Switch to Debit Card vs Credit Card. use cash back=ATM

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What habit should I adopt for using a CC?

Shred all CC - they are devilkin
3
38%
Keep a CC for emergencies or as backup
5
63%
Use a CC to defer meium+ purchases such as clothes, groceries and fuel
0
No votes
Use a CC primarily such as lunch and convenience store items
0
No votes
 
Total votes: 8

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Micah
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Switch to Debit Card vs Credit Card. use cash back=ATM

Postby Micah » Wed Jun 11, 2008 9:18 pm

I used to use my CC like cash and had it set to "Auto pay full amount" with no worries. Keep in mind I was buying my first house- 650/mo.

Then I lost my job. I switched it to "Auto pay minimum".

3 mo later, I relocate 9 hours away. Lots of this expense is going on CC.

I pick up a rental at 1050/mo (read 1050 deposit too!).

There are very few ATM's for my bank here. I discovered that a LOT of stores can function as ATM's when using a debit card.

So I started using my DC and cash instead of my CC. After a couple of months, my CC "New Charges" were down below 100$.

I finally switched my CC's auto pay feature to "Full Balance". It hit hard- 2000$. My checking is down below 400$. BUT- IM IN CONTROL!!!!

And furthermore, if i become unemployed again, I'm not going to have a rear-loaded CC bill to pay!


Now that I'm in control, I wonder if i should switch back over to the CC for the 1% cash back................
Lesson learned?

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kmull
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Postby kmull » Thu Jun 12, 2008 5:22 am

Do you have an emergency fund? That's a major key.

If you can hold onto the cash that you spend on the credit card, you shouldn't have a problem. But if you can't... run like the wind.
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Cleverbeans
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Postby Cleverbeans » Thu Jun 12, 2008 5:34 am

My wife and I have a credit card that we use for emergencies. Our system works like this, we have the CC we use it to pay for the immediate expenses and we transfer the money from our ING savings account to cover the amount we spent on the card that day. It takes a couple days for the money to clear, once it does we use that to pay off the credit card immediately. Basically we use the credit card for liquidity in accessing our emergency fund.

mpacuk
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Postby mpacuk » Thu Jun 12, 2008 12:27 pm

Beans,

Have you thought of opening an Electric Orange Account? It's a regular checking account (with a decent interest rate) that can link directly to your ING Savings accounts. This allows immediate transfers of cash to be available for ATM withdrawals or Debit purchases.

I direct deposit into the Electric Orange (because, since it's ING, there are no brick and mortar locations to drop your money off at). At the end of the month I transfer whatever is left into my Savings account to get the higher interest rate. But, I always keep a $500 cushion in the electric orange for unexpected charges, instead of reaching for the credit card.

Since you're always paying in full right away, you really aren't losing anything. It just might make it a little quicker/easier for you.

I've been using it for about a year now and love it. It may be a double-edged sword to some though, since the draw of the ING Savings account has been that you don't have immediate access to the funds, so it makes you less likely to touch it.

Just something to think about.

debtfree
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Postby debtfree » Tue Jun 17, 2008 7:21 am

I've never had a need for a CC for emergency reasons. We have a debit (VISA) card hooked up to our emergency fund. I could see possibly having a CC for convenience reasons or if you wanted to pay for something on-line and didn't want them to have access to your checking account. IMO using a CC for an emergency fund is just asking for trouble.
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Sam
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Postby Sam » Tue Jun 17, 2008 9:28 am

We use a Visa debit card for our day to day expenses. We do both have a credit card but we only use CCs for business expenses or travel (i.e. plane tickets or to reserve a hotel).
Sam

http://adventures-of-sam.blogspot.com
(Follow Sam's financial and real estate adventures.)


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