This is a short post but basically it’s a follow-up of the How To Save Money on Credit Cards article. Below are several thoughts on the benefits of not using credit cards and saving up for major purchases.
- Stick the money in a shoebox, under the mattress or in a hole in your backyard – just do it though! Remember as a kid when you received an allowance? Wasn’t there a certain satisfaction in knowing you had waited many weeks or months to buy that new toy or game?
- Eliminate impulse buys. Which are you more like to regret? Going out to a superstore to buy a $300 video game console or saving up, researching and shopping around for the $300 unit over six months?
- When it’s YOUR money in YOUR shoebox there will NEVER be an interest rate charge on the money! Think about it; if you essentially are paying cash for most items you’ll never pay interest on those items because they are paid for. Put another way: a $300 purchase can quite easily end up costing $320, $340, $350 if you leave it on your credit card long enough.
- Some sellers offer cash discounts. On average a car dealer makes $1500 profit on a customer who leases, $700 from someone who finances (through the dealer’s financier , of course) and $72 on a customer who pays cash. Knowing the cost of the car is the same regardless of how you pay, it makes you think twice about increasing the dealer’s profits doesn’t it?
Now, if you’ve already used the credit cards and have a balance you want to eliminate read How To Save Money On Credit Cards