Financial Advice from a Laydee: Credit Cards and the Ethical Use Thereof

Hey, everyone, hope the holidays are treating you well. It's that time of year where we reflect and make resolutions and decompress, so, if you'll allow me, I shall continue with the money talk. Getting your money in order does a great deal for stress-reduction. Finance is self-care, y'all.

So, credit cards. They are capable of both great good and great evil ...

THE GOOD:

• Credit cards are great for online purchases, because they have fraud protection. Are you using debit cards to buy things online? STOP IT. PayPal? They're the devil. In 12 years I've had fraudulent purchases made on my card twice, and in both instances my credit card company [A.] noticed it before I did and [B.] held me liable for none of it.

  I think they're also a better choice than debit cards for gas stations, because gas stations are notoriously rife with skimmers.

A skimmer

• If you have a credit card, you should check out what protections you get from it. For instance, extra insurance on rental cars is pretty common. Some cards give you a few months' warranty on any expensive electronics you buy with them.

• They can help you build a credit history, if that's important to you. There are other ways to live, but not having a decent credit history can limit your ability to borrow money or find an apartment to rent.

  If your credit history is bad or nonexistent, you can get a secured credit card. They're not so much "credit" because you give them money up front to hold. But if you demonstrate that you can use it within the company's parameters, then they'll eventually upgrade you to the usual type of credit card. A friend of mine used this approach when she moved to another country where her American credit rating had no clout.

THE BAD:

• Credit cards redistribute wealth from poor to wealthy. How? Every time you pay with a credit card, the seller has to pay a fee to your credit card company. The seller can't pass that fee along to you because their agreement with the credit card company expressly prohibits it. Folk with good credit (who are usually comparatively well-off) qualify for special rewards or cash back from their credit cards, which is funded from those fees everyone pays. It's like the opposite of how taxes should work in that we all pay more so that the least broke among us can pocket extra cash.

  It's hard to avoid credit cards for a lot of purchases, like plane flights or computers, but when it comes to things like groceries I try to pay with cash. It's a simple way for me to help keep food cheap for everyone. Another approach (one that applies more to gas than groceries) is to look for vendors who offer a cash discount, since that's one way around the prohibition against vendor-applied fees.

  It shocks me how many otherwise ethically-minded folk neglect this effect and advocate using a credit card for absolutely everything in order to rack up rewards.


What, not old enough for this?

• Credit cards can be really, really bad for you if they're not compatible with your spending habits. I don't know whether they increase debt, but the average credit card debt in this country is something like $6k. J.D. Roth of Get Rich Slowly cut up his credit cards as a key part of getting out of debt, and recommends that others do the same.

Overall, it's like you have a tiny greedy bank CEO (or Viking, I guess that works, too) in your wallet, protecting you from fraud. That's a weird metaphor, but my point is that it's not always obvious how to use credit cards ethically. I've got a bit of a compromise going on ...

THE COMPROMISE:

• I try to use cash for most everything I can, especially groceries, medicine, household necessaries, and utilities (well, I use bill-pay for the latter). This dovetails nicely with my budgeting method, wherein I withdraw a set amount of cash weekly. Win-win.

• I use my card for car rentals, online shopping, tickets, hotel rooms, and big cost items where I need the fraud protection and/or warranties and insurance.

Next topic will be debt reduction, I think, but I'm totally open to suggestion for ethical/feminist finance topics.

Financial Advice from a Laydee: Bargaining

You guys, I am preeetty good at financial stuff. I am also perpetually bursting with financial advice and dying for an outlet. And since 'tis the season for it, I thought I'd start posting some of it.

What does this have to do with the rest of the blog? Plenty! For one, a lot of the financial advice out there is written by doodz. And, not to knock doodz, because they write tons of good stuff, but sometimes it doesn't translate. This is not because of our tiny math-allergic female brains, but because of society.

For example: bargaining. Every dood-written financial blog I've read eventually says something like, "You can get a discount on anything! Just ask for it!" Get Rich Slowly advocates doing this, as does Ramit Sethi. Once I decided to take Sethi's advice and try to negotiate a lower cable rate. I had in hand an advert for a low introductory rate that I did not qualify for, being an existing customer, and a set of suggested tactics from Sethi, including things like asking to speak with customer retention, that would supposedly help convince them to lower my rate. I stayed cool and friendly and I think I'm capable of sounding reasonably professional. And it did not work at all.

It also didn't work when I tried to bargain for a lower price on a used car. I chose to remain carless because the seller would not budge by even the smallest amount on the price. That just offends my principles. Who refuses to bargain on a used car? Incidentally, the only time I successfully negotiated a lower price on a car was when I was co-buying it with a dood. I could give you a couple more examples but let's just say it's a pattern. And it's not just me. Laydeez everywhere run up against walls when they try to buy cars or negotiate raises.

In fact, the only time I can think of that I successfully negotiated for something was with my landlord. When I first moved in, the dining room contained a giant free-standing wardrobe so that they could market it as a two bedroom. It took up an annoying amount of space and they refused to remove it. That is, until it came time to renew. Then, it became more worthwhile to deal with the wardrobe than to find a new tenant, especially one that might not pay on time regularly or keep the place spotless. And so I got my way eventually, not by negotiating but by establishing myself as a valuable tenant. And a couple years later, I got them to agree to shorter leases in order to keep me on. It's the usual drill: I did more work for less reward.

Sorry if this isn't very encouraging, but I think it's useful to know. The realization that I acquire bargaining power by building financial relationships rather than through charm means that when I move someplace new I spend a LOT of time looking for a good apartment, one that I am more likely to stay a while in. And I'm delaying buying a car, and if/when I do get one, I will plan on driving it to death. I may even hire a dood to negotiate the price for me. Perhaps most importantly, it means that when I look for a job, I pay attention to what they say about women. My current boss hires a lot of women and promoted that in my first phone interview with him, and that kind of thing definitely factors into a job search when you know you've got the raise-negotiation-odds stacked against you in general.

I hope this sort of thing is helpful. I'd like to continue writing about finance now and then because I am so tired of all the bullshit you hear regarding laydeez and financial literacy, like that "women also prefer to learn about money in person or in groups with others in their situation, as opposed to curling up with a book" (ref). Could that be because most of those books are written by men? Who are giving naive advice like, "go ahead, ask for a raise!" If the advice doesn't work for women, then women will stop reading and seek advice from their peers. Cuz bitches be rational.

Also! Readers, I'd love to hear about your experiences with negotiation, especially if you got it to work for you, and if you have any thoughts on how that intersects with any aspects of your identity.