Comment by calambrac | Hacker News Reader

Comment by calambrac | Hacker News Reader

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I've found the opposite to be true; when I have cash in my pocket, I spend it.

I'm very disciplined about paying off my credit card every month, which means I have a fixed total budget that I refuse to go over. A part of that I dump into cash in my pocket for beer and sushi and whatever doesn't accept credit cards, and the rest I set aside to pay off the month's credit card bill.

The effect of this is that I have to keep a running ballpark tally of how much I have left in the credit card pile, and since I've conditioned myself to be deathly afraid of going over, I always estimate conservatively, and I inevitably wind up with a surplus that I dump straight into savings and never touch again.

Why a credit card instead of a check card? Because the credit card company pays me that 2% for free, because if it gets stolen it's the credit card's money at risk and not mine, because if an emergency happens I have the flexibility to break my rules, because it establishes a credit score that I can parlay into lower interest rates when I want to buy a car or a house later.

I think the advice to not have a credit card is pretty terrible, actually. There are so many benefits, and as long as you have a little self-control, pretty much no downside.

> There are so many benefits, and as long as you have a little self-control, pretty much no downside.

I would change that to "a lot of self-control".

As someone who is filing for bankruptcy (due to investment property loss related to the sub-prime debacle, not credit cards) and has had all his credit cards canceled (even the ones paid on time), I can tell you how much more difficult it is to live off cash alone. There have been so many times when the flexibility of a credit card would have saved me from several $35 overdraft fees. Such repeated experiences quickly teaches you to change your habits and be more frugal.

If you don't feel disciplined enough with your credit cards now, try not using them at all for a few months. Take them out of your wallet and stick them in a box at home so you can't use them when you're out.

> I think the advice to not have a credit card is pretty terrible, actually. There are so many benefits, and as long as you have a little self-control, pretty much no downside.

I disagree. This is great advice for the majority of people. Not everyone, but the majority.

Do credit cards offer benefits? Yes--convenience, expense tracking, protection against theft, etc.

Are these benefits free? No. People spend a lot more using credit cards than cash. Maybe not you, but most Americans. I don't care enough about this to look up the stats, but I do have a PHD psychologist friend on the payroll of one of the major credit companies and his job is to contrive ways to make people spend more on their cards.

Think about it like this: your cash is dumb--it justs sits there in your pocket. Your credit card is smart, however. A whole cadre of smart people--who are incentived to get you to spend more and pay late--are tracking how you spend money and are cooking up ways to get you to spend more and pay fees.

I know the empirical numbers would help my case more, maybe I'll dig them up and write a blog post about it.

If the numbers show that people spend irresponsibly with credit cards, that isn't necessarily evidence that it's good advice to say "Don't get a credit card". Those numbers you're basing that advice on have a built-in skew towards people who have chosen to use credit cards. You have to ask the question "Would a person who would accept the advice to not get a credit card behave in the same way as the average credit card user if they did have one?"

I would argue that if you're seeking and open to advice on whether or how to use a credit card, you're probably already differentiated from the free-wheeling credit-abusing mob, and that if that's the case, if you know you can be responsible with it, it's actually a really great idea to have one.

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