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“Credit Cards Are For Old People”

by J. Money on Wednesday, June 22, 2011

pancake faceThat’s what my 40 y/o cousin told my 13 y/o nephew yesterday at breakfast :) After my nephew proudly exclaimed “Cash is king!” when our server denied our credit card at the restaurant, haha…

How does HE know cash is king?? And why are credit cards only for old people?? (wait, don’t answer that).

It was a pretty funny exchange. Especially when 2 seconds later my nephew turned to me and went – “you should tweet that!” Haha.. I had gotten caught tweeting about him last night when it was our “family time,” so anytime something funny or money related came up it was expected that I’d turn to my phone and spread it around town. Pretty bad, huh? :)

But anyways, I thought it was pretty interesting because I totally forgot that when you’re a kid, the only way you know how to buy things is with CASH! You don’t get the luxury of whipping out the plastic or cutting a check to prolong transactions like the rest of us do. If you don’t have it in your wallet, you can’t pay for whatever’s in front of you! What a concept! :)

Now anyone who knows me knows I’m a HUGE fan of credit cards when used responsibly – and there’s no way I’d ever give them up if I had a choice in the matter – BUT, I gotta admit the cash-only way of thinking is pretty damn sexy. It’s inconvenient as $hit some times (like yesterday, when we had to find an ATM to pay for all 8 of our meals (the restaurant didn’t accept credit cards, which is how this whole thing got started in the first place)), but it sure would save a looooooot of people a lot of heartache over their lifetimes! And if there was ever a day they vanished out of our lives completely, I’m willing to bet the average amount of debt we all carry would go down down down over time too. (Ooooh that would make for a good study actually!  Comparing the average debt BEFORE credit cards came around (in the 1950′s), to the average debt today WITH them? Someone’s gotta have already done that before – I’m gonna Google it when I’m done posting this :))

Again, big proponent of credit cards when used smartly, but damn glad they’re only for us “adults” out here and not the kiddies for the first 18 years of their impressionable little lives. It’s amazing some of us are even allowed to HAVE them after all the trouble we get into! And I’m gonna be pissed if the trouble makers get them banned from us one of these days!! Haha… maybe we should change the slogan to “Cash is Cool!” though so the younger generation accepts it more? :) Or better yet, bribe Lady GaGa to sing about it?!

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(Photo by Michele Hubacek)


{ 29 comments… read them below or add one }

1 Tea June 22, 2011 at 8:00 am

I have one general rule with credit. If I am going to pay to use someone’s money, then what ever I am using that money for, has to make me more money than it is costing me to borrow it. Meaning, I will borrow for an investment, but not to buy some “toy” that will depreciate. Keep a healthy emergency fund, and there should never be a reason you need to pay to use someone’s money unless it is to make money.

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2 cashflowmantra June 22, 2011 at 9:28 am

Kids can be pretty observant. There are a lot of people in this world, myself included, who would do good to remember that cash is king.

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3 No Debt MBA June 22, 2011 at 9:31 am

Maybe a song about stars who make millions but still go bankrupt would sell better. We could incorporate a catch phrase about how everyone has to live within their means.

I do get frustrated when some people’s irresponsibility constrains the actions of those who are actually responsible. Think about the hoops you have to jump through to set up a trading account with advanced options, the law in Massachusetts that everyone has to have health insurance, Social Security, and so on. A world where everyone was responsible would be a very different, very nice place.

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4 Stephanie June 22, 2011 at 9:49 am

Uh, your website just accused my comment of being spammy, and then when I hit the back button the comment was gone. I’m insulted! :-P

Anyway, I was just saying that I like Tea’s rule of thumb, and that my rule is to never use my credit card if I don’t anticipate being able to pay it off in full. Only twice in my 11 year credit history have I carried a balance, and both times it was just a small balance over the course of 2 months. I’ve earned way more in rewards than I’ve paid in interest charges.

Also, I think it’s a good idea for parents to set their kids up with some sort of unofficial credit account to teach them how credit cards work, because otherwise these kids hit 18 and think that a credit card = free money and they don’t even think about having to pay it back. But doing so requires the parents to be responsible with credit cards themselves, and I think that’s a big part of the problem right there – Kids grow up seeing parents who model irresponsible financial behavior and the cycle just continues.

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5 J. Money June 22, 2011 at 10:29 am

@Tea – Ooooooh I like that! Very VERY smart use of credit cards for sure, especially in forcing yourself to stay out of trouble (well, unless the “investment” turns out not to be as good as expected – but still, much better mindset to generally be in). Mine is pretty much “only borrow what you can pay off at the end of the month,” but it’s def. not as safe proof as yours ;)
@cashflowmantra – Yeah, they pay attention (and pick up on) everything!! I love it. So open to creativity and new ways of doing things too – I miss that :)
@No Debt MBA – Haha, oh yeah! Even if we can increase our responsibility rate by just 1% the world would be in a better state of mind ;) 100% would just be too boring! haha…
@Stephanie – Yup! Excellent points (and ideas). I’m totally gonna set up a “J. Money Jr. Credit Card” for my children once they’re old enough to know what money is (1 y/o, haha… instead of teaching them football or basketball in hopes they make it big one day, I’m gonna instill in them the love of smart money management! which will last them forever!! :)). I feel like I was much more comfortable w/ credit cards when I turned of legal age because of growing up with them and learning how they work from my parents (aka “don’t ever use them – they’re evil!!” haha…) They might cringe if they knew what I was doing with them now, but they sure gave me the sense of urgency when it comes to paying them off in time :)

Oh, and sorry about my comment system – it gets a bit wonky every now and then (esp if you put in links – more than 2 automatically triggers the alerts)

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6 Crystal June 22, 2011 at 10:50 am

I wish people would know if they should be credit card people or not. One of my pet peeves is when someone starts complaining about the credit card debt they have like the cc companies forced them to swipe for a Coach purse…grrr. I personally am awful with cash (like water through a sieve), but I am great at paying my bills off in full, so rewards credit cards were made with me in mind! :-)

PS Your comment system also deleted my first comment as spammy and I am not including any links…

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7 Yes, I Am Cheap June 22, 2011 at 10:57 am

Sounds like someone’s uncle has been teaching him well! This kid is going places.

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8 Stephanie June 22, 2011 at 11:08 am

@Crystal – Me too!!!! I think a lot harder about a purchase if I use my credit or debit card, because I know I’ll have to save the receipt and account for it on my handly little spreadsheet, and that just creates more work for me. If I spend cash, it’s just too easy and I don’t even think about it. I know for most people it’s the other way around (easy to use a card, a bit more painful to part with physical cash) but when you’re as obsessive as I am about tracking income and expenditures it’s SO much easier to just drop some cash and forget about it.

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9 J. Money June 22, 2011 at 11:27 am

Sorry about the spammy commenting stuff guys! Not sure what’s going on :( The only other thing I can think of is that it’s flagging all the “credit card” talk we’re doing and considering *that* spam since usually stuff online like that IS SPAM! Haha… I think I had this problem with my last c/c post but who knows. Thanks for being patient and re-writing it again, I know it’s annoying (maybe copy it before posting if you leave another today?)

@Crystal – YES! Agreed!! People forget they personally made all those decisions to add that debt on those credit cards! They may have an issue with the rates they’re getting from these places, but then all it means is you need to watch your habits and not put yourself back into a crazy position like that! It gets me riled up too! haha… oh, and for anyone reading this that has massively high interest rates – try calling them up and simply asking for it to be reduced! You’ll be amazed at how easy it is sometimes when you just ask like that. Not all the times, but most of the times. A couple % points could make a huge difference too.
@Yes, I Am Cheap – Haha, I’d take the credit if I could! :)
@Stephanie – That’s an interesting way of thinking about it… credit cards make you have to do stuff you don’t like, so you just don’t use them! That certainly helps :)

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10 Jeffrey Trull June 22, 2011 at 12:31 pm

I think credit cards are great, too, with the caveat that they are used responsibly, as you say. Unfortunately, the vast majority of Americans don’t seem to be able to use them responsibly, and this causes people a lot of financial harm. I think even those that initially use credit cards responsibly may end up with problems if they lose a job or income source.

I’ve been using credit cards for a few years now, but I’d like to experiment with going cash only and see how I do. Yes, using only cash is a pain, but the fact that it is a pain is what makes it a great system for spending less.

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11 Ginger June 22, 2011 at 12:58 pm

Why was your card declined? I’m with Jeffrey and Crystal, credit cards are the best, if used well. I get money for using someone’s else’s money and I never pay interest. Oh, and if someone steals my purse I do not loose any money.

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12 Jenna June 22, 2011 at 1:10 pm

I prefer to use my credit card not just for the rewards (I do love free money!) but also for the ease of tracking purchases. If I pay for little things with cash, I don’t have the discipline to write down what I’m buying or keep receipts and do it later. I think I’d be better about this if I ONLY spent cash, but that’s not the case. I tend to only take out and spend cash for specific reasons, like a small amount to buy lunches at work, or before I travel. But, I’m a responsible credit card owner: The only time I ever carried a balance on a credit card was when I opened a new card that offered 15 months @ 0% APR. I was moving and bought a bunch of furniture and was able to set myself up on a little interest-free payment plan!

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13 Christine June 22, 2011 at 1:15 pm

Oof it certainly doesn’t help that when we go off to college we’re bomboarded with credit card offers on campus. They offer free tshirts in exchange for a high percentage credit card! I’m glad my mom started me on a joint acct with her to start building up my credit and to teach me about it too before all that. I think I’ll do that when I eventually have kids. Hehe and maybe incorporate a credit card game while we play house too.

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14 Jen @ Master the Art of Saving June 22, 2011 at 1:15 pm

I too am a big fan of credit cards, when used responsibly of course. I actually did a post the other day called “Credit Card Happy!” about credit card rewards.

The last couple of years, I’ve been working w/ my daughter (9) about almost everything money. I imagine that if I keep it up until she moves out she’ll be set knowledge-wise.

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15 Kelsey Horner June 22, 2011 at 2:01 pm

I’ve gotten myself into my fair share of credit card debt, and I’ve since dug myself out and starting using credit cards to MY advantage. Just wanted to pass on a good deal if you haven’t seen it already — AT&T came out with the “Universal Card.” It’s a rewards card, and if you’re an AT&T customer, you get 10% off your bill for the first year and 5% off after that. Definitely worth checking out if you’re a customer already! Unfortunately, I’ve been trying to apply and their website seems to have a bug.

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16 Jenny~Z June 22, 2011 at 3:16 pm

I, unfortunately, made some horrible credit decisions shortly after my 18th birthday (including leasing a $35,000 car and opening/maxing out a credit card). Since then I’ve been to collections for the car, maxed out 2 more cards plus taken on student debt. Currently, I’m 23, have paid off the collections debt and 2 of the cards and am working on the last one. I clearly was never taught how to responsibly use credit cards or to live within my means. I learned my lesson though and while I do use a credit card for the majority of my purchases I’m sure to never carry a balance! I 100% believe that parents should do their best to educate their children about responsible spending habits and proper use of credit.

Do I get a penny for my thoughts??? haha
Jenny~Z

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17 WR June 22, 2011 at 4:52 pm

debt is the slavery of the free – Publilius Syrus

credit cards simply help you enter into slavery quickly…

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18 retirebyforty June 22, 2011 at 5:07 pm

Cash is King baby! The kid has got the right idea. We try to minimize the credit card usage these days and we pay for most things with cash. It works for us.

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19 J. Money June 22, 2011 at 6:19 pm

@Jeffrey Trull – Yup, no doubt about that one good sir. I’d probably save more money using cash only than plastic any month! I’m just not willing to deal w/ the pain as yet, haha… but I swear one of these months I’m gonna do it! ;)
@Ginger – Haha true that! When someone steals cash it’s gone. They take your card and you have lots of help ;) (though it’s scarier with a debit card than w/ a credit card!). Oh – the reason our card was declined was because they don’t accept credit cards to begin with ;) Only cash.
@Jenna – Ooooh well done my friend, that’s awesome! Not many people can pull that off without messing up and receiving all those penalties ;)
@Christine – Haha agreed! I even FELL for one of those credit card t-shirt things!!! arghhhh haha…. I canceled it the second I received it, luckily, but still – that line to receive the shirts was huge!! :)
@Jen @ Master the Art of Saving – Yeah she will! I love hearing that too!!
@Kelsey Horner – Hey, very cool – thanks :) I do have AT&T actually for my iPhone, but there’s only 1 company I trust 100% still and that’s USAA. Although American Express is starting to win me over so far this year :) (I use them for my “corporate” stuff)
@Jenny~Z – You get a thousand pennies!!! GOOD WORK on ridding yourself of all that and learning to rock it now :) That is awesome!!! So many people just give up and learn to live with it over the years, but you’ve beat it. You should be proud of yourself!
@WR – Not all of us ;)
@retirebyforty – And ya gotta stick w/ what works too, no doubt about it.

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20 South County Girl June 22, 2011 at 6:32 pm

Sometimes I have to say kids have it right on. They aren’t hampered down with all these technicalities… Simple is Better…

Hope my future goobers are savvy.

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21 Molly On Money June 22, 2011 at 6:44 pm

Visa makes a gift card that you can spend at most stores. My kids got them one year. It was a little weird because it felt like they were being trained to use their future credit cards. I’m a parent that teaches thoughtful spending but it can be tough-merchandisers do impulsive spenders and will do almost anything to make it happen.

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22 crashdamage1957 June 22, 2011 at 8:02 pm

It seems to me that pre-paid C’cards would be a good hybrid between charge cards and cash.. the convenience of a card, with the limit that you woudl have to have the cash to load the thing in the first place.except that right now, the excessive fees and arcane use -it- or- lose -it rules make them a really poor alternative choice.

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23 Jen June 22, 2011 at 8:09 pm

I’m thinking your nephew has been listening to Dave Ramsey..as one of his mottos (that he says at the beginning of almost every show) is “Debt is Dumb, Cash is King!” Or maybe he’s just smart!

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24 MariaN June 23, 2011 at 3:08 am

Good morning, J. Very interesting post; and a contentious one, I think. I agree that ‘Cash is King’, I am afraid. Credit cards are a bit like other ‘removed mediators’ – they tend to mask relationships further and make actions easier. Actions, like spending money we don’t have, on crap we don’t need, killing the planet meanwhile. It is a very similar set up to the latest weapons systems – they are like playing computer games. People are so removed from the consequesnce of their action that it is a play. As a result, killing is easier, I believe.

I still have loads of CC (with frightfully high limits) and use some of them; but given what I have just written I suspect this is not going to last long. How about Debits cards though?

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25 Catherine Turley June 23, 2011 at 3:01 pm

i never even thought about not using my credit card until my favorite little vegan restaurant pointed out that they don’t have to pay as much if customers use cash. i now use cash at all mom and pop stores.

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26 Kelsey Horner June 23, 2011 at 3:09 pm

I never really thought of the cost to the business when it’s a small, local business. I’ll definitely rethink using the credit card at smaller shops from now on!

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27 J. Money June 23, 2011 at 7:36 pm

@South County Girl – Very true indeed – sometimes simple IS better! It’s too bad we get so jaded over the years and have so many things rolling around in our heads every time we make a decision ;) Athough it obviously helps with decisions too, haha…
@Molly On Money – That’s a cool idea! And once the money’s gone, it’s gone – no building up interest or trouble until they get their next card, I like it :)
@crashdamage1957 – Right. Pre-paid or debt cards are nice in-betweens that save you the hassle of using straight up cash, but also don’t get you in too much trouble if you stick to your guns.
@Jen – Haha, perhaps. But only if he has a radio w/ him when he fishes – that’s pretty much all he does these days ;)
@MariaN – That’s interesting about video games = killing and how people perceive it nowadays/etc. I know there’s research done on this allll the time just like they did when rap music came out (and people sill say that’s bad! which I don’t agree with), but I haven’t really paid enough attention to say I fall on one side or the other. It’s certainly pretty fascinating though :) And I’d throw in “local news” in there to cuz all that violence is in there every day too!

As for Debit cards – yeah, if I ever gave up my credit cards I’d totally revert to those in its place. It’s super convenient and keeps you out of trouble a lot more. I think it would just scare me more for two reasons: 1) If it’s stolen and used before you catch it, your money goes bye-bye a lot faster than w/ credit, and 2) I’d feel less secure not having that large credit limit there (mine are $25k and $30k). Obviously I’d never need to max out either of those for an emergency that would come up, BUT I like knowing I hace access to it just in case something scary DOES come up. Esp that would cost more than what I have in my checking account (not sure what that would be, exactly, but ya never know).
@Catherine Turley – Yup! In cases like those I try and do the same thing :) I know what it’s like to run a small business and those fees DEF add up!
@Kelsey Horner – Yeah, that would be awesome of you :) I slip every now and then when I don’t actually HAVE the cash on me to begin with, but if I do I always try to pay with that first, and then use card as last resort. If they have an ATM it helps too, but then you’re paying THEM to use cash! haha… (but maybe you really want to help them out? :))

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28 Sabrina June 30, 2011 at 6:23 pm

I do prefer cash over credit. However, I must admit that my credit card does come in handy. I’m not a parent, but if I was I would start teaching my child how to be financially smart at an early age. Kids are pretty impressionable and observant at a young age. Your cousin definitely proves that.

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29 J. Money July 1, 2011 at 12:45 pm

Agreed :) And also, in TRUE emergencies having a credit card could also be very very important if they ever get stranded or in trouble/etc. It always made me feel REAL secure knowing i had one in my pocket throughout college just in case.

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