Thursday, October 30, 2008

Before You Swipe....

If I showed you a $100 dollar bill and asked you how much you would pay for it what would you say?

Would you pay $117 dollars for a $100 dollar bill?

Most people would say no that would be a rip-off.

Then they pull out their credit card and pay for a purchase and do exactly that.

Paying more then face value for the ability to use it now instead of later.

For some reason this definition of paying more for a $100 bill then it is really worth has helped me greatly with my spending.


scargosun said...

I guess it also depends on how much later you plan on paying for it.

Muffy Willowbrook said...

Unfortunately, I don't think people understand this concept. And I learned it the hard way!

Emily said...

And that's just if the interest compounds once. It can get exponentially higher than that. I've never NOT paid off my full balance, and I'm very glad I dodged the credit card debt bullet.

SS+1 said...

hmmmm...interesting points. I never thought of it that way before....I suck with money! lol

houstonmacbro said...

And with inflation factored in, who really knows what the value of that $100 bill is any more.

I just went to the clothing store today. I resisted the urge to pull out my credit card and used my VISA/ATM (bankcard). It might hurt a little more now, but I have gotten in the habit lately of "If I can't pay cash for it, I don't need it" mode

Thanks for the reminder.

Sarah said...

hmmm... i'm wondering if emily is my sister emily. i too, have 110% always paid in full, every month.

Emily said...

Sorry Sarah, I don't think I'm you sister, though we do sound like-minded.

I was always told by my parents that I HAD to have a credit card though; when they first got married they couldn't buy a car because they had NO credit.

They ended up having to buy a TV (that they could have paid for straight away) on a payment plan to get a credit rating to get a car loan.

So credit cards CAN be a good thing.