Life without Convenience Cards?

[artemis]

i think this is right
this to me is the essential benefit of the credit card.

And it is an even bigger benefit for Joe & Jane Average than for most of us on this board. The bank taking some time to return $500 or $1,000 to us is an inconvenience, but to a lot of people that's a missed auto loan or rent payment or a late utility bill; they don't have a lot in savings and really can't afford to lose that money even if for just a couple of days.

[MPMD]

And it is an even bigger benefit for Joe & Jane Average than for most of us on this board. The bank taking some time to return $500 or $1,000 to us is an inconvenience, but to a lot of people that's a missed auto loan or rent payment or a late utility bill; they don't have a lot in savings and really can't afford to lose that money even if for just a couple of days.

sure.

for joe and jane average you probably have to weigh credit card debt against that benefit but overall your point is well taken.

seems like a straightforward algorithm:
are you using CC purely for convenience and points?
if yes - keep your CC
if no - get rid of your CC

[F0017S0]

sure.

for joe and jane average you probably have to weigh credit card debt against that benefit but overall your point is well taken.

seems like a straightforward algorithm:
are you using CC purely for convenience and points?
if yes - keep your CC
if no - get rid of your CC

Keeping them...

[Tim]

Wanted to actually simplify things, but I’ll just rejigger some recurring expenses and keep the status quo.

This.
I have 3 cards set up with only one small recurring payment and set on autopay. Have two Capital One cards, wife’s name and one my name.
Only one card is used for convenience and that is the one I review.
The four others each sit in the top drawer in my closet. Activated but in the original envelope.

Keep the cards, but put the unused ones in a drawer. (4 users on each account). 20 cards and only 2 in wallets.
BTW, homeowners and auto insurance use credit scores and such. It can even get down to a required deposit on a utility.

[F0017S0]

This.
I have 3 cards set up with only one small recurring payment and set on autopay. Have two Capital One cards, wife’s name and one my name.
Only one card is used for convenience and that is the one I review.
The four others each sit in the top drawer in my closet. Activated but in the original envelope.

Keep the cards, but put the unused ones in a drawer. (4 users on each account). 20 cards and only 2 in wallets.
BTW, homeowners and auto insurance use credit scores and such. It can even get down to a required deposit on a utility.

This is one of the reasons I appreciate this site and its wealth of knowledge: I had completely forgotten that there are other realms that aren't exactly "borrowing" that rely on a borrowing history.

[xraygoggles]

Sounds like a bad idea, for the persec reasons described above.

If you want to simplify, why not just choose one all-inclusive 2% cash back card - like citi double cash - and then use that card for all your purchases?

[jacoavlu]

one disadvantage to using any sort of card is the privacy compromise. It’s not practical to use cash for everything. But I certainly try to use cash for as much small spending as I can.

[xraygoggles]

one disadvantage to using any sort of card is the privacy compromise. It’s not practical to use cash for everything. But I certainly try to use cash for as much small spending as I can.

Why would you need privacy in your purchases (unless it's illicit goods)?

Using cash for small purchases (or any purchase really) sounds cumbersome & very inconvenient. Cash is great for tips, but otherwise not as useful.

[jacoavlu]

Why would you need privacy in your purchases (unless it's illicit goods)?

Using cash for small purchases (or any purchase really) sounds cumbersome & very inconvenient. Cash is great for tips, but otherwise not as useful.

I never said “need”

but as to why, have you been paying attention lately?

my cash works just fine

[The White Coat Investor]

I searched the forum trying to find a previous post on this topic without success, but it pertains to those who live life without using credit/convenience cards. Although I have no credit card debt (I pay them off in full every month and track every expense), I have always considered canceling all of them and going debit only. I am though concerned about the "consequences", namely:

1. Loss of credit history which would impact a future home purchase (or any other major purchase for that matter for which I might need to access some credit);
2. Loss of "rebates" in the form of cash back/points on standard purchases;
3. Other issues that might not come to my mind immediately that others can identify.

For those of you who have gone credit/convenience card free in your life:

1. When did you cancel the cards?
2. What were the positives and difficulties that you encountered?
3. Did anyone who cancelled their cards eventually find themselves in the position that s/he opened new accounts again?

Are you having trouble saving enough? If not, what benefit do you hope to get from getting rid of the credit cards? I don't know of any other benefit you could get from cutting them up. That's a good reason and it applies to lots of people. But not those who come here and ask the questions you did.

[F0017S0]

Are you having trouble saving enough? If not, what benefit do you hope to get from getting rid of the credit cards? I don't know of any other benefit you could get from cutting them up. That's a good reason and it applies to lots of people. But not those who come here and ask the questions you did.

Negative, Sir: I am maxing my Roth 401(k) this year, I already maxed my Roth IRA, and I will max my HSA this year. In addition, I am now eligible to participate in my ESPP, so I will divert 1-2% of pay into that opportunity. I am beefing up my emergency fund (almost $14k right now, depositing $400-500 a month), and outside of my usual expenses, the balance is going to my brokerage account to VTI. My only debt is my car loan (approx. $21k, and I'm on track to retire that in 20 months), but my net worth is still >$125k.

My maxim for credit cards has always been: it has no business on your card if you do not have the cash ready to cover it in full at the end of the month. My post was more of a philosophical musing, not a question of a particular issue of my financial situation.

I know an attorney in the area who owns outright his home/investment properties, his car, and doesn't have any credit cards to his name. He says that he prefers just living with a debit card and it's more than sufficient for his lifestyle. It's the simplicity of the debit-only that appeals to me.

But to me, philosophically, that has always begged the question: why not just cut them out? It can be argued that their marginal benefit(s) is/are destroyed by their significant downside risk.

[CordMcNally]

But to me, philosophically, that has always begged the question: why not just cut them out? It can be argued that their marginal benefit(s) is/are destroyed by their significant downside risk.

Besides people who overspend and shouldn’t have a credit card in the first place, what other downsides do they present? They’re safer and generally have better protection than debit cards.

[F0017S0]

Besides people who overspend and shouldn’t have a credit card in the first place, what other downsides do they present? They’re safer and generally have better protection than debit cards.

You are correct: credit cards do have better protections than a debit cards. That strikes me as by design of the credit card issuers, though (via lobbying), as a means of compelling everyone to favor credit over debit. Seems to me that the law could be easily changed to afford debit cards the same protection as credit cards, but that is for another discussion.

Mostly, it strikes me the decision to "disfavor" one legally was by design of the credit card issuers to "compel" people to enter the credit universe when otherwise their prudent financial practices (like those of you or me, or other forum members) don't require the use of a credit card. It is reported in an old Frontline documentary that card issuers call folks who pay their balance in full "deadbeats" becasue they make little money off of us. Pretty sinister!

Seems like those tiny plastic/metal/composite rectangles are more radioactive than they appear to be...

[Tim]

You are correct: credit cards do have better protections than a debit cards. That strikes me as by design of the credit card issuers, though (via lobbying), as a means of compelling everyone to favor credit over debit. Seems to me that the law could be easily changed to afford debit cards the same protection as credit cards, but that is for another discussion.

Mostly, it strikes me the decision to "disfavor" one legally was by design of the credit card issuers to "compel" people to enter the credit universe when otherwise their prudent financial practices (like those of you or me, or other forum members) don't require the use of a credit card. It is reported in an old Frontline documentary that card issuers call folks who pay their balance in full "deadbeats" becasue they make little money off of us. Pretty sinister!

Seems like those tiny plastic/metal/composite rectangles are more radioactive than they appear to be...

Development of the credit cards and debit cards were in two completely different decades. Different purposes and coverage.
I suppose you don't remember having to go to your bank and get cash, pre ATM days.
One is immediate cash (money made on withdrawal fees is any, the other is a convenience card that allows the merchant to pay a fee to get immediate cash.
Internet changed things alot, but it did not change existing business models.

[F0017S0]

I suppose you don't remember having to go to your bank and get cash, pre ATM days.

I remember those days: I worked and deposited my checks in person, rolled my coins, wrote my account number on the side, filled in deposit slips, the whole shebang.

It is interesting that you cite "immediate cash": nowadays, both in a sense are, if my understanding is correct. So if the historical difference between credit and debit no longer apply, then it seems like the purpose of credit cards has been outlived because the speed of debit transactions is on par with credit transactions. Your citation of "business models" seems to be the only element that keeps credit cards alive, and the government willingly handed issuers a benefit over debit.

Again, I do not dispute that the current business model and law favors credit over debit (hence, why I will begrudgingly keep my cards, and that I am a "responsible" user by paying my balance in full every month). On the flip side, it doesn't seem to me to make sense anymore for that to be the case, except to support the credit card issuers...