Comments on: The importance of credit cards? http://www.debtreduction101.com/2009/02/26/10456_the-importance-of-credit-cards.html Digging my way out of debt Tue, 15 Nov 2011 21:23:21 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Broken Arrow http://www.debtreduction101.com/2009/02/26/10456_the-importance-of-credit-cards.html/comment-page-1#comment-296 Broken Arrow Fri, 27 Feb 2009 13:09:55 +0000 http://www.debtreduction101.com/?p=456#comment-296 Fortunately, I should be able to have your cake and eat it too? Recently, I signed up for a Macy's card. Yes. A guy. Who doesn't even know that he's been living within driving distance for more than a decade. I signed up for a Macy's card? I got it because the sign-up was free, and the discount was real. They did ask if I wanted to sign up for Visa credit card as well, but I had the option to decline and I did. So, all I have is a regular Macy's card. No worries about any potential annual fees, interest charges, APY, keeping track of balances, etc. but still getting store member discount. But then, you guys are pretty financially responsible, so I don't think that should be a problem if you want it either.... Fortunately, I should be able to have your cake and eat it too?

Recently, I signed up for a Macy’s card. Yes. A guy. Who doesn’t even know that he’s been living within driving distance for more than a decade. I signed up for a Macy’s card?

I got it because the sign-up was free, and the discount was real. They did ask if I wanted to sign up for Visa credit card as well, but I had the option to decline and I did. So, all I have is a regular Macy’s card. No worries about any potential annual fees, interest charges, APY, keeping track of balances, etc. but still getting store member discount.

But then, you guys are pretty financially responsible, so I don’t think that should be a problem if you want it either….

]]> By: Chris http://www.debtreduction101.com/2009/02/26/10456_the-importance-of-credit-cards.html/comment-page-1#comment-295 Chris Fri, 27 Feb 2009 00:08:54 +0000 http://www.debtreduction101.com/?p=456#comment-295 There is no "smart" way to use credit cards and if you play with fire long enough, you will get burned. I'm a financial counselor and one of the most common themes among my clientele is how they are drowning in credit card debt. Some of the folks that I've coached started out debt free but used credit cards during an emergency. The main reason they used the cards was simply because they were available and because they had no emergency fund. Credit cards are a bad option during an emergency and if you have bad options, you make bad decisions. I always advise clients to close all of their credit card accounts and pay for everything with cash or a debit card. In regards to the credit score myth, I just finished counseling a couple who had an 800+ credit score but had a negative net worth. If this couple had done so well "managing debt" and building their credit score, why did they need to see me for counseling? When you learn to live debt free and save up for purchases, you'll find that you don't need a credit score. There is no “smart” way to use credit cards and if you play with fire long enough, you will get burned. I’m a financial counselor and one of the most common themes among my clientele is how they are drowning in credit card debt. Some of the folks that I’ve coached started out debt free but used credit cards during an emergency. The main reason they used the cards was simply because they were available and because they had no emergency fund. Credit cards are a bad option during an emergency and if you have bad options, you make bad decisions. I always advise clients to close all of their credit card accounts and pay for everything with cash or a debit card.
In regards to the credit score myth, I just finished counseling a couple who had an 800+ credit score but had a negative net worth. If this couple had done so well “managing debt” and building their credit score, why did they need to see me for counseling? When you learn to live debt free and save up for purchases, you’ll find that you don’t need a credit score.

]]> By: Paul http://www.debtreduction101.com/2009/02/26/10456_the-importance-of-credit-cards.html/comment-page-1#comment-294 Paul Thu, 26 Feb 2009 21:11:45 +0000 http://www.debtreduction101.com/?p=456#comment-294 My experience is that it's probably a good idea to pick and choose when you do this - i.e. when you can REALLY get a good amount of discount out of it. Like for the washer/dryer, obviously 15% is a lot of money. But too many open cards do count against your credit rating in the long run, and too many requests for credit history (which you consent to when you apply for a card) also count against your rating, something I don't really understand but know is true. I personally do not think saving 10% on $100 or even $200 is worth the hassle of opening and closing the card and the potential impact on my score - I'd much rather spend that time and hassle shopping around for sales or waiting for something to go on sale. So I generally decline the store's discount offers (with the exception of the occasional large purchase where the discount is substantial). You should also consider using a regular card (e.g. Visa) that gives you cash back or points or something for each dollar you spend - you might come out way better in the long run vs. the one-time discount you get at the store, and way less hassle and credit rating issues (and temptation!) with having just one card. My experience is that it’s probably a good idea to pick and choose when you do this – i.e. when you can REALLY get a good amount of discount out of it. Like for the washer/dryer, obviously 15% is a lot of money. But too many open cards do count against your credit rating in the long run, and too many requests for credit history (which you consent to when you apply for a card) also count against your rating, something I don’t really understand but know is true.

I personally do not think saving 10% on $100 or even $200 is worth the hassle of opening and closing the card and the potential impact on my score – I’d much rather spend that time and hassle shopping around for sales or waiting for something to go on sale. So I generally decline the store’s discount offers (with the exception of the occasional large purchase where the discount is substantial).

You should also consider using a regular card (e.g. Visa) that gives you cash back or points or something for each dollar you spend – you might come out way better in the long run vs. the one-time discount you get at the store, and way less hassle and credit rating issues (and temptation!) with having just one card.

]]> By: M E 2 http://www.debtreduction101.com/2009/02/26/10456_the-importance-of-credit-cards.html/comment-page-1#comment-292 M E 2 Thu, 26 Feb 2009 18:50:20 +0000 http://www.debtreduction101.com/?p=456#comment-292 From what I understand, in the long run it will help your credit score. You will have a higher available credit balance and if you don't use it, a lower usage of available credit balance. For example : you have 5 store credit cards, each with a $1k credit limit. You put $500 on one of them but the rest have zero balances. You would then have a 90% (available) to a 10% (usage) ratio. Which is VERY good. Conversely, someone who has one store credit card with a $1k credit limit and the same $500 balance would then have a 50% (available) and 50% (usage) ratio. Which is not so good. HTH From what I understand, in the long run it will help your credit score. You will have a higher available credit balance and if you don’t use it, a lower usage of available credit balance.

For example : you have 5 store credit cards, each with a $1k credit limit. You put $500 on one of them but the rest have zero balances. You would then have a 90% (available) to a 10% (usage) ratio. Which is VERY good.

Conversely, someone who has one store credit card with a $1k credit limit and the same $500 balance would then have a 50% (available) and 50% (usage) ratio. Which is not so good.

HTH

]]> By: lizajane http://www.debtreduction101.com/2009/02/26/10456_the-importance-of-credit-cards.html/comment-page-1#comment-291 lizajane Thu, 26 Feb 2009 16:17:11 +0000 http://www.debtreduction101.com/?p=456#comment-291 I've done the same before, so I'd love to know the answer to this one (whether it helps or hurts credit scores). If you have the control to use them to your advantage to get that % off and that's it, I don't see the harm in having them. But if it hurts the credit score, then maybe not. I’ve done the same before, so I’d love to know the answer to this one (whether it helps or hurts credit scores). If you have the control to use them to your advantage to get that % off and that’s it, I don’t see the harm in having them. But if it hurts the credit score, then maybe not.

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