Why You Should Use Credit Cards...

Is Using Credit Cards a Good Idea?

Yes, if you do it right...

Why Using Credit Cards Is a Good Idea

One of the most controversial topics I have covered on my blog or in my books about saving money is credit cards.  Apparently suggesting that people use credit cards seems like bad financial advice!

I agree that using credit cards to buy things you can't afford can lead to financial disaster.  Even if you can make the minimum payment on a credit card balance, it can take around 20 years to pay off a credit card debt!  Over this time, the interest charges keep on piling up and you end up paying a very high price for whatever it was that you charged 20 years ago...

But that is not how I suggest using credit cards as part of a smart personal finance strategy.  I merely suggest taking advantage of the perks of using credit cards without paying anything.  How can you do this?  Easy- just pay your balance in full every month (or actually more like 25 days with most cards now).

For example, I was at Target with my wife buying some grocery items.  My wife had enough cash in her purse to pay for the items.  I had enough cash in my wallet to pay for the items.  But I whipped out a credit card to pay.  Why!?

Because I could save 5% off my purchase by using my Target card.  When the Target bill comes, I will pay the balance using the electronic bill pay feature from my credit union.  The result is that I just saved 5% and it didn't cost me anything.

I do the same thing at Lowes by using my Lowes credit card to save 5% on everything I buy there.  As long as you don't buy more stuff than you otherwise were planning to buy and pay your balance every billing cycle, you really do save 5%.

I sometimes use a credit card with rewards to make other purchases.  With the rewards on my credit card, I can get pretty much anything I want from Amazon for free.

So when I say to use credit cards, I mean to use them to save money- not to spend money!

Here is one of my statements about using credit cards that caused a kerfuffle:
Tip 15: Use Credit Cards

Penny Pincher Journal

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What To Do When the Store Won't Accept a Return

You Can't Return That!

Some Stores Make Returns Difficult!
Image Source: Dr. Penny PIncher

Yesterday after school, my teenage son went on a shopping trip without any parental supervision to buy some clothes for an upcoming school dance.  He also picked up a pair of casual canvas shoes for $15.

I thought the dress clothes were sharp, high quality items, but I was immediately skeptical of the shoes.   They seemed cheaply constructed and I wondered how much he would really wear them.

As my son was showing me the clothes that evening and removing the tags, I suggested he keep the receipts and tags from the clothes handy in case he wanted to return anything.

After he tried on the shoes again, he realized that they were a size too small and he didn't really need them anyway.

The next morning I took the shoes back to the store to return them for him since he was at school.

It was a small store at the mall, with a single cash register and no separate area to return things.  I pulled the shoes out of a bag, and the cashier said, "Footwear is not returnable."  She gestured toward a sign that said something to this effect to reinforce her point.

At this point, many people would probably accept being out $15 and being stuck with an item that is useless to them.

"I see," I said.  "Fortunately these haven't been worn yet."

The cashier sized me up and decided that a return was in order.  After explaining that she would make an exception to policy and do the return,  she took the shoes and gave me $15.

I think returning the shoes made sense for everyone involved.  The shoes were in new condition, never worn.  The store would be able to sell them again at a profit.  I had no use for the shoes and would have tried to sell them at a consignment shop and perhaps gotten a few dollars for them which would have been a waste of time and money.

Of course this experience made me think of a few lessons I could highlight for my son:

• Double check the size of clothes and shoes before buying
• Also check for any defects such as stains, rips, or missing buttons
• Hang on to receipts and tags for new clothes in case you need to return something
• Use common sense rather than following store policies that are designed to maximize profit and convenience for the store
• Politely explain the situation about your return and find someone who has authority to make a decision

This store return actually went relatively smoothly.  I spent a lot of time this summer working to get replacement plants from a mail order garden supply company.  Some of the plants I received were dead on arrival and I asked for replacements.  The initial response was that I needed to have the original invoice from the shipping package to get a return.  Of course, I had thrown away the packaging from the plants long ago.  It took weeks of writing back and forth to finally get replacement plants.  It would have saved everyone a lot of hassle if the company had a more reasonable return policy...

A few years ago, I bought a tree from a local store that didn't make it.  Good news:  the tree had a 1 year warranty.  Bad news: I couldn't find my receipt.  After several attempts to take the dead tree back and even working with the home office of the store to search through transaction records, the store manager finally went ahead and refunded my money even though my receipt was never found.  I walked directly to the garden department, picked out a replacement tree, and carefully filed the receipt away this time.

I think a couple additional lessons for me about returning items are:

• Keep track of receipts and invoices, especially for items that might be returned a long time later!
• If you have a legitimate issue with an item, don't give up on trying to return it

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