Institute of Consumer
Financial Education
Institute of Consumer
Financial Education

Credit Card Use: Yes, No and How

By Loren Dunton, (1918-1997) Founder of the ICFE

CONGRATULATIONS on your willingnessto read these Credit Tips. We can all benefit from reminders aboutour credit card spending and smart people are willing to use thereminders.

Credit cards can be a wonderful convenience and having at leastone for identification has become almost a necessity in our dailylives. But they can also be "plastic dynamite" to ourfuture if we carry too many and use them too casually. And nowonder since even college students find them so easy to obtain.

What is costly of course is using them to make purchases we areunable to pay for at the end of the month. Millions of peopleare now paying twenty-five to thirty dollars-a-month in 15-20percent credit card interest.

Talk about something "dangerous to our wealth!"

If thirty year-olds would invest that $25 a-month at 8 percentthey would see it grow to more than $57,279 by age 65. Imaginewhat would be available for those individuals at age 65 who alsocut $75 off their unnecessary spending and invested hundred a-monthin a good mutual fund or even in a compound-interest savings accountat 8 percent they would have almost a quarter million dollarsin savings.

For some, these warning stickers on each credit card will be enoughto make them stop and think. Just this can help slow down on unnecessaryor too-self-indulgent spending. Or at least be motivated to putoff a purchase until one knows it can be paid for when the billcomes.

As Paul Richard, RFC the Institute of Consumer FinancialEducation's executive director, who created the "Credit/DebitCard Warning Labels" says, "So many forces in our societyare trying to influence us to spend our money that we need allthe help we can get to spend less so as to save and invest morefor our future."

Two helpful ideas: One, create a Spending Plan* because "budgets"don't work. Two, learn the technique of "Spending-by-Choice",** not on impulse.

Remember, for all of us, but young people especially, acquiringbetter spending habits can change a life ... for the better!

*A "Spending-Plan" is similar, but NOT the same, asa budget, which nine out of ten people fail at. A " Spending-Plan"gives people the psychological satisfaction of spending money.A budget while admittedly it shouldn't, seems to often rob mostpeople of the spending satisfaction.

**The "Spending-by-Choice" technique means usingcredit cards for purchases only after we have taken enough timeto visualize three other things that could be purchased with thatsame money.

For Credit Card Warning Labels, visit our Online Store.