On AM on Thursday they noted research which shows four in ten people use credit for basic purchases such as groceries, the implication being that many of those are doing so because they can’t use cash as they need to defer that spending to stay afloat.
PETER RYAN: So credit cards being used for entertainment or paying for the groceries at the supermarket whereas once upon a time they would have been a direct charge from the savings account?
CHRISTINE CHRISTIAN: Would have been a direct charge from the savings account or cash, and credit cards were you know, generally used then for bigger ticket items where people felt that they could purchase the item and then pay it off over a period of time.
The research is specifically about people who have no choice but to use their credit cards for such purchases:
Four in ten (43 percent) Australians expect they will need to use their credit card to pay for otherwise unaffordable expenses in the coming months
I’m certainly one person who uses the credit card regularly for things like groceries — but happily for me it’s not because I have no choice; it’s a deliberate decision.
I do it because my cards have an interest-free period, and I pay the entire credit card bill before the due date, so I don’t incur any interest.
There’s the convenience of not continually having to go and get cash. And the cash sitting in my mortgage offset account for a bit longer helps reduce my home loan interest.
And then there’s the points. Most of my purchases are now on the Mastercard, which earns Commonwealth Award points (for a $59 annual fee — I’m not totally convinced it’s worth it).
Additionally if I remember to hand over my supermarket loyalty card when buying groceries (well, those I don’t buy at a greengrocer or at Aldi) for transactions over $30, I earn frequent flyer points and petrol discounts.
The frequent flyer points I’ve earnt (plus a bunch that have been sitting in my account for quite some time, some of which came over from the Mastercard) have piled up and last weekend I ordered a new barbecue with them — a Weber Q which apparently has an RRP of $419. I’ve been meaning to buy a barbecue for ages, so I’m looking forward to having a go of it. (Surprisingly unlike that clock I ordered years ago which took weeks to turn up, they’ve already been in touch about delivering it.)
The Commonwealth Awards points, I’m still saving. They might go into a new digital camera when my old Canon A70 finally dies. Or perhaps towards a new TV if I eventually get enough points. (I just realised my Loewe 68cm 4:3 CRT is almost ten years old. Damn thing still works, though a slight flickering occasionally at the top of screen might give me a good excuse to upgrade.)
Sadly none of the schemes I’m in have the gizmo I’m currently coveting: the Topfield 7160 PVR. I might have to buy that one myself.
On the credit card, naturally.
Of course, I’d never want to be in the position of not paying the card off in full every month. I wouldn’t want to be using it for spending on things I can’t afford, and it would be especially alarming if those things were the essentials of life.
That must be a scary position to be in.
PS. There’s an interesting article in today’s Age, where Choice notes: “If you are shopping exclusively at Woolworths chasing points in the hope of getting a $50 gift voucher, you are much better off just shopping at a cheaper store like Aldi or Costco if you are looking to save money.”