Author Topic: How do you use your credit card?  (Read 4052 times)

LibrarIan

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How do you use your credit card?
« on: January 13, 2014, 01:02:20 PM »
Mustachians,

I have not had a credit card in a couple years. I used to have a CitiBank Visa card and I feel like I was pretty responsible with it. But in my pre-Mustachian life, I decided that I did not need one anymore and I canceled it. I've started to realize that I probably should have one for when I eventually go to buy a home. Anyway, I was curious to find out how Mustachians use their cards. I hate them and I don't want to be in the credit system, but I guess you just can't avoid it if you want to do certain things in life.

What do you buy with them?
How do you monitor your card so you don't have late payments (i.e. some kind of handy reminder system you use)?
Do you pay off the balance in full immediately upon getting a statement or in portions?
Are there certain things (apart from just never paying) that I should avoid so I don't lower my credit score?

Any other tips/tricks/cheat codes are quite welcome. I'm researching cards now but I'm still wary about getting one before I have a plan in place for its use.

Thanks,

LibrarIan

Jamesqf

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Re: How do you use your credit card?
« Reply #1 on: January 13, 2014, 01:10:26 PM »
What do I buy with them? - Everything I can, for the cash back.

How do you monitor your card? - On line. plus remembering when payments are due.

"Do you pay off the balance in full immediately upon getting a statement or in portions?"

No, I pay when the balance is due.  The day before the due date, generally.  What I pay is either the balance due or, for the 0% interest for a year ones, the minimum payment rounded up to an even hundred.

Cecil

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Re: How do you use your credit card?
« Reply #2 on: January 13, 2014, 01:11:18 PM »
I have a CapitalOne credit card that gives me 1.5% cash back on all purchases (best one I could find in Canada).

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What do you buy with them?


Everything I can.

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How do you monitor your card so you don't have late payments (i.e. some kind of handy reminder system you use)?

I get an email when my statement is available, and I set up a scheduled online banking payment. I monitor my finances closely enough that I'm not going to go a whole month without noticing I forgot to pay.

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Do you pay off the balance in full immediately upon getting a statement or in portions?

Always in full, immediately. Otherwise I lose my grace period and have to start paying interest.

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Are there certain things (apart from just never paying) that I should avoid so I don't lower my credit score?

Don't worry about your credit score too much. Certainly don't do anything that might cost you money in an attempt to increase your score.

apoclater

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Re: How do you use your credit card?
« Reply #3 on: January 13, 2014, 01:21:49 PM »
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Are there certain things (apart from just never paying) that I should avoid so I don't lower my credit score?

Here are the big "Don'ts", in my estimated order of magnitude (worst to least worst):

1. Don't forgo paying your bill entirely (in other words, pay your bills - period).
2. Don't forgo paying your bill temporarily (in other words, pay your bills on time).
3. Don't close old cards (unless of course, you have an annual fee on one that you don't see the value in paying any longer).
4. Don't utilize your credit over 10-20% (ie if you have $10,000 worth of credit, don't use more than $2,000 at a time).
5. Don't open too many accounts over a short period of time (this, however, will recover in the long term).

Frankies Girl

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Re: How do you use your credit card?
« Reply #4 on: January 13, 2014, 01:39:10 PM »
What do you buy with them?
Just about everything - food, household stuff, gas, pay for repairs, whatever.

How do you monitor your card so you don't have late payments (i.e. some kind of handy reminder system you use)?
I have email alerts when the statement is generated. I also set up my due dates to be a specific date so I know when stuff is supposed to be due as well. I love being able to log in and check the last day-week-month and see exactly where the spending happened. It's much better for me than trying to keep up with cash transactions.

Do you pay off the balance in full immediately upon getting a statement or in portions?
In full and on time, without fail. There's no point to using a card if you're going to rack up interest payments. That's just giving away money and putting yourself in debt.

Are there certain things (apart from just never paying) that I should avoid so I don't lower my credit score?
If you're paying off every month in full and on time, that's the big thing. I'd also advise not having tons of cards (churning to get rewards) unless you're extremely organized. I'm not, so I have one good rewards card and one backup card that has other benefits.

Any other tips/tricks/cheat codes are quite welcome. I'm researching cards now but I'm still wary about getting one before I have a plan in place for its use.
Can't really think of anything that hasn't already been mentioned.  They are a great tool if used correctly. Unfortunately, it seems like no one (not counting the members here and other frugal sites) understands the concept of responsibly using a credit card - you don't use it unless you have money in the bank to cover the cost. If you have to save up for something before purchase, then you shouldn't purchase UNTIL YOU HAVE IT SAVED. I use it since it is easier to manage and has a ton of protection if lost or stolen and I get rewards/cash for the usage, and isn't linked directly to my bank accounts.

Nothlit

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Re: How do you use your credit card?
« Reply #5 on: January 13, 2014, 02:00:25 PM »
What do you buy with them? - Everything I can.
How do you monitor your card so you don't have late payments (i.e. some kind of handy reminder system you use)? - I periodically check my transactions online, but I have signed up for autopay so I never have to remember to make a payment. It happens automatically.
Do you pay off the balance in full immediately upon getting a statement or in portions? - Since I've signed up for autopay, my credit card company automatically pulls the full balance due each month from my bank account, a couple of days prior to the due date.
Are there certain things (apart from just never paying) that I should avoid so I don't lower my credit score? - Keep overall usage relatively low (i.e., don't run up the balance all the way to the limit every month, even if you pay it off in full every month). Don't carry a balance beyond its due date. I use creditkarma.com to keep an eye on factors that may influence my credit score.

xingcat

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Re: How do you use your credit card?
« Reply #6 on: January 13, 2014, 02:01:05 PM »
I buy things that give me a decent cash back percentage, generally gas and groceries, on my card. I pay off at the end of the payment cycle, the entire balance. Basically, I'm earning money for buying things, which is great.

seattlecyclone

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Re: How do you use your credit card?
« Reply #7 on: January 13, 2014, 03:21:28 PM »
What do you buy with them?
Pretty much everything. I probably average 2-3% cash back these days by having and using a few different credit cards that give high percentages back on different categories of merchants. One card I've been recommending a lot lately is the Sallie Mae MasterCard from Barclaycard. It gives 5% back on gas, groceries, and bookstores (Amazon counts as a bookstore). The bonus rate is good for the first $250 of gas, $250 of groceries, and $750 at bookstores in a given month. All other purchases get 1% back. If you're a Mustachian whose spending mostly goes toward essentials, you can't go too wrong by making this your one and only credit card.

I also carry a Chase Freedom card and a Discover card for their rotating 5% back categories, and an Amazon card for 2% back on restaurants and drug stores (but not Amazon purchases, since the Sallie Mae card gives a better cash back rate there). Though I happily carry multiple cards to optimize my cash back, you may want to start with just one card until you have established some good habits in paying off the balance on time every month. Remember that one month of interest charges can often be enough to outweigh a whole year of cash back on a card, so don't even try to play the cash back game until you know your processes for paying off your balance each month are rock solid.

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How do you monitor your card so you don't have late payments (i.e. some kind of handy reminder system you use)?
All of my cards have an automatic payments feature that pays the entire statement balance on (or shortly before) the payment due date. The only risk in this system is that I might not have enough money in my checking account on the date the payment goes through. My card balances are usually low enough that this isn't an issue, but I try to remember to check the balance online every month just to make sure I put a little more in the checking account if the card balance was a bit higher that month.

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Do you pay off the balance in full immediately upon getting a statement or in portions?
See above. I have the credit card company automatically take the full balance out of my checking account on the payment due date. Never pay less than the full statement balance. Therein lies madness.

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Are there certain things (apart from just never paying) that I should avoid so I don't lower my credit score?
A history of paying your debts on time is the biggest factor in your credit score. Other factors include:
* Credit card utilization: it's fine to use your credit card for everyday purchases, but try to keep your overall credit card balance (across all your cards) below half of your total credit limit. Even lower is great if you can manage it. This shows that when you apply for a new loan, it's not just because you maxed out the rest of your cards.
* Age of accounts: Once you open a credit card account or two, never close it. Even if you never intend to use the card again, leave the account open. This helps keep your average account age as high as possible, which is a good factor in your credit score.
* Number of accounts: More total accounts on your history, with a good payment history, shows that more banks have trusted you with credit and you've paid as you agreed in each case. This also increases your score.
* Credit inquiries: Each time you apply for a new line of credit, it goes on your credit history for a couple of years. If you apply for a bunch of loans all at the same time, that's a small red flag.

dmdunca

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Re: How do you use your credit card?
« Reply #8 on: January 13, 2014, 03:23:17 PM »
What do you buy with them?
Everything: groceries, gas, the dentist, the electric bill, the cellphone bill, the DirecTV bill, insurance premiums, medical bills, eating out, travel,

How do you monitor your card so you don't have late payments (i.e. some kind of handy reminder system you use)?
I track all my spending in YNAB: The CC account is just another account like my checking account.  I know at any given time the exact balance on the cc account.  I double check it online every few days.

Do you pay off the balance in full immediately upon getting a statement or in portions?
I have it set to automatically pay in full on the due date.

Are there certain things (apart from just never paying) that I should avoid so I don't lower my credit score?
I'd avoid using so many cards that you can't keep careful track of every purchase.  We use two: the Cap One Visa and the Costco Amex.

I am currently using a Cap One Visa that gives me 2% in rewards when redeemed for travel expenses.  We are going to Hawaii next month and I was able to use my rewards to cover the round trip airfare for the both of us.