While digging through a folder, I discovered an article someone had sent about a year ago, by Dan Thahn Dang of the Baltimore Sun.

According to his article, a recent Study of Consumer Preferences found plastic was used for 53% of store purchases. When we combine the credit, debit and prepaid cards, as a nation, we are identifying plastic as the way to pay.

It was bound to happen eventually. Those of us that have problems with the plastic know this isn’t a great thing. Don’t you just cringe when the person in front of you at the grocery store or fast food place is asked by the clerk, “Credit or debit?”, and they answer, “Credit?”

What are they thinking? It’s one thing if they’re paying the bill off every month. The statistics indicate that so many aren’t doing that. Instead, they are paying the minimum payment.

The article explains when you have an outstanding balance of $2,000. paying a 18.5% interest rate and are only paying the minimum payment each month, it’ll take eleven years to pay off the purchase.

You will spend $1,934. interest added to the $2,000. balance. Isn’t this doubling the purchase price of your purchases?

When you use cash instead of plastic, you’ll tend to spend less in the first place. Remember the first credit card you had? You told yourself only for an emergency. Remember how it was.

You almost felt a little guilty using it the first few times. Then the bill came and you only paid the minimum payment. You then said to yourself, “That wasn’t so bad.” Then you did it again. It wasn’t so bad again. You were an adult now. You had credit. A right of passage had occurred. You were establishing CREDIT.

Actually, you were creating DEBT!

Next, you started buying other things with the card, just little things. You kept making the minimum payment. You got yourself hooked. You started a habit.

Once a habit gets started, you pay the result of the habit. The result with credit is a loss of usable income due to the interest charges.

We see what’s happening, but it’s so easy to say “Yes” when the plastic is on our person. It’s just so easy to say “Yes.” When we’re on a cash or greenback only system, we can’t say “Yes.”

The greenbacks are a limited supply of money, just like when we were children. There is a limited supply. So we pass up the purchases we might say “Yes” to, if plastic is on our person.

That’s why I believe plastic is the worst form of money. It tends to represent an unlimited supply of money in our mind. We trained ourselves to believe that. It’s not true. But we trained ourselves to think it is.

Best policy, go back to greenbacks and cut up the plastic. At least until you know how to use plastic. If you’re not paying off the cards every billing cycle, you don’t know how.

.
Post to del.icio.us   Digg this   Post to Slashdot