Comments on: Don’t buy the cash-only hype

By: fuzzy

fuzzy — Fri, 26 Jan 2007 04:11:02 +0000

for Heidi: I’ve had the same Discover card for ten years, paid it off each month, and never been canceled. So it’s safe to pay it off with Discover, at least. I’ve never actually known anyone who got their card cancelled because they used it responsibly. I have a Bank of America Card that’s years old and has never been used, and they faithfully send me crap regularly– including replacement cards occasionally– hoping that I’ll pull it out and start using it.

By: Zee

Zee — Wed, 24 Jan 2007 21:45:10 +0000

I think the biggest thing about using credit cards is the commandment: “thou shalt know thyself.”

In other words, for all the perks of using credit listed above, if you’re at all susceptible to the tendencies of overspending, I’d suggest skipping them altogether. Particularly when you’re in college or not working much, in my experience it’s just SO easy to charge things and then come up short at the end of the month. And then you end up having to carry a balance, which costs you more money than it would have to just pay cash in the first place.

I’d love to be able to use credit, but I know myself well enough to know I can’t be trusted with it. These days, I generally use cash because I tend to spend much less with it than I used to – even when using my debit card. However, I did find a bank that gives me cash back anytime I use my debit card as a credit card so you can still get perks if you look for them!

By: Lisa

Lisa — Wed, 24 Jan 2007 20:04:47 +0000

Pat Rock: Great point! These credit card companies are trying to sucker us in so that they can make more and more money off of us with fees and interest. We say NO WAY in our house. I buy very little online and have one card I use there. We use a gas card so that we don’t have to carry that much cash with us and pay it off at the end of the month from our gasoline budget. We found that when we were using our mastercard for gasoline that it was way too easy to use the card for other things, like lunch out or impulse purchases. We always go to the same gas stations anyway so we just got one of their cards. I used to play the games with the credit card companies and got the cash back and other rewards. It just got too difficult to keep up with. Plus, when we analyzed our spending we found that we were overspending just like the statistics posted here — 12-18% more than we needed to be spending. Cash works for us.

By: Want Not » More on credit cards and building credit

Want Not » More on credit cards and building credit — Wed, 24 Jan 2007 20:04:33 +0000

[...] Yesterday’s post on the Dos and Don’ts of credit cards prompted this comment from tennessee gal: Delurking to ask a question. I am still in college and stumbled across your site through a link, but I love the freebies! I currently have no credit in my name and after trying to get my fiance a cell phone with no credit (they wanted a $1000 deposit), I decided I should get a credit card and use it to buy my gas each month. The point is to keep it simple. Something that I would be purchasing anyway, and I know I can pay off with my current job. My question is this: I’ve heard two different theories. One is that you don’t build credit buy paying off your credit card each month, that you should carry a balance on it. The other is that you should pay it off each month and that does build your credit. I am personally a fan of the second one where I pay it off each month and not carry a balance. I talked to Mom about this and she couldn’t remember how she built credit. And there are so many conflicting articles on the internet about this, I wanted to know your thoughts! I have not picked a card to get yet, so any suggestions you have would be welcome. Please help this college student going on the right track! (and I think I’m supposed to say that you are beautiful and ROCK!) [...]

By: Therese

Therese — Wed, 24 Jan 2007 17:41:43 +0000

Also a big fan of the Discover card. Hubby puts tons of business expenses on it, and we pay it off monthly. We have our cashback bonus bucks transferred to our savings account whenever we build up a $100 balance. Makes for a nice vacation fund!

By: Liz

Liz — Wed, 24 Jan 2007 17:06:01 +0000

Hi there,

I may be the only person that does this…but when I use a credit card, I deduct the charge right away from my check register in Quicken. That way when the credit card bill arrives, I just cut and paste the charges into the Quicken credit card account. “Reconcile” the balance with the statement and write a check for the whole amount.

Psychologically this works for me for three reasons:

1. Prevents me from overcharging because if I don’t have the money in the checking account, I’m just not going to buy it.
2. Painless to write a check for a large amount every month because you’ve already “paid” for it. Your balance will not go down.
3. Gives me the freedom to use my credit card for any type of purchase. (even groceries)

I do think having credit is a good thing. Being Canadian (and having an excellent credit record in Canada) I was shocked when I moved to the States and couldn’t qualify for a credit card right way. It took a couple of years of excellent bill and rent payments and a secured card before we got a proper credit card. So if you have credit…don’t get rid of it.

By: Heidi

Heidi — Wed, 24 Jan 2007 16:31:26 +0000

Tennessee Gal has some great questions. I’ve heard of people who were dropped by their long-time card companies when they zeroed out their accounts each month; besides being irritating and inconvenient, wouldn’t that impact their credit score? It makes sense to me to maintain a fairly small monthly balance to insure continuity on the same card.

By: tennessee gal

tennessee gal — Wed, 24 Jan 2007 04:00:58 +0000

Delurking to ask a question. I am still in college and stumbled across your site through a link, but I love the freebies! I currently have no credit in my name and after trying to get my fiance a cell phone with no credit (they wanted a $1000 deposit), I decided I should get a credit card and use it to buy my gas each month. The point is to keep it simple. Something that I would be purchasing anyway, and I know I can pay off with my current job. My question is this: I’ve heard two different theories. One is that you don’t build credit buy paying off your credit card each month, that you should carry a balance on it. The other is that you should pay it off each month and that does build your credit. I am personally a fan of the second one where I pay it off each month and not carry a balance. I talked to Mom about this and she couldn’t remember how she built credit. And there are so many conflicting articles on the internet about this, I wanted to know your thoughts! I have not picked a card to get yet, so any suggestions you have would be welcome. Please help this college student going on the right track! (and I think I’m supposed to say that you are beautiful and ROCK!)

By: alice

alice — Wed, 24 Jan 2007 03:25:29 +0000

As for seeking out the best rate – this is a great thing to do, but be wary of the temptation to keep closing old accounts and opening new ones to get the best deals. A longstanding credit account helps your credit report, so it’s best to keep at least one card open.

I definitely don’t advocate keeping a card with a bad rate, but wanted to point out that keeping at least one card active in the long term has benefits beyond the APR.

By: Groovecatmom

Groovecatmom — Wed, 24 Jan 2007 02:36:43 +0000

I had my credit card in ice in the freezer once. I saw it on Oprah, about ten years ago when she had on a financial guy and gave a list of rules. That was one of them. (And you’re right, it didn’t help online, because I had the number memorized. Duh. But back then not many stores were online.) Also, he said to “visualize the bill” coming before you make the purchase. And to throw away catalogues as soon as you get them. I try to do those things. Today I would include “delete all the sales emails before you open them” because I am a sucker for free samples with purchase and free shipping. We finally got an amazon reward card, and I am not sure what took us so long. The certificates they send us are almost as pretty as you, Mir!