Don’t Be A Dummy, Idiot!

In Life, Philosophy
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I have written more than I probably should have on credit cards and debt, given my lack of financial training and acumen. And since I have written about these things and share them on the interwebs, naturally my internet search results and Facebook ads invariably tend toward these types of items with great frequency. And so from time to time I see links pop up showcasing “THE OMG BEST CREDIT CARDS TO TOTALLY GET,” albeit perhaps a bit more subtle in the marketing.

At any rate, the articles themselves generally are usually fairly dry and read like an infomercial, but what’s really fun is to delve into the comments. I thought it might be fun to do a bit of a fisking of some of the choicer comments. Granted, this is really low-hanging fruit territory, but what else is the internet for?

Original comments indented in quotes (with occasional bold emphasis mine), my commentary following.

Barbara August 14, 2015:

You did not include the Marriott Rewards card. Has terrific benefits if you travel a lot and spend a lot. Extra points when staying in any of the Marriott family facilities, can choose miles or points. Has an annual fee, but easily gained back in benefits each year.

It seems the commenter here doesn’t realize that the reason this particular card has such “good” Marriott rewards is that its entire purpose- as the commenter admits!-  is to get you to spend as much with Marriott as possible. After all, if you are led to think you are getting great rewards for making a very specific purchase, then you’ve already done their marketing for them. As the comment continues:

We travel a lot, charge most everything to the card and pay off each month directly from bank account so no worries about interest. Just booked a 5 night stay at a Category 8 resort, using our points, costing us NOTHING! The more you spend or stay, the higher level you achieve, which gives you more benefits, like automatic room upgrades (if available) and access to special Rewars Member lounges. We frequently stay in full suites, whether we pay or redeem points for rooms. GREAT card for frequent travelers and big spenders.

I find it fascinating that this commenter is oblivious to the fact that she has been permanently upsold because of the promise of further “rewards” which, as is even explicitly admitted, entails both past and future big spending. But yes, it has terrific benefits like getting you to buy something you might not otherwise have purchased! And you get to pay an additional yearly fee for the privilege of doing so!

Which is exactly like it costing you nothing!

D. Sewell August 14, 2015:

Best is to use a no-fee, 2%-rewards-on-everything credit card and a bank account to earn miles and interest, and for convenience (ATMs, notary service) and safety (FDIC), but to pay off the card fully with each bill and thus pay no interest… ….You get more money faster and you get an easier life. Money under the mattress is shrinking from inflation and can get you killed if anyone knows about it.

So, the only alternative to credit cards is the potential of being murdered for the money hidden under one’s mattress? There are no other alternatives?

linnipoo July 28, 2015:

One cannot say that best credit card is no credit card; otherwise how would one establish any credit at all?

One wouldn’t, and perhaps wouldn’t want to, since establishing credit can only be done by means of interaction with debt.

MickinMD July 22, 2015

For those not wanting the $75 annual fee for AmEx Blue Cash Preferred – whose main feature is 6% cash-back for standalone supermarkets but only 1% at Costco, Walmart, etc. – there’s a no-annual-fee AmEx Blue Cash Everyday. I got the Preferred, collected the $150 bonus and paid the $75 fee, then switched to Everyday after the first year.

The interesting kind-of-sort-of-buried point here is that cc’s like American Express- which are closed-loop systems- generally focus more on the amount of spending than on the number of transactions. The reason a “Preferred” card doesn’t offer rewards for places like Walmart, etc., but does for standalone supermarkets is that businesses like the latter are more likely to generate higher rates of spending per transaction. This means that AmEx and other closed loop companies’ strategy is ultimately for you to spend a lot of money by means of their product, and it pays off in their revenues: AmEx only processes 10% of the transactions as Visa but has nearly double in gross revenues.

Another interesting point is that AmEx and others like it have more detailed analyses of its customers purchasing habits (since it is the issuing bank for its cards as well), which means it is able to more finely tune its product to maximize its revenues by means of its customers’ interaction with its products.

The absolutely incredible thing about this whole scenario is that it is often able to entice customers to pay for this “privilege” and think they will be making it back quickly, when in reality the entire strategy- which is repeatedly borne out in the research (and no doubt in AmEx’s own analyses) is to have the customer increase his spending per transaction.

And given that the average spending spike with credit card use is to spend between 12-18% more than with cash, in a delicious irony the more cash you “get back” the more money you are actually losing for the use of a credit card.

Type July 17, 2015:

Cash isnt king anymore! In fact if you use cash all your doing is jipping yourself out of cash back. There is no benefit to using real cash if you pay off your entire credit statement every month. I literally cannot think of any instance where using cash is better unless your doing something that requires no paper trail 😉

The lack of imagination is interesting, since in, ahem, literally every instance paying with cash is better than paying with credit cards. The commenter here is completely excluding risk from the equation. Paying off your entire balance every month is a fine plan, but that plan assumes an always-best-case-scenario. A bad month or two, a loss of a job, a major emergency, and suddenly the balance payoff must take a back seat to other priorities. One benefit to paying with cash is that when emergencies and such occur, one is not facing both the emergency and debt.

I have 2 credit cards. It auto pays directly from bank. I dont have to see or touch money practically.

Pocket full of change? No thanks, charge it.

Because out of sight and out of mind is a great financial strategy.

Suz July 15, 2015:

I charge everything – insurance, dining, gas, groceries. I pay my balance in full each month. I earn cash back rewards each month. My money sits in the bank all month until I pay the bill so therefore I’m still earning (measly) interest on the money. I don’t pay any fees or interest on my balance at all.

Therefore, I don’t see how I’m losing out in the least.

There are several ways one is losing out. Firstly, there is the risk that debt entails, even if one has the money to pay it off. Best laid plans are great, but reality can quickly turns those plans inside out and suddenly the risk that debt poses can become all too real. After all, it’s unlikely most people deeply in credit card debt intended that, but everyone else is a bad driver, right?

Secondly, it is very likely that the use of credit cards will lead to a 12-18% increase in spending over cash, which would not only obviate the cash back rewards but would actually mitigate them more in proportion to one’s further spending.

Lastly, most cash back is practically a rebate on the fees generated by the merchant processing the transaction through the credit card company. Ergo, it is in the credit card companies’ best interest for you to do as this commenter does and “charge everything,” since companies such as Visa collect billions on transaction fees every year. The cash back rebates really cost them nothing, since the entire point is to entice the customer to spend more and more often on everything that they can get at back for.

Credit card companies make their money off of people who don’t pay their balance. In fact awhile back some were starting to charge “fees” to “punish” those who DID pay their balance off each month. If that happened, I’d cancel my card right away and find one that doesn’t. Luckily my bank didn’t go that route.

Actually, credit card companies like Visa have most of their revenue generated by transaction fees, data processing fees, assessment fees, etc,  to the tune of around $16 billion in revenues.

Djrogers July 14, 2015:

Please explain how you are ahead of me if you pay cash and I charge it but pay it off every month? I’m netting 2% what are you getting??? If the bank is gonna give me money I’ll take it. Just like buying a car with a 0% interest for 60 months. Sure I could give them a bank check but making my money work for me vs giving it all to the bank in one lump sum is the smarter thing to do.

Well yes, aside from the risk entailed by the (5yr!!!) car loan and the depreciation in value over that time period which may exceed the return of that money “working for you” over the same period of time, it is just like the bank giving you money!

Patrick June 24, 2015:

its not a matter of being able to pay cash. why would i do something as stupid as pay cash for something when I can use a card make 5% on the transaction then give the cash to my credit card company.

I’m sure the credit card company feels exactly the same way!

If you dont use cards then you arent really good about making the most of your money.

Yes, if you don’t take on the needless risk of debt, spend approx. 15% more than you would with cash and help further the credit card companies’ strategy with your spending habits, then you certainly aren’t making the most of your money!

Lars June 9, 2015:

If you have good credit and can competently manage your budget, you would be foolish not to use these cards. I have made at least $5000.00 over the years by taking advantage of the introductory offers. (I currently use the double cash back mastercard, having just had $498.00 direct deposited into my checking from chase sapphire preferred). I carry 0 balance and pay no annual fees, ever. Put your electric , phone, groceries, gas and anything else you can on the card! Dummy!

Yeah dummy, do exactly what the credit card company wants you to do to keep them profitable! Charge it all! Dummy!

Of course, the real question is how much more did this person spend over the years to “make” $5000? Let’s imagine your expenses for a year are $30,000. Let’s further assume that you spend an uber-conservative average of 10% more because of using the credit card. Let’s further assume this level of spending gets you that $498 a year (which we’ll round to $500.) Given the 10% extra spent, you would actually spend around $33,000 a year to get the $500 in cash-back rewards (which naturally cap out at a certain limit). In the ten years it would take you to “earn” $5000 in cash back, you would have spent an extra $30,000(!).

There’s nothing quite like making your money work for you…

Nancy S. June 5, 2015:

Credit card spending is getting a rap here. You HAVE to spend money, so you may as well get something for it.

You do. You get the thing you bought. Why also spend that money and add in the risk of debt?

Do you buy groceries? utilities? Insurance? How about Doctor’s visits, gasoline, replacing an appliance.? You can live well within your means, and pay the balance in full each month. I watch what I spend, but I put everything I can on one credit card. I have redeemed points a few times, waiting until I get $500. I use it as a credit on my bill. You’re really not smart if you aren’t taking advantage of offers like these.

So all of this risk of debt, for the promise of $500? Yeah, totally not smart if you miss out on this…oh, yeah, and missing out on the risk of debt…

Ron Wohl May 17, 2015:

For all the above reasons, I use American Express because I pay all my debts in 30 days. I have been a debtor before and use debt to finance business expenses, but I always carefully review my cash flow to be sure I can payoff a debt before I sign-up for more debt.

If you can payoff a debt before you take out the debt, what reason is there to take out the debt?

The comment- apparently without irony- continues:

Credit is a long and poisonous snake. If you are not a careful user, it can bite you when and where you least expect with devastating results


Mark P. May 9, 2015:

Let’s say that you are going to make a huge purchase. To the tune of, lets say, $20,000. Why wouldn’t you take a 0% (zero percent) loan for 15 months. You could keep your money in the bank, or money market funds earning you interest the whole time.

Then pay off the free loan before the deal ends! So, you are using their money for free, and the whole time you are making money on your $20 grand cash.

The reason you wouldn’t take out the loan is because the risk that debt entails is a part of the equation, both for the loan itself and any return one would do facilitated by this loan. This commenter assumes a best-case scenario in which everything works out, but leaves out that the loan is by no means free, because if the plan doesn’t work out as intended, it suddenly becomes very un-free.

It also requires almost a year and a half of unnecessary financial risk.

Also, having good credit gets you MUCH lower interest rates when you are buying something like a car, boat, or your new home. Lets face it, VERY FEW people have hundreds of thousands in cash on hand to buy a house, right?

This is an interesting twist in the argument. Earlier the commenter finds it inconceivable that someone wouldn’t want to use a “free loan” for a large purchase. But now here the rationale for not paying cash for these types of items is that very few people have that much available cash, which of course indirectly assumes paying in cash is at least potentially meritorious.

Ah, but I am probably foolish for expecting consistency. 🙂

Ken Sims April 30, 2015:

Why would anyone use cash over a credit card? Pay it off every billing cycle and never pay interest. Time it right and you’re using money that won’t come due for two months. Use your credit card in this manner and the rewards they give you is truly FREE money to use as you wish.

It’s the timing, of course, that is the trick. But what happens if your timing isn’t right? All of sudden that “truly free” money isn’t really free any more.

shah April 9, 2015:

This note is about how bad American Express is. I had SPG card from American Express. Payment is always made on time and in full. One month I paid $15 (out of $3000+) less by mistake. I have a reading issue. I got charged $25 dollars in interest. I paid in full next month. I got charged another $14 in interest. I spoke to AE person name John and he refused to remove $14. I spoke to his supervisor in Fort Lauderdale she refused too. Not only she refused bust she put a block on any future credit. I wrote to CEO office they refused too. I also suppose to get 10,000 points after first purchase they didn’t give. I spent $5000 which should have given me another 15,000 points. AE refused.

And then, of course, sometimes you have no control over other people’s incompetence. But hey, it’s truly free money, isn’t it? So why wouldn’t you take out that loan? 😉

Fif March 31, 2015:

So, all of these cards offer a rewards programs and that what makes them great, eh?

I suppose its great for the companies offering the cards because the more YOU spend, they more they make in transaction charges and account interest.

I suppose cardholders will argue they’re great because the more THEY spend, the bigger the reward they receive.

It seems to me cash back reward programs are nothing more than a regressive sham, designed to deceive consumers who SHOULD know better into thinking they are somehow receiving something for nothing and that these programs come free of any other social or economic consequences.

Every so often there is a smattering of sanity.

syeb February 9, 2015:

I love how these people say something like: “Oh I don’t use credit cards like the unwashed masses. I pay cash for everything. In today’s world that is just impossible. Last I checked “cash” was not a payment option on Amazon.

I’m guessing this commenter doesn’t grasp that “cash” is not a univocal term for “green pieces of paper.”

Francie January 28, 2015

I most certainly get something for nothing. I don’t carry a balance, I pay the cards off each month, and enjoy the rewards (cash back).

In some ways, this commenter is right about getting something (risk of debt, on average higher spending) for nothing (cash back that on average costs more to receive than paying cash).


The point is, if you use the card for all routine purchases, you get the % back for money you would spend anyway. It has nothing to do with net worth or wealth accumulation. It,s just a case of something for nothing.

This seems to be a common theme. Given their ability to apparently bring forth something out of nothing, these pieces of plastic must be divine!

Todd January 21, 2015:

By using cash you are leaving considerable money on the table.

Which is certainly better than giving more of it to the credit card company!

In the form of cash back or mileage rewards.

That generally cost more to receive than the amount of money left on the table.

If I pay my bills through one of our travel friendly cards our yearly trip to fill-in-the-blank is already paid for. Do you get a free trip using cash to pay your monthly bills?

“Free trip,” of course, is merely oblivious shorthand for “We spent approx 15% more than we would have otherwise to get a “free trip,” when the money that might have been saved if paid with cash could have purchased the same trip.” “Oh, and now we always have the month-to-month risk of high-interest debt!”

Keith November 14, 2014:

These reward cards are intended for people who use them. A LOT.

Your friendly neighborhood credit card company couldn’t agree more!

Well go get ya some! Get off your ass and go make your fortune.

The only one stopping you is you!

Yes! $5000 in rewards over 10 years when one has likely spent 5-6 times more to get those rewards is part of making one’s fortune!

Neo February 10, 2014:

I’ve made 1400$ in 9 months tax free signing up for and meeting the minimum spend on about 7 credit cards. I pay off my cards online weekly. I’m basically paying 20% less for everything and only buy what I need (food, ,gas, car insurance, etc) there are tons of credit card offers that provide 20% bonus so why dilly dally with 5% cash back. If I won’t meet the minimum I buy gift cards for food on discount gift card websites making my meals a total of 30% off. I am Neo in the credit card Matrix.

I seem to recall the Architect mention that the One was a variable that was still part of the Matrix’s control.

So this is actually a really good analogy.

Nicole Kim The Blogger January 13, 2014:

Believing for Super natural debt cancellation. All things are possible for believers.

Keep believing!!! And keep spending!

And finally, the best summation of all:

Tom February 3, 2014:

On the surface these offers look great. It’s like a wet spot in the sand in the vast desert. You’ve been walking for so long in the heat you’re thirsty and upon gazing at the wet spot you think there is water there. Only to find it was only camel piss. Same with these card offers; just camel piss.

Well played, sir.

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