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Valued Contributor
Posts: 1,597
Registered: ‎09-15-2012
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Re: Please Use Credit Responsibly!

Thanks for the continuing support, all!

@navigate

The $10 and $120 thing is saying that at 0% interest, you still need to pay off all the debt you accumulate during that period. So by charging more than you can pay off, you are placing cash flow strain on yourself. Regardless of interest, a purchase on day 1 of your card still needs to be paid off over 12 months to avoid interest. So if I normally spend $500 a month, but this month I spend $1,700 because I got a credit card, I need to pay $100 extra every month to pay off the extra balance before it accumulates interest. But many people don't do this, and they end up paying interest. It harms them financially, but all they notice is they accumulated more "stuff" earlier than they really could afford it.

In My Wallet: Amex BCP (12/12) $32,000, Chase Freedom (12/12) $16,500, Cap1 Quicksilver (6/12) $14,000, Barclaycard Rewards (5/13) $10,500, Citi Forward (12/12) $9,600

Last App: April 2, 2014
Moderator Emeritus
Posts: 4,875
Registered: ‎11-02-2010
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Re: Please Use Credit Responsibly!

This is an excellent thread -- thanks, SnackTrader, for your well articulated post.

 

I agree with this. We do get excited about approvals, but it's vital that we also remember to use our credit wisely. I spent way too long a period of time with my cards maxed out, and it took me the better part of a couple of years to dig myself out of the hole. It's not a position that I ever want to find myself in again. As a result, I've changed the way that I view credit. I've mentioned this before, so please bear with me for repeating myself. I've come to view credit cards as tools. As such, they can either be used properly and with care, thus bringing convenience and benefit to their users. Conversely, if used carelessly, they can cause damage. It's important to learn to spend within one's budget and not view the nice, large CLs as extra money that's sitting around -- it's not extra money, it's debt that needs to be repaid.

 

And SnackTrader makes a good point about the temptation of 0% intro rates. I will admit to carrying a balance on such a card, but the charges are for major dental work. I have the money in savings to cover it -- I could pay the balance in full at a moment's notice if Citi required it of me -- but I'm chosing to their money interest free and allow my savings to continue to accrue interest, paltry APY though it may be. But I take comfort in knowing that I can pay the card off immediately if need be.

 

The problems arise when people use these cards for purchases that are beyond the budget, hoping that somehow they'll be able to pay the card off before the intro period expires. Or barring that, simply keeping up with monthly payments without a clear end point in sight. That's a big red flag, as so much money then goes towards paying interest that original purchase winds up costing far more than just the purchase price in the long run.

 

Can emergencies happen and funds not be readily at hand? Yes, and credit cards can be a great help under such circumstances. But then the emphasis needs to shift towards paying off those emergency expenses and not simply continue to charge unnecessary items. Sometimes life does require a period of belt tightening, and it's important to avoid the temptation to continue using credit cards for discretionary spending when they need to be paid down.

 

These are things that I've learned since joining myFICO. My credit was a mess when I first came here, but I had already taken the very first steps towards getting my credit life in order. I like to think that if I could manage to get my credit back on track, anyone can. But the best way to maintain good credit is to avoid the pitfalls that lead to bad credit. So enjoy your cards everyone, but use them well!


Current Scores: EQ 775 (03/04/2014), EX 756 (03/01/2014), TU 760 (03/01/2014)
Ruby Spade Garden Club Member - Last App: 03/04/2013 - No apps until 2014
Cards: Cap1 Venture 6.4k, Cap1 Quicksilver MC 1.75k, BankAmericard 1-2-3 Visa Signature - UCF Alumni Association 5k, Discover 7k, Citi Diamond Preferred MC 10.35k, Wells Fargo Rewards Visa 7k, Chase Freedom 5k, Chase Ink 7.5k, Amex Green NPSL, Dillard's Amex 7.5k, JC Penney 7.5k, Kay Jeweler's 5.1k
Valued Contributor
Posts: 1,339
Registered: ‎09-11-2012
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Re: Please Use Credit Responsibly!

Very nice.

 

I usually buy something nice on the 0% APR card and the rest of the card PIF. I keep about 1-2% total UTILS reported. and about 10% reported on that card with 0% APR. So far it has work wonder for me. Even the Amex EO office said that I paid my card off right after the charge post. She gave me kudos!

 

2013 Approvals: Discover IT - 3/1, Amex BCE - 3/4, CSP - 5/4, Barclay Ring - 6/12, BoA Privileges Cash - 6/27, Citi TY Preferred - 8/6, OCCU Duck - 11/4, USBank (Cash+) - 11/22, Wells Fargo - 12/21, Nordstrom - 12/29

12/19/2013, $100k+ Available Credit. Total Util: 0-1%
Mega Contributor
Posts: 15,442
Registered: ‎04-09-2011
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Re: Please Use Credit Responsibly!

Excellent post Snack!!! :smileyhappy:




Silver Spade Garden Club Member - Last App 12/16/13 - Looking for a clean slate NO INQ's / Diamond Inspired!
Starting Score:
EX (PLUS) 583 EQ FICO 565 TU FICO 590 3/15/2011 / Goal Scores: 720
Current Score: EX FICO (PSECU) 671 (myFICO) N/A / EQ FICO 679 / TU08 FICO 678 / TU VS 706 3/6/2014
Regular Contributor
Posts: 188
Registered: ‎07-23-2008
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Re: Please Use Credit Responsibly!

Great advise and congrats on 1000th post. This forum is awesome and thanks for your contributions :smileyvery-happy:

FICO scores:EQ- 723 (6/13), TU- 722 (6/13), EX- ?
My Wallet- AMEX BCE-17.5K, Chase Freedom-6k, Cap1- 5K, BMO Harris-5K, Wells Fargo-2K,
Store Cards-Lowes- 8K, Ashley Furniture-6K, American Furniture-2.5K,


Valued Contributor
Posts: 8,340
Registered: ‎10-21-2012
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Re: Please Use Credit Responsibly!

[ Edited ]

A very informative and spot-on post SnackTrader!  Your contributions to the forums are always appreciated... great milestone indeed!

Moderator
Posts: 27,207
Registered: ‎09-13-2012
0

Re: Please Use Credit Responsibly!

Great post! Your comments, thoughts and advice are always well- articulated.

Congrats on 1000th post!
Valued Contributor
Posts: 1,597
Registered: ‎09-15-2012
0

Re: Please Use Credit Responsibly!

Aww shucks, you folks make me blush!

In My Wallet: Amex BCP (12/12) $32,000, Chase Freedom (12/12) $16,500, Cap1 Quicksilver (6/12) $14,000, Barclaycard Rewards (5/13) $10,500, Citi Forward (12/12) $9,600

Last App: April 2, 2014
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