Credit Card Use...

Yes, No and How

By Loren Dunton, (1918-1997) Founder of the ICFE

CONGRATULATIONS on your willingness to read these Credit Tips. We can all benefit from reminders about our credit card spending and smart people are willing to use the reminders.

Credit cards can be a wonderful convenience and having at least one for identification has become almost a necessity in our daily lives. But they can also be "plastic dynamite" to our future if we carry too many and use them too casually. And no wonder since even college students find them so easy to obtain.

What is costly of course is using them to make purchases we are unable to pay for at the end of the month. Millions of people are now paying twenty-five to thirty dollars-a-month in 15-20 percent credit card interest.

Talk about something "dangerous to our wealth!"

If thirty year-olds would invest that $25 a-month at 8 percent they would see it grow to more than $57,279 by age 65. Imagine what would be available for those individuals at age 65 who also cut $75 off their unnecessary spending and invested hundred a-month in a good mutual fund or even in a compound-interest savings account at 8 percent they would have almost a quarter million dollars in savings.

For some, these warning stickers on each credit card will be enough to make them stop and think. Just this can help slow down on unnecessary or too-self-indulgent spending. Or at least be motivated to put off a purchase until one knows it can be paid for when the bill comes.

As Paul Richard, RFC the  Institute of Consumer Financial Education's executive director, who created the "Credit/Debit Card Warning Labels" says, "So many forces in our society are trying to influence us to spend our money that we need all the help we can get to spend less so as to save and invest more for our future."

Two helpful ideas: One, create a Spending Plan* because "budgets" don't work. Two, learn the technique of "Spending-by-Choice", ** not on impulse.

Remember, for all of us, but young people especially, acquiring better spending habits can change a life ... for the better!

GOOD LUCK!
*A "Spending-Plan" is similar, but NOT the same, as a budget, which nine out of ten people fail at. A " Spending-Plan" gives people the psychological satisfaction of spending money. A budget while admittedly it shouldn't, seems to often rob most people of the spending satisfaction.

**The  "Spending-by-Choice" technique means using credit cards for purchases only after we have taken enough time to visualize three other things that could be purchased with that same money.