Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
you really don't need to use the cards. I graduated college in 2004, and I jumped on one of the then-popular no fee 0% offers to pay off a set $ amount of student loans. Then i took that amount/12 and paid it off in a year. I've used 0% offers in other ways too, when i had some short term higher expenses, rather than paying interest.
I'm sitting on an 804 FICO now, and I'm 31 with a stack of credit cards that have been unused for years. i have free monthly FICO monitoring through me credit union, so i get an updated score monthly. So i can really pinpoint what actions have reduced my credit score. Opening a new card is a 10-20 point hit. but then it creeps right back up to where you were before.
I'm just curious, what type of plans do you have for using credit with a score like that? I know some people with an 800 credit score and they just wanna sit on it for the sake of having a high credit score.
Yes, very much! If you're, for example, young and single, your job is as secure as any and/or you can easily find a replacement if you lose your current one, your only dependent is a goldfish, and you rent an apartment...in that case, your "emergency fund" might consist of a case of instant ramen noodles, canned goods (soup, tuna, and -- my personal favorite -- cold, canned pasta), and the possibility of moving back in with Mom and Dad. OTOH, if you're married, have 3 kids, one of whom you're paying college tuition for and another will need braces soon, you own a house with 17 years left on a 30 year mortgage, your health has some issues and your employer has just announced a round of "cost-cutting"...well, you're gonna want a pretty sizable buffer to cover any possible problems.
Exactly depends on the persons situation, for example my emergency fund is to stop eating out everyday that's $400/month right there. Then that means I have to cook = ( (ain't nobody got time for that) lol
An emergency fund of $1000 in a savings account is pretty paltry. It's not the same thing as having $30k in a savings account. The deductible for an auto accident could easily run you $500. A round trip plane ticket to travel back to your home town for a funeral could run that much, too. If you don't have the cash to put down on those things, then you have to use your CC and incur more debt. It would take the OP all of 2 months to save up $1000 if he/she can actually put aside $500 a month, not 2 years.
OP, somebody mentioned credit unions, and I second that. It usually "costs" between $5 and $25 to join a FCU (that money stays in your savings account), they pay better interest on savings (such as it is), and they give better loan rates. Many will work with you on improving your credit if that is a problem, including giving you a loan to consolidate your debts at a much lower rate than the CC or banks.
you're missing the point
he will still have the credit cards available to him .
lets say his interest rate is 20 pct, he's basically paying 200 dollars a year to keep that 1000 dollars in his emergency fund which makes no sense.instead he is better off putting that 1000 dollars towards his cc bill and not paying interest on that 1000 dollars. then if he ends up needing that money he can use the credit card for but by doing it this way he is only paying the interest in the event the emergency happens.
i'm not even sure why you're bring up the interest rates credit unions pay.sure you may get 1 pct more at a credit union than you would at a bank, but he is paying credit card interest, likely 15-25 pct anually to get that rate.you're making a big deal about getting 1 pct extra in interest while ignoring how much interest he is paying the credit cards.would you borrow money at 15-25 pct in order to get 1 pct on it?
as for the bolded- it's not more debt.he's paying the 1000 dollars now which reduces his debt by 1000 dollars plus the interest he is paying on that thousand.then if and only if he needs that money for an emergency he charges it to his card and he is back where he started except he hasnt been paying interest on that 1000 dollars and he only has to pay interest on it again if an emergency happens.
if someone had no saving and no credit card debt, would you tell them to borrow a thousand bucks at credit card interest rates just so they could say they have 1000 dollars in an emergency fund?
this thread is a perfect example of most people making and advocating terrible financial decisions.
I'm for saving up an emergency fund then paying off the CC debt. I don't feel like a CC is a safe backup in place of cash. I have a decent amount of CC debt myself and while I put money toward both, I put more toward my emergency fund. Once that reaches a level I'm more comfortable with, I'll put more towards the Credit Card debt. I'm also starting to work a Part time job soon in addition to my full-time. I will be splitting that income...half to debt, half to savings.
I'm just curious, what type of plans do you have for using credit with a score like that? I know some people with an 800 credit score and they just wanna sit on it for the sake of having a high credit score.
ever since i hit 800, i wondered what i could do with it. but i don't think it gets me anything more than 750 got me. if you have any suggestions - let me know!
i'm not sitting on it for the sake of having a high score. but, what could i possibly do to take advantage of it?
I'd save an emergency fund first too. 1 or 2K might seem "paltry" to some people and it is if you lose your job, or have a major emergency, but 1 or 2K WILL help you for minor things like your car breaking down or a sick pet or whatever. With 0 in savings, even a small expense that comes up means you'll have no choice but to use your credit card again and isn't that what you're trying to get away from? Once you have a little bit of cushion, then you can be really aggressive paying off those cards. 9K is a lot, but it's totally doable to pay off if you make big payments and don't use the cards anymore. And think how much you'll be able to save once the cards are paid off!
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
