Why Do Rich People Use Credit Cards?

by Jason Unger

Reasonable people can have a reasonable dialogue about whether or not credit cards have value.

We’ve preached that using a debit card is the best way to spend, but fair arguments can be made that if you pay off your balance every month with the right card, you can accrue extra benefits for your normal spending.

The psychology of how you spend shows that paying with a credit card leads to more expensive and unhealthier purchases than with cash, and some would argue that credit card companies have been screwing customers for decades.

So when I saw this question on Quora — and the ensuing answers — I had to jump in.

Why do rich people use credit cards when they can afford to pay expensive things at once?

I was amazed at a number of the answers, so here’s my take.

Do Rich People Use Credit Cards?


Just wow.

I read through all the answers to this question, and I can’t believe they’re all so wrong.

What do we have so far from the answers?


Did anyone actually read the question?

Here’s what what was asked:

Why do rich people use credit cards when they can afford to pay expensive things at once?

Am I the only one who sees the issue here?

There’s an inherent assumption with the question that no one has attempted to address.

Ready for this?

Here we go. Get rid to have your mind blown.

Rich people don’t use credit cards.

What? Of course they do, man. What are you talking about?

Look, obviously there’s some high net worth people who use credit cards. I’m not going to deny that.

No One Became Rich Thanks to Credit Cards

But the reality is that people who are rich become rich because they don’t use credit cards.

No one ever became rich because they could put off payments for 30 days, and no one ever stayed rich from rewards points.

There’s a great book you should read. It’s called The Millionaire Next Door.

Here’s a great description of it from the amazing personal finance blog Get Rich Slowly:

Written in 1996 by marketing professors William Danko and Thomas Stanley, its main premise is that people who look rich may not actually be rich; they overspend — often on symbols of wealth — but actually have modest portfolios and, sometimes, big debts. On the other hand, actual millionaires tend to live in middle-income neighborhoods, drive economical cars, wear simple watches, and buy suits off the rack.

Think about it.

  • Is someone who spends a lot of money rich?
  • Are you rich if you drive a flashy car?
  • Is that person who’s constantly posting pictures from their vacations on your Facebook feed rich?

No. Not at all.

It simply means that they either spend a lot of money, or have a lot of debt they need to pay.

Read this whole post from GRS to understand the findings of the book, and then go read it yourself.

So what exactly makes a person rich?

Here’s one of the 3 ways the rich manage their money better than you:

Your salary is only as good as your ability to continue to work. As we’ve seen with athletes with million-dollar-a-year salaries, you can’t count on money to always be pouring in.

The real rich focus on growing their net worth.

Buying a BMW isn’t going to make you rich. Owning a million dollar home isn’t going to make you rich. Not spending all of your income each month will make you rich.

By keeping more of the money you make, the longer you’ll have it to keep you rich.

Dude, why are you so opposed to credit cards?

Honestly, I’m not really.

I get the idea of racking up frequent flier miles and consistently paying off your balance each month. I understand why that’s attractive to people.

But I also know that spending with credit cards affects you psychologically.

Yup, it does. Here’s what research has shown:

  1. Paying with a credit cards is less painful than paying with cash. So shoppers spend more money.
  2. Credit card users not only spend more, but they also purchase more unhealthy things.
  3. Those who pay with cash enjoy a better relationship with their purchased products.

People who are rich are rich because they keep more of their own money.

They focus on growing their net worth; not their rewards points.

Rich people don’t care about credit cards because credit cards don’t make — or keep — you rich.

Photo by Ryan Born on Unsplash

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