Introduction To Credits Cards

Spoiler Alert
A theme of the credit card series of pages will be that if:

• you do not make any transactions that code as balance transfers or cash advances,
• the merchant is not adding the merchant's fee for accepting credit cards to the cash price,
• you are using a credit card to buy the same goods and services you would buy if you were paying with cash,
• at prices that are the same or lower than if you had made the purchases using cash, and
• you pay your entire statement balance by its payment due date

then you are not harming yourself by using a credit card instead of cash.
I cannot tell you whether your particular purchases were prudent.
If the purchases were poorly chosen, then they were poor choices regardless of whether you used cash or credit.
If the six bullets above are true and you have a credit card account then at any one point in time you will have a current balance but not be carrying a balance.
Your current balance may or may not be zero.
However, if you find yourself often carrying a balance outside of promotional rate offers, then you have a problem.
I can offer you no solution if you do have such a problem.
Instead I hope to explain the danger to you so that you can recognize it early and change your behavior if not avoid it altogether.
I may be running a long con on myself if I think I can make a difference in any one person's life but the opportunity cost is minimal for me, so why not at least try?
If you have not heard the phrase opportunity cost or you have heard the phrase but you are not sure what it means, I will be addressing that in a future page.

​Rewards and Sign-Up Bonuses

This website will touch on credit card rewards and sign-up bonuses.
However, rewards and sign up bonuses will not be among the primary topics of this site.
If you are carrying a balance on a credit card for an extended period of time outside of a zero interest rate promotion, the cost of interest will absolutely overwhelm the benefits of credit card sign-up bonuses and rewards.

​About Exercises

Some of my pages that cover credit cards will have exercises for you to go through.
You can read through my explanations here or listen to me present them on YouTube.
Ideally you will also work through the solutions on your own
Even if you never choose to work through them on your own, just seeing or hearing the explanations presented by this site will at least give you the concepts.
The exercises are not intended to be a substitute for a graduate degree in Financial Engineering.
Some topics, such as the compounding of credit card interest I will acknowledge but try not to focus on.
It is not as if credit card interest if computed with simple interest would be fine but the compounding is what makes it bad.
Compound interest just makes something that is already bad for you even worse for you.