HomeCredit7 Reasons Why I Am Using Your $23

7 Reasons Why I Am Using Your $23

The following is a post from staff writer Crystal from Budgeting in the Fun Stuff, where she writes about finding the balance between paying your bills, saving for your future, and budgeting for the fun stuff along the way.

I came across this Yahoo Finance article, credit card fees transfer wealth to rich, study finds, that covers the results from a study by the Federal Reserve Bank of Boston.

As you may already know, most merchants increase their costs to cover the fees they pay when customers use credit cards. What you may not know is that lower income individuals are more likely to pay in cash, thereby they technically foot more of that bill. According to this study,

U.S. consumer finance data shows that people on a low income are less likely to have a credit card, and those who do, spend less a month on average, than higher earners. High-income consumers are also 20 percentage points more likely to receive credit card rewards — be they frequent flier miles, cash back or other enticements…After accounting for rewards paid by banks, households who earn more than $150,000 annually receive a subsidy of $756 on average every year, while the households earning $20,000 or less pay $23.

As I have written before, I am a rewards credit card user and my husband and I usually get more than $350 a year in cash back and gift cards. I may be cashing in with your $23. So, why am I not apologizing? Here are a few reasons off the top of my head:

1. I feel safer carrying easily cancelled credit cards than I do when I carry cash.  As Daniel has written before, credit offers additional security.

2. My reward cards offer me benefits other than credit including longer warranties on electronics.

3. I don’t think that merchants would go back to pre-credit card prices even if I didn’t use a rewards card.

4. It’s easier to budget since I use credit card statements to input my spending data.  It’s also a huge part of how I automate my finances.

5. Credit cards offer a grace period so we can get our ducks in a row before paying – very useful with our biweekly paychecks.

6. My husband and I spend less with cards than with cash because the record stares us in the face for the month. Cash seems to drip out of our wallets when we’re not looking.

7. Making $350 a year seems better to me than spending $23. ;-)

My husband also wants me to add for him that “it doesn’t make my wallet freaking ginormous”. :-)

Do you use credit cards or cash? Why or why not?



  1. Credit. When I have cash I gain weight. I will be in trouble when food trucks and vending machines all accept credit. Cash just flows out of my pocket like water so I never carry it with me.

    I also enjoy not having to keep track of how much I’m spending at the grocery store. That’s my big luxury in life– unlimited spending at the grocery store.

    • @Nicole, lol!!! I hadn’t thought of that. I rarely carry cash, so I’ll be in trouble when vending machines take credit too!

      What are your faves at the grocery store – not the boring stuff – the stuff that makes you feel like a sneaky kid when you put it in the basket? Mine are Twizzlers and Oreos…

  2. I love reward credit cards, well maybe not love, but I take advantage of them to the utmost!

    I’m one of those reward credit card users that always pays their balance off in full each month (sometimes with a bit of pain when it comes to vacations).

    I figure why pay more with cash when I can get an instant discount with a credit card?

    Now you do have to be disciplined, but growing up, I was raised by a very frugal family, so for me it’s no problem.

    Ironically, I’m thinking about cashing in my reward points and buying a new 50 inch TV soon. You can do this after a few years of using a decent reward credit card! So it’s kind of a forced saving plan for fun stuff!!!

    • @Money Reasons, yeah, those months after our cruise costs hit the cards really hurt to look at…

      LOL on the tv. Mr. BFS prefers the Discover simply since it has “more fun” gift cards and options. We sort of see our cash back as fun money too, but we seem to spend at least half of it on “boring” cards like CVS. Enjoy your new tv! We love our 47 inch LCD.

  3. I use my credit cards for everything, mainly because I have a humongous spreadsheet where I download every transaction and categorize it. The rewards help too.

    Plus, there’s this strange phenomena where money in my wallet just evaporates and I can never remember where it went. I do that with credit cards too but at least at the end of the month I have a paper trail that I can retrace my steps with.

  4. Speaking of budgeting off statements, i use a chase card and they send me a great year end statement that breaks down all my yearly spending by category in a nice little chart. It really helps with adjusting next year’s budget.

    Unfortunately, it comes with an annual maintenance fee and I’m very close to cancelling because there are so many good free cards out there. fyi to yakezie folks- nerdwallet and creditcardchaser both have cool widgets for picking out credit cards.

    • @Car Negotiation Coach, the Discover More card has the online feature that you can run a report on any sum of months to see what you spent in what categories. It makes you a list and pie charts. And no annual fees. :-)

  5. Hey Crystal – Good staff post! That’s so cool you guys have collaborated.

    To answer your question, I always strive to spend as much as possible on credit cards. It’s easier for record keeping, and the one personal card I have has a 1% rebate to pay off principal to my mortgage.

    • @Financial Samurai, I actually didn’t think you were a credit card user (couldn’t tell you why though…). Yay for an even quicker mortgage payoff!

      To answer your Comment Luv’s post, it was way better to rent to males. They are easier to deal with than females. We rented our spare room out for 3 years and the guys were soooo easy to have around…

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