Today, I did something unusual. I opened a new credit card. I know, I know. Bear with me...there is a method to my madness. My current credit card was opened right after college, and thus has a high interest rate, no perks like cash back, and a fairly low balance. The low balance is good, because it has kept me with less than $1500 in debt, which I think is pretty darn good for someone my age, but I'd really like to have no debt whatsoever (aside from the house and my student loans) pretty soon here.
I usually trash credit card offers as soon as they come. However, today I got one from Citi that caught my eye--zero APR on balance transfers through May of 2010, and cash back eligible on all purchases, and a lower interest rate, with no annual fee. What? You mean I could pay down my debt without paying interest? And I could save up for big purchases, put them on the card, receive the cash back, and pay them off at the end of the month? Sign me up!
Also, the balance is much, much higher than my last card. As I said, I don't plan to actually USE the balance, but having my debt comprise a smaller percentage of the amount on my card will also improve my credit score.
So how do you handle credit cards? Do you have them at all? Do you put all your expenses on them to receive cash back and pay them off every month? Are you still struggling to pay down some excessive spending a few years back? Do you use your credit card more than you should? Clue me in!
Monday, May 4, 2009
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We actually have a ton of credit cards- but we pay off the balance every month. Gotta get the rewards! = )
ReplyDelete(I have been thinking about the envelope system- but I don't know.)
We have like 4 or so credit cards between the two of us. They are all rewards-based: our go-to is a Citi card that gives us cash back. We get $50 for free buying things that we would buy anyway- groceries, etc. We end up with the cash back 3 or 4 times a year! It definitely adds up. We also have a gas credit card & get cash back from that too!
ReplyDeleteWe fully pay off all of the cards every month and haven't ever carried over debt. Between my car and student loans, we definitely have enough without the credit cards adding to it!
We are hoping to create good credit for ourselves with the cards, which is the reason that we have multiples in the first place.
When we moved in together 5 years ago, we had some massive CC debt...mostly DH's. We each had 2 credit cards. This past November, we paid off the last of it. We paid off $17k in one year!! We were paying $1500/month just to pay it off. Craziness.
ReplyDeleteLike 6 months ago I got a letter from one of the accounts that they were closing it due to inactivity...fine by me since I had only opened it for a 0% transfer. DH just got a letter the other day that they were lowering his credit limit due to inactivity. Which is totally fine because it was something crazy like $36k and now it's down to $17k.
Now the only CC we use is our Costco American Express and we pay it off every month. We use it for gas, restaurants and Costco purchases. I never want to have CC debt like that ever again!!
We have credit cards - no matter how we use them we pay the balance monthly. But, we've been steering clear of them for everything but set expenses since January and saving over $1000 a month. Apparently my target trips and his extra grocery spending added up, lol.
ReplyDeleteWe have two main credit cards, one to be used online and one to be used elsewhere... We had our credit card # stolen online and the current place we have it through took care of everything without any hassle on our end. So, we're keeping that one especially for online purchases...
ReplyDeleteWe only use credit cards for non-consumable items. I guess it was something that my mom taught me when I got my first credit card. That way when you go to pay it off, you're not paying for things that are already gone... Examples: food, gas, grocery's, etc... I hate paying for things at the end of the month that are already gone. We tend to use our cc's for clothes, furniture, household items, etc... Likewise, we pay them off at the end of the month as well.
Taryn, what is the envelope system? or am I completely out of the loop? haha
My husband and I have 1 credit card. We used to have 2, but paid 1 off and closed it. The other one had a really high balance, and we've been working to pay it off for about 8 months, and it will be paid off this month! Then we will work on paying off student loans, and hopefully be out of debt by the end of the year. We only use the credit card for big purchases/hotel reservations/etc... things that may need to be disputed at some point. We always have the cash to immediately pay it back though. We are on a "cash budget" (the envelope system) and it has worked very well for us. We follow the "Dave Ramsey" plan.
ReplyDeleteThe Cranes - Taryn's envelope system may be different, but my husband and I follow one too. It's a cash budget, and you allocate certain amounts of cash for different categories (groceries, gas, entertainment, restaurants, etc.. anything you spend money on), and operate on cash instead of debit/credit cards. It is not for everyone, but it has definitely helped my husband and I cut down on our spending, because it's a lot harder to part with cash than it is to swipe a card.
ReplyDeleteWe have 3. One is for home depot. We pay them off every month and we love getting rewards!
ReplyDeleteI'm planning to stay the hell away from credit cards till after I get done with grad school and have a real job like a real person (so right around my 30th birthday), but alledgedly the best thing to do to make your credit score all nice and shiny is carry a small balance month to month, so that you constantly have a little bit of debt on the card. For some reason, this makes the credit gods happy. It's what they said to do on NPR, anyway. So that's how I plan to roll.
ReplyDeleteI don't want to talk about it.
ReplyDeleteMyrunningjourney- Thanks! That does sound a lot more difficult than swiping a card! ugg I don't know if I could do it. I actually never ever carry cash with me.... It's smart at times and not so smart at other times! Thanks again! :-)
ReplyDeleteI have some from my irresponsible college days that we're working to pay off. It doesn't help that we used them to buy a lot of stuff when we first moved into our house either, but we're working on it. I have one with a very low rate and a high credit line, that I've transferred other balances on to. It helps in paying them off quicker.
ReplyDeleteWe don't do the buy stuff and then pay it off at the end of the month as none of them are rewards cards and I don't want to apply for any others. Although John does have 2 low limit big box retailer cards (We're rebuilding his credit) that if we use we pay off each month.
We actually leave all credit cards locked up at home so that we don't use them. We have to really want something enough to think it through and make a return trip to buy it.