I’ve been reading the fascinating tale of “James” over at Red Tape Chronicles and I have the simple and ultimate solution to his woes: Cash Reserves.   Do people simply not understand that credit cards are essentially a loan and not “free” money?  I have a fairly simple rule I follow:  If I don’t have the cash reserves to pay off credit cards completely in full at the end of the month then the transaction doesn’t happen.

With banks now raising fees, raising minimum payments, raising interest rates, and raising balance transfer fees the “golden credit card age” is effectively over and I have huge doubts that it will ever come back.    I do foresee a new golden age of alternative “money” and let me give you a simple example.   My son (too young for credit) has figured out how to barter with gift cards.    He swapped a Best Buy gift card for cash, at a discount, and bought I tunes gift card with cash.   He is bypassing the need for credit cards by simply utilizing the gift cards themselves as bartering tools and cash swap instruments!   He doesn’t see the need for credit cards, he sees transactions as paying cash for “store specific credit vouchers” to buy goods and services.   Since he buys music and TV shows off of iTunes, he buys iTunes gift cards and never hassles us for credit card numbers.

I think there is going to be a new golden age of alternative “money” circulating the world in the form of gift cards on occasion sold at a discount.   Ever notice how you can get more bang for your iTunes buck at Costco?