We maxxed out 2 cards a few years ago when first my son had some major legal expenses and then my mother in law died with only a $500 life insurance policy. (We had asked her several years before if she had life insurance when we wanted to buy a prepaid funeral plan after the death of her husband and she said she had it covered–I guess she thought it would be enough. It turned out to be about $5k short). I had some student loan debt too.
We took advantage of the lower interest rates and refinanced our mortgage along with a small home equity loan. Then we paid off the credit cards and student loans and still came out ahead. Not to mention being able to write the interest off too.
Now I use a Visa debit card for everything even paying most of my utility bills online with it. I have my payroll check direct deposited and the mortgage payment taken out directly. I rarely use my MasterCard and if I do, I pay the balance the next month. I hate paying interest.
I hated even more getting myself to a position where I was afraid to answer the phone because it would be a creditor calling. That has got to be the worst way in the world to live.
I avoided having any credit cards my entire life until this year, when I discovered that because I had contracted no debts since I paid off my student loans and had lived outside the US for a decade, I discovered I had no credit!
So now I have a credit card with a tiny limit, and I use it to pay all my bills, making sure to pay it off early each month. Eventually those banking SOB’s will realize I’m a solid citizen with a conscientious attitude toward finances.
Never have standing credit card debt, except occasionally for a particularly large purchase (a new furnace comes to mind). We use a Citibank Mastercard Airmiles card with a twist.
You get one airmile for each $15 you spend, rather than 1 for 1. However, if we use the card to book a 500 mile round trip, we only get charged 500 miles. It’s great for relatively short flights with not to much notice (14 days is required). For very long trips, we usually have enough notice to get the cheapest fare available.
Re: debit cards. Is there any advantage to them other than the limits imposed on spending by the balance in your checking account. My understanding is that you are not protected by the $50 limitation of liability if the card is lost like you would be if it were a credit card.
None here, despite having been laid off at the end of January. I’m sort of proud of us that, with no income (my wife’s home with our kids), we’ve managed to continue to pay off credit card balances in full each month, and have not had to sell any securities (yet) to make payments (though we have been paying the mortgage out of our brokerage cash account instead of our regular checking account). The kids were both able to finish the year at a relatively expensive Jewish preschool. It helps that we don’t have cable or satellite, have only one cell phone at $30/month that we never use all our free minutes for, have one car that’s paid for and has cost us only $800 in unscheduled repairs in seven years, that the other vehicle is financed through my father-in-law, who’s given us a payment holiday until I’m working again, and that I paid off the last of my student loans several years ago. The biggest thing, though, is that as my income rose substantially over the last few years, we didn’t really change our lives or commit to any major new purchases (like expensive cars or a bigger/nicer/better house). We continued to live as if I was making half what I was, so that when I was suddenly making nothing, we could cope a lot better.
I am the same. Discover sends me up to 2% of my purchases back once a year. 30 extra days that my cash earns some interest, although not a lot but some. Plus, I have the use of my cash if I need it. I don’t buy anything unless I can pay it off at the end of the month. Only debt I have right now is for the house.
I don’t understand why people use check cards. It takes the money directly out of the bank. Use credit and the money will earn a little interest until you write that one check every 30 days.
“Take care of the little ones and the big ones take care of themselves” a quote by Rockefeller after he chased down a dime he dropped on the sidewalk.
You and me both. In the last two years I have wacked my CC debt and my car loan. But that stinking student loan will remaining with me for a long time. Oh well, it was that or no law school for me. . . .
My hubby and I don’t carry a balance on anything. He uses his Discover for everything, but I tend to use my check card. Don’t know why–y’all are quite correct, it makes more sense to keep the dough in the bank to earn interest, plus earn the cash-back.
I use a debit card most of time. If I don’t have enough money in my account for an important purchase I use a credit card until I have enough. Usually the next month.
All Delta card, always paid off every month. I mix in some business travel, and my wife’s card adds miles to my Delta mileage as well. All in all, we typically go over $25,000 per year in purchases, which gets us a free companion ticket as well (not that they’re always that great a deal).
10 years ago, I was single and $13k in debt, so I ripped up all my cards and got a consolidation loan which automatically paid out of my checking account. I was debt-free in three years and didn’t get another card until I could handle it.
Only a few minimal routine bills–car insurance, ISP, satellite connection–on one that is most secured. The second is rarely used, mostly for convenience while travelling, which doubles as a debit card.
One advantage of being raised by Depression-era parents–and being flat out broke for a while–was absorbing a bent toward saving and a healthy caution about debt. I very rarely buy anything that can’t be paid off in whole w/in the month, or where I’m not rock-solid certain the needed money will be there. Sometimes it takes a bit of shuffling funds around to get the best deal, but money’s just a tool, albeit sharp edged.
I was lucky. My folks (and experience) taught how to make the tool serve for me instead of the other way around. My debt load? Minimal, including all living expenses. I could pay off all my outstanding debts right now. Oddly enough, it’s possible to be a hedonistic tightwad.
During my college years I was suckered into getting about 6-7 credit cards. I had a balance on all of them. Not a large amount, but it did add up. After college I set on paying all of them off, and I did. I still used them occasionally, but never got them as large as they used to be. My thought was, “if I can’t afford to pay for it in cash, do I really, really need it?”
I went from there. If it was a necessity, I used it, if it wasn’t, I deferred getting an item until I was able to pay for it with cash. Now I stay home with my son so I use it when I don’t have cash in hand, but my SO pays it off at the end of the month. But, just because he’s paying for it doesn’t mean I go off and shop at Fendi.
I do have a few student loans, though.