I have lots of credit cards. I don’t use many of them because they are dangerous. Using plastic to pay for items encourages you to spend more than you normally would.  It doesn’t matter what kind of system you use or how controlled you are. Don’t agree with me, how about with smart people at MIT? They studied all kinds of people’s use of credit cards and found that “In studies involving genuine transactions of potentially high value we show that willingness-to-pay can be increased when customers are instructed to use a credit card rather than cash. The effect may be large (up to 100%) and it appears unlikely that it arises due solely to liquidity constraints.” i.e. it doesn’t matter who you are you will spend more money when you use a credit card on average.  Now how can I ramble on about this when I started out talking about how I have a bunch of credit cards? It is because I am not some weirdo that carries around hundreds of dollars in cash in his pocket. Honestly, who does that using cards are easier. I mean it just feels weird to have a bunch of cash on me.  Anyway, so if you are like me and have several cards you should try my tactic to make some extra money out of your credit card. Don’t use it.  Why do I say that? Because credit card companies are not just happy with the fact that you have a card. They want you to use it. Hell they do not even care if you carry a balance because they are going to make money anyway through merchant fee. Ever wonder why some truck stops offer a cash price. Because credit card companies kill them in merchant transaction fees. Sometimes up to 4%. That is big money for the card companies. So how will not using you card make you money.

Credit card companies incentivize cardholders to use their cards.

Often that is in the form of cash back bonuses and such but sometimes they will just send you cash.  Example, last week Discover Card sent an flyer in the mail to me and my wife. They offered me $100 (Jessica only got $75) if I spend a certain amount on the card by February. Why did they do that? Because I hadn’t used the card in something like a year.  Not only were they not making any money off me they were not making any money off the stores where I might shop. So the lesson is; don’t cancel old credit cards just put them on ice for a while and it may pay off handsomely. Maybe next time we can talk about why I got more money than my wife…..

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