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Old 04-04-07, 03:26 PM
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Credit card question

My wife and I have just completed paying off the majority of our credit card debt, and have heard that keeping the cards open is good for your credit score. Does anyone here know anything about this? We worked very hard to pay off the debt from when we were in college and first moved in together. I was really wanting to close the accounts, but if keeping idle cards open is a good idea I'll probably do that.
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Old 04-04-07, 04:07 PM
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Thanks guys.
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Old 04-04-07, 04:08 PM
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and if need be, negotiate for a lower interest rate with your current credit card company.
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Old 04-04-07, 05:44 PM
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Hey guys, if I'm looking to get a credit card to build up some credit, do you have any recommendations? APR's, fixed rates, all that? I know very little about them and would appreciate any info.
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Old 04-04-07, 06:34 PM
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credit gives you an excuss to get into debt. I try to stay away from any kind of debt whatsoever. If you must have a card, I would recommend keeping only one card...having more than one can lower your credit score. I would also pay that off every month.
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Old 04-04-07, 06:50 PM
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Quote:
Originally Posted by elchiv View Post
credit gives you an excuss to get into debt. I try to stay away from any kind of debt whatsoever. If you must have a card, I would recommend keeping only one card...having more than one can lower your credit score. I would also pay that off every month.
I very much agree with this. We have a limited number of cards and except for once or twice in my long life, we have paid them off each month. I have had the benefit of not being inundated as a young adult, with credit card apps on a daily basis. Credit will make the careless consumers debtors in no time. It takes a lot of restraint to put off a purchase until you know you have the money to pay it in a short time. Despite growing up with parents that are careful about their finances, one of my daughters has 5-digit debt. She has a bit of an addictive personality, and when she wants something, she wants it yesterday. She was really shocked when we explained why her balances were not going down after making minimum payments. Our society promotes the belief that if you want something, just put it on plastic. And the numbers of people in debt just continues to rise...
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Old 04-04-07, 06:57 PM
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I would suggest not doing this, if you have had the credit card since college your average credit age is higher. By closing this account and opening up a new one, your credit age becomes lower which will affect your credit score.

Here's a booklet that states everything you need to know about credit scores. http://www.myfico.com/Offers/myFICO_UYCS%20booklet.pdf

Here's an exerpt from page 16.
"Should I Close Old Accounts to Raise my Score ?
Generally, this doesn’t work. In fact, it might lower your score. First of all, any late payments associated with old accounts won’t disappear from your credit report if you close the account. Second, long established accounts show you have a longer history of
managing credit, which is a good thing. And third, having available credit that you don’t use does not lower your score. You may have reasons other than your score to shut down
old credit card accounts that you don’t use. But don’t do it just to get a better score."
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Old 04-04-07, 07:22 PM
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Originally Posted by D-rob fan View Post
Generally, this doesn’t work. In fact, it might lower your score. First of all, any late payments associated with old accounts won’t disappear from your credit report if you close the account. Second, long established accounts show you have a longer history of
managing credit, which is a good thing. And third, having available credit that you don’t use does not lower your score. You may have reasons other than your score to shut down
old credit card accounts that you don’t use. But don’t do it just to get a better score."
Again, Fico encourages people going into debt. If you want to be a slave to the lender, then keep several cards open, but you will not gain true financial independence until you learn to break free from the money lenders.

I think if you want a good source for getting out of debt, read Dave Ramsey. I gave a copy of his book to my son and he cleaned up 30,000 debt in 2 years and is doing great now.
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Old 04-04-07, 07:23 PM
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Quote:
Originally Posted by D-rob fan View Post
I would suggest not doing this, if you have had the credit card since college your average credit age is higher. By closing this account and opening up a new one, your credit age becomes lower which will affect your credit score.

Here's a booklet that states everything you need to know about credit scores. http://www.myfico.com/Offers/myFICO_UYCS%20booklet.pdf

Here's an exerpt from page 16.
"Should I Close Old Accounts to Raise my Score ?
Generally, this doesn’t work. In fact, it might lower your score. First of all, any late payments associated with old accounts won’t disappear from your credit report if you close the account. Second, long established accounts show you have a longer history of
managing credit, which is a good thing. And third, having available credit that you don’t use does not lower your score. You may have reasons other than your score to shut down
old credit card accounts that you don’t use. But don’t do it just to get a better score."
Thank you very much. Especially for the myfico link. I printed it out and will take a good long look at it when I get home tonight.
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Old 04-04-07, 07:26 PM
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Old 04-04-07, 10:13 PM
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I think that using credit in this case is a lifesaver. If I faced some huge bill, like hospital or, say your furnace goes out, I would have to consider that route because one has to keep their family going. This is a very good reason to use it. But people like the daughter I mentioned above, uses it because it is there and because she can. That was upsetting to my hubby and me because we can't bail her out--nor should we (in general). Exceptions always happen. Good luck!---cheese
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Old 04-05-07, 12:46 AM
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el chiv is right. read dave ramsey. why keep debt? close the cards, pay everything cash. if you're afraid of closing the cards, pay them off, then cut them up and never worry about them. learned a long time, ago. im debt free.

be debt free. no need to CONsolidate. it's a con. the debt is still there. example, you have 30,000 in cc debt spread over 5 cards, now it's just one card and one payment, still 30,000 in debt, it isnt going to go away. interest rate lowers, so what, still 30,000 in debt.

you build emergency funds. thats what keeps you safe. hospital bill, car repairs, home etc. keep in mind hospitals will work out payment plans and hey no interest like a credit card.

why be a normal american with cc debt?

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Old 04-05-07, 01:45 AM
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Here is what i did -

I did not get a credit card until i was 28 years old and entering a doctoral program. I bought a house for 145,000 in austin without ever having a credit card and i financed it with a fixed low interest rate with absolutly no problem. Before i had a credit card i had also bought a car with an auto loan through my credit union. don't believe the hype about "building your credit score" in my case, it was total BS.

Now i have one credit card that i put a $3000 limit on that i have for immeaditate emergency and i have an american express business card without a limit for my consulting business. I only use it so that i can get a good accoutning of my business purchases throughout the year.
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Old 04-05-07, 09:55 AM
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I can completely understand where you are coming from. I was in a similar situation about 12 years ago. I was doing really well in my job but then we had a tragedy strike us and we were grossly unprepared. Fortunately our family is really close and a brother had the confidence to lend us some money. The problem was that my business was completely run by credit and we had to use up all our funds on our emergency.

Long story short, I stopped using CC right then and there and have never looked back. But its not easy and sometimes its the only way. I wish you guys the best of luck in your situation because financial problems and living paycheck to paycheck is stressful and tough.
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Old 04-05-07, 10:02 AM
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im actually under a loan consolidation program...(not cause i was forced, i just wanted to be there...anyway)

i'll be done paying every cent i stupidly spent in college in 1 year. after that, i was told to keep one low interest card. preferably a card like american express that you have to pay off every month. those definitely raise your score.

being in the program....my credit score is now over 700....and ive been able to finance 2 vehicles with great aprs
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Old 04-05-07, 10:37 AM
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you pay like $60 the first time you go. the only thing i consolidated were credit cards. i dont think they do stuff like educational loans and car/house stuff....only because school loans is a total different story and cars & homes (including furniture) can be taken away from you if need be. thats why i was still able to go and get my masters....and even take my vehicles out.

after that....they shredded my cards and i had to vow not to open another account. at the time, i was a college counselor and had brought consumer credit counseling services to my school to do a presentation. it intrigued me that i could put all my cards into one payment at a lower apr and still come out clean in the end.

depending on how much you owe...they determine what you will be paying monthly. all credit cards have set apr's with these types of agencies....so like...one of my worst cards was visa at 21% and with the agency, it went down to 4%.

i get a montly bill...showing my balances on all 3 of my cards that i consolidated (mind you, they were really high because i had consolidated other small cards like victoria secret/dillards, etc) . every month you see a big decrease in your balances and it feels good.

once im done....i'll be debt free...with a great credit score and no penalty because i went into the program. so MORE CARDS!!!!!!!!!

once im done with this....we're looking at financing a new home its one of the best things ive ever done with my life. i dont stress about making my payments....missing one and getting ****ed with a higher apr, or dealing with transfers and what not.

i do recommend that you evaluate your situation. make sure you'll have money in the end to live on....since you wont be relying on your cards.
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Old 04-05-07, 10:43 AM
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you're lucky.

i was "that" dumb college kid that got credit cards and spent it on drinking every night & late night whataburger for the cruda.
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Old 04-05-07, 10:55 AM
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it never hurts to call one of those agencies and ask.

i didnt have those types of things....so i dont know

call. consumer credit counseling services is out of corpus christi
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Old 04-05-07, 11:08 AM
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Quote:
Originally Posted by Art Vandalay View Post
el chiv is right. read dave ramsey. why keep debt? close the cards, pay everything cash. if you're afraid of closing the cards, pay them off, then cut them up and never worry about them. learned a long time, ago. im debt free.

be debt free. no need to CONsolidate. it's a con. the debt is still there. example, you have 30,000 in cc debt spread over 5 cards, now it's just one card and one payment, still 30,000 in debt, it isnt going to go away. interest rate lowers, so what, still 30,000 in debt.

you build emergency funds. thats what keeps you safe. hospital bill, car repairs, home etc. keep in mind hospitals will work out payment plans and hey no interest like a credit card.

why be a normal american with cc debt?
I gotta agree with you. "Building your credit" is such a myth. Why spend thousands of dollars in interest, hundreds of dollars in balance transfers & late fees, all to 'build your credit' for a 2% break on a car loan? Not to mention, people end up spending 15-20% more using a card rather than cash - it's just easier to spend when you're swiping a card instead of whipping out the Benjamins. Fact is, most of us can't afford to finance a new car. Why do we insist on financing $30k cars making $40k/year? And as far as a home loan, you can get non-FICO based, manually-underwritten home loans. All a high FICO score means is that you're good at getting into debt.

I'm using Dave Ramsey's principles to help get out of debt. I'm not using a credit card ever again, and I don't plan on financing another car, either. Because there's two law degrees to pay for in our household we'll be aggressively paying off our debt longer than the usual two-years advocated by Ramsey, but we'll definitely have the credit cards and the rest of my car paid off.

Soon, we'll have the student loans that were on the 30 year plan paid off in about 6 or 7, and we'll have (hopefully) two great incomes and great potential to grow our wealth to live great and help others.
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Old 04-05-07, 12:04 PM
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1. keep the minimum number of credit cards you can, "more is not better even if you have zero balances". If you have a card you don't use, by all means close the account.
2. Pay your CC bills ON TIME, this is probably more important than anything. Credit scores will be better for someone who has one late payment in 5 yrs with continued balances than someone who has zero balances but has 10 late payments in 5 yrs. Paying off balances with frequent late payments does NOT help your score.
3. Keep the lowest balances you can on your current CC accounts, even if they don't have zero balances.
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Old 04-05-07, 01:21 PM
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^^keeping no cc is best. if you have them, cut them up and pay them off.


Texaspandamama, i hope everything works out for you. you should call the dave ramsey show 1-4 on 550am, ask for advice. i know one thing he will say is sell stuff and someone or both have to get another job. point is to get the debt snowball rolling and star paying off the debt, might mean cut back on things, eat rice and beans (as he always says) now going to be forever just temperary. call the hospitals or go in person (better) work out some deals, tell them your situation, most of the time they will lower the bill.
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Old 04-05-07, 01:37 PM
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Originally Posted by kyleo View Post
Hey guys, if I'm looking to get a credit card to build up some credit, do you have any recommendations? APR's, fixed rates, all that? I know very little about them and would appreciate any info.
If you plan to pay it off every month, which you should, then APR's and fixed rates don't really matter. I'd go for either a Visa or MC that has no annual fee. If you can find one that has no annual fee and also earns you some kind of goodies like airline miles or hotel points that would also be nice, but those will be harder to find. Unless you plan to be charging a whole lot on the card where you'd earn miles/points quickly I'd make the no annual fee the priority.

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^^keeping no cc is best. if you have them, cut them up and pay them off.
Not necessarily. Credit cards are a tool and you can either use them to your benefit or get hurt by them. In and of itself a credit card is neither good nor bad, it's how you use it. If having one means you can't control your spending and you put yourself in debt then then you need to get rid of them.

If you can control your spending there are a lot of advantages to having them like building credit, and getting to hang on to your money for 30 days and earn interest on that instead of having your cash leave your hands the moment you buy something. My wife and I put absolutely everything we can on credit cards. But everything we charge is within our budget so we pay it all off at the end of each month. As an added bonus the two cards we carry are affiliated with an airline and a hotel chain so every couple of years we'll have built up enough points & miles to take a nice vacation with airfare and hotel for free.
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Old 04-05-07, 02:19 PM
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makes no sense to me. why put it on a cc if you can afford it in the 1st place? building credit is a myth. save you a couple of %age points on an auto or mortage. people tell you need good credit so they can make money on interest rates and fees, you pay cash, no money to be made. buying a home is a little different but having credit to buy a home is a myth also, but getting around that his hard.

why charge it if you can afford it? why not save for those vacations, thats what you are doing already except building points, eerrr spending money on a cc to earn vacations, just save for it. break down into a monthly plan then in 2 yrs you have your cash and nothing to worry about.
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Old 04-05-07, 02:58 PM
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Originally Posted by Art Vandalay View Post
makes no sense to me. why put it on a cc if you can afford it in the 1st place? building credit is a myth. save you a couple of %age points on an auto or mortage. people tell you need good credit so they can make money on interest rates and fees, you pay cash, no money to be made. buying a home is a little different but having credit to buy a home is a myth also, but getting around that his hard.

why charge it if you can afford it? why not save for those vacations, thats what you are doing already except building points, eerrr spending money on a cc to earn vacations, just save for it. break down into a monthly plan then in 2 yrs you have your cash and nothing to worry about.
Why charge it if I can afford it? Because I make money by charging it. When I buy $100 worth of groceries I can either pay cash and walk out of that store with my groceries in my hand and $100 in the cashier's drawer or I can charge it and walk out of that store with my groceries in my hand and $100 in my bank earning me interest which I get to keep. As long as I pay my credit card bill in full at the end of the month those groceries are still going to cost me just $100 one month later.

Why not just save for a vacation? I am. My wife and I set aside a few bucks for vacations every month. I'm not out there charging stuff I don't need just for the sake of building vacation points, I'm earning vacation points just by using my credit card to pay for the routine expenses that I'd be paying anyway. That $100 in groceries I charged also earned me 100 airline miles and after enough trips to the grocery store I'll have enough miles to turn into a plane ticket that I didn't have to pay for, all without spending one penny that I wouldn't have spent otherwise.

Like I said earlier, a credit card is a tool and it's goodness or badness depends on how it's used. If you have credit card debt it makes no sense to charge your groceries if you've got the cash because you're going to be paying finance charges on those groceries. I don't have credit card debt thus I can use credit cards to my advantage by doing stuff like charging groceries and all my utilities. When you have CC debt it costs you money to use that card. When you don't have CC debt it costs them for you to use that card.
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Old 04-05-07, 03:48 PM
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Originally Posted by coyotes_geek View Post
Why charge it if I can afford it? Because I make money by charging it. As long as I pay my credit card bill in full at the end of the month those groceries are still going to cost me just $100 one month later.

That $100 in groceries I charged also earned me 100 airline miles and after enough trips to the grocery store I'll have enough miles to turn into a plane ticket that I didn't have to pay for, all without spending one penny that I wouldn't have spent otherwise.

Like I said earlier, a credit card is a tool and it's goodness or badness depends on how it's used. If you have credit card debt it makes no sense to charge your groceries if you've got the cash because you're going to be paying finance charges on those groceries. I don't have credit card debt thus I can use credit cards to my advantage by doing stuff like charging groceries and all my utilities. When you have CC debt it costs you money to use that card. When you don't have CC debt it costs them for you to use that card.
You make good points on why you would use a CC. Problems arise because 95% of people DON'T have that kind of discipline, but think they do. OR they have CCs for "emergencies". Problem with that is many many more "emergencies" come up when you rationalize a CC purchase rather than have to shell out hard cash or write a check. It means more and it hurts more to pay cash. You may not have that problem, but I guarantee the biggest problem is EVERYONE thinks they are just like you, and can "scam" the CC companies.

Another point to ponder: consumers spend anywhere from 15%-40% MORE on purchases when using a card rather than cash. It is so much easier to go over your budget when you have a card. If I have $10 in cash left on my lunch budget and go to a restaurant, odds are I'm not gonna order a drink, cuz that would put me over budget when you include tax & tip. If you've got your card, it's so much easier to add a drink or even an appetizer, because your brain just doesn't register it as the same type of spending. But by the numbers, a drink with tax/tip ends up probably costing you $2-3. On a $8 or $9 plate of food, that's a 25%-33% increase. In fact, that's the reason McDonald's put credit/debit card machines in their restaurants, because their survey results showed people spent 37% more money when using a card over ca$h.

Take the restaurant example and blow it up to an electronic purchase: say you want a TV. If you save and buy, odds are you will spend less than if you buy a brand new HDTV with "no interest for 90 days" and low payments. 87% of people DO NOT pay off a purchase within their 'no interest' period.

The numbers just grow exponentially for bigger-ticket items. We all know teachers aren't exactly rolling in it, but I've got teacher friends looking to finance a new vehicle on a $40k salary, when they could get a lease-return, two-year old vehicle for 60% of the cost of a new car. Not to mention, if you live close to work, you can get cheaper cars, pay cash, and save your money to trade-up in vehicles, rather than financing them the rest of your life. We all start somewhere, but I look forward to not financing cars ever again.

It may work for you for getting 'free' airline tickets, etc. (although odds are you spend more money than you would've because you use a card), but for the overwhelming majority of people (90%+) I would think that CCs can cause nothing but harm, because people work their finances like math problems, forgetting to account for human behavior and the assessment of risk into an equation.

Regardless, congrats on being rid of credit card debt. I dunno about your cars or other debt, but I bet it feels nice not to have those payments anyway. I'll join you by the end of the year being rid of those

First, you bought new stuff, which comes at a premium. Obviously the 0% is better than putting it on a regular CC, but if you have the money in the bank, you're not really saving any money. Example:

You buy new appliances for house (stove, microwave, fridge) for $2,000 @ 0% for 12mos.
You keep your money in your checking account or a CD for 12mos to "make money" instead of purchasing for cash. CD's at best are about 5-6%, so you're "making" an extra $100-120 because you financed your appliances at 0%.

So in theory, you're up $120.

Why not just offer them cash up-front? Odds are, you'd probably get the thing at a discount, probably 10%. $2,000 - 10% = $1,800.

In theory, you're up $200 immediately in this situation, rather than $120 after 12 months.

Your theory also fails to account for human behavior and risk.

Human behavior
says that 90% of people (and possibly you) would NOT have spent $2,000 on the appliances if there was not 0% interest. Probably would've spent anywhere from 50%-80% less, but saw the "free money" and bought into the 0% marketing. People just buy more on credit then they do when they pay straight cash. OR what happens typically is that people take a low payment but do not end up paying stuff 'on-time' because "emergencies" come up. Usually these emergencies are weekend vacations, prom dresses, Christmas presents, etc. -- stuff that weren't true emergencies.

Risk is rarely assessed. You can accidentally make a payment late. The store clerk could've added on the warranty w/o your permission which adds on costs you were unaware of, screwing your 0% plan 12 months down the road, or at least costing you hours on the phone trying to fix their mistake. In an ideal world, none of this crap would happen, but life isn't always ideal, so it should at least be factored into your credit decisions. The maximum reward is $120 after a year. How much risk is worth that reward? People with a ton of debt probably shouldn't be so worried about these mathematical ways to "make money" off CC companies. Rather, they should be more concerned with living above their means.

I don't think it's the end of the world or anything, but just thought that people should recognize alternative ideas. Your plan may work mathematically (although I don't think it does), but people don't live in a mathematical world. People live in a world with a human behavior that has been trained to want something up-front with a monthly payment rather than saving up to pay for something. People live in a world with risk that is rarely assessed, resulting many times in tons of financial failure, obviously greater problems than your appliance situation.

Good discussion on this topic though.. way to go all
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  #26  
Old 04-05-07, 10:33 PM
Art Vandalay's Avatar
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no annual fee isnt much, still have finance and interest charges to worry about. 4% back isnt much either, lets say thats monthly and you spend 400 a month, you get back $16 a month, $192 month a year, isnt much to justify. spending money on purpose on a cc to save that small amount or trying to save money, is ludicrous.

not having a card is not ridiculous. props to you all if you have the discipline for paying off and not spending but if you budget paying for the card, why have it? thing is why put yourself in a situation to have to be responsible with cc spending.
id rather avoid that altogether.

there is no need to have a cc, thats what the companies have made everyone believe. you dont need one, it's called saving money. money in your regular bank acct isnt going to earn much of anything and especially if your using that money anyway to pay off stuff bought on the card. a money market fund will earn more than measley savings or ck acct. money market fund is where i keep my emergency money so it earns about 5% but i hardly use it, cause it's, well, for emergencies. rewards are for one thing only, to get you to have a cc and justify having one. hey if your discipline enough, go ahead, i guess. i just believe playing with fire eventually you will get burned.

but all it takes is one time slip up or that emergency you have to pay for with no planning and no cash or not enough cash on hand next thing you know in the hole at least 5 grand because of that bill and because you need other things so more spending then you're big time cc debt, with house payments, car payments, etc.

cc have the right to jack up rates at any time no matter how good your credit is. also they have a thing where you sign up and get the low rate, but they have the right that if they find anything on your credit report past or present they dont like, they will raise that rate as high as possibly.

keeping a savings acct in a bank isnt going to earn much at all, even if you hope to earn money on investments, you shouldnt count on a ck or savings acct for that purpose.

a high percentage of americans just dont save money anymore. everyone thinks saving and budgeting mean broke and cheap, it doesnt.

it's a great discussion, keep in mind im not here trying to telling anyone how to live their life just giving some advice and passing on what ive learned, experienced, and seen.

Last edited by Art Vandalay; 04-05-07 at 11:16 PM.
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  #27  
Old 04-07-07, 11:21 PM
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If I omit you, don't feel disliked it's only that after a certain number of posts from what seemed to be misinformation I blanked out some of the remaining posts.

I'll start off with the original poster:

Keep a total of one to two credit cards. Leave open the ones you opened back in college, again I'm only stating one to two total credit cards and yes this can be per individual. The amounts will not show as outstanding debt, but will show how much credit you have the ability to use an any given point. So if the amount seems "high" call the financial institution servicing the card, request to lower the limit, and request they do not auto increase the credit line at any point. In the event you are looking for credit elsewhere, it's good to show that long standing history you've had, and that you don't have a high limit that can be easily capsized... besides closing the account isn't going to remove it from your credit report just yet. Idle cards is basically stating don't have too many cards that you're not doing anything with for the purposes mentioned above (spending potential).

In regards to the comments about high interest rates, this shouldn't matter anyway, pay off the card each and every month. There is no need to revolve debt from month to month unless you have to. It's not necessary to keep a balance on a credit to increase scores. The credit card and usage will give you more than enough history.

Credit cards get a bad rap, if an individual has one credit that actually gives INCENTIVE; travel, cash back, discounts, whatever... these are great cards normally with interest rates to match. Use these cards to your advantage, wouldn't you like someone to GIVE you rewards for the things you are going to have to pay anyway. For instance your cable/internet bill, cell phone, gas, groceries, restuarants, electric, water, et cetera, et cetera... these are things you are going to basically have to pay for anyway, all that is necessary is to do what you normally do anyway, pay your bill. You're going to have to pay a bill to someone anyway. All you're doing is sending all these money bill payments to one place, your credit card and you're getting money for it. If you went out and paid your electric bill, if the company handed you $5 back would you really say no thank you. In some instances you need at least a credit card, hotel/car rental/airplane, some places these days are allowing debit/checkcard for these items but what happens when they decline that. You can't pay in cash, I've tried it, believe me. Again, this incentive WORKS if you're not putting things on the card you don't have money to buy. It's not willpower, it's common sense, that's not meant to be harsh, but it's the damn truth.

In reference to Austin Spurs fan, it's not that his case is exceptional it's reality. A $145,000 financed home (which isn't much really, especially for Austin) for a guy entering or already enrolled in a DOCTORAL program. Not every career path leads to success, but believe me they were betting on him being able to pay off the debt without an issue. He's also with a credit union, a good checking and savings account history is a sometimes all that is needing to prove worthy of another "relationship", such as an auto loan for someone who has show dependency (the sense of just about any place is to get you into as many items you're needing to keep you with them verse doing business with some other institution, not a bad thing, just realize these places are still trying to make some sort of money). Of course I don't know his entire background and there are exceptions to every case, but the point is he is where I would generally tell most individuals to start off with a lot of their financing, at a credit union; better rates, lower fees, not as much in a sense of offered products, but still enough for the average consumer.

In regards to emergency funds, not everyone has the ability to set aside money every paycheck, month or every point money unexpected comes in, but I would suggest for those that do have savings accounts with relatively decent amounts to at the very least look into what rates their financial institution is offering on money markets, cds, these are items where you can place your money to receive a better return on it. For those that often worry about needing money in the event of emergency then opt for a money market. Anyone with a steady $2500 in savings has no reason no good reason not to be looking to place that money into a money market. It's all about money, who has the better return and making your money work for you, that's why it's in the savings correct? So take it and place it into a money market and earn more...sure the better earning rate varies from institution to institution but it won't be by money (after your money DROPS below a certain amount the rate of return deceases to lower than a savings, thats why this is not the account for someone who isn't keeping a STEADY savings).


Like myself after a certain point individuals stopping reading, but if you read good for you, if you didn't so be it, and if I stepped on anyone's toes this is what it is, and I see no need to spread misinformation or another view point on the matter.
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  #28  
Old 04-08-07, 10:26 PM
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true lots of reading but ill try to keep this straight to the point.

1. everyone has the ability to save money and especially for an emergency. if you cant, you're spending too much and keep going into debt and if dont have enough money monthly, get a better job, work more hours, or cut back on expenses, can't spend all your money and save at the same time. you have to make a sacrifice some where. if you would rather save 500 for a new tv than for emergency, your priorities are jacked. save for emergency first then the tv. you build for the emergency first, min payments on cc. once the fund is in place, start the debt snowball rolling. you don't want to be in debt then go into more debt because of an unexpected expense.

2. if you rather pay your montlhy bills to get 5 bucks back, go for it. the incentives arent worth the risk. if they decline your debit/credit bank card to rent a car or whatever, most likely it's because you dont have enough in the bank, that should tell you something, you cant afford to go or get it. so you should wait and save money. ive used my debit/credit bank card to rent cars,fly, and for hotels, i've have yet to have a problem.

if you're using your card for bills you have to pay anway and to get rewards , then hopefully that money in the bank you're saving to pay your card isnt being spent at the same time. too much to worry about to save for such a low percentage of money or a reward. big deal for the 6 cents on the dollar. you have spend to much to get a low reward. the ratio is in their favor. even if i pay it back, id rather be in control and not on under a contract. cc companies have the right to change their terms anytime, a borrower is a slave to the lender, so what if i know or think i will pay it back, why borrow if you dont have to. that one day might come where that money you use to pay back the card had to be spend on something else, now that plan is screwed and instead of having to cut back on expenses for the month, you have to dig yourself out of debt. too many things can go wrong, imo.

3. argreed, the emergency funds should be in some type of money market fund because you've save a bunch of money and it should earn some at the same time. because you're not going to use it a whole lot and you want it in a money market acct that allows you to make limited withdrawls.

when i refer to saving money, im refering to buying items you want or need. you should already take into account your retirment savings and pay yourself first always most of the time or at most occupations that is done automatically or if your job doesnt you can set an auto withdrawl to your owe retirement acct.

budget your cash. i like to know where my cash goes, if you dont, money goes.

Last edited by Art Vandalay; 04-08-07 at 10:53 PM.
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  #29  
Old 04-08-07, 11:45 PM
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Sorry if this has been covered already, and it's slightly off-topic, but since some of you are fervent cash-only types, I thought I'd offer this tidbit:

Don't forget to ask for a discount if you're paying cash for a big-ticket item like an appliance. Merchants have to pay for those credit card transactions, so they should be able to knock something off the price for a cash payment.
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  #30  
Old 04-09-07, 01:36 AM
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ok i guess here is my advice and 2 cents:

1. people should only have credit cards if they are responsible and realize that a credit card is actually a loan. and if you have a credit card you must have applied for it and therefore you agreed to the terms of that loan. so before anyone starts applying like crazy be sure to at least go over some of the terms. yeah its a lot of reading for the lazy but its good to know what you are getting yourself into.

2. make sure you make your payments on time. if you fail to make a payment realize there will be a late fee. btw if you are on vacation, forgot about the payment, or sent it in the day its due...really, what kind of an excuse is that do you forget about your mortgage, car, or utilities? its pretty much common sense. and im sure just about every creditor has many payment options (bank, online, auto pay) if you can make the minimum payments on time its pretty easy to manage a credit card and build your credit.

3. be aware of your limitations. for example if you make $30k a year and have your cards maxed or almost maxed please know that you are putting yourself in dept. doesnt matter if you make 30k or 150k everyone has limitations, and everyone should know what that is. if you have a large house payment, car payment, etc...dont add to your debt by charging like crazy.

4. on payments my advise is to make 3x the minimum. that will help bring your balance down faster especially on large balances owed. some people dont know that if you pay the minimum payment it is not always going towards principle. for example lets say you pay $25 a month and are charged $15 on interest you only paid $10 down on your loan no wonder so many americans are in debt for years.

5. i know some people complain "well i cant afford to make that payment" or
"thats too much for me to pay". well that problem could have been avoided if some people knew what they could afford and knew their limitations. if you cant afford it dont charge it plain and simple.

6. having little to no credit is not good but having too much credit can hurt you too. if you have many credit cards or even a few but with large credit lines it can hurt you if say you want to finance a house, car, etc... they look into that and they may tell you to call your credit cards to lower the credit lines.

if people can just use common sense and be a little more responsible having credit will help out very much. and if you are responsible, guess what?...you must have a good credit rating and options to lower your APR. btw if you make late payments are overlimit dont expect any options for a lower apr or other benefits.

its also good to check your credit report at least once a year to know what you have out there. everyone is entitled to one credit check once a year for free at www.annualcreditreport.com.
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