Author Topic: Afraid to use credit cards  (Read 5005 times)

Zarrr

  • 5 O'Clock Shadow
  • *
  • Posts: 7
Afraid to use credit cards
« on: December 29, 2013, 07:04:02 PM »
My wife and I were victims of the Target fraud incident that just happened. We lost roughly $1500, but fortunately our bank is reimbursing us. It took about 1 week to get the money back. One of my coworkers only uses his Amex charge card, and he said that Amex reversed the charges immediately. I realized that if I used a credit card for my shopping at Target instead of my DEBIT card I would have had better protection.

We have a few credit cards, but I just paid them all off in 2012 after carrying balances for several years. I don't ever want to be in that position again!

How do you pay with credit and balance that against the funds in your bank account? Do you track every single expense? I find this hard to do...do you only spend money within the confines of a budget? I'm at a loss as to how to track this. When I use my debit card it's easy to see how much money I have because the balance is going down. The reason I got into a mess with my credit cards prior to 2012 is because I'd spend just SLIGHTLY more than I earned each month (even though I intended to pay the full balance).

Any advice is greatly appreciated!

fkampere

  • 5 O'Clock Shadow
  • *
  • Posts: 23
Re: Afraid to use credit cards
« Reply #1 on: December 29, 2013, 07:10:51 PM »
Sign up with mint and create a budget and you shouldn't have a problem. I never have and I use my credit card for everything and pay it off every month.

AccidentalMiser

  • Pencil Stache
  • ****
  • Posts: 659
  • Age: 51
  • Location: SE Tenn
Re: Afraid to use credit cards
« Reply #2 on: December 29, 2013, 07:18:47 PM »
I always pay with credit, an Amex from Costco (soon to be an Amex from Fidelity) and a Mastercard from Citibank (for Sams Club and places that don't take Amex).  We manage them using Mint as fkampere said.  I pay them off every Saturday morning.  Simple and I don't get behind.

I was also hit with Target fraud, and Amex reversed the charges immediately.  The only thing I ever use a debit card for is Aldi.

Zarrr

  • 5 O'Clock Shadow
  • *
  • Posts: 7
Re: Afraid to use credit cards
« Reply #3 on: December 29, 2013, 07:34:49 PM »
I'm looking at Mint's budgeting feature right now and it could work. I also saw in another thread about budgeting software something called YNAB and it looks pretty cool.

What's killing me right now with Mint is our transactions at Walmart & Sam's Club. Hard to look at that and tell from past transactions what is food, or clothes, or even diapers. How do you break down transactions that are a combination of groceries and other budgeted items? I'm sorry if this is a silly question....

As I 'm writing this out it's dawning on me that I've had NO IDEA where my money goes.

Zarrr

  • 5 O'Clock Shadow
  • *
  • Posts: 7
Re: Afraid to use credit cards
« Reply #4 on: December 29, 2013, 07:36:46 PM »
Hey...I just realized that each transaction on Mint has a drop down menu where you can 'split' a transaction. Very handy!

Apocalyptica602

  • Bristles
  • ***
  • Posts: 271
Re: Afraid to use credit cards
« Reply #5 on: December 29, 2013, 08:14:26 PM »
My wife and I were victims of the Target fraud incident that just happened. We lost roughly $1500, but fortunately our bank is reimbursing us. It took about 1 week to get the money back. One of my coworkers only uses his Amex charge card, and he said that Amex reversed the charges immediately. I realized that if I used a credit card for my shopping at Target instead of my DEBIT card I would have had better protection.

We have a few credit cards, but I just paid them all off in 2012 after carrying balances for several years. I don't ever want to be in that position again!

How do you pay with credit and balance that against the funds in your bank account? Do you track every single expense? I find this hard to do...do you only spend money within the confines of a budget? I'm at a loss as to how to track this. When I use my debit card it's easy to see how much money I have because the balance is going down. The reason I got into a mess with my credit cards prior to 2012 is because I'd spend just SLIGHTLY more than I earned each month (even though I intended to pay the full balance).

Any advice is greatly appreciated!

Don't wait for the credit card bill, do everything electronically. Use Mint if you want to quickly track expenses or see everything in one place.

I use Mint, but I also have a credit card with the same bank that my checking account is at. I log into their Online Banking service and see a overview of my two accounts (one checking one credit card) with balances.

I've never carried a balance and I pay for every single thing I reasonably can with that credit card.

Every week or so I'll log in and see my checking balance and my credit balance, even though I can totally wait until the end of the month and pay the entire bill... oftentimes I don't prefer to do that. I'll just pay off the balance mid-month with an electronic transfer from my checking account instantly.

So realistically my credit card goes from a few hundred to 0 and back up to a few hundred a few times a month, but I always make sure my last months statement is paid in full.

In the end it comes down to whether you are on top of it or not. I like having an idea of my balances even though I'm no longer in a position where I need to worry about every penny.
« Last Edit: December 29, 2013, 08:16:14 PM by Apocalyptica602 »

gooki

  • Handlebar Stache
  • *****
  • Posts: 2383
  • Location: NZ
Re: Afraid to use credit cards
« Reply #6 on: December 30, 2013, 01:34:51 AM »
I find having a credit card with a very low limit works well. Ours has a $1000 limit and the balance is paid in full once a month, electronically.

N

  • Handlebar Stache
  • *****
  • Posts: 1378
  • Location: Chicago
  • You must change your life. -Rainer Maria Rilke
Re: Afraid to use credit cards
« Reply #7 on: December 30, 2013, 01:59:47 AM »
I use YNAB and I love it.
I dont have a cc balance. I only charge things I know I have budgeted for and have money to pay off. I pay the balance in full. With YNAB, I enter my expenses (either by importing from my card's online site which automatically opens into YNAB) or manually, and I split the transaction.

Its easier if you dont buy so much stuff, of course. But its not difficult. I tend to update everything on a weekly basis to keep on top of things.

With YNAB, you are encouraged to operate with a one month buffer-meaning you have enough to pay for the month ahead of you. I cannot tell you how much less stress that is, how good it feels, not to be month to month, check to check. Its made a huge difference for us. Also, not only do I have a month buffer of expenses, but YNAB basically is a virtual envelopes system. I can move my money around to different categories so easily, without dealing with cash. So I have categories with savings built into them. Like car insurance I pay every 6 months, but I allot money into every month, so I can pay the bill in full, but the money is just sitting tight in my checking account waiting.

Im not afriad to use my cards, because I only use them for things Ive budgeted for and plan to buy. Its just another method of payment for me. I think of paying the bill as a transfer from my checking acct to my credit card. Its no different than if I had paid with a debit card to me.

Sydneystache

  • Bristles
  • ***
  • Posts: 274
  • Location: Sydney (Westie!)
  • Aiming for RE!
Re: Afraid to use credit cards
« Reply #8 on: December 30, 2013, 02:12:13 AM »
Zarrr, just put the fraud down to one of the inevitable things that happen in our modern world today. I don't have a credit card - not because I am afraid of them, but I have an aversion to spending money that is not my own. I like how they are issued pointing out the great things and points you can accumulate and then the disclaimers and penalties are in tiny print. KISS principle applies in financial products I buy or not buy into.

I have a debit card and a couple of years ago I had a card reissued because this UK bike company, Wiggle, was hacked massively. But my bank was quick to notice the fraud and I didn't even notice it until they notified me.

I don't buy into the tactics of cc companies and given the crazy Xmas-NYC sales currently in my country, I am grateful not to yield to that spend-spend-spend temptation.

Charlotte

  • Guest
Re: Afraid to use credit cards
« Reply #9 on: December 30, 2013, 03:58:59 AM »
Along the lines of KISS -- could you get a credit card (with a low limit) at your own bank? Then when you log on, you can see the balance and pay it off regularly.

This is what we do. It's somewhat unmustachian since we don't get points or anything. But the balance is there and  pay it off when my paycheck hits the account (twice a month).

randymarsh

  • Handlebar Stache
  • *****
  • Posts: 1374
  • Location: Denver
Re: Afraid to use credit cards
« Reply #10 on: December 30, 2013, 06:02:52 AM »
I just don't buy things I know I shouldn't.

If you want to track CC usage though, you could just use a check register and keep a running balance.

exranger06

  • Stubble
  • **
  • Posts: 100
  • Age: 31
  • Location: CT
Re: Afraid to use credit cards
« Reply #11 on: December 30, 2013, 08:29:50 AM »
Do you ever use checks any more? If so, how do you keep track of checks that haven't cleared yet? All you need to do is pretend that your credit card is a check and use it the same way. For example, if you write a check for $100, you keep track of that somehow so you don't overdraft your checking account. You subtract $100 from your available balance, essentially setting aside that $100 so it can't be spent on anything else and ensuring you won't overdraft. Well, if you bought something on a credit card for $100, you do the same thing! Subtract $100 from the available balance in your checking account. That $100 is now "set aside" for your credit card bill. Every time you buy something with a credit card, subtract that amount from your checking account balance. Then when your credit card bill is due, you should be able to pay it off in full because you set aside the money in your checking account.

rubybeth

  • Handlebar Stache
  • *****
  • Posts: 1402
  • Location: Midwest
Re: Afraid to use credit cards
« Reply #12 on: December 30, 2013, 08:56:09 AM »
We charge virtually everything we can for the cash back or points, depending on which card we're using, and we also have the Target Red Card debit card. I guess I don't keep meticulous track of each time we spend at stores like Target, but I know in general how much we spend in the larger categories each month. You could just write down "$50 Target" and then keep track on your phone or wherever is most convenience how much of that was groceries, supplies for the home, kid, a new pack of socks, etc. You can also try the Mint.com split feature, as you've noticed, but I find it kind of clunky and only do it to split out "cash" from purchases if I get cash back at the register.

oldtoyota

  • Magnum Stache
  • ******
  • Posts: 3151
Re: Afraid to use credit cards
« Reply #13 on: December 30, 2013, 12:09:52 PM »
I do what you are asking with YNAB.

I am sorry that happened with Target. I used T during that time period and, as far as I can see, nothing happened. However, a month earlier, my card number had been used illegally. AMEX is the one that told me, and they reversed the charges immediately and send me a card overnight so I would have it before I flew out on vacation the next day.

I do think it's "safer" to pay with a credit card. While Amex would probably piss off one customer, they won't want to piss off thousands.

With YNAB, you can split transactions and set aside money in your bank account for anything you want. I have money set aside for future tuition and emergencies, for instance. I don't use that money for anything else, because all the dollars are allocated in YNAB with their "job" to do.

Probably, because you used cards a certain way in the past, you are concerned you will repeat the behavior. If that is the case, I can empathize with your concern. However, think of the card as your bank account. It's not for going willy nilly with your spending. It's a tool you use to pay for things with money you have allocated for those purchases.



oldtoyota

  • Magnum Stache
  • ******
  • Posts: 3151
Re: Afraid to use credit cards
« Reply #14 on: December 30, 2013, 12:13:16 PM »
This is what we do. It's somewhat unmustachian since we don't get points or anything. But the balance is there and  pay it off when my paycheck hits the account (twice a month).

YNAB has several rules. One is to give every dollar a job. Another is to life off of last month's income. This way, you stop living paycheck to paycheck. I saved up some money and used some savings so that we could start doing that.

In December, we lived off of November income. My January budget is made up of December income and so on. It's freeing, because you can budget ahead of time based on the income you know is *already in your bank account.*

Now that I have all of the December income marked for January, I have gone through and budgeted how all of the dollars will be spent (gave every dollar a job).

=-)


Jamesqf

  • Magnum Stache
  • ******
  • Posts: 4047
Re: Afraid to use credit cards
« Reply #15 on: December 30, 2013, 12:26:54 PM »
We charge virtually everything we can for the cash back or points, depending on which card we're using...

Same here.  And also keeping track of which card is better for any particular purpose.  E.g. the BofA one gives 3% on gas, but next quarter the Chase one will be giving 5%, but the Citibank one has 0% interest to the end of 2014, so put the big purchase on that...

YNAB has several rules. One is to give every dollar a job. Another is to life off of last month's income. This way, you stop living paycheck to paycheck.


But when you get really good at this Mustachian stuff, you can live off last year's income :-)

rocksinmyhead

  • Handlebar Stache
  • *****
  • Posts: 1491
  • Location: Oklahoma
Re: Afraid to use credit cards
« Reply #16 on: December 31, 2013, 07:27:50 AM »
just adding another voice to the choir saying I use my travel rewards Amex for every purchase I possibly can, and I use Mint to help me keep track :) I pay mine off every payday.

One thing that helps me is thinking like this: If you can keep track of the decreasing balance in your checking account and avoid overdrafting (which it sounds like you can), why not keep track of the increasing balance on your cc account? If you know you can only afford to spend X amount per month or per pay period on non-bill expenses (which is what I use my cc for, rent etc. comes out of the checking account), then just watch your balance and you can say, "oops, I'm getting close to $500, better slow down because I don't want to 'overdraft'" or whatever :)

It seems like the consensus on Mint vs YNAB is that it just comes down to personal preference. I've been using Mint since 2008 and while there are some things I wish would change about it, overall it suits my needs very well. Others feel that YNAB is better for budgeting, but I like Mint's budgeting capabilities as well.

As for the varying levels of fraud protection, I did just find out today that someone was using my Amex card fraudulently over the weekend (I'm guessing due to the Target thing since I used it there once). Had a good customer service experience, I called Amex and they fixed it in <15 minutes and are expediting me a new card. But I've heard of banks being really helpful with this too, I think maybe it's just more of a crapshoot. I know I personally did feel relieved when I realized this was the only card I'd used at Target in that time frame because I knew if anything happened it'd be super easy to fix.

I'm looking at Mint's budgeting feature right now and it could work. I also saw in another thread about budgeting software something called YNAB and it looks pretty cool.

What's killing me right now with Mint is our transactions at Walmart & Sam's Club. Hard to look at that and tell from past transactions what is food, or clothes, or even diapers. How do you break down transactions that are a combination of groceries and other budgeted items? I'm sorry if this is a silly question....

Yep, I have this problem too :( There is a "split transaction" feature on Mint that lets you separate one transaction into multiples and categorize them accordingly. The only problem I have with this is that it requires me to do shit by hand, and probably within a few days before I throw away the receipt, and I'm terrible about that (which is why I don't think I would like YNAB as much, I think you have to do stuff manually?) I don't care about separating it out too much right now so I don't really worry about it, but I have done this in the past and it does work.

Quote
As I 'm writing this out it's dawning on me that I've had NO IDEA where my money goes.

This is an awesome realization!!! Welcome to the forum :)

Zarrr

  • 5 O'Clock Shadow
  • *
  • Posts: 7
Re: Afraid to use credit cards
« Reply #17 on: December 31, 2013, 09:49:40 AM »
I read every single reply and just want to say THANKS!

My wife and I looked at both Mint and YNAB. Of course Mint is free and YNAB has a one time cost (it's on sale on Steam right now for $30), but we decided to go with Mint and try to make that work since it is free.

It took some time to go through all transactions and account for every single transaction, but we did it...and we have a reasonable budget set up in Mint. The one thing that I don't like about Mint is the inability to plan ahead for next month's budget. To get around this, we're using a Google Docs spreadsheet that is "shared" between our google accounts and then tracking expenses in Mint for budget compliance.