No Credit Cards vs. Credit Card Savvy

I'm curious to hear others' thoughts on not owning or using credit cards versus a perceived advantage of using reward based credit cards in a savvy way, such as buying things to get the cc rewards (cash back, travel mileage, etc.) and immediately 'prepaying' after each savvy purchase by transfering money to your cc account.

Owning the credit card (of course) is not a problem. The problem revolves around mismanagement, more than on person on the card, not living within your means, etc.

One of the cards I have, I was offered through my timeshare. I have a MBNA Visa that will offer airline points for free air travel, rewards, or just plain cash. You bet, I just tell them that I want to cash in a bunch of points and they will send me a check. How cool is that?? We charge everything over $5.

Note: If you know you're not too good with credit cards, then either don't own one or own one with a small limit to be used for emergencies.

I agree with osterperson. My opinion is that if someone currently owns credit card(s) and they do or are considering only paying the minimum payment, then these people are not responsible enough to have access to revolving credit. "Live within your means". Of course, this assumption doesn't apply to every human out there.

Most banks issue debit cards, and there should be no reason why someone needs to own more than one major credit card. If you have to apply for different cards because your credit rating isn't high enough to increase the limit on your first card, then you fall into the same boat and should not have revolving credit. Dept store cards are a death-trap. "Save 10% by opening an account today" they say, but you might end up paying more than the cost of the item in interest if you don't manage your credit wisely such as only paying the minimum.

I do like the safety of credit cards though. I will not use my debit card online directly for purchases. This way, if my CC is ever compromised, my checking acct isn't wiped out and the card issuer lawyers can fight it out with the shady vender versus you spending money you now don't have in checking to pay for a lawyer yourself to try and recover your money. It also saves you the hassle of having to set up a new checking account and switching all your online payments you have going to utilities and other bills and having to explain why they didn't recieve your payment this month.

I believe the 80/20 rule applies here: 20% of credit card users are winners largely at the expense of the other 80%. Benefits of a prudent credit card use are indisputable: convenience, flexibility, consumer protection, better record-keeping, rewards, extended warranties, etc. All these benefits accrue to the users wise enough to control their use so that they can readily pay off the balance each month.

Like taxes, college aid or any number of other financial arenas, those who take time to understand the rules and manage their lives accordingly will be winners.

I do like the safety of credit cards though. I will not use my debit card online directly for purchases. This way, if my CC is ever compromised, my checking acct isn't wiped out and the card issuer lawyers can fight it out with the shady vender versus you spending money you now don't have in checking to pay for a lawyer yourself to try and recover your money. It also saves you the hassle of having to set up a new checking account and switching all your online payments you have going to utilities and other bills and having to explain why they didn't recieve your payment this month.

I think that's the biggest advantage of a credit card over a debit card.

I never use my debit card online, as I feel I need to protect my cash. Additionally, a credit card company can offer certain kinds of insurance if you use their card. For instance on a car rental. There are many perks that credit cards have that very few people realize they have. For instance, a free international cell phone rental for a month if you travel over seas.

There are a bunch of advantages, but as always, the key is to pay them off every month.

Grant

debit cards can't build or rebuild your credit history.

Only credit cards and Installment loans (like mortgages, student loans, personal loans, and other loans) can build the necessary credit history to obtain major financing at a later date.

Reward-based credit cards are only helpful if you pay off the balance each month. Otherwise it defeats the point of getting the cash-back bonuses when you're paying interest.

credit card savvy. reason: not only do you get the rewards, it helps your credit rating and don't forget those emergency expenditures.

I'm part of the 20% that's benefiting. My 2 main cards are Hilton Amex and Marriott Visa. We charge everything on them and pay in full each month. For large expenses, I "borrow" from my money market account to make the credit card payment, then pay back the money market account. Yes, my finances are complicated but it works!

We've had some fantastic stays in hotels in Europe and walked out with a bill for my Internet access.

I know some experts say that you spend more if you have credit cards and don't have to dip into your wallet and hand over actual cash and they're probably right- but my husband and I are pretty frugal people so I don't think that's a factor with us.

I say as long as youre disciplined with your credit cards, I would go the credit card route. The rewards can really add up.

Here an article from bankrate.com on paying taxes on credit card rebates. Thanks.
http://www.bankrate.com/brm/itax/tax_adviser/20051027a1.asp

Harrine Freeman
CEO H.E. Freeman Enterprises
Speaker, Author of How to Get Out of Debt: Get an "A" Credit Rating for Free (ISBN 1933949430)
www.hefreemanenterprises.com

I've always considered credit cards a convenient way to pay and a source of short term "free" cash. This approach works only when you pay your credit card monthly balance in full every month. By "free" cash I mean being able to buy something now and, if I make the purchase right after the credit card closing date, not pay for the item for about 45 days. When the credit card is paid in full, I've had use of free money for a month and a half. But now, with a new computer program I started using about 2 months ago, it is also possible for me to earn rewards for paying my bills. This program is so flexible and easy to use. I haven't done it yet, but, I plan on setting up most of my bills to be paid automatically by one rewards credit card. In the program, I will manage my finances the same way I have learned to do, but, the program will automatically set aside my bill payments so that when I get the statement from my rewards credit card, I can pay it in full every month. I will be getting rewards for paying my bills! I love this software!

I have 3 credit cards I use them frequently. Mostly for the rewards and also as a way to itemize my spending. They always get paid off. Credit cards are safer than cash or debit.

Last month I lost one of my credit cards and I didnt report it becuase I thought I lost it in my house. I guess someone tried to use it and the credit card company contacted me to tell me what happen and to reissue my card.

Only once did the credit card company shaft me. they moved the due date on me and I got hit with a 35$ fee. Im still ahead though,, I have had hundreds of dollars worth of rewards.

ps. why do you say perceived advantage

I definetely agree... it takes discipline

Owning the credit card (of course) is not a problem. The problem revolves around mismanagement, more than on person on the card, not living within your means, etc.

One of the cards I have, I was offered through my timeshare. I have a MBNA Visa that will offer airline points for free air travel, rewards, or just plain cash. You bet, I just tell them that I want to cash in a bunch of points and they will send me a check. How cool is that?? We charge everything over $5.

Note: If you know you're not too good with credit cards, then either don't own one or own one with a small limit to be used for emergencies.

in modern society, credit cards are almost unavoidable, there places where they only take credit cards as a form of payment..

in modern society, credit cards are almost unavoidable, there places where they only take credit cards as a form of payment..

I can vouch for that statement. Last month my wife & I were in Las Vegas and we stopped by the nightclub PURE, where a lot of the younger Hollyweird stars visit. We got our daughter a PURE t-shirt and we couldn't even pay cash - we had to use a credit card.

You gotta have a credit card in today's world, and hopefully have the discipline to pay it off every month too.

Rookie

They wouldn't take cash? It sounds like that debit card commercial where everything is going so smoothly until the one guy pays with cash and everything comes to a screeching halt. How dumb.

I had to buy a black, dress belt when I went to Vegas because I forgot to pack mine and I needed it for the wedding we were going to attend. Clothes shopping in Vegas is no joke. I finally found one for $50 after checking a few dozen shops where prices ranged between $68-$119 for a similar belt. I wouldn't normally even pay $25 retail for a belt at Dillards or Kohl's!

I paid with a credit card only because I needed my cash to satisfy my gambling cravings.

I paid with a credit card only because I needed my cash to satisfy my gambling cravings.

Hey, a big lightbulb just lit up here... Slot machines with a slot where you can insert a credit card and gamble away wrecklessly!
Although it wouldn't do much for the friendly image the gaming industry promotes, what a money maker! (the gov't has probably already legislated against that idea - what a home wrecker that could be)

That would have horrific results. Its bad enough that they now accept $100 bills (or vouchers holding even higher amounts), but could you imagine Joe Anybody sticking his gold card in a machine and dropping $5000 in a few hours? OUCH!

thats sort of like strip clubs. You go , get stupid drunk, start the credit card tab. Ms Stripper notices this and puts on her A game then the next day you noticed your card is maxed

Hey, a big lightbulb just lit up here... Slot machines with a slot where you can insert a credit card and gamble away wrecklessly!
Although it wouldn't do much for the friendly image the gaming industry promotes, what a money maker! (the gov't has probably already legislated against that idea - what a home wrecker that could be)

do like the safety of credit cards though. I will not use my debit card online directly for purchases. This way, if my CC is ever compromised, my checking acct isn't wiped out and the card issuer lawyers can fight it out with the shady vender versus you spending money you now don't have in checking to pay for a lawyer yourself to try and recover your money.

I've learned my lesson on that last point, johnandreew. My husband ordered appliances online from Sears which botched the order and ended up charging him TEN TIMES. Used his debit card and wiped out his entire checking account. Took four days for Sears to fix the error and the money to return. Good thing no other checks bounced during that time period, but it was a nail-biter. Should have used the credit card instead.

My Chase Rewards VISA gives me 5% back on gas and stand-alone grocery stores and pharmacies, and 1% on everything else. You accumulate points and of course they'd like you to redeem them for gift cards to Best Buy or wherever. I wait until I hit 10,000 points and take the $100 check. I think I'm up to $400 this year. Do I spend more with the ease of a credit card - I don't know, not much. Certainly not enough that I question my spending.
I'm pretty frugal. The only thing I'm going to spend on myself for Christmas is a nice heavy wool hand knit sweater in the $100-$150 range. And I wouldn't get that except one of my current ones got a hole in it. I spend a bit here and there going to bridge tournaments, but get plenty of satisfaction just saving.

I think I definitely spend more than normal when I have my credit card with me. It's a bad habit, so I generally don't carry them with me.

Well I have 2 Credit Cards, and used to have 4 cards, 2 years back. I have never had any problems using the cards. It depends on proper management and discipline. People normally tend to misuse it and get into heavy debt loads. If properly managed a credit card is a good utility to have in the times of need.

Could I deposit the check in my bank for the amount to cover my existing balance, and then quickly make an online payment to payoff that old balance?

I'm well aware the company will make me payoff lower interest rates first (which would make what I'm trying to do pointless) however, I'm trying to cash the check and payoff the balance BEFORE the next statement is generated bypassing that sceneiro.

The only "gotcha" I can think of that would backfire on me is they would ignore statement dates and go by check post date or whenever a lower rate transaction hits your account (again, not after the grace period of new purchases and the statement date like they should do).

---------Side notes-----------
1) I have other cards, but this is the only one currently with a 0%, so the others aren't worth it to me to use.
2) As mentioned I have more then 50% open on this card, so I could have the current balance on the account twice and still stay below my credit line (which I could foresee happening for a few days until everything clears/posts)
3) Please don't inject personal finance opinions or random guesses. I'm looking for genuine input.




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