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OK, sounds like a silly question because credit cards are so common, but consider this: "Citibank calculates that a consumer using a credit card will buy 26% more [than those using cash] - even if the consumer pays it all off [each month] without interest charges." - Randy Alcorn; Money, Possessions, Eternity. If that's true — that we spend more using plastic even if we faithfully pay it off each month — should Christians pay with cash?


I work for a company owned by Citibank. I agree that people spend more on their credit cards, even if they pay them off in full each month. I struggle with a job that sometimes encourages people to spend more money then they have. There are a lot of people that don't make wise decisions with their money, and it really makes me feel bad.

Interesting question! Does anyone know whether the same is true for debit cards?

As for credit cards, I use mine as an alternative to carrying cash but now you've got me thinking. Plus the more I learn about the industry's practices the more horrified I become.

It would be great if there was an ethical alternative to the biggies - one that still gives the convenience but encourages responsible financial behavior. Impossible?

It seems to me that (at least in our case) that statistic might exaggerate the impact that paying with cash could have on our budget. In the first place, there is a lot of spending that cannot be done with cash: certain bills, online purchases, etc. Furthermore, there are many kinds of spending that wouldn't be reduced because payment is made in cash: medical copays, auto repair bills, etc. It seems to me that gasoline would go in this category too, since I personally drive as little as possible already.

I quickly looked at our budget and estimated that what is left when I exclude all of these things is about 20% of our monthly spending -- of which nearly all of it is made with a credit card (and paid off each month). If it is true that we buy 25% more because we use a credit card, we could theoretically reduce our total monthly spending by about 4%.

Perhaps it's worth abandoning the credit card to save 4%. But I'd also like to know more about how using cash will reduce my spending. In my experience, I choose to purchase something long before I get to the checkout. And I make the decision based not on how I'm paying for it, but on what the price is. Sometimes I haven't even decided how to pay for it when I decide to purchase it. It would be good to understand this further to see what sorts of steps we could take -- other than ditching the convenience of the credit card -- to get a similar effect. But a fascinating thought nonetheless.

One thing I am sometimes concerned about is the fact that my pay-it-off-each-month use of a credit card is subsidized by those who use their cards irresponsibly and pay much in fees and interest. Their fees and interest pay for my convenience. Is that right?

Re credit cards: If one pays it off, there is no diff for average person from paying with cash.

I realize that a few places give a cash discount, but those are rare.

Cash vs credit card proabably impacts discretionary spending, not necessary spending (i.e. Mortgage, utility bills, car payment, etc). My sense is that if I needed to go to the ATM machine and get cash each time I wanted to purchase clothes, go out for dinner, etc., I would likely spend less.

I was wondering about debit cards too. I almost never carry cash unless I'm going to the farmer's market. Bills are all autopay. I don't use credit cards except for work. Seems to me that the statistic might not be a cause/effect relationship. Maybe people who use cash tend to spend less in general and wouldn't change if they switched to credit . . . or maybe people who spend more are more likely to use credit and that wouldn't change if they switched to cash.

Maybe a better question for discussion is, "What should Christians buy?"

There are other large-scheme considerations in this decision.

How does the credit card industry treat the disadvantaged in society? Do they charge reasonable interest if you get stuck behind? What effect does their 3% transaction cost have across the board, indeed worldwide, on commodities? Am I comfortable endorsing these effects because of the convenience or rewards that credit cards offer?

Dropping credit cards may be something like economic vegitarianism. There's nothing wrong with eating meat, except that it supports a the meat industry (just an example). I haven't quite made the jump myself.

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