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Health & Fitness

Will that be cash or credit?

Did you know when you pay with plastic, neurologically; it does not create the same feelings as when you pay with cash? When McDonald’s started accepting credit card payments, they found that the average purchase amount increased from $4.50 to $7.00 (source: NPR). A broader study across multiple industries conducted by Dunn & Bradstreet found that the transaction amounts increased from 12% to 18% when someone paid with a credit card instead of cash.

I know many of you reading this have been trained by the media.  You believe that it is more convenient to use plastic. That is just what the credit cards companies want you to believe.  As you are conveniently spending 12 to 18% more on your purchases, they are conveniently charging you as much as 29% interest when you over spend and can’t pay off the balance every month.  Get that balance high enough and it will take you 20 years to pay off those all of those cheeseburgers.   

I don’t care about rewards point, or cash back offers. No matter how good the program seems it is heavily weighed in their favor. But Tom, I always pay off my balance every month. Good for you. According to the National Financial Capability Study only 49% of Americans report paying off their credit card balances every month. That means that the other 51% is paying interest month after month.  This can limit your ability to fund your kid’s college fund or save for retirement. You decide golden arches or golden years?

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I am not mad at the credit card companies. It just turns out that using cash is just as convenient as using plastic and you spend less! Did you know that life takes cash and for everything else there is cash, so don’t leave home without your cash.  

Debt Sucks! Want a better way to manage your money? You’re in luck; we love to help ordinary people create a plan to live an extraordinary life… a Financially Smart Life. 

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