@cobaltnv wrote:
@Anonymous wrote:
what is the point of making a 5k purchase on a CC if your going to just PIF anyway? Mine as well just pay the 5k at time of sale. That to me isnt using your CL at all since your PIF anyway. Using your CL to me is making a big purchase and having a plan to pay it off in 6 or 12 months or whatever and having your money work somehwere else for the time being.
Dont get me wrong here people im not saying that i wont continue to play the game for years to come im just playing devils advocate.
If you know you are going to be helpin a kid out with loans or whatever you already know how to play the "game" to get your scroe where it needs to be but why continue to play it so religiously after you have mortgages,cars, etc.?
Message Edited by jdp2134 on 09-06-2009 09:05 PM
There are a few reasons to make a large purchase on a credit card and pay in full.
1) convience
2) many credit cards offer you additional purchase protection/warranty
3) if you choose your card wisely you can get rewards 1-5% sometimes higher
As far as having your money working for you instead of paying off the credit cards immediately. Unless you have some very low promotional interest rate (or are an outstanding investor) the interest you will pay to the ccc will be much higher than any gains your money will make elsewhere.
I agree that debt for the sole sake of having credit available is a bad idea. I also agree that rewards are a good way to maximize the value of a CL. If you have reimbursable work expenses, plus normal month to month cash expenses that can be run through a CC, why not gain the monetary rewards back.
As for the putting money to use, I can say for those who are self employed, either full or part time, there are often times that using short term use of CC's can be advantageous. I do NOT recommend putting monthly "burn" on CC's. However, I have on many occassions enjoyed a 10-30% return on money (in 2 to 6 months) and had used my CC as the capital. This has ranged from inventory items ordered or IT projects which involved equipment in which I would be paid 60 to 90 days later (after install and invoicing). In these examples, I paid 2 to 3 months interest at 9-13% APR while enjoying a 10-30% return in as little as 2 to 3 months (120-340% APR return).
However, I do utilize Business CC's, LOC or net accounts most of the time for these types of transactions. But, there are many individuals who have used personal resources to fund business ventures. Just don't pay the rent and payroll on CC's. Whenever these are used, it should be backed by some asset or receivable. Expenses need to be funded in other ways.
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