Credit Cards: Short or Long-term Credit?

[flyingmd]

Hi All,

Have been following this board for a while and appreciate the input and suggestions found here. Despite using creidit for many years, I have learned so much reading and following these threads. Just curious how people view their credit cards. I have always tried to get enough credit to cover 2 months expenses and have always paid in full each month with few exceptions. Once in a while I will let a large balance go during the summer months when my business slows up alittle and then pif as soon as the cash flow improves. I have always viewed credit cards as a short term use of credit. If I need to finance something (assuming I can afford it) then I will either get an installment loan specifically for that item or use one of my revolving credit lines. It is my impression that when one uses a credit card to buy things they can't afford and then carry the balance that they are asking for trouble. Or worse, buying and raking up a credit card then going out to get another one! Almost all my spending is on charge type cards despite some very large credit card lines (I have a ML CC with a 250,000 line and no balance amoungst others). I am curious as to how people view the purpose of credit cards in general and whether or not they carry balances for larger items over a longer perior of time vs a specific note for a specific item. Also, I never really churn cards for interest rates and teaser rates because it almost doesn't matter what the interest is. I pif 11/12 months of the year. I apologize in advance if this isn't an appropriate question for this board.

[Anonymous]

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@flyingmd wrote:

Hi All,

Have been following this board for a while and appreciate the input and suggestions found here. Despite using creidit for many years, I have learned so much reading and following these threads. Just curious how people view their credit cards. I have always tried to get enough credit to cover 2 months expenses and have always paid in full each month with few exceptions. Once in a while I will let a large balance go during the summer months when my business slows up alittle and then pif as soon as the cash flow improves. I have always viewed credit cards as a short term use of credit. If I need to finance something (assuming I can afford it) then I will either get an installment loan specifically for that item or use one of my revolving credit lines. It is my impression that when one uses a credit card to buy things they can't afford and then carry the balance that they are asking for trouble. Or worse, buying and raking up a credit card then going out to get another one! Almost all my spending is on charge type cards despite some very large credit card lines (I have a ML CC with a 250,000 line and no balance amoungst others). I am curious as to how people view the purpose of credit cards in general and whether or not they carry balances for larger items over a longer perior of time vs a specific note for a specific item. Also, I never really churn cards for interest rates and teaser rates because it almost doesn't matter what the interest is. I pif 11/12 months of the year. I apologize in advance if this isn't an appropriate question for this board.

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Welcome!

Personally I use credit cards for everything, including things that I will take a month or two to pay off.  I do this for a few reasons:

1.  I just got out of undergraduate and have only been working for 7 months.  Basically every dollar I've earned thus far went to paying off an old credit card balance and current rent, food, and other necessary expenses.

2.  Because I haven't been able to save up any money yet, I don't have the ability to pay up front for things like school tuition and books (currently the only things that leave a balance on my credit cards).

3.  I don't have any expenses that take my UTL above 50% so I feel comfortable having balances for a couple of months until they are PIF.

I'm currently about to enter a place in my life where I can start to put away some of my income every month and hopefully can stop carrying a balance on my credit cards completely!

[Creditaddict]

Can I just ask:

When you got this card?

What the initial limit was?

did you ask or did they auto give CLI.

250k is max for BofA if I'm not mistaken?

do you have other super high lines like that?

[Uborrow-Upay]

My credit cards are for my convenience only.  I don't look at them as an option for long term debt whatsoever...in most cases, not even for short term debt.  If I don't have the scratch, I don't make the purchase. 

That said, there have been a few occasions when I've carried a balance for a month or two for a necessary large purchase.  On a personal level, that purchase would be a medical expense.  On a business level, it would be for an item or a service which will earn me more in profit each month than the amount of the carrying costs.

Credit is just a tool, nothing more and nothing less.   And I make sure that I own that tool, and that it doesn't own me.

[flyingmd]

Very well said. Totally agree.

[tinuviel]

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@Uborrow-Upay wrote:

My credit cards are for my convenience only.  I don't look at them as an option for long term debt whatsoever...in most cases, not even for short term debt.  If I don't have the scratch, I don't make the purchase. 

That said, there have been a few occasions when I've carried a balance for a month or two for a necessary large purchase.  On a personal level, that purchase would be a medical expense.  On a business level, it would be for an item or a service which will earn me more in profit each month than the amount of the carrying costs.

Credit is just a tool, nothing more and nothing less.   And I make sure that I own that tool, and that it doesn't own me.

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+1. This is how I view credit currently. After having spent years in debt, I have no desire to go back. As you said, credit is a tool; I use it for the reasons that you stated, plus rewards.

[castlefox]

I would only have debt on my credit as a means of last resort because of how expensive the APR's are when compaired to how I can just save the money myself and save myself a lot it interest that would have been added on to my ballance. I havnt put anything on my card that I havnt been able to pay off right away.

IMO I also dont think I can realistically build my credit score with out my credit cards.  I didnt have a credit card until a year ago and Im 25 now.  I was rather scared of going into debt from the high APR.