credit card

[npgunner]

It may not be considered kosher by some, but since I use YNAB to budget every dollar that I have and generally only use my checking account to pay credit card bills, I have my bank setup to automatically pay the credit card upon bill receipt each month. I technically (unless there is a technical glitch of course) cannot miss a payment. Then of course I have YNAB setup to automatically create a new transaction for each bill at the same time each month (roughly the same time it is received). Since I YNAB just about every single day, I have a 2nd line of defense that would work against technical glitches.

However, remembering to manually pay one credit card bill is easier to pay several other bills that are setup on auto-pay to the credit card.

We also use YNAB around the house here. Really convenient app considering it syncs across 3-4 mobile apps and the desktop.

We put everything on our Discover that we can. Pay it off when the statement comes and have the rewards put back on the statement. With our lifestyle we probably get $500-600 back a year; which is usually what we budget for Christmas gifts. So we enjoy it. I also enjoy the added security off how easy it is if someone skims your card. Dad had this happened on his bank debit card and it took the bank 3-4 weeks get his money back. Happened to me and before the transaction even cleared Discover had it canceled and a new card on my way. We aren't a paycheck to paycheck kind of family, but someone else holding my money for 3-4 weeks would get my balls all twisted something fierce for the annoyance factor.

Credit isn't for everyone and I do believe you can survive without it. I understand the reward will never make my bank account rival Donald Trumps; but I enjoy making my $500ish yearly just for living life.


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[ironsniper1]

What they said, get a "no fee" card or two and pay the balance in full every time without fail. It's not a credit card, it's a convenience card. As in, you have the cash, just not on your person. I've had the same credit card for 25 years and have never paid a penny in interest.

Get all your power, water, phone, TV, Internet, etc. all in your name, and pay the bills on time every month.

thats really all i want to use it for is my bills, i pay all my bills before they are even due except rent as thats taken out of my checking every month.

 

It may not be considered kosher by some, but since I use YNAB to budget every dollar that I have and generally only use my checking account to pay credit card bills, I have my bank setup to automatically pay the credit card upon bill receipt each month. I technically (unless there is a technical glitch of course) cannot miss a payment. Then of course I have YNAB setup to automatically create a new transaction for each bill at the same time each month (roughly the same time it is received). Since I YNAB just about every single day, I have a 2nd line of defense that would work against technical glitches.

However, remembering to manually pay one credit card bill is easier to pay several other bills that are setup on auto-pay to the credit card.

thats another reason why i want to do it, pay one bill instead of many, i dont care about rewards or stuff like that, i just want to build up my credit rating and monthly income

Edited September 17, 2015 by luke9511

[Sam1]

You are correct, but......the OP is wanting to shed debt and build a credit rating. He should pay cash. If he doesn't have cash, he doesn't buy it!

 

Screw a credit rating!

 

You and I are likely in a place where we can benefit a small bit from a credit card perk. It doesn't sound like the OP is.

 

Bad info... dude is just starting out.  Pay cash for everything on a low(er) income and don't do anything to advance your credit score, then go try to buy a house 10 years down the road, with no credit history & a measly $10k in the bank... See how fast mortgage companies flock to give you money.

 

On the opposite side, you have a 5-10 year credit history with everything paid on time and $10k in the bank and your arm will be tired from throwing away the mailed spam trying to get you to sign up for a mortgage.

 

Credit cards are not a bad thing unless you have no control over yourself.  Since I switched to a chase southwest card, I've flown on 6 trips for 100% free, had free nights in rooms, and currently have enough points to go on 4 or 5 round trip flights sitting on the account now.  Cost?  $69/year for the card.  Interest? 0% if you pay it off every month.  Not sure why people are so anti-credit card.

[JPR1959]

Isn't paying your student loans on time building credit???  I can't believe no one has stated that.  If you buy things with a debit card, you are establishing a line of credit.  Having a job and a bank account establishes credit.  I would not start using cards to build up credit.  If you need new tires or appliances, then used their same as cash credit card and pay it off on time or sooner.  Statistics show you'll buy 18% more if you pay with a credit card.  If you pay cash, it hurts more.

[Sam1]

In some aspects it does.  Here's the chart from myfico.com on how it works:

 

[macville]

In some aspects it does.  Here's the chart from myfico.com on how it works:

 

 

Not sure how much I believe that chart. Earlier this year my score was over 800. I sold my house April 1st and cashed out almost $70k in equity. Paid off my car loan and am totally debt free right now. So of course may 1st my score goes down 15 points. It's creeped up some, but still under 800. The way they figure things is moronic. Someone like myself, who is responsible, gets dinged because they do responsible things like paying off loans in full. And we wonder why our economy is in the crapper.

[Sam1]

Not sure how much I believe that chart. Earlier this year my score was over 800. I sold my house April 1st and cashed out almost $70k in equity. Paid off my car loan and am totally debt free right now. So of course may 1st my score goes down 15 points. It's creeped up some, but still under 800. The way they figure things is moronic. Someone like myself, who is responsible, gets dinged because they do responsible things like paying off loans in full. And we wonder why our economy is in the crapper.

 

Closing accounts, especially ones that are in the green, ding your score.

[Lumber_Jack]

Closing accounts, especially ones that are in the green, ding your score.

Plus the "amounts owed" that is accounted for 30% went to 0

[gregintenn]

Bad info... dude is just starting out.  Pay cash for everything on a low(er) income and don't do anything to advance your credit score, then go try to buy a house 10 years down the road, with no credit history & a measly $10k in the bank... See how fast mortgage companies flock to give you money.

 

On the opposite side, you have a 5-10 year credit history with everything paid on time and $10k in the bank and your arm will be tired from throwing away the mailed spam trying to get you to sign up for a mortgage.

 

Credit cards are not a bad thing unless you have no control over yourself.  Since I switched to a chase southwest card, I've flown on 6 trips for 100% free, had free nights in rooms, and currently have enough points to go on 4 or 5 round trip flights sitting on the account now.  Cost?  $69/year for the card.  Interest? 0% if you pay it off every month.  Not sure why people are so anti-credit card.

I disagree. It might not fit society's idea of money management, but having a "good credit score" is horsefeces. Debt free is where it's at.

 

I don't have any payments, and pay no interest. Guess what? Because of that, I can fly anywhere I please anytime I please, and I don't need a stinking credit card to do it.

 

Credit means that you are buying crap you have no business buying, and paying for it, plus interest. How's that getting ahead?

 

As far as buying a house goes, you show up the the closing with nothing buy your checkbook, and nobody's going to care what your credit score is. You say that isn't feasible? Go to a mortgage lender with 20% down, and they don't care either. Local auctions carry non-qualifying terms with 15% down.

 

Bottom line: You have a credit score if you owe money. If you don't owe money, you may not have a high credit score, but you don't need credit either.

Edited September 18, 2015 by gregintenn

[Lumber_Jack]

I have never had a credit card and had student loans and a small car loan a few years ago. I was fortunate(unfortunate) to get a workers comp settlement that paid off all this loans in 2012. So me and my wife lived for 2years debt free. Fast forward to this spring and we had a really hard time getting a mortgage. If it weren't for my wife having MD after her name I'm certain we wouldn't have gotten one, even with the 20% down.

I could have (should have) had a credit card years ago preparing. The Dave Ramsey plan works fine if you wait until 50 to buy your first house, or can't have a credit card without running up a balance

[raildog]

Closing accounts will kill you score when we were getting ready to build our house we payed off and canceled 5 credit cards and two car loans in all about $20,000 in debt my score dropped 90 points and the wife's 70 points

[Dustbuster]

That was a good post on working a card but a card can cause trouble!
http://youtu.be/QCijdeZ9nnc

[musicman]

I disagree. It might not fit society's idea of money management, but having a "good credit score" is horsefeces. Debt free is where it's at.

I don't have any payments, and pay no interest. Guess what? Because of that, I can fly anywhere I please anytime I please, and I don't need a stinking credit card to do it.

Credit means that you are buying crap you have no business buying, and paying for it, plus interest. How's that getting ahead?

As far as buying a house goes, you show up the the closing with nothing buy your checkbook, and nobody's going to care what your credit score is. You say that isn't feasible? Go to a mortgage lender with 20% down, and they don't care either. Local auctions carry non-qualifying terms with 15% down.

Bottom line: You have a credit score if you owe money. If you don't owe money, you may not have a high credit score, but you don't need credit either.

And you are TOTALLY missing the point of the conversation. Over and over. You have a CHOICE when it comes to credit. You can choose to extend yourself and get into debt. Or you can be a millionaire (my parents) and get tons of free stuff at no expense to you, simply for using plastic instead of carrying around $15k in cash all the time. (I have a funny story of Dad paying for a pair of jetskis in small bills because the salesman pissed him off. Took dude almost 2 hrs to count it all, haha!)


Sure, you don't NEED a credit card to pay for airplane tickets. You can pay in cash or check. Some folks, who are smart enough to realize and use the advantages afforded to them at no cost simply don't have to pay for them. At. All.

Before GM put low limits on their cash rebates towards vehicles, my Dad regularly got anywhere from another $3k-7k off the new Tahoe he bought with cash every 2 years, simply for using a GM card for his business expenses. He did not buy things he shouldn't have because he had a credit card, he simply used that instead of cash or check whenever he gassed up work vehicles, bought tools or meals. He needed gas, tools, and food regardless of the payment method.

You can enjoy an aversion to credit, but facts are facts. You keep saying that if you use a credit card you are paying interest. Do you understand that that is not necessarily true? If I buy $1k worth of stuff, and then pay my card off in full within the usual 20-30 days from the statement date, I only pay them the $1k. Nothing more. That is the key to the whole mystery.

As for the 20% downpayment for a house: congrats! That's great! Very happy you had the ability to do that!

When my wife and I bought our house one year after college, we did not have almost $40k in the bank for a down payment. What we did have were excellent credit histories and solid jobs at the time. We got a rate just one quarter of one percent over prime. An excellent rate no matter your financial situation. As rates came down we refinanced again, and now to a 15 year loan and are shaving quite a bit off the back of that as well. Our cars are also paid for.

The breakdown in this logic that credit causes debt is just as blatant as the sad, pathetic, and just plain stupid idea that Moms Demand Action and their ilk push... they say guns cause crime, and if we remove guns from people, crime will stop. The FBI proves that to be a lie. It is generally the IMPROPER USE of guns by people who should not have them in the first place that causes nearly all firearm crime.

Similarly it is the IMPROPER USE of credit by people who are ill-equipped to handle the responsibility or by people who just shouldn't have it at all that gets people in debt. (Housing crisis, anyone?) Greed, instant gratification, sometimes a feeling of hopelessness and a lack of understanding of compound interest are the problems. Not available credit.

Credit cards are tools just like firearms, hammers, and cars. Making mistakes with any of them can cost you. I won't call anyone a fool who properly uses a hammer. Edited September 18, 2015 by musicman

[gregintenn]

And you are TOTALLY missing the point of the conversation. Over and over. You have a CHOICE when it comes to credit. You can choose to extend yourself and get into debt. Or you can be a millionaire (my parents) and get tons of free stuff at no expense to you, simply for using plastic instead of carrying around $15k in cash all the time. (I have a funny story of Dad paying for a pair of jetskis in small bills because the salesman pissed him off. Took dude almost 2 hrs to count it all, haha!)


Sure, you don't NEED a credit card to pay for airplane tickets. You can pay in cash or check. Some folks, who are smart enough to realize and use the advantages afforded to them at no cost simply don't have to pay for them. At. All.

Before GM put low limits on their cash rebates towards vehicles, my Dad regularly got anywhere from another $3k-7k off the new Tahoe he bought with cash every 2 years, simply for using a GM card for his business expenses. He did not buy things he shouldn't have because he had a credit card, he simply used that instead of cash or check whenever he gassed up work vehicles, bought tools or meals. He needed gas, tools, and food regardless of the payment method.

You can enjoy an aversion to credit, but facts are facts. You keep saying that if you use a credit card you are paying interest. Do you understand that that is not necessarily true? If I buy $1k worth of stuff, and then pay my card off in full within the usual 20-30 days from the statement date, I only pay them the $1k. Nothing more. That is the key to the whole mystery.

As for the 20% downpayment for a house: congrats! That's great! Very happy you had the ability to do that!

When my wife and I bought our house one year after college, we did not have almost $40k in the bank for a down payment. What we did have were excellent credit histories and solid jobs at the time. We got a rate just one quarter of one percent over prime. An excellent rate no matter your financial situation. As rates came down we refinanced again, and now to a 15 year loan and are shaving quite a bit off the back of that as well. Our cars are also paid for.

The breakdown in this logic that credit causes debt is just as blatant as the sad, pathetic, and just plain stupid idea that Moms Demand Action and their ilk push... they say guns cause crime, and if we remove guns from people, crime will stop. The FBI proves that to be a lie. It is generally the IMPROPER USE of guns by people who should not have them in the first place that causes nearly all firearm crime.

Similarly it is the IMPROPER USE of credit by people who are ill-equipped to handle the responsibility or by people who just shouldn't have it at all that gets people in debt. (Housing crisis, anyone?) Greed, instant gratification, sometimes a feeling of hopelessness and a lack of understanding of compound interest are the problems. Not available credit.

Credit cards are tools just like firearms, hammers, and cars. Making mistakes with any of them can cost you. I won't call anyone a fool who properly uses a hammer.

Most folks who use a credit card have no idea what they are doing. Credit card companies are a lot like Las Vegas. How do you explain all their big fancy buildings, employees, and advertising if they just simply give away free stuff?

 

You are correct that if you pay your balance in full each month, you do not owe any interest. Guess what.....most people don't.

 

I understood the op was wanting to get out of debt. I stand by my statement that a credit card isn't the way to do it.

 

Again, I have a credit card, and use it for convenience, as well as a layer of consumer protection when purchasing on the internet. I also have no debt. I'm not against them as a matter of religious belief, I just dislike seeing them take advantage of people who get in a tight spot, or simply don't know any better.

 

You do as you please. I was just offering the op some advice. He has debt he wants gone. I've eliminated debt from my life, and wanted to share some of how that happened. It wasn't with a credit card.

[ironsniper1]

I'm making payments on my debt with my bank account the credit card I want to use for utility bills only


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[Sam1]

I disagree. It might not fit society's idea of money management, but having a "good credit score" is horsefeces. Debt free is where it's at.

 

I don't have any payments, and pay no interest. Guess what? Because of that, I can fly anywhere I please anytime I please, and I don't need a stinking credit card to do it.

 

Credit means that you are buying crap you have no business buying, and paying for it, plus interest. How's that getting ahead?

 

As far as buying a house goes, you show up the the closing with nothing buy your checkbook, and nobody's going to care what your credit score is. You say that isn't feasible? Go to a mortgage lender with 20% down, and they don't care either. Local auctions carry non-qualifying terms with 15% down.

 

Bottom line: You have a credit score if you owe money. If you don't owe money, you may not have a high credit score, but you don't need credit either.

 

being debt free is awesome, never sad it wasn't.  Don't think anyone here will argue that point.  Using myself as an example on the CC thing, my CC sees anywhere between $40-$60k every year.  I'm not in debt over it because it is paid off every month (which means I pay 0% interest).  Technically, you could say I'm in debt about 2 weeks a month, I guess.  From that, I get free stuff.  Lots of it.  The credit card companies give these rewards programs for people that run their bills up and pay the interest, they don't like people that actually have control over their spending and never pay interest; in my case, they lose money by allowing me to use their card.

 

Another perfect example, two weeks ago when I bought a set of tires from that shop, there was a $60 rebate on top of the other rebates and discount, for simply using their store card.  I'm not in debt over it, already paid the bill.  But now I have a free $60 prepaid card on the way for simply using their card instead of paying cash.  

Edited September 18, 2015 by Sam1

[56FordGuy]

Studies have shown people spend anywhere from 18-40% more when using plastic vs cash. Like Greg said, credit card companies aren't in business to offer you something for free. They're making a buck or two, even on people who think they're outsmarting the system.

"Everybody has a credit card, its how things are done."

When is the last time a big group of people made a good decision? :lol:

"I need to borrow money so I can have a good credit score so I can borrow more money."

Okay. You do that, bud. [emoji106] I'll keep on being old and boring and buying stuff I can pay for. I may miss a few percent off or cash back or airline miles, but I'm okay with that. My system seems to be working out pretty okay for us so far. Besides, I can usually negotiate the same discounts you get with store cards by offering to take my business elsewhere. Everybody gets to pick their own system, so if credit cards are "working" for you congratulations. Edited September 18, 2015 by 56FordGuy

[Sam1]

As you said, everybody's got their own thing, I just don't think the OP's question on CC's to build credit should have been turned into a pissing match about how everyone that uses a credit card or gets a loan is an idiot.

[TripleDigitRide]

I've been debt-free (except for my home) for most of my adult life, I have a great credit score, and I pay almost everything with a credit card that has NEVER carried a balance or costed me a single penny in fees or interest.

If you can use a credit card only for purchases that you were going to make anyway, they can be great. The problem is, many people use them to buy crap they can't afford to be buying in the fist place.

I hear people saying that a good credit score isn't important if you have saved at least 20% for a down payment on a home. That's simply not the case. While having a 20% down payment will HELP offset a low credit score, you will still pay a higher interest rate than someone who has the 20% AND a high credit score. A fraction of a percent can make a significant difference throughout the life of a mortgage loan. Every little bit helps.

In the end, do whatever works for you.

Sent from my SM-G920V using Tapatalk Edited September 19, 2015 by TripleDigitRide

[crossfire]

As you said, everybody's got their own thing, I just don't think the OP's question on CC's to build credit should have been turned into a pissing match about how everyone that uses a credit card or gets a loan is an idiot.

Sam1 is right, does every post in general chat have to turn into a pissing contest? OP was just asking for advice and got a couple different views, why not let him decide what is best for him?

 

People need to lighten up a little, :2cents:

[peejman]

As far as getting loans goes, sometimes having fair/poor credit is better than having no credit. The only thing I've ever paid interest on is my house. While I'd loved to have paid cash for it, the idea of just writing a check for $150,000 or more is a bit tough to comprehend. The $50,000 check I wrote was painful enough. :)

[gregintenn]

As you said, everybody's got their own thing, I just don't think the OP's question on CC's to build credit should have been turned into a pissing match about how everyone that uses a credit card or gets a loan is an idiot.

 

I never read where anyone was called an idiot in this thread.

[56FordGuy]

I never read where anyone was called an idiot in this thread.

I thought the thread was fairly civil, myself. While a couple of posts (mine included) didn't directly answer "what's the best credit card", it would be like someone posting and asking "how do I make my own bungee jumping rope". I have to think someone would step in and mention that maybe there are more preferable ways to go about getting bungee jumping equipment than making it in your garage. In more relatable terms, it's like any thread here where someone says "I'm intersected in XYZ carry gun" and then a discussion of XYZ vs four other similar guns takes place.

[Mike.357]

if you are responsible a CC can be a good thing.  If you are not responsible then you will have issues.  It is pretty simple.

[Lumber_Jack]

For those on the Dave Ramsey plan his general disapproval is not only for the debt load but the unethical way credit card companies treat people. Again this only applies to people who carry debt but there are some true horror stories of out right unethical business that Dave chooses not to participate in. I don't necessarily agree or disagree but it's more than just can you manage to not carry debt.