I came across a good article at Money Magazine from June 2008, Life without plastic.
This article goes through some benefits to success when you stop using credit cards as part of your financial plan. For many people, the credit card has become the emergency plan while we continue to spend on items we really don't need and have a tendency to spend more each time we are out just because using a credit card creates a disconnect between how much the item costs and what we feel like we are really spending.
"...After McDonald's began accepting credit and debit in 2004, diners who paid with plastic spent $7 a visit on average vs. $4.50 when they paid in cash. A 2003 survey of supermarket receipts found that credit-card shoppers rang up 30% bigger bills than and carted out twice as much in non essentials as cash buyers did"
They also discuss the differences in consumer protection using a debit card versus a credit card. Since 2000, both Visa and MasterCard have extended their zero-liability protection policy to debit card purchasers as well, this has helped close that gap considerably.
Impact to your FICO score? While canceling credit cards accounts can have a negative impact on your FICO score, you can store a card or two in a safe place, using it for a small purchase annually to keep it active. This will help preserve your score if you choose to do so for personal reasons.
I recommend reading the entire article when you have some time.
1 comment:
For me, even having the card around is bad. Who cares about FICO when you use CASH. I know society thinks you need a high FICO score, but I don't care. Dave Ramsey himself said once that someone wouldn't let him purchase something like an apartment complex, because he has no FICO score but has enough CASH to buy the who darn place....So what gives? America thinks you need a FICO score, but you don't.
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