Wednesday, September 14, 2011

Coupons & Credit Cards: More Similar Than You Think (Guest Post)


In the day 298 post, Sarah made a comparison between cable services and credit card promotions – they are both a hook, line, and sinker. I completely agree and we should all view them as such before we bite the bait. They only make sense if used 100% responsibly. For the cable “deal” that means it should be the exact same package you were going to buy anyway. For the credit card “deal” it’s only worth considering if you always pay your bill in full every single month and the card won’t cause you to overspend.

But what about coupons? Are they just as problematic as credit cards?

My background with credit cards                 

First off, let me explain my background with credit cards so you can know where I’m coming from. When I was 18 years old, I was in a very bad accident that left me with mountains of medical bills. What insurance didn’t pay ended up going on credit cards. This burden of debt became such a large part of my life, I created a forum/blog  dedicated to credit cards, as a place for myself and others to discuss the good and bad that come with using them.
But even throughout my own debt ordeal, I never once blamed the banks for my debt. Why? Because it was my decision and responsibility. It was my decision to use the credit cards for that purpose. Don’t get me wrong, there are many shady tricks banks pull off which they definitely are at fault for, but when it comes to the concept of spending more than one can pay at the end of the month, I think we have no one to blame but ourselves.

Why I think there’s a double standard

Credit cards can be used for good or bad. Someone can use them to earn cash back, gas rebates, or airline miles, and pay their bill in full every month. Or someone can use them to spend beyond their means, raking up a balance and incurring interest. I think our culture generally does a good job highlighting the pros and cons that come with credit cards.
Coupons can be used for good or bad, too. But unfortunately, you rarely hear about the latter. For some reason, our society seems to portray them as the greatest thing since sliced bread. But is that an accurate representation? Could the argument be made that coupons (and promotions in general) are also very damaging to our finances, when used the wrong way?
How many times have you (or someone you know) bought something just because a coupon was involved? I’m definitely guilty of doing that sometimes! Just a few days ago actually, I ended up spending $15 at CVS so I could use a $3 off coupon. Without the coupon, I probably would have spent $5 or $6 because I only went there for some darn dental flossers. I tried to use the excess spending to stock up on various supplies, but that was still wasteful. Why? Because even though the items were on sale, they still were more expensive than Target or Walmart. Conclusion? I wasted money.
Coupons + credit cards = double the trouble?
Even though credit card rewards are trivial in the grand scheme of things, we all know some people use them as an excuse to spend more. So what happens when you also add coupons into the mix? Last week I was having lunch with a friend, and his friend, who I’ll call Nicole. She said “I need to go to JCPenney after this, you want to come?” I said no thanks and asked why she was going. Her response was something like this “Well I have a coupon for $15 off a $75 purchase and my JCPenney charge card is giving double points right now.” Now if you think that’s bad, the scariest part is what she said next: “There is absolutely nothing I need or want right now, but I don’t want to lose out on this deal so I will find something.”

Conclusion?

Just like credit cards can be an excuse to overspend, the same can be said about coupons. From the grocery store to Groupon, it’s such a prevalent problem. The most dangerous part is that unlike credit cards, very few people view coupons as dangerous… but they really should be!

Mike started Credit Card Forum in 2008 during the peak of his debt, which has since been paid off completely! Speaking of store-affiliated cards, his most recent post was about why the Walmart credit card is a rotten deal.
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