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  • #593761

    real-brisker
    Member

    Is there any reason why one that is living on a very tight budget should use a credit card? What my question is – By using a cc is it going to make it harder to keep to the budget?

    #919051

    smartcookie
    Member

    If you keep Cheshbon really good exactly what you put onto your card, and pay your bills on time, then it’s great.

    I’m using a CC for years for everything(even groceries), and we never paid a bill late. We’re accumulating good points and already have enough for 2 international tickets.

    It’s great. But in opposition, it’s terrible for people who aren’t on top of it.

    #919052

    ZachKessin
    Member

    personally I would say its a really bad idea. CC will tempt you into buying things that you really can’t afford. I got rid of my credit card ages ago and have never looked back!

    #919053

    real-brisker
    Member

    smartcookie – Owning a cc doesn’t tempt to spend what you dont have?

    #919054

    smartcookie
    Member

    Not at all. If it does for you, than absolutely stay far from it.

    #919055

    cv
    Participant

    I use cc because it is convinient – no need to have cash on me. I know how much I can spend a month and I pay every month a full amount. So, I never pay any interest for using cc. If person can’t be organized, can’t stop him/herself from impulsive purchases, they should stay away from cc.

    #919056

    cshapiro
    Member

    im not on a budget but when i swipe my card i have an idea of how much is accumulating…also if certain cards give points, no fees and you can check ur balance and pay online like i do….

    #919057

    Midwest2
    Participant

    YOu also don’t need to have cash on you if you have a debit card. And, unlike a credit card, you can tell the bank you want no overdraft protection, so if you exceed the money you have in the bank the transaction will be refused (embarrassing, but it will keep you within budget).

    You can also check your balance online.

    Debit cards don’t charge interest. Depending on the type of account, you may actually *earn* interest.

    And, you don’t run the risk of running up weird fees that you never heard of because they’re buried in the 45th paragraph of the small print you never read 😉

    Or you can keep most of your money in an interest-bearing savings account and only transfer it to your checking account as you need it.

    The people who run the credit card companies do it to make money – YOUR money. Why pay them to spend your own money?

    #919058

    aries2756
    Participant

    You are better off having a credit card with a limit you can manage than a debit card. If by mistake you are overcharged on a debit card it can take two days or longer for the money to be returned or released back into your account. That means if the cashier charged $500.00 instead of $50.00 which has happened, even though they do an immediate reversal, it can take a long time even days, until you have use of your debit card again. The money is instantly withdrawn from your account and you cannot use your card again until the bank releases your money. This can cause huge problems if you rely heavily on your debit card.

    So even though the cc company gives you a $5,000 limit, you can have them limit your card or your spouse’s card to $1,000 for instance so you have more control of your spending. You can also keep within your budget by keeping ALL your cc receipts in one envelope and keep a running number on the outside of the envelope similar to a checkbook register.

    #919059

    commonsense
    Participant

    a credit card builds up credit which can help you in the future, It’s difficult to buy a house without a credit history. You can also get very good rewards such as cash that can help you.

    #919060

    ZachKessin
    Member

    From what I have heard (mostly on Dave Ramsey) having 0 credit history as long as you pay your bills on time and have a good work history causes no problem getting a mortgage.

    Remember the FICO score tell you how much you love debt, not how well you are doing.

    #919061

    real-brisker
    Member

    aries – Even if you use a cc with a limit which is within your budget, I still think its better to use a debit card beacuse it uses up the actual money, rather a cc just makes a chov, and you still can also use the money in the bank.

    #919062

    smartcookie
    Member

    True, CC are also good because they build your credit(if paid on time).

    I also like the CC because at the end of each month, we receive the itemized statement of all our spendings and we see exactly where every penny went.

    At the end of the year, we take out all our CC statements and review them. Then we can see where to cut expenses for the next year.

    Again, CC only works if both husband and wife are very strict with it.

    #919063

    aries2756
    Participant

    RB, when you use a CC you know that the money in the bank is used to pay off the CC. The point of the CC is that the stores would rather take a CC than a check. You use the checks to pay of the CC and you gain points and build credit as you use the CC. You also train yourself how to use a CC and not to go over your credit limit, as well as sitting down at the end of the month to pay your bills on time and not pay interest. It is a good training method. Don’t spend what you don’t have, learn to live within the budget by having a visual record on the envelope, and pay your bills on time to build good credit and gain rewards.

    Of course the main idea is not to spend what you don’t have and that is the best foundation to build on for your entire life. The problem with the debit card is this faulty error system that the bank holds over your head. And if you are in a sticky situation and you know you sent out the bill for the CC you can use it again. If your check didn’t clear yet in the bank your debit card is useless. You also don’t gain rewards. In addition, if your spouse also uses the debit card, you are in trouble if s/he makes a purchase you didn’t know about and you are standing at the check out and your card is denied on the spot. People have a tendency to just watch the receipt when it comes out and use that as their register. So lets say the receipt says they have $200. By the time they get to the next store, their spouse might have filled up the car with gas for $60 and now they don’t have enough left on the card to pick up the groceries they just ordered. If they use the checkbook itself it is not a problem, but with the debit card it is. It is not like a checkbook in that sense it is more like cash.

    But RB, you are right. If someone is NOT capable or cannot be trusted to stay within the concept of the budget, they should be limited by the debit card.

    #919064

    real-brisker
    Member

    aries – Well said!

    #919065

    Midwest2
    Participant

    With a debit card I can go online and see the exact amount charged and where. The only problem is buying online where sometimes they don’t charge until they’ve shipped the item, but that would be the same for a credit card.

    I’ll say it again – the credit card companies are making lots of money, and that money is coming from YOU, the customer. Why pay someone else to use your own money?

    #919066

    YW Moderator-42
    Moderator

    If you treat the credit card like a debit card (only spend what you have) and pay in full each month then credit cards are great. You build credit, gain points, etc. Nowadays you can check your accounts online so you can always know what you owe and you can even pay multiple times per month if that helps you keep better cheshbon of what you really have available.

    I keep track of all my spending – bank accounts and credit cards – in a spreadsheet. I have a line in the checking account sheet that is linked to the total owed from the credit card sheet so the bottom line amount available in the bank reflects money owed to the credit card. So I always know what I have available and can always go back and see where all the money went.

    #919067

    akuperma
    Participant

    Anytime you do not pay your balance in full by the end of the period, you are borrowing money from the issuer of the credit card (usually a bank), at fairly high interest.

    Ignoring the issue of ribis, that interest in compounding at a high rate and over a short period of time the compounded interest becomes a problem in itself.

    If you pay off your account on time, you can have up to a six week “free loan” from the credit card company (time between buying the goods/services and paying for them).

    #919068

    YW Moderator-42
    Moderator

    I heard that it is good for your credit history to pay most of your credit card balance before the month closes so that you never have an official record of owing a lot of money.

    To explain, if you spend $1000 between Jan 1 and Feb 1, you will get a bill for $1000 on Feb 1 that is due on March 1. As long as you pay that on time you are fine in terms of interest. But in terms of your credit history you will have a record of having owed $1000 so it’s better to pay all or most of that $1000 before the bill closes on Feb 1.

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