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If I use cash or a debit card, the money is gone all but right away. If I use a credit card, it is not. I am effectively getting a interest free loan of that money. Why would I not prefer to use other people's money rather than my own?
A person could keep their debt to credit ratio lower by making weekly payments, some people do that.
It doesn't have to be weekly, but if you pay the balance before the statement closing - in other words, there's never a balance on the bill - you will always show 0% credit usage.
The downside is that the payment history won't show up.
I do know I spend way more when I use cash than credit cards. If I spend cash, it's gone, no tracking. If I use a credit card it's on my monthly bill and imported into my spending tracking, making me feel guilty if I bought something I shouldn't have. I also get rewards - this is of course a benefit due to me paying off in full every month (never paid a dime in interest).
I don't have any real use for a great credit score (I don't own a car and have no plans to own a home), but the rewards and a 1-month float are nice benefits. I don't think it's absolutely vital to have a credit card, but if you can control your spending you're missing out on the rewards if you go pure cash. Oh, and I technically have an "emergency fund" up to my overall credit limit if some catastrophic event happens to me.
I don't recall ever having this cash freeze, and if I did, it didn't affect me much.
I usually pay via credit on my check card. I've had banks call me immediately if they've noticed weird charges to confirm that they are valid.
I haven't had an overdraft in years. I keep track of the dates of automatic or scheduled debits, and leave the money in there (never a problem). It's called "balancing a checkbook".
Have a few life setbacks, and your credit card plan could set debt accumulation into motion.
The cash freeze is there, it may not have affected you, but that doesn't mean it doesn't affect others. It's a technically called hold and is similar to the hold placed on newly deposited funds(so where ever you would see that, you'll see this). Next time you rent a car on your debit card, log into your bank account, it'll be there.
As for the "life setback" comment, that's a little backwards. How does the fact that I keep cash in my account and pay the balance when it'd due vs you paying immediately make you any better off in the event of a "life setback"? Here's a fact, at any given point, all other things being equal, I have more cash in my checking account because I used credit cards than I would if I lived without them. It's the benefit of the free 30-60 day loan. I get to hold onto my cash longer.
You're saying using cash only prevents you from going in to debt. Well what happens when you run out of money? If that same life setback comes along and you have no cash, what do you do?
The fact that I use credit cards doesn't mean I don't have cash. It means that I choose not to part with it any sooner than necessary. It gives me options that a "cash only" person doesn't have.
It doesn't have to be weekly, but if you pay the balance before the statement closing - in other words, there's never a balance on the bill - you will always show 0% credit usage.
The downside is that the payment history won't show up.
That's not entirely true. The CC company reports balance as of a date, but it's not necessarily the statement date. So if you pay it off the day before your statement, the period closes, then you charge something, it'll likely show up on your credit report(it's very unlikely for the statement and reporting dates to be the same, I think I heard that it's usually about 7-10 days after statement closing to give your prior check time to clear).
It's not the statement date that matters, it's the date the CC reports to the reporting agency. If you knew that, then you could just pay before that date. Most people concerned about utilization just do weekly or bi-weekly to be on the safe side.
The cash freeze is there, it may not have affected you, but that doesn't mean it doesn't affect others. It's a technically called hold and is similar to the hold placed on newly deposited funds(so where ever you would see that, you'll see this). Next time you rent a car on your debit card, log into your bank account, it'll be there.
As for the "life setback" comment, that's a little backwards. How does the fact that I keep cash in my account and pay the balance when it'd due vs you paying immediately make you any better off in the event of a "life setback"? Here's a fact, at any given point, all other things being equal, I have more cash in my checking account because I used credit cards than I would if I lived without them. It's the benefit of the free 30-60 day loan. I get to hold onto my cash longer.
You're saying using cash only prevents you from going in to debt. Well what happens when you run out of money? If that same life setback comes along and you have no cash, what do you do?
The fact that I use credit cards doesn't mean I don't have cash. It means that I choose not to part with it any sooner than necessary. It gives me options that a "cash only" person doesn't have.
Why go through the trouble of the credit card? Aside from the points and the credit score, what net life benefit does it give you? You get to hold onto cash that's already spoken for, how exactly does that make any sense?
Why go through the trouble of the credit card? Aside from the points and the credit score, what net life benefit does it give you? You get to hold onto cash that's already spoken for, how exactly does that make any sense?
Points, cash back, priority boarding, free checked bags, travel insurance, ad&d insurance, extended warranty, protection against loss or theft, the float and security over direct debts hitting my checking account those are benefits I get
Credit is fine, as long as you control it, not the other way around. You cannot rent a car without a credit card, and, right or wrong, you get no credit rating for paying cash for everything. You cannot buy things online, or cover emergencies, without a credit card. Being adamantly against it is dumb, in my opinion. You just need to maintain constant control.
What we do is always use "same as cash" credit options. We use it, they don't use us. Even if I had the money, I would still buy a car at a zero interest option.
We charge everything we can of our monthly expenses on a Capital One Venture card, then we pay the balance every month. For this, we get points for travel expenses. We opted for a $59. fee after the first year because the points are doubled.
If you are always in control, you do not need to be fearful of credit.
Yeah, things like unexpected expenses, pay cuts, etc, would be considered "trouble managing credit". Now, I have cash savings for those kinds of things. Some people are capable of learning from their mistakes.
It's smart to have available cash. Luckily, there is no law prohibiting those who have credit cards from also having cash savings. People can do both.
Points, cash back, priority boarding, free checked bags, travel insurance, ad&d insurance, extended warranty, protection against loss or theft, the float and security over direct debts hitting my checking account those are benefits I get
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