Engineer’s Finance
Blog that describes an Engineer’s Finances.
Don’t Carry Your Cards
This is one of the easiest ways to reduce your expenditure. I do understand that the Debit/Credit cards give lot of benefits to the consumers but it makes you spend your hard earned money. Isn’t it true? You would have anyway spent your money, what is the point about the cards? I don’t quite agree with it. the cards gives us lot of benefits like we can track our expenses, they are not as cumbersome as cash to carry around, the cards offer rewards for spending money and many more benefits. I agree with that, but ultimately the card that you are going to use will be charged and you will be paying the bank directly or indirectly some money for the service that you are using.
Keeping in mind all these benefits, still I would argue that it is not good to carry the cards around. The chances of overspending are higher while we carry the cards than the money. I have noticed this many a times personally and also with the friends. When I go out with my friends, I prefer window shopping than shopping, the chances of me getting tempted to buy one or the other stuff is higher when I carry the credit card. When I just carry the cash and no cards, even if I am tempted to buy stuff I just ignore the temptation telling myself that I can’t afford it right now and within some time the temptation just dies off.
It is not easy to always carry cash around as you never know the need of the hour. At times the vehicle that you are travelling in might break and you need to fix it and if you don’t have enough cash then you are in trouble and also you might need cash for an emergency during these times you would prefer to have cards or the cash that is sufficient for the circumstances. I would suggest you to always carry some cash for such emergency situation. Just in case, things go wrong, you need to handle it without any difficulties.
Imagine you are going on a trip for the weekend and you have a card and some cash in the wallet. The chances of you spending more money on buying gifts, souvenirs are high when the shop accepts the credit card and also if there is a hotel which accepts cards then I am sure you won’t be that bothered about the price of the meal. I don’t know whether you would agree with me, but this happens with me. if you use the cash for the purchases then you will not be so very lavish in your spending because you know you don’t have much cash and you want to save up for the next day or so. It is kind of restricting you not to spend money unnecessarily. I am not against eating a very good meal at a nice hotel but I am against spending more for such a nice meal. It is not a necessity.
When you think of spending the cash then I would suggest you to keep a track of the expenses, it is not easy to track and I am sure you might forget the expenses and keep wondering where the money vanished. I have been accustomed to such vanishing acts. I never used to keep a track of the money that I used to spend and at the end of the day I used to break my head as to how I spent the money and it was not an easy one to get back all the details. I would suggest you to make a note in your mobile or in a sheet of paper, whichever is convenient.
Let me know your experiences about carrying cash instead of cards while shopping and the experience of spending less.
September 2, 2009 - 9:22 am
Saravana,
I kind of disagree with your views here. Discretionary spending is individual dependent and not based on the cash or card you carry. Banks prefer you to opt for the usage of cards because the cost of transaction is lesser for them compared to the cost they’d incur if the same transaction had been carried out at a branch.
Having said that, this argument holds true only for debit cards. In case of credit cards, I totally agree with you.
September 2, 2009 - 7:57 pm
@Bhargav:
I agree that discretionary spending is individual dependent. But most of us do spend at times unnecessarily since we have the card. It happens with me every other time. I overspend if i carry my cards.
September 3, 2009 - 7:09 pm
I disagree with your view on this. As Bhargav has rightly pointed out, discretionary spending is indiviadual dependant. At this juncture, it is only apt that I describe you my experience:
While looking for alliance for my sister, there was a sudden need to go to Pune and all modes of transport were full. There was a chance that this alliance would not work out because of this. We had given up. As a matter of pure chance, I happened to be at bus station and inquired about services to Pune. It turned out that there was a special service introduced to Pune and the advance booking was available only at that counter. I had not expected to be at the bus station that time so I had no money with me, no money in my account but I carried a credit card. That was the first time I used a card. The tickets were booked, journey made and everything ended on a happy note
So you see, it was only because I had a credit card, all this was possible. It is definitely a “nice to have” or I would say “must have” in case of emergency. Whats more – if you pay bills on time and take care not to fall in their interest cycle, you even get nice rewards
And the argument that not carrying a credit card would lead to less spending is flawed. Because, if you see something very tempting(and you don’t have control at all), you will definitely borrow money from someone to buy it. In a way, you will be taking credit from more people other than a bank and spoiling personal relationships too. The main thing is “self-control”. Instead of advising people not to carry cards, you can ask them to practise self-control, which i think you have already done in a previous post
September 8, 2009 - 2:41 pm
Lavish spending with Credit Card may be one thing which can happen. But after 1-2 months when you get the statement and have to pa back one will realise the expenses. It has happened with me and after few tries I buy what is planned/necessary. And yes, Cards are necessary for emergencies (like Shashia pointed out). My advice is get two credit cards, one with low limit like <10k and always carry it with you and have another main card which u always use. It works, its my experience of 2 years…
October 4, 2009 - 9:03 am
I agree that credit cards may prove to be useful in an emergency but I am somehow still not convinced that it is a necessity. I still do not have any credit card and I don’t plan to take 1 either, in the near future. And what rewards do you guys talk about? In most cards it is 1 reward point for 100 Rs. purchase. You spend 50,000 Rupees and you get a puny kit bag worth 500 bucks. Wouldn’t you rather spend 50,500 Rupees and buy that kit bag with your own money? The only time a credit card might come in handy is during emergencies like shashi pointed out. At other times the debit card does the job and with the debit card, you know the money comes out of your own savings account so you will be more careful than with a credit card. ‘Buy now, pay later’ always seems tempting, isn’t it? I prefer ‘Buy if you have the cash NOW (debit card), or else Shut up and wait’!
January 18, 2010 - 9:53 am
Well, if you are a spend thrift…it is imperative that you end up spend the either way. So my point, if you are a smart purchaser, they you think twice and be a step ahead of other not only in terms of spending money but also securing the money. Everyone talked about emergency situations and the nature of spending will be quite low if it’s cast/debit card is right….think about security purposes. What if you lost your wallet, if you had lot of cash, you end up loosing it…but the adv with card is you can immediately update them about the situation and @ times even if someone makes the transaction you can still argue and avoid paying those charges. So a safe, smart and easy way to carry money would be card+a small amount of cast for emergeny purposes.