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Home > Smart Spending > Archives > 2008 > October > 13 > Entry
DEL.ICIO.USIt’s In The Cards: Use Plastic Wisely
The Atlanta Journal-Constitution
Remember the classic cinematic scene in “The Graduate?” A fellow tells the Dustin Hoffman character, “I want to say one word to you. Just one word… Plastics.”
Well, I’d like to say a few words about plastic — the much-maligned credit card. A recent article urged consumers not to carry plastic because it creates debt and late fees.
That may be sound advice for some, but not for smart shoppers. With us, the card is providing an interest-free loan. We purchase an item, then don’t pay for it until weeks later.
Is this how you use your card? Or are you inclined to not taking care of the tab in full before fees kick in? (If so, here’s five tips on reducing your card debt.)
Last month, my son’s tuition payment of $6,800 was due. I applied it to my card and was able to wait a month to pay it off. That’s a month’s worth of interest I earned on the amount while it sat in my account.
Better yet, after I accumulate points for credit card spending, I convert them for cash. This year, I anticipate $500 getting kicked back to me.
Does your credit card offer a cash-back deal?
All it takes to benefit from a credit card is a little discipline. Pay the total on the date due, not before. Fringe benefit: No worries about stuffing your wallet or purse with cash.
Where have you gone, Mrs. Robinson?
Why, of course, you’re off to the mall, with your credit card in hand.
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Comments
By verdi73
October 13, 2008 8:20 AM | Link to this
We soley use 1 credit card that offers points for hotel stays. We use it like a debit card where we log everything in the check book, and then pay it off at the end of the month. All it takes is a little self discipline. I am sure the credit card company hates us because they are not making any money off of us through interest.
By Jason
October 13, 2008 9:47 AM | Link to this
Waiting until the end of the month to pay your bill is bad for your credit score. FICA only considers balances due at the end of the billing cycle when making their calculations; they don’t know that you’re going to pay your debt in full, only that you owe a debt. Therefore, you should make your payment before you receive your statement, so it will be reflected in the balance owed at the end of the billing cycle.
By haze
October 13, 2008 9:55 AM | Link to this
Your comments give false hope to consumers. Let’s get real, very few people have that kind of discipline. And most will begin with that intent but will end up deeper in debt. Also it is a proven fact that you spend more money when you pay with credit cards (even if you can pay it off each month). As a very wise man who teaches about money makeovers said, It hurts to let “Uncle Benjamin” (a $100 bill) slip through your hands, but it doesn’t hurt as much to slide the plastic!
By Me
October 13, 2008 9:57 AM | Link to this
Well I guess Jason told you.
By Me
October 13, 2008 10:02 AM | Link to this
And so did Haze. Perhaps you should have done more research before you published your article. Or maybe it’s just one of those situations where what’s good for the goose may not be good for the gander. Oh well!
By Smart Shopper
October 13, 2008 10:14 AM | Link to this
I’ve used plastic for 25 years, I don’t carry a balance, I’ve paid off my 2 cards each month and I earn at least one free dinner per month using points and converting them to restaurants,, my credit score is 850 and as Dave Ramsey says, my house is paid for ,so that is my “BMW” bragging rights,,, oh I have a paid for 2007 Mercedes as well. To say that some people can’t have the discipline to pay of your cards is correct, most Americans are obese as well. It is a choice they make, no one fored them to be late on their payments or get fat, time to wake up America, start getting up early, digging for the worm and get out of debt. I’ve sacrificed much over the past 20 years to stay debt free… you can too if you just pay the price.
By Be Debt Free
October 13, 2008 10:16 AM | Link to this
I believe the best advice for anyone who uses credit cards is to cut them up, pay things with cash, set up a budget using real numbers and stick by it.
There is a temptation that “having it around for a rainy day” makes rainy days more prevalent.
Try the cash envelope system, see Dave Ramsey, and get to a point where you don’t owe anybody anything! That is a great place to be and I don’t believe you need to play the credit card floating game to get there…
By AJ
October 13, 2008 10:30 AM | Link to this
Using credit cards is all about personal responsibility. For my life, NOT using a credit is irresponsible. Each person has to decide if they are responsible enough to use a credit card.
I have one credit card where I get 5% cash back for gas and groceries, then another where I get 3% at restaurants, and so on. I pay my bills on time (or early) and in full. To not get free cash is stupid in my opinion and worth any slight decrease in my FICO (not FICA) score. I live by a budget, so with or without credit cards, my spending is the same.
By Lissa
October 13, 2008 10:44 AM | Link to this
We’ll be enjoying a nice $500 reward for using one card to make all our purchases that we would have made anyway. We put all our gas, groceries, and just about everything else other than the household bills on it and pay it all off each month. Our “cash back” hits next month, just in time for the holidays. :)
By Pam
October 13, 2008 11:04 AM | Link to this
Hi Lissa, What card rewards $500? Just curious. My daughter goes off to college next year so I could really rack up some rewards.
By SharonH
October 13, 2008 11:53 AM | Link to this
I use my credit card for rewards also. I put everything possible on my card and pay if off at the end of the month. I have several cards that I rotate this way. There are also several deals throughout the year. Right now, Discover Card is giving 5% back on groceries and restaurants for the next 3 months, last 3 months, it was gas. When I use up the reward on Discover, I’ll switch to Chase MC for which I will get 3% back on everything. This year, I too will get over $500 back in cash rewards. It doesn’t require that much discipline if you stick to the budget and not buy things that are not budgeted for in the first place.
By SharonH
October 13, 2008 11:57 AM | Link to this
Lissa, why don’t you put household bills on your card also? I think you are missing an opportunity there- I put my phone bill/internet, cell phone, electric, and satellite bill on my card. Not gas or water because they charge a fee for using a credit card.
By Texas Pete
October 13, 2008 12:59 PM | Link to this
Do not put visits to massage parlors or local hotels that you did not visit with your wife. Belive me it all comes out in divorce court.
By EMMA
October 13, 2008 1:11 PM | Link to this
OMG Thanks everyone up above. Some excellent advice and ideas. I soooooo needed this, I only have four and I just wanted to know how others manage theirs. OMG Thanks again. People are doing things I didn’t even think about doing.
By Ryan
October 13, 2008 2:12 PM | Link to this
Very, very good tips! I also get $300 cash back per year with my card(s). But, caveat emptor, this system is NOT for commoners.
By Lissa
October 13, 2008 3:44 PM | Link to this
Pam - We use American Express Blue Cash card. It gives you cash back annually depending on the amount spent. I think the normal rate is .5% (1% on gas and groceries), but after $6500 it kicks up to 1.5% (5% on gas and groceries). There’s no limit to how much you can get back. Last year it was $300 for us and this year it’ll be $500. It’s worked out great for us, but it doesn’t do much good if there aren’t a lot of purchases on it for the year.
SharonH We budget the household bills separately, so they don’t go on the card. I know we’re missing out on the rewards there, but it makes it a little easier on us. The majority of it gets paid with web bill pay anyway.
By mr. cheapskatin'
October 13, 2008 7:55 PM | Link to this
I always assumed the credit card companies hated me, too, for never paying interest. That’s why I’ve been surprised the last few times when my monthly check to Visa apparently arrived a day after the deadline (even though I mailed it in time). They agreed to waive the late fee. I figured they’d try to hit me there since they aren’t scoring any punches with interest payments. As for having discipline to pay on time, anybody can do it. My dear daughter drove up a serious credit card debt with unfettered spending. I helped her pay it off in return for a pledge that she avoid interest payments in the future. It’s working (or so I believe).
By damnthebutcher
October 13, 2008 8:11 PM | Link to this
2 true statements that you should NEVER do. Do use a credit unless you can pay off at the end of the month and NEVER buy a car or truck from Lawson Chevrolet in Jasper. Both could be the worse decision you will ever make. You could get screwed doing both big time!!!
By damnthebutcher
October 13, 2008 8:11 PM | Link to this
2 true statements that you should NEVER do. Do use a credit unless you can pay off at the end of the month and NEVER buy a car or truck from Lawson Chevrolet in Jasper. Both could be the worse decision you will ever make. You could get screwed doing both big time!!!
By damnthebutcher
October 13, 2008 8:11 PM | Link to this
2 true statements that you should NEVER do. Do use a credit unless you can pay off at the end of the month and NEVER buy a car or truck from Lawson Chevrolet in Jasper. Both could be the worse decision you will ever make. You could get screwed doing both big time!!!
By Be responible, use CC
October 14, 2008 12:59 PM | Link to this
I agree, You need to use your credit cards it determines your credit worthiness, not using them indicates you are not worthy of credit… Just be self-discplined and determine when it is a good time to use them. I pay all my bills and earned points at the end of the month.. As soon as I am paid I pay the balances off and never accural interst, it is a great concept.. Let’s be adults here and be responsible. I have taught my 23 yr old son the sane concept…
By ATL cc user
October 14, 2008 1:22 PM | Link to this
Cutting up your credit cards is OK; but if they are paid off, actually putting in writing that you would like to close your account is better. A mortgage application can be evaluated by the amount of OPEN credit you MIGHT possibly rack up later.
By doxieluver
October 14, 2008 2:35 PM | Link to this
We used to charge our daughter’s tuition on a credit card that gave us 2% back. However, the colleges have gotten smart. At UGA and Med Univ of SC they charge a convenience fee of $60. So be aware of this before you use the credit card on college tuition.
By doxieluver
October 14, 2008 2:38 PM | Link to this
Excuse the UGA comment about convenience charge. That’s incorrect. They are just picky as to what type of cc they accept.
By Edward
October 14, 2008 5:46 PM | Link to this
If you have any cards,cut them up now to regain your credit,and freedom