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Jul

17

Playing the Credit Card Game

ByeBye Mastercard

You guys know me pretty well :). You probably remember how much I’ve ranted about the credit card companies and how evil they are. I’ve expoused hatred for credit cards, shown how I live without them, and vowed that I’ll never need to use a credit card again.

Well.

While I still really don’t agree with Visa, MasterCard, and the like (they’re like tequila and the hot afternoon sun; the mix doesn’t sit well with me), I’ve found that we can come to some compromises. I feel awkward even saying that. To you, I need to be perfect. I need to hold up my values. Right? It seems to be that my values have shifted a little.

While I still have many bones to pick with the major credit card companies over interest rates and collection policies, among other things, I’ve come to see that credit cards CAN be used as a tool.

I went to California to visit friends a few weeks ago and found myself in a conversation about credit cards. One of Sean’s friends confessed to having a lot of debt, and gave me the details on how he plans to get out. After talking for a while, I mentioned to him that I have no problem with him using credit cards; “after all, some people say they can be a useful tool, which can be overpowering if you don’t know how to use it.” To this he replied,

“Well, I don’t know if they’re a useful tool so much as a dangerous one. I feel like I’m holding onto a chain saw for dear life and I forgot to read the manual. My arms are shaking and I might drop it and cut off a finger any minute!”

Haha! What a perfect metaphor.

His reaction was exactly the one I had when I was still deep in debt. But - I am no longer in debt, and the journey to get out of debt taught me loads about money. I regard my finances with far more wisdom now than I used to, and I have a plan for my money. I never wonder where my money goes, because wherever it goes was already planned in the fates (budgeted for).

Anyhow, this is all a way to say that in the very recent past I have used two separate credit cards for two separate reasons, and I feel no guilt whatsoever. I feel like I’ve learned how to use the tool, and I’m comfortable being the operator of the machine.

The Points

I normally don’t give a care one way or the other about rewards and points associated with credit cards. The amount you get back for what you spend is usually pitiful, and not worth the risk you run when dealing with credit cards. But having said that, there is one exception - and by making an exception myself, I think each of you has probably one exception as well that is completely justifiable and that works in harmony with what you care about. What do I care about, and where is my exception? Nordstrom.

I buy a heck of a lot from Nordstrom, even now that I’m living frugally. I’ve written extensively before about why I buy quality things - they last longer, look better, keep up better, and sometimes are so great you never have to buy another again in your life. I buy all my makeup and shoes and much of my clothing and jewelry from Nordstrom.

Since what feels like the beginning of time (2005), I’ve had a Nordstrom credit card, and the rewards structure is pretty awesome. You get double points for every time you use the card at Nordstrom, and point whenever you use the card in general as well. Nordstrom also has sale days where you can get double-double points or triple points on your purchases. For every few dozen points you earn, they send you a $10 or $20 gift receipt in the mail that can be used to buy anything in the store. It’s not amazing, but it works for me, especially since I’m going to shop there anyway.

So two weeks ago I went to Nordstrom to buy some makeup - about $60 worth. I had the money in my checking account and went in expecting to swipe my Visa Check Card for the purchase, when I heard over the intercom that it was a triple points day. Normally, before having paid off my debt, I would have used my Nordstrom card anyway - but this day, I stepped back from the counter and sat down to think.

After mulling for a couple of minutes, I decided to use the card. After all, I had no balance carrying over. I also had no reason to use the card for anything other than points, because I had the cash. And so, I used the card and got the points, and when the bill comes next week, I’ll pay it in full. No harm, no foul, and next month I’ll have $10 to spend at Nordstrom any way I like (I’m eyeing a $20 pair of jersey leggings).

The Convenience

The other occasion I used my credit card was when I was out buying motorcycle gear. I had planned to go to the store and look around to get a feel for prices, and hadn’t intended on buying anything because I hadn’t yet transfered any of my savings for motorcycle-related expenses into my checking account. When I got to the motorcycle store, however, they were having a massive sale! I had priced out all of my gear weeks before online, and figured that I would buy everything online except the helmet because prices were so much cheaper than in the stores.

Hemlet! When I arrived at the store and everything was on sale, and it was the LAST day of the sale, I decided to take a look around. What I ended up finding were prices that were lower than those I’d found through extensive searching online! It was very cool and sort of like fate.

Once I had made the decision to buy some gear that afternoon, I also decided to use my Bank of America credit card with which to buy it. I hadn’t the money for the purchase in my checking account, and there wasn’t time to transfer the money from savings to checking before making the purchase. With a shrug and a sigh, I plucked out the last credit card I had paid off and not yet gotten around to closing and made the purchase.

Two days later the charge showed up online and I transfered the six-hundred and some-odd dollars into the credit card and that was that. Because the timing was essential in that transaction, I was able to use the credit card to spend my savings without drawing directly from savings.

So in conclusion, I have found that I can use credit cards. I will never use one unless the purchase was already budgeted for or saved for before-hand. And I will only ever use the cards to get points or to save me in a banking-timing pinch. I will never use a credit card to delay an expense because I don’t already have the money, and I will NEVER use a credit card for an impulse purchase that I will later regret. I’ve learned that much
The fantastic picture at the top is by ShutterCat7.

Filed Under Inbox Clips - Reader Q&A, money and finance

Comments

7 Responses to “Playing the Credit Card Game”

Laura on July 18th, 2008 12:13 am

Welcome back Shanti!

-I think using a credit card can be a great money saving tool if you can do it correctly and pay the balance off every month.
-For me however I know it would lead me down the wrong path again. It all depends on your personality type.
shanti on July 18th, 2008 12:34 am

Hi, dearie! I think while I was paying off my debt I was really un-trusting of CCs… I avoided them because I allowed myself to get into a downward spiral of spending. Now that I’m out of debt and past it, I can seen a lot more clearly and I know I now can handle it.

I don’t know when, if ever, I will pick up a credit card again… but it’s reassuring that my habits have changed and that I can handle them now - responsibly.

<33!
learning the ropes on July 18th, 2008 11:31 am

With all the praise you’ve showered on Nordstrom I’m tempted to ask you to write a review of the store. I thought of shopping there many times but held myself back thinking that it would be too expensive.
shanti on July 18th, 2008 1:44 pm

Haha - Nordstrom is a great store I don’t know if I’d do a review on this blog… I don’t really do store reviews here… but I could write a guest article for you sometime if you’re interested. People would like it, I’m sure, but I don’t know. Nordstrom is a store for ME, you know? Everyone will have their own preference.
The Executioner on July 18th, 2008 6:56 pm

Wow. I’m surprised you’ve changed your stance a bit. You seemed to be adamant about shunning credit card use in your previous entries.

Credit card companies are pure evil. They advertise a lifestyle of wealth and success, but they really want you to become a debtor for life. However…

If you beat them at their own game (by incurring no finance charges while still reaping the reward benefits), you can have the satisfaction of knowing that you are sticking it to The Man. Bleeding the beast. [Insert your favorite metaphor here].
Aaron Stroud on July 19th, 2008 11:58 am

Welcome back Shanti! Credit cards are simply tools. They can be extremely useful and are perfectly safe just as long as long as we remember to use the card instead of letting it use us.
Moneymonk on August 4th, 2008 1:01 pm

Credit cards is like a two edged sword

“I buy a heck of a lot from Nordstrom”

here, here

I tried to avoid that place, sometimes it’s hard