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I've always used credits cards as much as possible, and always pay them off each month. Besides the convenience and protections, I've received free trips (e.g., airline points and bonuses) and free merchandise (e.g., amazon points), depending on which card I use. Because I have a great credit history from this, I also get lower rates on loans if needed.
I haven't read this entire thread, but many "experts" -- including Dave Ramsey -- advise not to use credit cards and claim you don't need a credit history, but I've had success using one for everything and paying the balance every month. My credit history helped me buy my first house, which I paid off quickly, paying cash for subsequent houses. It's a convenient way to do business, and you have a written record of your expenditures. The counsel against it is primarily based on the fact that most people lack the self-discipline to not carry debt over from month to the month and/or overspend with borrowed money. But, of course, that doesn't apply to everyone.
Several bills I'd like to pay with credit cards charge a fee if you pay that way. Utility bills and real estate taxes are the big ones that charge a fee. I really don't spend enough to earn any big rewards. We get a few gift cards for restaurants.
I haven't read this entire thread, but many "experts" -- including Dave Ramsey -- advise not to use credit cards and claim you don't need a credit history, but I've had success using one for everything and paying the balance every month. My credit history helped me buy my first house, which I paid off quickly, paying cash for subsequent houses. It's a convenient way to do business, and you have a written record of your expenditures. The counsel against it is primarily based on the fact that most people lack the self-discipline to not carry debt over from month to the month and/or overspend with borrowed money. But, of course, that doesn't apply to everyone.
Experts are still people - and in that sense, have their own opinions and perspectives. The point here is that just because they recommend something doesn't mean the contrary is wrong or false. It typically comes down to what you are looking to achieve.
They typically recommend things based on certain situations. So yea, not using a credit card means not putting yourself at risk of overspending or being caught in a debt-cycle. Which is obviously not a bad thing. However, there are other ways to minimize that risk. If you are responsible and know how to manage your finances, you can take advantages of the benefits of credit cards without exposing yourself to the risks.
I haven't read this entire thread, but many "experts" -- including Dave Ramsey -- advise not to use credit cards and claim you don't need a credit history, but I've had success using one for everything and paying the balance every month. My credit history helped me buy my first house, which I paid off quickly, paying cash for subsequent houses. It's a convenient way to do business, and you have a written record of your expenditures. The counsel against it is primarily based on the fact that most people lack the self-discipline to not carry debt over from month to the month and/or overspend with borrowed money. But, of course, that doesn't apply to everyone.
Ramsey’s focus tends to be advice in re: consolidating (and eliminating) debt - and teaching people to budget. For the people who read/follow Ramsey, it’s sound advice to avoid credit cards (especially since it’s assumed that’s how many originally found themselves in debt).
The test is a simple one; if you are used to carrying a balance on credit cards (or have had an outstanding balance in the last two years on any card) in addition to whether you can realistically afford to pay it off each month, no exceptions. The last thing you ever want to do is pay utilities or monthly household living expenses with a credit card (and wind up carrying the balance over) - and all it takes is one time to find yourself in a cycle.
Credit card debt is shredding the middle class; it’s playing with fire for those who lack self discipline or find themselves ‘addicted’ to the spending without adequate funds.
I agree that certain people need to avoid them like the plague, and DR's audience would include a large number of these, but I object to his blanket condemnation of them and also his assurance that you don't need a credit history. If you're wealthy enough to pay cash for your first house, go for it, but 99.9% of first-time home buyers don't fall into that category.
For many institutions, Interchange fees normally pale in comparison to the interest they bring in. AmEx is probably the only one that make more in transaction fees. But they're not strictly credit cards either - a lot of their products are charge cards.
It doesn't quite work as just about every credit card will consider this as a cash-advance. Which will often come with a fee (flat rate or % of your advance) as well as the fact that the interest on that advance takes effect immediately (there is no grace period). And that interest is more often much higher than purchases.
In the olden days (early 90's) there was a bank that gave you those checks and charged no transaction fees. I had a friend you wrote a check to a bond fund once and a month, earned the interest and then paid it back each month. He was making about $100 a month doing this. Smart.
I was listening to Frank Abagnale talk about his life. He has spent the past 40 years working for the FBI. He is an interesting person to listen to. Some years back a movie about him was made based on his book, Catch Me If You Can
In a question and answer segment he was asked about debit cards. He commented that he never uses them. That a debit card does nothing for you and can open you up to fraud. He says he uses credit cards for everything. When the bill comes he pays off the bill.
Frank mentions that with a credit card, if you suspect fraud, you call your credit card company and they will suspend the payments to the fraud. They will cancel your card and send you a new one right away.
With a debit card you might lose your money, wont have use of it until an investigation takes place. It might take weeks to get your money back.
While a credit card used wisely builds your credit, a debit card does nothing for you.
With a credit card you are using someone else's money during the month for free, as long as you pay off the balance when the statement comes. Your money stays in your bank and only comes out when you make that payment.
The idea sounds intriguing. Anyone else using a credit card to pay the bills and then paying it off each month and not using a debit card?
PLUS, if you use a credit card that uses reward points, it's like they're giving you free money. IF you pay off your balance every month.
PLUS, if you use a credit card that uses reward points, it's like they're giving you free money. IF you pay off your balance every month.
See ^^^^^^^ two up.
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