didn't carry a balance. You can bet that my decision about which piano I bought was not driven by how I paid for it, but by the size, the quality, the tone, and what I could afford. I had already selected the piano and negotiated the price, before I even thought about the method of payment.

realjd

No, they know it will be made up by transaction fees. If they get a 2.5% transaction fee, they can give 1% of it as cash back, miles, etc. and still turn a profit even before factoring in interest on balances not paid in full.

I was just explaining my spending habits, not everyone's. I was merely using it as a counter argument to explain why I disagree with your interpretation of the statistic that credit card transactions at McDonalds are significantly higher than cash transactions. I don't doubt the stat itself, just your conclusion.

roguerafter

This thread so reminds me of my dad. He had his one credit card, which he rarely used. He always paid cash or wrote checks. Just finally got a debit card last year. This was, until I showed him how much I had earned in cash back and UA miles in the last year. All of the sudden, All the bills were autopay on his CC, and he uses it all the time! Just shows you CAN teach an old dog new tricks!