Comments on: A Credit Card is Not a Free 30 Day Loan

By: John

John — Mon, 23 May 2011 13:08:11 +0000

@Prett – you provide a very interesting perspective comparing a different culture to that in the US. Thanks very much for sharing. I’ll check out your blog.

By: Prett

Prett — Sat, 21 May 2011 16:50:06 +0000

I recently came to the US – a society with high demand on convenience from a more traditional society where people have more demand on security. And it is interesting to see the difference – in my native country almost everyone have a debit card to gain from paying without cash, but nearly no one have a real credit card – people find it risky an scary to use money which is not earned yet. That is the result of too many catastrophic changes people have seen during they life. I think while the economy in the US was good and stable everyone used to have from one to ten credit cards and new that in any situation (job loss, health problems) he will find an easy way out. But last economy recession and all the resulting uncertainty made people to think that they trust they lives and the results of lots of efforts to a chance.
And it is interesting to see that people in the US start returning to the same position that people in my country have – “I don’t want to spend money not earned yet”.
My credit cards blog is there if interested.

By: faisal

faisal — Mon, 21 Mar 2011 09:42:44 +0000

Great post full of useful tips! Usually we use credit card for buying something, but sometime we can not limit to using credit card for consumtion only. I realize that you are an expert in this topic. My site is fairly new and I am also having a hard time getting my readers to leave comments.Thanks for the post

By: beatthebanks

beatthebanks — Wed, 12 Aug 2009 15:35:50 +0000

The banks have a lot to answer for, even now the cost of credit cards is at an all time high.

By: John

John — Thu, 12 Mar 2009 03:21:06 +0000

@Alissa – It doesn’t sound like you fall into the same credit card traps that a lot of people do. I agree that if you are proactive about your budgeting and spending that it doesn’t really matter too much which payment method you use. The big trap people fall into is spending 12-18% more when they use a card compared to cash – if you do that than the 1% cash back doesn’t look so hot anymore. It seems like you do not fall prey to that problem due to your budgeting habits.

By: Alissa MacPhee

Alissa MacPhee — Wed, 11 Mar 2009 18:04:38 +0000

I know this is an old post, but I just found your blog and I’m enjoying reading through it.

We use a credit card for any purchase that we possibly can. I don’t see it as “credit”, per se, but simply as a method of payment. I think you can get into almost as much trouble paying cash or using a debit card. You can just as easily spend money that was supposed to be set aside for a bill by using any of these methods. Our budget is set up using the zero-based envelope method. Each month, we allocate every cent of my husband’s income into various categories. With each purchase, we deduct that amount from what’s remaining in that category. When that category is empty, we cannot spend any more from that category, period. We would follow this method whether we were using cash, debit, or credit card to make the actual payment. I don’t believe it’s the method of payment that gets people into trouble, but failure to follow a budget. Somebody could just as easily withdrawl all of their money and claim they’re living on cash, but then not have enough money left to cover a mortgage payment or a home repair, because they failed to follow a budget.

What I like about using the credit card is that it’s easily trackable (I download transactions daily, and reconcile them with my manual entries just to make sure I haven’t missed anything), and they offer more protection that debit cards and cash. Our card also gives us Air Miles rewards, which we are saving up for a some-day family trip to Disney World. By the time our kids are old enough to enjoy the trip, we should be able to cover the whole thing with Air Miles, which is very exciting! We leave our money in a savings account for the month, and pay the bill when it arrives, which earns us a little bit of interest. I think this also differs somewhat from how some people use credit cards. I’ve heard people say that they pay their cards in full each month, so therefore there’s no problem – but in reality, they’re spending the money this month, and paying for it with NEXT month’s income. So technically, it IS debt. We are spending money that we already have in the bank. I think that’s also a consideration.

Alissa MacPhee´s latest blog post…Still here.

By: Joshua

Joshua — Sat, 01 Nov 2008 20:45:48 +0000

I have used cards strictly for the rewards, but here is the method that I used :

Regardless of which card it is, as soon as I come home, I take the receipt and transfer the amount that was charged into my savings account, and then reconcile it on my budget sheet. This way, the money is out of my “operating account” ( checking ) as if I had used a debit card and I have reconciled the charge within my budget.

Once the statement comes in, the funds to cover it are already set aside in the savings account. I can transfer the funds back in and pay off the card.

I wouldn’t recommend this to anyone unless they are very disciplined, because it is stil easier to spend more than you have when you use plastic.

‘Nuff said!

By: John

John — Sat, 25 Oct 2008 02:30:17 +0000

@ChristianPF – I agree with what you are saying. And I do not want it to seem like I am suggesting that everyone should go out and get a credit card. I used to think it was a great deal to get the bit of cash back but I have moved away from that line of thinking. I did mention that I use a card because I wanted to be transparent and not hypocritical by railing against credit cards even though I do use one. Also, I didn’t want to come off as some pompous jerk by saying “you people can’t handle them but I can!”

So are you saying you do not use credit cards at all? Or are you saying that you don’t like to be seen as endorsing them on your blog?

@Vern – thanks for your nice comments. I agree that a credit card is something we all should be careful with like you seem to be.

By: Vern Michelli

Vern Michelli — Fri, 24 Oct 2008 16:17:38 +0000

Interesting post and very well written. I’m pretty much in the same camp as the author, in that I have (and use) a credit card but I only buy things that I already have the cash for. I originally got the card in my early 20s because I wanted to build some credit, so I just had a Netflix subscription go on it every month and then paid it off immediately. So for me, I use it both as a convenience and as a way to prove that I’m creditable… Card companies seem to agree with me.

By: ChristianPF

ChristianPF — Fri, 24 Oct 2008 15:49:46 +0000

The problem for me with credit cards is that almost everyone “thinks” they have the discipline to handle them, while the great majority do not. This is one of the reasons credit card companies are so stinkin profitable.

I know there are some (like yourself) who can use them and benefit, but personally I can’t recommend using them for convenience because I know that some of the people I recommend it to will end up in a worse situation because of it. They are adults and should be responsible for their own actions, but I just don’t really want to be a part of it… Just my 2 cents…