Due to the cash back rewards and no annual fees, I just see it as a win win situation. It also helps to establish and maintain an active and healthy credit history. I charge car insurance, utilities, cell phone, internet, magazine subscriptions, etc. all to my credit cards. Make sure you have a credit card which has no annual fee and pay off your balance in full every month. I use AMEX true earnings through costco.
Overusing your credit card actually hurts your ability to earn credit, since it gives the appearance that you're too free with your spending. IMO, a credit card should only be used to pay for food and gas, and occasionally a luxury item like a TV set or a new chair. Of course, carbuyingtips.com has made me paranoid about my credit.
Well I pay off my balance in full every month. IMO, CCs are not a way to buy things you can't afford, they are a tool to make using the money you have easier to spend in certain circumstances.
I know a few people who do that. I haven't gotten around to it yet, it's something I've considered though.
that's actually incorrect, and a common misconception. carrying high revolving balances will do that, but simply usage alone does not. what the OP said is perfectly fine as long as one has the discipline to pay them off every month. In fact doing what the OP said will improve your credit standing, it shows you know how to effectively manage money. Added bonuses are earning rewards points, and protection of monies from fraud (something you won't get with using Debit cards)
Great thread SS. I was thinking about this exact thing earlier today. I was going to start a thread to see if anyone knows what are the best cards to use for this. Right now I just use a card with UPromise, but it sucks. (Take note young men. Never let your wife make financially based decisions without consultation )
Exactly. I'm not sure about the last part though. I'm pretty sure that I've had BoA (or Visa, can't remember) contact me when someone stole my numbers and started charging things in another state. It was like a commercial, I didn't have to do or deal with anything other than that phone call.
well no one said it wouldn't be a pain in the ***. bottom line - if false charges occur on your credit card, it is far easier to get them wiped out there than it is to go through your bank and try to recover actual bank account funds.
American Express ONE is a good card (assuming you follow the OP's advice and pay off every month). Instead of earning "reward points" to be redeemed on certain things at certain times, they take your spending and put 1% of qualified purchases as CASH into a money market account... where it earns interest. This way, you earn cold hard cash for your normal spending, are you aren't subject to blackouts or restrictions.
That sounds like a great deal. AMEX true earnings gives 3% back for gas, 3% for restuarants, 2% for travel and 1% back for everything else. With today's fuel prices, every cent back counts IMO.
AMEX cards typically have (overall) the best rewards attached to them... the downsides are they charge vendors more, ergo a lot of businesses won't accept them. I've found about 80% of the places i patronize accept AMEX cards, as well as gas stations, so i rock my AMEX most of the time.
I typically believe you do just the opposite and pay everything in cash except electronics food and gas. I dont like the idea of having to pay a large lump sum at the end of a billing period and would rather stagger it across the given time frame. I try and force myself to stay below a budget so I have money left over at months end to put towards soemthing I really want like a vacation or just to stash away. As far as credit cards go, I have had a great experience with Discover, as they are very consumer friendly. They give you 1% cash back on some stuff, 2 or 5% on other stuff. Cash back is the best reward from where I sit. I wont do Amex because I wont pay an annual fee to have a card. They should be paying me to carry their card.
One site that I frequent a few times a month regarding CC deals is: http://www.creditcardwatcher.com/
It has already been mentioned, but "over-using" your credit carg is a myth. As long as you pay it off every month, it does NOT affect your credit. I will tell the extent that we use our card. We just purchased a new vehicle and had 6000 saved as a down payment. We put the entire 6000 on the old Discover card, then just transfer the money ;-] What does that mean to us? Several free meals at Red-Lobster, Chili's or Olive Garden
also regarding the fact that carrying a high monthly balance does not lower your credit score...indirectly it does. One of the things looked at when securing any kind of loan is the percentage of available capital on your credit cards. Someone who uses a great percentage of their available Credit Card balance is a greater risk then someone who uses a lower percentage monthly. Soeone who uses the card for everything is more likely to fall behind on payments in instances where extenuating circumstances occur like layoffs etc. By showing lower monthly balances you leave less risk that you could get caught paying off two high interest loans at one time. In my house searching expedition this is something I have been told over and over again. Ive seen and heard the rates my friends got and the ones I am being offered are better because Ive never been late and rarely use credit cards except for the stuff I mentioned. Ideally you want to use the cards to establish credit and show you can pay it off monthly on time. Case in point was also when I went for a car. I was done in about 5 minutes and had secured a 0% interest rate which Toyota claimed they never gave with 0 down payment. And at the time I was coming off a stretch where I had been unemployed for about a year.
your entire argument is based off assuming the consumer has no discipline. If you DO have discipline and can maintain your budget, everything you just said goes out the window
thats exactly right. I do the exact same thing, anything i can charge i do, but that is the key... making sure to pay off your balance every month. No need to spend money that you dont have just because you can charge it to a credit card and pay it later. The added bonus to this is if you collect airmiles, or any sort of reward points. they add up quickly that way. might as well get some free stuff for everything youd normally be paying for anyways
Thing is its not my argument. Its seems to be pretty standard. Its not about discipline, its about the capital you have available to you to pay off any significant debt. Someone who max's out their cards is not getting the same rate for loans as someone who only uses say half or a third of whats available to them. Youre expected to pay them off on time and thats where your credit score could take a big hit, but part of that credit score also seems to be determined by your equity.
Who's talking about maxing them out? I put EVERYTHING on my card, but manage to live within my means. Average is MAYBE 20% of card-max I do know my credit rating hasn't dipped below 800 for some time now ;-/
I use my credit card exclusively for buying online (concert tix etc.). In fact I don't even keep it in my wallet. It is too tempting. If I can't afford it I have to save or I don't buy it.