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I don't view credit card lines as free money. I pay them off every month, so I consider them a short-term loan, taken for the sake of convenience. I never put anything on a credit card that I couldn't pay for in cash.
What happens with people heavily in credit card debt is, their sense of entitlement overrules their common sense. I just read on a thread that a guy has $40k in cc debt and is contemplating bankruptcy because he cant make ends meet anymore... but refuses to give up the cable tv/internet package because "its our only source of entertainment." That's entitlement for you, and it is the same reason why people run up that much debt. They just believe there are certain things that they should have in life, and they swipe the card because that's the tool that is giving them their due.
I've watched for long time as friends/family get themselves deep, deep in debt due to mis-management of their CC due to lazy and/or misconceptions in their attitudes towards money.
What none seem to get ,or understand, is that a Credit Card is nothing more than an open ended line of credit that is a LOAN!
Imagine , if you will, that every time you needed to use (read borrow on) a CC that you had to fill out a loan application. Would that slow a lot of people down since they know that they wouldn't qualify for that loan. Sure, we all have been brainwashed into believing that somehow that loan was 'free' money since that is no pain (up front) to "spending" free money.
So my question to all is how do you view your Credit Card spending?
Do you view this debt as free money?
Do you view this money as a loan?
Do you even have a clear understanding of what a Credit Card really represents?
I always believed that anyone with a CC should always set a limit that is lower than the actual limit to avoid go over the limit.
I always believed that anyone with a CC should always set a limit that is lower than the actual limit to avoid go over the limit.
You don't need to have a low allocated limit to not feel "tempted" to go over the limit. You just don't go over the limit! Don't spend more than you make!
Having a large credit line with a low % of that taken up is advantageous to one's credit score.
So my question to all is how do you view your Credit Card spending? It is an alternative to carrying lots of cash. It's also a useful tool for buying online and using Paypal.
Do you view this debt as free money? It's free if I pay the bill off every month.
Do you view this money as a loan? A short term free loan.
Do you even have a clear understanding of what a Credit Card really represents? I think I do.
Maybe it's acquired habits.
Back in 1985, after I graduated HS and got my first job I got my first credit card from a local bank. It had a $500 credit limit. I had that card for several years and was fine with it. I did carry a balance on it for a short time once when money was tight. I never had enough money on it to get into trouble.
Now I have a Visa with a stupid high credit limit. I use it moderately and pay it off every month.
My line of thinking is like this:
I see a cool widget that I'd like to have.
I check my bank account. Do I already have the money on hand?
If yes, then I go ahead and charge it. (If no, then I pass on it.)
When the cc bill comes in I pay it immediately.
A free short term loan.
It's pretty much "don't spend what you don't have."
I have a bit of fun with it:
We bought an older Toyota truck from a dealer a few months ago. We agreed on an out-the-door price and I went to the bank to get a cashiers check, made out to my name. Went to the dealer. Offered up my credit card for payment (keeping the cashiers check hidden, if I needed it I'd have endorsed it and then signed it over to them). They took the credit card. On the way home with the new truck I payed off the credit card at the bank (I have a US Bank Visa and I can pay my cc bill at the teller window, I get a reciept). I get rewards on my card and I got a big one when I bought the truck! ha!
When I checked my statement later my payment went through before the charge for the truck went through.
I usually pay cash, but use credit cards for big items that i might need for convenience only. I only have one of each Visa/Mastercard, Amex, and Discover. I use my Discover much more often than the other two. In fact, i think i didn't use my Amex at all last year. I called the three to see if they are going to charge me annual fees due to the changes that happened on Feb. 22nd and was told that my interest rate has gone up. It's ok though since i pay off the balance every month anyway.
I usually pay cash, but use credit cards for big items that i might need for convenience only. I only have one of each Visa/Mastercard, Amex, and Discover. I use my Discover much more often than the other two. In fact, i think i didn't use my Amex at all last year. I called the three to see if they are going to charge me annual fees due to the changes that happened on Feb. 22nd and was told that my interest rate has gone up. It's ok though since i pay off the balance every month anyway.
Even if it's a big purchase I always do the SPLIT PURCHASE. For example, if I was to buy an Iphone i would put $200 on my CC and $200 out of my account.
I've watched for long time as friends/family get themselves deep, deep in debt due to mis-management of their CC due to lazy and/or misconceptions in their attitudes towards money.
What none seem to get ,or understand, is that a Credit Card is nothing more than an open ended line of credit that is a LOAN!
Imagine , if you will, that every time you needed to use (read borrow on) a CC that you had to fill out a loan application. Would that slow a lot of people down since they know that they wouldn't qualify for that loan. Sure, we all have been brainwashed into believing that somehow that loan was 'free' money since that is no pain (up front) to "spending" free money.
So my question to all is how do you view your Credit Card spending?
Do you view this debt as free money?
Do you view this money as a loan?
Do you even have a clear understanding of what a Credit Card really represents?
I use my credit card to pay for things because I don't like to use my debit card. I also use it for major purchases, where I already have the cash saved up but want the extra protection that the credit card offers on such a purchase.
I pay my bundled cable bill, groceries, gas, and some medical co-pays with my credit card. I deposit my paycheck into my bank and I then pay my credit card bill in full when I receive it. I try to make sure that I'm not buying too many extras with my main credit card.
And I also have two store (clothing) cards which I pay off in full whenever I use them. I hate to buy clothes so maybe 10 to 15 times a year I use one of those store cards.
I find it easier to track my purchases by using credit cards and I don't have to worry about writing down so many transactions in my check register.
I paid off either my car or my student loan with a credit card. I can't remember which. They were offering a much lower percent interest rate with a convenience check. I found out how much I owed, determined I could pay it off in a couple of months, and did the transfer.
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