RSS Feeds
Facebook
GRS Twitter
I’m always reluctant to cover credit cards here at Get Rich Slowly. There are other sites that do it better. Besides, I’m still not wholly convinced they’re a good idea. Plus, my wife — who is always right — told me the other day, “I don’t like it when you write about credit cards. Credit cards are boring.”
Still, in today’s world, effective use of credit cards is an important part of personal finance. If you don’t use them correctly, you can end up deep in debt. (I’ve experienced this first-hand.) But if you do use them properly, they can actually help your financial situation. (Note: See How to Choose a Credit Card).
Joining the Dark Side
When I started Get Rich Slowly, I was staunch supporter of the anti-credit card camp. I’d been stupid with credit cards when I was younger, and they were a big reason I found myself with over $35,000 in consumer debt. I’d been burned, and like Dave Ramsey, I couldn’t see any benefit to using them.
As my financial habits improved, however, I came to understand that credit cards aren’t necessarily evil. My wife, for example, has had a credit card for as long as I’ve known her (over 20 years!), and has never carried a balance. She loves using her Discover card, which gives her up to 5% cash back. (”To be honest,” she told me tonight, “I only get about 40 cents per month from using the thing, which is about half a percent cash back.”)
Still, I was wary. But three years ago — as we were preparing to travel to England, Ireland, and New York — I decided to take a risk. Based on the urging of GRS readers, I signed up for a credit card. I chose the Capital One No-Hassle Cash Back card because it offered some perks for travelers, and because I liked the idea of getting a one percent cash discount on everything I buy with it.
When I signed up for a credit card, I made some rules for myself. I vowed to:
- Pay off the entire balance every month.
- Never buy anything on credit unless I already had the cash in the bank to pay the bill.
- Make my decision about what to buy and then decide how to pay. (Instead of saying, “Oh, I have a credit card, so I can buy this.”
- Never use my credit card for impulse purchases.
If I violated any of these rules ever, I promised myself I’d cut up the card. Three years later, I still have that credit card.
The Chainsaw of Personal Finance
While I’m not about to sing the praises of credit cards, I do think they’re a useful tool in the responsible person’s financial toolbox. To quote myself from Your Money: The Missing Manual:
Credit cards aren’t evil, but they can be dangerous. Just as you’d treat a chainsaw with respect, you need to be careful with credit to avoid hurting yourself. And if you use them wisely, credit cards can actually give you a financial edge.
I don’t write about credit cards very often at Get Rich Slowly. If there’s something that needs to be said about credit, I usually let a guest poster do that. (Get Rich Slowly has good relationships with both Index Credit Cards and Card Ratings, and fellow blogger Five Cent Nickel keeps an updated list of balance transfer credit cards; they all know a lot more about this stuff than I do.)
But I’ve been wondering lately just how GRS readers use credit cards. I suspect that many (most?) of you are like me: You use credit cards wisely, and they’re tools that helps you achieve your goals.
So, I have some questions today. As I mentioned, I’m using the Capital One No-Hassle Cash Back card (man, what a dumb name!). What about you? Which credit card(s) do you use? Why do you use it? How, when, and where do you use it? Do you have personal rules for credit card use? Have you ever been in credit card debt? How do you steer clear of that now? I plan to collect your answers for a future post, one that I hope will help others learn to use credit cards responsibly.
This article is about Ask the Readers, Credit Cards Friday, 16th July 2010 (by J.D. Roth)
I have a Royal Bank Gold credit card and my husband has a CIBC (canadian Imperial bank of Commerce) Aeroplan card.
We use them for convenience, paid off every month. Hubby’s gets us tons of Air Canada miles, mine gets me contributions to my Registered Retirement Savings Plan (RRSP). I’m clearly not going to retire off of the spending on my credit card, but it helps!
DH and I both have mileage cards. Since we don’t carry balances, it’s great. Between the CC miles and flying for work, we rarely have to buy tickets when going on vacation.
We were both in credit card debt while we were in graduate school, but DH had some stock that we wanted to sell. We sold about half of it to pay off the credit cards (~$4000 at that time) and to pay back my parents for the loans they took out for me for undergrad (~$10,000). Since 2001, we have not carried balances.
I use the Schwab card that gives 2% cash back on all purchases. It deposits 2% of my monthly purchases into a Schwab brokerage account, which I then move into a Schwab IRA.
Unfortunately, the card is now closed to new users.
That said, Fidelity has a similar one.
I have 2 credit cards from Bank of America - a Visa and Mastercard. The first card I use for online purchases only. The second I use for store purchases - the gas station and grocery store weekly and all other stores whenever. Originally I separated the 2 cards in case of card info theft. Not sure it is effective but I like to think it is. My rules for credit card use are simple. I only buy what I have cash to cover - the cards are for convenience only - not credit. I use an excel spreadsheet that is envelope style for my checking account. There is a column for each card - and when I make a purchase with a card, I promptly move the amount from whichever other column/envelope - like gas - to the credit card column. A little tedious perhaps but it works for me. I had a credit balance up to 10k back in the mid-90s after college and lawschool which took me forever to pay off. Don’t want to go there agagin. The only downside to my credit cards is that if I were spending cold cash at the grocery store, I might spend less. However, I stick to a grocery list and only usually buy one splurge item, like a box of donuts or a bag of cheesy puffs, so it wouldn’t be much less. Balance that with I feel much safer using a credit card at the gas pump than going inside the convenience store - especially with a baby in tow.
Both of those cards are my go-to as well depending on weather or not I need a Visa (Schwab) or an Amex (Fidelity).
I’m currently living in Germany, and this country does not use credit cards at all outside of the tourist-filled big cities. It’s all cash or “Easy Cash” cards (from what I understand, it’s a debit card basically). It’s a bit strange - they expected us to buy our bikes (about $1000 Euros for 2 really nice bikes that are our main transportation in the summer, helmets, and locks) with cash. It wasn’t a big deal for them - most Germans seem to carry around a few hundred Euros. I’m interested to see how I’ll be going back to the states in three years…it should be an interesting change back.
My husband and I do use credit cards, or at least we do when we can. We have a Mastercard through USAA and a card that allows us to get our gas (through the army) with 5 cents off per gallon if we get it at a gas station on an army post.
I use a Visa card affiliated with Working Assets, though the banks have changed over the years. It gives a 10-cent donation to social and environmental causes with every purchase. By nature I’m very frugal, so I don’t have a problem using it for everything I buy; in fact it helps because I’m lousy at balancing a checkbook and keeping track of cash withdrawals. I find that a credit card is good when travelling, to guarantee hotal reservations and to avoid carrying large amounts of cash. I also like knowing that I have a line of credit in an emergency.
I have one Mastercard that DH and I both use for almost all our purchases. I get airmiles on it - redeemable points. Perhaps it would be better to look into cash back, but it’s not worth the hassle as I’ve had this card for years. We do get free stuff from it. Having the one card helps with tracking and splitting joint expenses. I pay it off in full every month. And pretty much follow JD’s rules. Never in my life have I thought to buy things on the credit card that I didn’t have the money for. I definitely think about the purchase independent of the payment method. But if I’m going to buy something anyhow, I’d like to get the points. The insurance on the credit card is also nice to have. DH has his own VISA as well, but he uses it less than once a month.
I use Citi Forward and Citi Premeire Pass.
I use Citi Forward because I receive 5 Thank You points (which would be equated to 5% back) on book stores, restaurants, movies, and concerts, and one point on everything else. I mostly use it as an avid Amazon buyer because Amazon counts as a bookstore.
I use Citi Premeire Pass for booking flights because I receive 1 point for every dollar spent and every three miles flown.
JD,
I use a credit card for everything I can. I have the Navy Federal Credit Union nRewards card which gives 1% cash back on all transactions up to $10,000 in a year and 1.5% cash back for all money spent after that! I even pay my rent which has a $10 fee to use my CC because my rent (after my roommates pay me their parts) is $2100 a month (I have two roommates). I earned $300 from this last year for essentially doing nothing but always paying my bill off in full. I stick strictly to my budget and using a credit card doesn’t affect my spending habits. I find if I have cash I actually blow more money than if I use my credit card!
-Lance
I used the UPromise card which send a certain percentage a 529 plan for my kids college. I have an autopay set up to pay the entire balance every month. Also, as long as I have had credit cards I treat it the same as writing a check. As soon as I make a purchase I note it in my ledger, then when the actual payment is made I will reconcile the payment with what I have already written down in my ledger.
I have two different cards: a Discover card and a Chase Freedom Mastercard. I originally signed up for both of them because they were free and each offered cash back rewards. Unfortunately, the Chase Freedom card recently instituted a yearly fee of $30. This is ok though, because I typically earn about $100-$150 in cash back rewards from them. They have 1% cash back on all purchases, plus up to 5% cash back in special categories.
For the Discover card, there are variable levels of cash back from 0.25% to 1% for all purchases. Also, there are special categories throughout the year that offer 5% cash back. This is where the real rewards come in. By carefully planning my purchases for the 5% cash back, I am able to get this card to work for me. I typically earn $50-$100 cash back on this card a year, and there is no fee.
Also, in 5 years of having these cards I have never carried a balance, and only missed one payment by two days because of a vacation that got unexpectedly extended (stupid I know).
I have two cards. My first card is my Chase Freedom card which pays all my automated fixed expenses so that it stays open. My second card I got when I recently started traveling internationally was the Schwab card mentioned in post #1. Since it’s return is better than Chase these days I’ve been using it for everyday purchases. The only reason I opened that card was because there are no foreign transaction fees. Combined with ATM reimbursement since I have a checking account with them and I had no fees when traveling for multiple weeks in Brazil!
In general my preference is to have only one card but since my first card was my chase card it is my longest credit history.
I always pay my cards in full and since I live on last month’s pay the money is always in the bank before I spend it. To be honest, and I should thank my parents, until I started reading this site it never occurred to me that I could use the credit card to spend money I didn’t have. Because of my habit of always using the card though, if I ever do have cash, my brain considers it “free money” since it is already out of the bank and it disappears very quickly.
My wife and I both have a Citi Dividends reward card. I’m not sure they even offer them to new customers anymore, but they seem to have kept them around for existing customers. They used to pay 2% (way back in the day, 5%) on gas, grocery and a few other category purchases, so we pretty much have used it for those purchases. We pay our cards off every month and have amassed around $1,300 over the few years of having the cards. We’ve earmarked this for electronic purchases, and have actually bought a couple of flat panel TVs (when it’s a great deal of course).
I use one card: Chase Freedom. 3% cash back on top 3 categories, 1% cash back on everything else.
I have 2 more cards that I keep open as backup or if I am taking a vacation and want to track expenses specifically for that excursion.
I use my card for everything and pay it back weekly.
I have two credit cards, only one of which I actually use. I get cash back every year on the card - 1.25% I believe. It is a no-fee USAA Visa. I am actually considering switching to the Fidelity card for the higher cash back percentage.
I only use it for convenience. Nothing gets charged on it that I don’t have the money in hand to pay for. Some of my automatic payments are set up on it (cell phone, gym etc.)and I use it to pay for travel related expenses.
I have always paid my card in full every month. However, I will admit that I used to be surprised on occasion by how big my credit card bill was because I had forgotten about some things that I put on the card. These days though I just don’t wait until the bill comes. Every week when I update my budget and pay bills I go online and pay the credit card too. Helps me keep a much tighter rein on it and I never get surprised by things (even I can remember what I put on it a week ago).
I currently have 2 cards, and I’m switching one of them to a cashback one at the moment. I use cash for day-to-day things, and debit for most exceptional expenses, although I will probably switch those to the new credit card for the cashback. I’ll keep cash for weekly budgeting though - it’s just so much easier for me to see what I’ve spent that way.
My “secondary” card is not kept in my wallet, so that if it gets stolen, I can still live while I wait for new cards (learning from experience). I used to use it for all internet purchases, but I’ve stopped doing that mostly now.
I pay both cards off in full by direct debit, so I have to know that the money is there! I do consider them as “emergency cushions” though - if I really do need something (e.g. if I was stranded away from home and needed to pay for accomodation and alternative travel home), I can use them, and have enough time to transfer money from savings that isn’t accessible via my current account’s debit card.
One question though: I always ask for a lower maximum than I’m offered - to what I feel is a “sensible” amount to have to spend in a month. A couple of times, I’ve raised this temporarily for a particular transaction that I wanted c-c safeguards on, or permanently to cope with inflation, and I’ve never had any problems doing this. But I wonder, does anyone else? And why? I don’t know if my reason (reducing the ability of a thief to spend all my money) is actually a good one…
Credit cards are simple. After using them, budget as if you have already spent that money.
I never pay attention to the amount when my cards are due because that amount is meaningless… just a behind-the-scenes transfer of funds already spent. I just run through to make sure all the charges are reasonable and an immediate payment of whatever the balance is.
Then, I check the rewards to see all the goodies I earned from spending money I would have spent anyway.
I use the Chase Amazon.com card. 3% back on Amazon.com purchases, from whom I buy frequently, 2% on gas, dining, drug store, and travel purchases, 1% on everything else. All my bills that allow credit card payments are auto set to be paid by the card as well to maximize points. About every other month, I get $50 back. I am considering the Fidelity 2% Amex card, but I like Vanguard better for my investments.
My first credit card at 18 was a Capital One Platinum card… simply because I needed to establish credit. It had a $500 limit. Seven years later I still have that card, in addition to a few others.
Thankfully I’ve never had an issue with credit cards. After letting my first credit card balance revolve once I realized how ridiculous that was. Why was I paying extra money for something when I had the money in the bank to pay it off in full? Ever since I’ve paid my credit cards off every month.
My second year of college I got a Chase Amazon Rewards card. I was buying a LOT of textbooks and Amazon gave 3 rewards points per dollar for purchases on their website (and 1 point per dollar for other purchases).
I’ve used this card as my main method of purchase since 2005. Since I no longer need to buy textbooks, I save up my Amazon Rewards certificates all year long until Christmas when I use those to subsidize Christmas present expenses.
The other card I use somewhat frequently is my Capital One No-Hassles Miles card (which is basically the same as the cash back version, you can just choose to get miles, gift certificats or cash back). I got this card in late 2007 in preparation for a 3-month backpacking trip through Europe. Capital One does not charge a service fee for use overseas unlike my other credit cards. It worked out quite well.
I would recommend either of the two cards I use the most. I’ve had no customer service problems with either Chase or Capital One.
I have 2 cards a Discover for the points.
A Citi Visa that I keep for the credit limit on it. I recently had to float a funeral for a few days on my Visa card.
They are mainly for convenience & emergency use paid off monthly.
Let’s look at the other side of credit cards - from the business that you make a purchase from. . .Did you know that the company(mainly the small business) gets charged 1-5% each purchase and even a charge if it is declined! So help out the small business around the block and pay by check or cash. Otherwise a good portion of their money goes right out to the credit card companies!
I love the the descriptor clause you use “my wife — who is always right —”. It’s the same in my house. If you’ll take some unsolicited advice, I suggest that you use this phrase EVERY time you refer to your better 51% in this blog.
A Hilton Honors AMEX. I travel a lot and stay in Hiltons. It produces points in conjunction with the HHonors program, enabling me to earn several nights per year in hotel stays for family events.
I have 2 credit cards which don’t do me much good: an AmEx Blue for Students (which I got suckered into as a college freshman, and which might have destroyed me had it not been for a low credit limit), and a Bank of America rewardless waste of wallet space (with an irresponsibly/unnecessarily high credit limit). Thanks to a money-savvy wife, I now carry no balances and use these responsibly. What I would really like to do is scrap the AmEx, however, in favor of a card a friend recommended, which is one of the AmEx cards offered by Fidelity. Depending on which card you choose, you can earn 2% (the site says 2% - not UP TO 2%, although who knows if that’s just fluff?), which can be immediately invested in a Fidelity IRA or a Fidelity-managed 529 college savings account. With the 529 card, family members can link their own cards (read: not cards under your account) to the 529 account to help you save. With my first kid on the way, it’s a strong consideration.
My husband and I have everything separate. We share one card, an Amex Platinum, and it’s the card we use for everything, unless they don’t take Amex and then we use one of our own, non joint cards. Yes, the annual fee is expensive. 100% of the reason we have it is because of the points. Namely, the points transferring to Continental frequent flyer miles. We fly out of Newark, which is a Continental hub, so we get all of the perks that come with the card. We used the points gained to buy one first class ticket, and then one full fare first class ticket to Hawaii for our honeymoon last year. And we plan on doing it again for the return trip in 2011. With this, and the added travel insurance that their concierge service gives you, the annual fees have more than justified themselves. Plus, two times my husband’s card had been compromised, and they called him within hours. They even overnighted a card to him while he was away on business. We also pay it off just about every month (this past month we didn’t, and I believe it’s the first time ever we’ve carried a balance). Points are useless if you’re wasting the saved money on interest.
I have 3 cards at the moment, but only one in active use. One is a Chase Amazon Rewards card (not using), one is a USBank FlexPerks card (used only for quarterly trash collection bill) and an AmEx Starwood Preferred Guest card that I use for some monthly bills and travel/big ticket items.
I used to have a balance– I rang up several grand during grad school on the Chase and USBank, but finally paid that off early this year. Now I use it just for convenience and rewards, and I pay off the balance monthly. In the next month or so (before the annual fee on the AmEx kicks in) I need to take a look at my spending habits and see which card gets me the most in the way of rewards. I have a feeling the Amazon Rewards card will win out, as I don’t put enough on a card in a year to justify an annual fee.
We actively use two credit cards, Discover More gives 1-5% cashback on normal purchases and up to 30% cashback in some cases if you use their online portal to jump off and shop online.
When Discover is not accepted we use a Wells Fargo rewards card that gives 1% cashback to the principal balance on our home loan.
We should probably shift from using Discover as the primary card to using Discover as the secondary card as we kind of get double benefit from the other rewards card in the form of cashback and reduced interest as a result of the lower principal.
We use Citibank for the rewards. Only use it when we can pay it off and don’t use it just for “fun” stuff.
We have the same one you do. It gets paid in full every month because we treat it as a debit card. We use it instead of a debit card because of the cash back. If we ever start using it as a credit card, it will be cut up.
I look for two things in a credit card:
1) cash back vs. points - points are rarely worth it, they tend to encourage me to spend the way the card wants you to - i.e. I had a Sony card and definitely bought more Sony gear than I would have otherwise — that said I was happy w/ all my purchases but still. I could see myself doing the same with airlines.
2) Cards without foreign transaction fees, because why make travel even more expensive?
I use an Amazon VISA (points) almost everywhere and Mastercard (no rewards) few times a month just to keep it healthy
I stopped listening to Dave Ramsey on credit cards when he said on his show: “Debit cards have the same protection.” That is absolutely not true. We started with debit only and moved to credit cards for the cash back. They are paid off in full every month. Why not make $ on things I am buying already.
The credit card protection proved itself when I purchased a textbook from an online seller who attempted to raid my account. The credit card company caught it quickly. If I used a debit card my account would have been raid and I would still be fighting with the credit union to get my $ back.
I am in the U.K. and I have a Barclaycard Cashback which pays a small percentage on all purchases incurred in the month.
I use this card for all day-to-day expenses each month: food, petrol, clothes, eating out (which is very rare nowadays) and so forth. However I use this card like a debit card. I do not merely pay off the balance in full each month– I pre-pay next month’s expenses too. So my credit card has a positive balance for 90% of the time, except when there is an emergency or I overshoot slightly towards the end of the month. If the budgeting goes well, I end up with a zero balance when the credit card statement arrives. And yes, I do budget very strictly and keep a daily balance of the amount left to spend on an Excel spreadsheet.
Note that the credit card company do not like me doing this and will only let me pay monthly in advance if I pay by cheque (not online.) Why do I do it? For the cash back, which is substantial over the course of a year!
Capital One with cash rewards. We earn cashy money on everything. The interest is high, but since we pay it off every month, it’s literally money for nothing!
I have a Schwab 2% cash back card that I use for absolutley ALL of my purchases. With my modest lifestyle I made about $750 last year in cash rebates which I invest with Schwab in a low risk mutual fund. I’ve had a credit card for 30 years and never carried a monthly balance.
1 Card
Bank of America, some fancy VISA card. I use it for any online purchase, netflix, cell phone bill (easy pay), Vacations, Travel,
I have used it for down payment on car purchase, and various other things I can’t remember now.
It is a points card, I never carry a balance. I probably spend 8k-15k a year on the card. I get roughly 1 point per dollar spent. Very low Intrest rate and very high credit limit b/c I also bank with BoA. I could probably find a better rewards card but I find BoA online too easy to use and I have never had to call and fix a issue.
I am using the Bank of America Cash Rewards card. I get $25 for every $2,500 I spend. I pay off the balance monthly. I like using it.
I trust myself more than many of these blogs that preach no credit card usage.
I only use the credit card for 4 reasons:
1)transaction tracking
2)paying off a predictable payment at a certain time in the month, or even more than once per month
3)protection from fraud or fat-fingered mistakes. Let’s say someone rings up a dinner bill as $2000 accidentally. I dispute and don’t pay until it’s resolved.
4)small emergencies where I wouldn’t take out a loan
I never thought to use a credit card to spend money more easily or money I didn’t have. Carrying a balance is a bad idea.
Citicards are the devil. I had a card with them that I built up from college and it started with a $500 limit. Over time my credit grew and I never carried a balance. They would refer to me as a deadbeat, since I don’t actively make them money. Eventually my credit limit was $25,000 or so and I kept getting letters that my interest rate was going up. My credit score has never been better, it is very good. I called them to see if they could lower the rate - while I don’t use the interest penalty regularly, what if I had a small emergency, I don’t want to be charged 24.9% interest to use my credit card. It was insulting. They offered to drop my rate 2%. I told them do it - but I will use this card 1x a year to buy a pack of gum and that’s it. I’m just keeping it as an open line of credit, nothing more.
I went to USAA that day, and in 2 minutes had a new credit card account at 8.9%, without even talking to a human. USAA rocks. Their checking also has ATM fee reimbursement up to $15/month!
I spent a week in a 5-star hotel (500 Euro/night) for free in Rome this summer thanks to points racked up using my Starwood Amex. We use it to pay just about everything and never carry a balance.
We have a few we use for different purposes. I always swore I’d never pay for a card, but my husband has a Citi Premire Pass (the pay version, unlike Henry’s), which gives us points for every dollar we spend and every mile we fly. It basically doubles our frequent flyer miles. We only have DH on the card because then we only pay for one membership per year; if I fly with him (which is all but a few flights a year), I get the miles too. Since we fly home a lot, this card really racks it in. We use the points for tickets (rarely) and store gift cards.
For everyday uses, we used to have a Citicard. Their ThankYou Network was amazing, but has scaled back during their recent troubles. Now we’ve switched to Chase’s Amazon card, which offers us more points for the dollars we spend. We charge everything (balance paid off every month) so this racks up. We just got $250 cash for the year’s spending!
My wife and I have 2 cards that are both set up to pay the balance off monthly in full from a savings account (no worries about cash balances in checking).
chase rewards: old card no longer offered that gives 5% back on gas, grocery, and drug stores. We only use it for those purchases.
schwab invest first: which gives 2% back to a brokerage acct monthly on any purchase. We pay every monthly bill we can from this card.
Folks, I have to leave for the gym. I won’t be back for a couple of hours. Unfortunately, nearly every comment is being routed to spam. I will approve your comments manually when I return, but for a couple of hours, your message may fall into a black hole. I apologize. Thanks for your patience.
Like many others posting, I have a Chase Freedom card. Every few months I get a $250 check in the mail, and I pay it off every month. It’s like getting paid (albeit a small amount) to buy things I would have purchased anyway.
I pay all my balances in full each month, so the only thing I really look for in a credit card is which one will give me the most cashback. That said, I have a few cards that I carry in my wallet:
1) Citi Forward
I use this card exclusively at restaurants as it gives 5 points per dollar, which could turn out to 5% cashback if redeemed for the right gift card. Same applies for books, music and movies. One tip is if you use this card for Amazon purchases, you get 5 points even if you don’t buy books or music, which is better than using the Amazon credit card.
2) Penfed Platinum Cash Rewards
Exclusively for Gas. 5% cashback credited to account after each month. Also currently they are offering 3% cashback on purchases from certain stores including eBay and Paypal.
3) Fidelity American Express Card
I use this card for everything else not covered by above cards, as it offers 2% cashback on any purchase.
4) Capital One
I don’t carry this in my wallet but it has it’s uses. When purchasing from a store located in foreign country or when traveling abroad, I use this card as there is no foreign transaction fee on this card as mentioned in the post. Typical cards usually have 1~3% fee.
We have a Chase Toy’s R Us MC and a Discover card for the backup.
We got the Toy’s R Us card when our first child was born and every month we get between $10-$40 in gift cards. Originally we used it for diapers and other baby-care needs, but now we use them for Christmas, birthday, or when Daddy wants a new videogame.
Now that both kids are in elementary school, it has been a godsend for the numerous birthday parties they get invited to. We just grab a gift card or two and grab a present without impacting our budget.
Capital One Cash Back. Just 1%, but we travel a lot. No forex fees for us.
We don’t spend it if it’s not there in the bank.
I really only have a credit card for building credit. Each month, I use it to make a small, recurring purchase, and pay that off as soon as I see the bill online. My understanding is that part of your credit score is based on how much of your available credit you’re using at any given time(so even if you pay the bill off in full each month, using almost all your credit limit can still hurt your score).
For most of my purchases I use my debit card: Just as convienient as a credit card, but less risk to my credit score.
I actually have 3 right now… as someone above mentioned, the Chase Freedom card changed recently, and I think I may be canceling. I really like my Citi Forward card… 5% back on restaurants and bookstores.
Then for all other purchases, I have an awesome card from my local credit union: 5% on gas and 1.25% back on everything else, applied directly to my bill each month!
I do not have a credit card and it will be a cold day in Hades before I ever get another one. I haven’t had one for 2.5 years now.
I paid off my balance in December 1994, then for the next 13 years, proceeded to pay it off in full every month - always early. I didn’t care about interest because it didn’t apply to me. I played the game with the credit card company’s on moving my dates, etc., and they were hard pressed to get by me - a true nerd. They tried…
When I moved to another state about 3 years ago, I ran across my credit card folders. I had kept every statement since 12/94. I had spent over $150K dollars.
Instead of having a chance at a secure retirement, I, instead, have a nice stack of paid for credit card statements.
Me, and mine, won’t have credit cards.
I use my debit card with care because it doesn’t have the same safeguards as credit cards do - if you say at the checkout counter “credit”, it does have the same safeguards. If you say “debit” and use your PIN, then you have to be prepared to go to war over the charges. I have gone to war over the charges twice now, after filling out a police report, going to the financial institution, and thus, spending hours to get the charges removed. It is a pain to do.
My parents taught me to never carry a balance and I have never once missed a payment in the 12 years I’ve had my 2 cards. Properly educating your kids about these exact rules of credit cards can’t be stressed enough.
I use Citi Diamond Rewards, connected thru the Thank You Network. I tend to not use my points for 5-7 years, and then splurge on something big.
I have a Citi Forward card that I use especially for any purchases from Amazon.com due to the 5% rewards for such purchases. For anything that’s on its rotating category, I use a Discover More card. Neither company has given me any trouble yet. For what it’s worth, Citi gave me a rather high credit limit for a just-graduated college student, while Discover, which I got while I was still in school, gave me a fairly low limit, but has increased that limit several times now without being asked.
american express blue, like their security plus good customer service. I only use it for major purchases such as new gadgets or car maintenance the rest are cash or visa debit cards. But when I charge it to my Amex blue, I make it sure either I have money to pay balance in full or will be able to pay it in a reasonable time, for me its 3 months.
I have a regular old Amex card (the green one). I know, there is a stupid yearly fee, but I feel like it keeps me honest. Like, I re-evaluate my usage of the card every year when the fee comes up to see if it is still worth keeping the card. So far it has been (over a decade).
Plus, with the amex green card they EXPECT you to pay it off every month. If you want to carry a balance you have to ask them for permission, so that is another gatekeeper to keeping me honest with the amex card.
I used to have an AT&T Universal card. I had a huge amount of available credit, and no balance, and I basically kept it “just in case.” I’ve had this credit card for over 20 years and I know it helped my credit score immensely. But they just tried to stick me with a yearly fee of $60 and they offer zero benefits for that money so I dumped them and cancelled my account.
I know it might hurt my credit scores in the short term, but I’m currently living overseas for at least the next year so I’m hoping that my score will bounce back by the time i need to use it again!
Well, I’m on the naughty list right now and although I *have* credit cards, they’re in a block of ice in my freezer. They’re all pretty useless because of their ridiculous interest rates; however, the one card I’m thinking of thawing is my Target card. It has a SUPER low balance ($200) but it gives me rewards when I use it. I like shopping at Target with coupons and sales and like to buy home-related things there but wouldn’t feel comfortable paying full-price. So I figure since it’s got a zero balance, I might bring it back into play but with the right ground rules in effect and like you the minute I break a rule, back in the freezer it goes.
I’m surprised I haven’t seen one person mention AMEX Blue Cash - that’s our main card and we do better than 2% each year on it (up to 5% on gas, grocery, drugstore, 1.25% on everything else). Also have an Amazon card for Amazon purchases (3%), and a Citi cash back for when AMEX is not accepted. Should probably switch to a 2% brokerage card for non-gas, grocery, drugstore purchases.
I have a Visa Signature card from BOA that I use for almost everything. I find putting most things on the card makes it very easy to update my budget spreadsheet at the end of the month.
I have no credit card debt and have never had credit card debt. I simply don’t buy things I can’t afford.
My fiance, on the other hand, is a big proponent of debit cards and uses one for almost everything.
We have very similar ideas on personal finance. However, not sure what system we will use when married. He falls into the “debit card for life” camp and I fall into the “credit card for life” camp.
Any reader suggestions for a happy medium?
Primary card:
Schwab 2% VISA. As others have noted, it’s got no foreign transaction fees and $ goes into a brokerage account that you can withdraw or consider their no trading fee ETF’s (and card is no longer available). I have the Fidelity 2% AMEX too in case Schwab pulls theres.
Secondardy cards:
Marriott - For Marriott stays only. Only card I have with an annual fee, but that’s more than offset by the free night certificate you get annually.
Upromise - Groceries only. Probably would be better to use the Schwab, but I like knowing that $ go seemlessly into my kid’s 529 plan. Over $1600 in passive savings through this.
Pentagon Federal Platinum - Gas only. Pays 5% on gas, 2% on groceries, and 1% on everything else. Great customer service.
Discover - Only for what they’re paying 5% for and I happen to need. Got $20 off my new lawnmower that way.
I have a USAA card I use for just about everything. I pay the balance off every month. They have partnerships with retailers I use that give you additional points per dollar spent–for some it’s up to 7 reward points per dollar spent. The points accrued paid for two round-trip tickets to Europe for my husband and I last year. The fact that it’s USAA is a major bonus, the bank is wonderful.
Edited to add: another nice perk–you can cash out the points, too–not just use them for airline miles–either for cash or things like electronics, so the rewards are really flexible. And, if you can’t use the points on an airline, you can use the equivalent cash towards the plane ticket.
I use the Alaska Airlines mileage card. It has a $75/year fee. However, it gives me a companion flight for $100. The free trips seem to add up quickly. And Alaska flies the entire West and more.
I pay off the balance twice a month to ensure that I never pay finance charges.
The main card for my wife and me is Costco Amex, pays 3% for gasoline and dining, 2% for travel and 1% on everything else. We use it for as many monthly expenses as possible and always pay off the balance. We get back more than $300 every year.
Also have a Visa (BOA) through Motley Fool as a backup for places that don’t take AMEX; pays 1% on everything.
No annual fee on either.
I stopped using credit entirely in 2006, paid off all my debt (~$25k) and vowed to never use credit cards again.
Now, we are trying to buy a house and my husband’s credit score is so low we do not qualify, so I got a new card last week from our local bank and put us both as signers (advice from our broker). I used it for the first time today and felt scared! I know I’m not going to rack up debt again, but part of me feels like I can’t trust myself not to go crazy.
I set up an account for the card in my YNAB file and wrote the amount in my checkbook right away so I will not overdraw the checking account on accident.
I’m wondering if this is how most people account for credit card transactions or if there is a batter way. I like to micromanage all of our money so it seems like it will work alright. I need the baby steps spelled out for me!
When I was first establishing credit I used the secure card from my bank with low credit limit, but when they transitioned me to a regular card with point rewards I found myself checking what the rewards were and worrying about getting enough points.
After that I added a Citi American Airlines card since I fly that airline 85% of the time. The miles accrue for me without too much attention to quantities - I do pay attention to my statements as I use it for tracking expenses. And the bonus is that the card has the frequent flyer number on the front for when I forget.
While out on a site visit/verifying an existing building for a client a few years ago, a co-worker and I came across a chainsaw sitting on top of a toilet. All I could figure was that it seemed like the best place to set it down instead of on the floor.
I also use Amex Blue as my primary card. I use the points to purchase gift cards for birthday & holiday gifts, because that’s how I get the most bang for my points.
The major downside to Amex accounts is that I find them difficult to manage from a bookkeeping standpoint. The card is in my husband’s name, but he doesn’t review & pay the bills. As the “additional cardholder”, Amex won’t talk to me, and I can’t view all our transactions unless I log onto their website as Mr.P.
However, reading these comments made me realize I need to re-think the best way to deploy our credit card usage. Since my husband & kids fly regularly to see the in-laws, maybe it would be worth getting an airmiles card instead.
I use my cards to purchase nearly everthing over $10 or $20, and pay the balance in full each month. I recently started using Mint, and hope to be better able to track the expenditures on a weekly basis.
I use a Chase BP Visa card. The reason I use this one is due to the 5% cash back on everything purchased at BP gas stations, including gasoline. Since I have to fill up my gas tank at least once a week for commuting to work, I can usually earn between $10 to $15 per month in BP rewards alone. Other rewards are 2% on travel and dining and 1% back on everything else. Since I never carry a balance, I receive a butt-load of money back.
I love credit cards and have used them almost exclusively since I was 18. I’m 30 now. I’ve never carried a balance. I’ve never understood why people avoid them, unless they might spend more than they afford. I use them for every purchase I can, down to the $1.50 purchases (hey, if the business doesn’t care…). Here’s why they’re great:
(1) Benefits - 1-3% cash back, depending on the program (I’ve used AmEx, Discover, Citi Cash Rewards, Amazon…I only have four “active” ones at a time and never close an account, and I always spend <30% of my credit limit.) A lot of the cards come with small, well-known travel perks. I don’t like airline mile cards, though, because I don’t think miles are a stable currency. I prefer to convert rewards to cash regularly.
(2) Some form of purchase protection, and no risk of my savings getting wiped out due to an insecure debit card purchase online.
(3) They make budgeting really, really easy. Before Mint, a lot of them tracked spending in different categories; now Mint aggregates purchases and organizes them for me. Using cash is a real pain because it messes up my online accounting system.
(4) They build credit.
They’re awesome. I have all mine on autopay.
1. Capital one no hassle for most purchases.
2/3. I use my card instead of cash for the most part. I prefer to pay for my usual expenses like groceries, vet bills and monthly charitable donations since I find it easier to track what I spend using the card. I have budgets for these items that I stick to. It is also used for large payments such as tuition deposits, and deposits for large home improvement projects (like our new windows - saved 5% by paying “cash” versus using the companies financing). My capital one rewards are usually redeemed for amazon.com gift cards, which I often use for gifts or fun spending for myself like a new book
4. My main rule is not to charge more that I have in the bank, I pay off my balance every month. I treat my credit card like a debit card, I don’t want to overdraw from what I have in checking.
5. I’ve never been in credit card debt, and the way I manage my expenses with my credit card works well for me. I don’t make many frivolous purchases so my monthly balance stays managable. The larger expenses are planned, emergency expenses (car repairs), while not planned, are included in the budget as part of my overall emergency fund
I use the Working Assets Visa card issued by Bank of America. Each time I “make a purchase with this card Working Assets contributes ten cents to nonprofit groups working in the area of peace, human rights, equality, education and the environment,” and I also get World Points so I use this card for just about every purchase over $5. My rules are basically the same as J.D.’s. I have never been in credit card debt, but I also never had a credit card until I was about 30 because I didn’t feel I could handle it wisely until then.
We use an Amex blue cash. After you spend $6000 in a year, you get 5% back on groceries, gas and pharmacies, and 1.5% back on everything else. No annual fee, and we pay it off monthly.
We usually get about $900-1000 back every year.
I’ve had a mileage credit card for years. As long as there’s no fee for doing so, I pay for everything I can with it. I track my expenses carefully, so always know how much I currently owe. I pay the card in full every month. I’ve flown a lot of places on the credit card. FYI, I have never had credit card debt. The only things have been a couple of cars (none costing more than $16K so far) and three (one at at a time) houses. I attribute my money management skills to the fact that my parents let me use the “commuter car” when I was in high school as long as I got up early enough to drive my father to the train station and was waiting for him when his train arrived in the evening. We lived in the country, and I also had to run errands and drive my brother and sister different places. I got the idea about evaluating the cost vs benefit quite early. (Mostly, the “price” was worth having a car. ;-))
I used to have a credit card problem caused by two things: unemployment and after graduation and untreated ADHD (it affects your impulse behavior, like impulse spending). The first problem was solved by eventually being employed at a reasonable salary that allowed me to pay off the debt I’d racked up, and getting treatment for the ADHD, which broke the impulse-spending cycle. Part of that included me giving my card to my boyfriend with strict instructions to give it to me, no questions asked, if I came over there and asked for it. The tiny bit of extra effort involved in having to go over to his apartment was enough to break the impulse.
I have a USAA Mastercard now, but rarely use it except for a two-month period early this year when I racked my reward points up enough to get $900 off of plane tickets to the U.K. before their reward amounts changed April 1st.
I also use a USAA debit card. My boyfriend’s mother, who’s worked at a credit union for years, worries about getting cleaned out if someone steals it, but my mother’s card got stolen in New York when we vacationed there. We found it missing the next day, called USAA, and they immediately refunded the full amount that was missing, including the $50 they don’t have to by law, and offered to overnight a card to our hotel. (We turned that down, opting instead to move money to my account and use my card for the rest of the visit.)
Word of advice: when there are two people purchasing something, in this case shuttle tickets to downtown, and the clerk gives a handful of tickets, papers and receipts to the OTHER person, and not the person who handed her the card, check to make sure you have the card before leaving the counter!
When I first graduated and got a job, I decided that I wanted to build my credit so that I could get a good loan on a house (this was in early 2008 just before everything blew up). I tried a few companies, and was denied. Heck, the GAP denied me for their store only card!
I eventually went to Bank of America because they had secured credit cards, but when I applied I was actually approved for just a regular card.
I used just the one for a time, but eventually also got a Capital One card for use on my honeymoon in europe, as they have no fees whatsoever for using it internationally. Unfortunately, the card that I had had a yearly fee and not the best rewards, but I recently applied for their absolute best card and was approved, so I’m going to stop using that one, be sure my balance is zero for a month or two, have the rewards (about 200 dollars saved up over a year) sent to me as a check, and then close the account.
I pay off my balances every single month, and I think that came from the fact that when I first had a “credit card” it was really a bank debit/mastercard. Every cent I spent came directly out of my checking, so I thought of it as cash anyway.
The only debt that I hold is whatever my current balance is since my last payment and my mortgage, and I owe a little bit of money to my parents that they loaned me without interest to help for remodling our kitchen that they have given us until we’re ready to pay back, which should be soon.
@SF_UK: Maybe someone else has said this already, but you should NOT ask for your credit limit to be lowered. Carrying a balance of 30% or less of your limit helps your credit score. Carrying a balance over this amount (I don’t know the exact amount because I don’t know the exact algorithms–they’re proprietary and appear to change fairly often) allegedly hurts your score. The point is to demonstrate that you can spend reasonably despite the ‘option’ of spending more. If you find you need to lower the limit to keep from spending so much, you probably shouldn’t have a credit card.
I use a us bank platinum rewards card. I use it for any online purchases for the extra security. The rewards seem to add up quickly, usually I earn at least $50 in gift cards that I cash in and give out as gifts at christmas time. Lately, I’ve also put larger ticket expenses (medical ect.) on the card to earn more rewards. My rule is that nothing goes on the card unless I have money in the bank to back it up. I don’t put too many things on my card each month because it makes it harder to balance my accounts.
Again, I’m completely amazed that no one has mentioned the Penfed card. Generally touted as one of the best and most coveted cash back rewards cards in existence. They seems to be a little hard to get, but if you do get one, its a ‘name your own limit’ card up to $50k. 5% back on Gas, 2% on Supermarkets, and 1% on everything else. Since most of our expenses are either gas or food, this makes perfect sense to us. We also have a Discover card, and a couple AMEX cards. I use the AMEX cards for electronics purchases and things like that for the added protection it offers for returns and warranties. Best thing about the Penfed is that the cash back is credited monthly as a credit on the bill, no waiting for a threshold or to cash in points or whatever. I use the Penfed card for nearly everything; I never carry cash, and seldom use checks except for rent. I pay off all the cards that have a balance every week. I just ignore the monthly bills. Each month I usually get back about $40 on the Penfed card. Cash back can be amazing especially if you use it for business expenses. My employer has a single credit account that the whole (although small) company uses. Last year he got a check for a little less than $40,000 from it. Best of all, since the IRS considers cash back rewards as a ‘coupon’ or ‘discount’, it’s all tax free. Most of the expenses on that account are actually just billed to our clients, so it’s free money to us.
I have 2 cards: an Amazon reward card and a Capital One card. I use the Amazon card for anything I purchase and it gets paid off every two weeks on payday. I think Amazon has a great reward system, which is the entire reason I got the card in the first place. It only has a $1,000 (yes, one thousand) limit so I know I’ll never get it high enough that I can’t pay it off.
The second card is for emergencies. My Emergency Fund is in an ING account, so it would take a few days to get access to that money. That card only has a $1,500 limit on it, but it’s what I use if I need to use some of that money immediately (thankfully, not that often). I’m actually afraid that I use it so infrequently that they’ll cancel it.
“CCs are the chainsaw of personal finance!” ha–that’s great!!!!
According to my credit report, I have lots of credit cards–at least 5 visas. But all are currently inactive with zero balance except for one I use for everyday expenses and pay off every month. I don’t use debit cards–too risky. I also travel a lot outside the country & I don’t like carrying cash & I find the credit cards are accepted everywhere.
The one I use all the time is a Wells Fargo Platinum visa that I’ve had for about 20 years from when I used to have my checking at that bank. I like it because it has a very high limit ($16K), a very low interest rate (10.9%), no annual fee, and excellent web account management that helps me monitor and manage my spending. I also get 2% cash back on everything.
I’ve paid it off entirely every month for the past couple years, but it was very useful to have that low interest rate when some things came up a few years ago where I needed $5-10K fast and I knew I could take a few months to pay it back without getting killed on interest.
I used this card (& others) for stuff like a divorce (needing $5K up front to retain a lawyer and 1000’s more each month while being unable to access joint savings that were frozen until the divorce was final), a car downpayment (just for convenience and to get the cash back!), and for remodeling projects at my house so I didn’t have to take out a HELOC (& also so I could get the cash back). (I also used other credit cards for stuff like this–taking advantage of those 0% interest short-term deals). All this also increased my credit score, which was helpful when I had to refinance the mortgage after the divorce was finalized.
I’d never do this, though, if my cash flow wasn’t very high. I can easily pay off a $10K balance in a couple months just by not putting as much of my paycheck into savings.
I don’t have anything to add except when we traveled overseas I really regretted having let capitol one close my card for inactivity. (I stopped using it when they discontinued the “Starry Night” face… how is that for irrational behavior?)
I have a couple cards that I use for different circumstances but the important part is that all of them are set to autopay the full balance from my checking every month so that there is never a balance.
One is a Costco Amex which has very nice cash back and if you have a Costco membership already then that covers the annual fee. Mint constantly recommends that I use it more instead of my other cards as it will give me more cash back but living in a tiny town amex isn’t taken by many places. It also has many consumer benefits while traveling and for every day purchases.
The other and one with a far more impressive story is a British Airways card that I signed up for when they were giving 50k miles free when you signed up and another 50k if you spent a given amount in the first few months. For reference… 50k was enough for a nonstop round trip ticket from Seattle to London. Only had to pay for the tax (~$350). I’ll be using it to go to Italy in the spring for 60k miles.
Credit cards can definitely be damaging but when used properly can allow you some very nice benefits.
I’ve used a Citi AAdvantage card (mileage card with American Airlines) for many years and charge everything I can with it–my rent, gas, groceries, utilities, all bills, cell phone–and pay it off every month, usually $3000/month minimum. I fly often on American and this is a great way to rack up miles. I have never carried a balance or incurred finance charges. There is, however, a $50 annual fee. I’ve gone to Europe on this card’s frequent flyer miles three times with the miles and have several tickets’ worth saved up for emergency flights to Texas (my mom is in very poor health). Reading your other readers’ comments about cash-back credit cards has me questioning my sanity now about using a mileage card with an annual fee! But when I need to fly to Texas immediately because of an emergency with my mom, a regular overnight or next-day flight is well over $1000, so I do save quite a bit of money using these frequent flyer miles (the FF fee is around $100). When I travel, I take along a Bank of America credit card as emergency backup, but I’ve never had to use it.
While I have more cards than I need at 80-y-o, I enjoy getting the points/cashback when I use my bank’s Visa card for college tuition for a grandchild. (Paid off within the month it’s charged.)
Three more:
(5) Cash takes time. It takes time to get it from an ATM, and it takes time to handle during transactions.
(6) This is a small effect, but I’ve always liked keeping money in my account earning interest for as long as possible. The autopay happens at the last minute. Probably only saves me $20 a year these days, but it’s something. All else equal, I try to buy with the card that’s earliest in its billing cycle.
(7) Safety cushion. Others have mentioned this. This is a big deal if you need to pay out-of-pocket for medical services in another country or buy an air ticket at the last minute. Fortunately haven’t had either happen to me yet, but they’re not crazy possibilities. The money you’d use to pay this off can be tiered in a set of 3- or 6-month CDs (or, if you truly believe this kind of emergency is a remote occurrence, in some indexed mutual fund) so that it’s actually earning something rather than just sitting around.
Credit cards just make so much sense, as long as you spend rationally. Like another commenter said, I know I’m slightly less prudent with cash, because it’s ‘out of the system’ for me.
I have one card - a credit union Visa I’ve had for years and years. There aren’t any “rewards” associated with the card, per se, but its APR has been 6.9% for the past 10 years, which was important when I carried a balance. Now I might be in the market for a rewards card, though I’m hesitant to open another credit account.
I didn’t have a credit card in college or for the next 4 years or so. Finally got one and used it wisely for about 2 years. Then I moved to Boulder and went 8 months without finding work. I was young and stupid and lived off of that card, using it to draw cash to pay my rent, and running up a total of $10,000. Spent the next 4 years paying it off, and now use it rarely…usually only when going out to eat or buying something online. It now is paid off every month. Certainly learned my lesson!
My comments got a bit out of hand after a few paragraphs, so I responded via my blog.
“Make my decision about what to buy and then decide how to pay.”
It never occurred to me that people would intentionally use a credit card any other way. I guess that’s why I also have never understood people with thousands in credit card debt from consumer purchases.
I have one credit card: A “student” credit card from my credit union with a $1000 limit. Someone recently asked me what the interest rate was, and I couldn’t tell them; I’ve had it for 5 years but have never carried a balance forward. The interest rate is irrelevant.
I have a Bank of America Visa card. I chose it at random from a bunch of offers in the mail; I pay it off as soon as the charges post, on the web site. I don’t wait until the bill comes because sometimes by that time I already owe finance charges and that makes me really angry. In fact, the whole industry makes me angry to the point where trying to find a “good” credit card to use just seems like way too much hassle.
I only use it for purchases that are more than my (low) daily debit card limit.
I have 2 cards: AMEX blue cash which I only use for he categories that give the most cash back: groceries, gas, pharmacies. The second card is a Discover Miles card which I use for everything else. I absolutely love it! I painstakingly paid off $20,000 on my cards 5 years ago and have been using them responsibly ever since so APR isn’t much of a concern. Thanks for staring the discussion JD. It’s cool to hear from the comments about the different cards and benefits.
@85 Rosa,
If it true that you really owe finance charges by the time you get the bill, you need to find another card. That’s unreasonable, and I thought it was illegal to do that now under the CARD act.
I was somewhere between 16 and 18 before I realized you /could/ carry a balance on a credit card (I thought the ‘credit’ was that the bank trusted you to be able to pay it off in full). So I’ve never carried a balance, and I’m well on my way to getting the card to pay for 1.4% of my life.
At this point I basically exclusively use my Emigrant Direct credit card, though back when I was a CostCo member I had the CostCo AmEx which gave 3% on dining out.
I have two cards, but only use the one from USAA. I get a little cash back, but more importantly, they’re not evil (*looks pointedly at certain weirdly-named cards*), and their fee/interest rate structure is acceptable.
I carried a balance for most of my adult life, usually no more than $3,000 - but more than I could pay off! I finally paid it off on August 31 2007 and have kept it fully paid since then. I don’t have any big rules about how I use my card, but I set aside travel money every month, and that’s always been my biggest continuous expense - now when I buy a plane ticket, I can afford it!
i have two cards but i always use my main card, an amex blue card. i use amex for a number of reasons: extended warranty, return protection, purchase protection, etc. it’s provides a peace of mind that other cards would not. further, their customer service has always been great.
the biggest reason, though, is that in 2007, i won a porsche cayman through amex’s annual wishlist promotion. not only did i get the car, but also a sum of cash from amex to cover the taxable income from receiving the car. ever since, they had my loyalty.
i never carry a balance so i don’t care what my APR is. as far as i’m concerned, it’s easier to keep tabs on spending with a credit card due to online statements and the only time i don’t use the amex is when the vendor doesn’t take it. it doesn’t really help me budget since i frontload that but their site does provide some interesting data breakdown on spending.
I use the Amex Blue Cash and the Capital One No Hassle Rewards. Not every place takes Amex, so I prefer to have two cards available. I like the Amex Blue Cash because: (1) they have great customer service; (2) the layout and detail of their website is great; and, (3) I can use the cash rewards toward my debt snowball (instead of more stuff). When traveling internationally, the Capital One card generally gives me better currency exchange rates.
Note: I do not carry any credit card debt, only long-term student loans at about 4% APR or less (most of it is fixed at about 2%). For the long-term student loans, it is more of a marathon than a sprint.
To JD: I wish there were more GRS articles about how people balance substantial student loan debt (e.g., greater than 120K) with their other life goals. Also, I would like to see some GRS articles about how financial goals may shift if you do not have a strong social network (parents and grandparents deceased at an early age, etc.).
I have a Chase Rewards Card because DH used to work for Chase. We have an interest rate of 7%, and use the card for rewards points for travel (our only luxury). We put everything on there, the cell phone, food, gas, eating out, car insurance, you name it. Two years ago, we both lost our jobs within 3 months of each other and I let the balance ride for a month or two (mostly due to financial emergencies). You never know what can happen when you don’t have an emergency fund in place. Thank goodness for only 7% interest. We’re now paying our new balance in full every month, plus an additional $500 until it’s back to ground zero.
Apparently I’m the only person with a CC balance! Nobody in the past 86 posts has admitted to one. Wow, either you all truly have fantastic habits or the indebted folks are just not willing to comment.
I am working at paying off a huge ($17K) CC balance which I accumulated because of some admittedly dumb purchases, costs from graduate school, and having to start a new career (at a low starting income with initial costs like a career wardrobe).
Having learned my lesson about my abilities to manage a credit card, I no longer use them. I use my debit card for convenience, but always pay for things straight out of my checking account. I use Paypal for online purchases when possible.
Perhaps when I’ve paid them off in full, I will consider using them to my advantage.
No credit cards, no debt or lines of credit besides our mortgage. We have a Visa Debit card from a local credit union, we had the option of rewards on our debit card (like a credit card rewards) or higher interest rate on the first $500 in our checking account. We took the higher interest rate. I see no reason for a credit card. If I can get rewards on debit card, I see no reason for a credit card, and I, personally, would prefer the higher interest rate.
As for credit score, that only matters if you plan to borrow more money — I do not.
Busting Martha’s myths:
(1) Benefits - Good banks have Debit cards that have benifits. Just got to look.
(2) Debit cards carry the same protection credit cards do.
(3) Debit cards do too, and btw, we love Mint also.
(4) Only important if you plan to borrow money. If you live under your means, you have no reason to care about your FICO score.
(5) Debit doesn’t, and it is the same as cash.
(6) The savings of interest accrued in the month is offset by the fact that on average people spend up to 16% more with a credit card than with cash. Debit is 8% more. Will you make 8% in a month? Moreover, I think overestimate the amount of interest is made on the money that stays in the account for an extra month.
(7) If your fiscally responsible, you should have 3 to 8 months in an emergency fund, and should maintain a reasonable health insurance policy (with a deductible less than your emergency fund). Doing otherwise is unwise. Moreover, if you end up in an event where insurance and emergency fund isn’t enough, interest rates charged by most hospitals are less than that of the average credit card; and most hospitals are willing to negotiate price where credit cards will only negotiate if you’ve been in default for a month or more.
I have two cards, A Chase Freedom card I use for almost everything I buy, and a Capital One for using abroad because it is the only card that doesn’t charge an extra fee for purchases abroad. I had the Capital One before a Chase Freedom rep convinced me of its better reward program. The same rep also told me to keep using my Capital One for foreign buys!
I have always paid off my balances in full ever since I got my first card 35 yrs ago, and only spend what I can cover without dipping into my savings.
My only concern with Chase Freedom card is they keep on changing the reward program, somewhat downgrading it with every change in my opinion. E.g. 1st they did away with the $250 check for 200 points just about a year after promoting it.Ever since you have to watch for special rewards programs you have to sign up for and they don’t advertise them well.If you miss seeing their promotions, you’re out of luck and you only get a 1% on everything. I think the ethical thing to do is the Card should automatically sign up every customer for every new reward plan (gimmick!), instead of hoping only some customers do. Chase should know customers like me will switch quickly to another card if the company plays too many tiresome games.
Capital One Cash Back and Citi Card. I travel a lot and having 2 credit cards comes in handy when the fraud unit from one company starts denying my purchases.
I looked into several air mile credit cards and did the math…it essentially was the equivalent to 1% cashback - it seemed like such a limited way to get ROI - at least I get to choose how to spend my 1% cash instead slooowly collecting points.
For electronics purchases, I use American Express Blue Cash - The cash-back is pretty mediocre for the level of purchasing I do (.5%) but the real value is the “extended warranty” protection. I had an iPod start to act funny about 1.5 years after I bought it. I submitted a warranty claim and, within 2 weeks, had a check in-hand for the amount I paid for it.
For gas/groceries, I use the Citibank Drivers’ Edge card (no longer available). Through the Thank-you network, I get about 5% cash back on these purchases.
For everything else, I churn cards. My rule: I need to make at least $200 to open a new credit card and I can get at least 25% cash-back for churning, I’ll open the card and close it after I’m done.
We currently use two different cards:
1) Costco American Express: we get 1% back on purchases anywhere and Costco only takes AmEx. We also get 3% back on gas so we use it for gas
2) Upromise - We use this card for everything else. We get at least 1% back and often more based on where we shop for stuff. The best thing is since my husband’s loans are through Sallie Mae the cash back from this goes right to his loan!!
We will probably look at something with more travel perks when we are done with his loans.
Not only do we never pay interest on the CC (pay it off every month) but we are using it to pay down other debt
I have a credit union credit card and a Chase card that I’ve had a long time–I use them once a year to keep them open and do not keep them in my wallet. My main card is a Capital One No Hassle Rewards, which I pay off every month, and we used the rewards to pay for a spur-of-the-moment England vacation to celebrate a health crisis that wasn’t. Just got a Citi Forward card after reading another PF blog that was looking at credit cards, and that one has some great rewards. Oh, and I have an American Express True Blue or something like that because it was part of the Costco membership. Just use that for Costco purchases.
My father was a credit manager and member of a national credit managers association. He had a credit card from just about every company you could think of and never paid a penny of interest. Well, in the interest of honesty, after he died, I discovered a small bill that he’d neglected to pay so he’d been accruing interest for two years. I don’t think I had to pay it upon his death, but I did.