topic Re: I Have a Credit Card Confession in Credit Cards

I Have a Credit Card Confession

grower1 — Tue, 13 Nov 2018 06:40:36 GMT

I feel like I can only discuss this here, as friends or DH would call me 1st world problems.

So this afternoon I was talking on the phone to my mom, she expressed some major concerns with her current bed/bedroom setup and I agreed that she needed new furnishings. I promtly set out online to find her a new bedroom set, mattress, box sping, pillows, comforter set, delivery with set up etc. She lives in another state, so I had to send her many photos until she decided on everything.

This whole time I was thinking about which card I would charge it to, which card would give me the most time to pay it off before the next statement cut (thus keeping my utilization low) and which card I could harvest the most points with. I was all strategy.

Everything was going according to plan, we picked out all of the items she wanted. I decided to myself that I would pay it off in 3rds, 3 big payments and be done with it by early in the new year 2019. However when the pending charges showed up on my account about 30 minutes later, I paid the whole balance in full, sigh.

I don't have the bravery to let my credit...actually be a credit. I have to pay off everything the moment that I see it. To make matters worse, I do AZEO because I do see a slight point benefit from it, but even carrying a $5-$20 amount makes me feel uneasy. Does anyone one else feel this way? I'm addcited to paying bills and can't rest if anything is unpaid. I'm suffering from some sort of my fico illness

Re: I Have a Credit Card Confession

Anonymous — Tue, 13 Nov 2018 09:34:05 GMT

That's not super uncommon in this space I think, it speaks to the obsessive compulsive nature we have about our credit and finances lol. If you must pay off everything, of course you must only spend what you have in your checking account - only spend what you can afford to pay off.

In such cases, maybe look into some kind of 0% interest option. If you can finagle valuable rewards with it that's nice, but the main goal is to pay no interest of course, as this far outweighs rewards if it becomes a pattern. If you find it difficult to allow yourself to carry debt even at 0% interest with an effective plan in action to pay it off before any interest is due, then you can start to distinguish your reaction to paying interest from your reaction to letting debt roll over: you have the opposite problem of the common consumer it sounds like, where you try to pay off your debt too fast. You must rationalize that, in some cases, paying a small amount of interest for a billing cycle or two may be your most financially sound option in achieving whatever you're trying to achieve (like buying a new bedroom set)...of course keep in mind that's a slippery slope, but that notion screams in the face of people that have OCD about paying off everything. You could also put off buying the bedroom set, but that kinda stuff seems to always have long term 0% financing.

Re: I Have a Credit Card Confession

Anonymous — Tue, 13 Nov 2018 09:46:01 GMT

I'm the same way.
Okay, so maybe it's overkill, but shouldn't you do too much rather than too little to maintain good financial health? I don't think of AZEO as a score boost at this point so much as treating credit as something you can pay off as you use.
I feel like those who don't pay any attention to their accounts will eventually get blindsided. They are more likely imo to accidently miss a payment, etc. If I keep tight control over my credit cards, I catch mistakes be before they become a problem.
I think it's great that you would do this for your Mom and a plus that you didn't let it interrupt the good habits that you practice.
I work say keep up the great work and stop worrying.

Re: I Have a Credit Card Confession

CreditInspired — Tue, 13 Nov 2018 10:24:53 GMT

Wow OP, quite impressive, I say.

I think you’re just fine, nope, more than just fine.

You remind me of the good old days—from my parents era—when they didn’t buy anything unless the money was already stashed away in a tin coffee can (Maxwell), under the mattress, or even in my mom’s bra.

Honestly, if more Americans behaved like you, many wouldn’t be 1 or 2 paychecks away from being homeless.

And if this is your “1st World problem,” so be it. At least you can put a big spend on your card and pay it off immediately, and you’re still earning rewards because you didn’t use a debit card.

Yep, I imagine there are many who would either be jealous or would love to be in your shoes.

We all have our own little idiosyncrasies. Mine is to only apply for 0% APR cards for large purchases (12-mo minimum). So if my purchase is $5K and I have 18 months, I pay $295/mo for 17 months. For me it’s silly, but I call it “beat the clock” and I actually get a kick out of this little scenario. I also get a kick out of never paying interest. Then I wash and repeat. I apply for another long-term 0% interest card.

Two months ago, I tried something different instead of applying for another card. I needed to make another large purchase. So, first I called Discover and asked for a 12-Mo, 0% offer which was granted and then I hit the luv button and got a $3K CLI.

So OP, I understand where you’re coming from and applaud your behaviors that’s unique to you.

Re: I Have a Credit Card Confession

bizarrocreditworld — Tue, 13 Nov 2018 11:53:44 GMT

@grower1 wrote:
I feel like I can only discuss this here, as friends or DH would call me 1st world problems.

So this afternoon I was talking on the phone to my mom, she expressed some major concerns with her current bed/bedroom setup and I agreed that she needed new furnishings. I promtly set out online to find her a new bedroom set, mattress, box sping, pillows, comforter set, delivery with set up etc. She lives in another state, so I had to send her many photos until she decided on everything.

This whole time I was thinking about which card I would charge it to, which card would give me the most time to pay it off before the next statement cut (thus keeping my utilization low) and which card I could harvest the most points with. I was all strategy.

Everything was going according to plan, we picked out all of the items she wanted. I decided to myself that I would pay it off in 3rds, 3 big payments and be done with it by early in the new year 2019. However when the pending charges showed up on my account about 30 minutes later, I paid the whole balance in full, sigh.

I don't have the bravery to let my credit...actually be a credit. I have to pay off everything the moment that I see it. To make matters worse, I do AZEO because I do see a slight point benefit from it, but even carrying a $5-$20 amount makes me feel uneasy. Does anyone one else feel this way? I'm addcited to paying bills and can't rest if anything is unpaid. I'm suffering from some sort of my fico illness

You're practicing what I think is an excellent habit to have. I hate balances and I hate interest, so I pay everything off (plus or minus a few dollars) before the statement cuts on each of my cards. It's part of the "don't spend it if you can't afford it" mentality that a lot of us have, which comes from how we were taught to handle money (or from our previous experiences with credit).

You're in a good position to be able to pay off the bills ASAP. If you can continue to do it, then keep doing it. If you find yourself in a position where you need to leave a few dollars on a couple of cards, don't sweat it. Also, make sure you're setting aside money in the bank in case you need it for an emergency. If you can pay the bills and save some money, then you're better off than a lot of people in the world.

Re: I Have a Credit Card Confession

AverageJoesCredit — Tue, 13 Nov 2018 12:46:55 GMT

Ive trained my mind to think this way on my second journey into credit. I may not have the money to buy everything and pif the same dsy it posts but my mindset is there. Having 0% promos and such can help but even then i know its something owed. Great job. Its nice knowing something you baught is paid for

Re: I Have a Credit Card Confession

UpperNwGuy — Tue, 13 Nov 2018 13:30:28 GMT

If I don't have cash on hand, I don't make the purchase. Once I make the purchase, I wait until the statement cuts before paying it off. I never carry a balance into the second statement, so no interest is ever charged.

Re: I Have a Credit Card Confession

Anonymous — Tue, 13 Nov 2018 14:01:23 GMT

I'm the same way. I hate, hate, HATE debt. Even long term debt like a mortgage or car loan. Even to the point where I took CLDs on all my cards so I can't run up a balance I can't pay in full.

It sure beats the alternative. Keep up the good work. I feel so much freer when I know I don't owe anyone anything.

Re: I Have a Credit Card Confession

Kree — Tue, 13 Nov 2018 16:36:48 GMT

[Disclaimer: This is not finacial advice. This particular post serves primarily as a thought exercise in percentages and maximized earnings, and as such does not cover all possible outcomes or variables that need to be considered. Investing with "debt" can be dangerous and is generally considered foolhearty. Never invest money if expenses cannot be immediately covered by petty cash or insurance savings.]

As a fellow minmaxer I understand the joy of maximizing rewards, while minimizing interest. And at the surface it would appear paying in full is the best option.

However, lets look at things a little deeper. A good benchmark for investments is 7% return on average. A good balance transfer offer is 0% apr for 18 months with 3% transfer fee.

1000 dollars charged, then transfered, over 18 months would cost you 30 dollars.

That same 1000 dollars invested over 18 months should earn you 110 dollars.

So by paying in full immediately, you could be losing 80 dollar per 1000 dollars spent.

EDIT: added in disclaimer.

EDIT: corrected some formating.

Re: I Have a Credit Card Confession

Anonymous — Tue, 13 Nov 2018 15:14:55 GMT

Nothing wrong with that.

I used to do the same (except on 0% cards.) Now I actuallly float a whole months spend and just have auto PIF on all my cards near the due date. I log in once a month to see what I will owe and track that in a spreadsheet. I know exactly how much money I have outgoing every month and so can pre-plan my savings. I save all that isn't spent. My focus now is not to pay it now, but to lower my daily spend so I have more to go into savings. I also don't need to monitor my accounts all the time. If I lose my job or something drastic I will need to drain a month of spend from my savings to pay them all off, but for now I earn interest on their money.

Re: I Have a Credit Card Confession

Anonymous — Tue, 13 Nov 2018 16:24:48 GMT

@Kree wrote:
As a fellow minmaxer I understand the joy of maximizing rewards, while minimizing interest. And at the surface it would appear paying in full is the best option.

However, lets look at things a little deeper. A good benchmark for investments is 7% return on average. A good balance transfer offer is 0% apr for 18 months with 3% transfer fee.

1000 dollars charged, then transfered, over 18 months would cost you 30 dollars.

That same 1000 dollars invested over 18 months should earn you 110 dollars.

So by paying in full immediately, you could be losing 80 dollar per 1000 dollars spent.

The OP's debt payment habit is excellent. He/she's feeling the immediate "pain" of debt, this is crucial for strong personal finance habits. Sure, floating the debt a little longer can earn you a tiny bit more of interest (in high yield savings, for example), but I really like the discipline of hating the pain of debt -- this will save you tons of money problems that crush the small amount of interest you could earn. There has been a lot of study on the "friction" of purchasing. The more friction, the less we spend. Pure cash is the most friction in modern society, with checks and debit cards being next. Something like one click purchasing or mobile pay is the least friction. Credit cards fall somewhere in the middle. Like it or not, we tend to spend more on credit cards even when paying the balance in full after the statement hits. There is something that happens in the brain when using a credit card that you convince yourself you don't have to worry about it for awhile, whereas cash is immediate pain, and a debit card you know it's coming directly out of your cash. Also, cards pyschologically separate you from cash -- this is why casinos use chips instead of pure cash, your mind tricks itself into thinking its just play money. I consider myself a personal finance ninja, and I open about 15 credit cards a year, but even I know I'm susceptible to this psychological flaw and I'm on guard againt it. Dave Ramsey is absolutely correct on this.

Regarding your investment example above, this is very dangerous thinking for several reasons. First, the market averages 7% (after inflation) over a very long period of time (think 30+ years), not short term. So comparing the CC interest over a year to short term stock market performance is extremely risky thinking. Second, you should never invest with debt, it's an extremely bad habit and will get you in financial trouble. Staying out of CC debt should be a top priority for anyone motivated by personal finance. The only "good debt" is a mortgage.

Re: I Have a Credit Card Confession

RonM21 — Tue, 13 Nov 2018 16:11:43 GMT

OP, I like this. It is interesting because we can all easily get caught up in the fine points of the credit game, yet it is easy to forget some common sense. To me, obviously paying anything off when you can is a great habit! It is much better than the opposite, and scrambling around scratching and clawing to figure out how to pay for a debt. I say good for you!

Re: I Have a Credit Card Confession

CAS2019 — Tue, 13 Nov 2018 16:12:12 GMT

@grower1 wrote:
I feel like I can only discuss this here, as friends or DH would call me 1st world problems.

So this afternoon I was talking on the phone to my mom, she expressed some major concerns with her current bed/bedroom setup and I agreed that she needed new furnishings. I promtly set out online to find her a new bedroom set, mattress, box sping, pillows, comforter set, delivery with set up etc. She lives in another state, so I had to send her many photos until she decided on everything.

This whole time I was thinking about which card I would charge it to, which card would give me the most time to pay it off before the next statement cut (thus keeping my utilization low) and which card I could harvest the most points with. I was all strategy.

Everything was going according to plan, we picked out all of the items she wanted. I decided to myself that I would pay it off in 3rds, 3 big payments and be done with it by early in the new year 2019. However when the pending charges showed up on my account about 30 minutes later, I paid the whole balance in full, sigh.

I don't have the bravery to let my credit...actually be a credit. I have to pay off everything the moment that I see it. To make matters worse, I do AZEO because I do see a slight point benefit from it, but even carrying a $5-$20 amount makes me feel uneasy. Does anyone one else feel this way? I'm addcited to paying bills and can't rest if anything is unpaid. I'm suffering from some sort of my fico illness

OMG! YES! I have the same problem! I have been talking to a mortgage LO at my bank (Chase), and have taken all of her advice. When I told her I pay my cc’s in full when the charges show up in my account, all she could do was laugh. She told me to at least let it hit the statement, because to do otherwise would show 0% utilization. This is VERY difficult for me to do. Nice to see there are others like me! 😉

Re: I Have a Credit Card Confession

staticvoidmain — Tue, 13 Nov 2018 16:28:27 GMT

I am addicted to paying mine off when I get the statement, not before. I like that I actually have utilization in my card. HOWEVER, I keep it below a certain percantage (in my case, 10%). If it gets above 10%, I immediately make a payment to get it back to below that percentage. I track everything reliegiously.

In this example, it tells me when to pay in full (Nov 10), which is the same day as my "start date" (day after my cutoff). As soon as it hits above 10%, the formula indicates it so. I see that it is above 10%, and I made a payment before Novemer 10th (I paid $400 in this example, to keep it below). I the paid the remaining balance in full last November 10th. This way, even if the bank reports my utilization, it *should* be below that number.

My spreadsheet tells me averything, including my money in my banks as well as projections. I never spend more than what I have, or know I can pay at any given time (except for loans, of course). I guess you can say, I'm addicted to my spreadsheet.

Re: I Have a Credit Card Confession

Kree — Tue, 13 Nov 2018 16:30:02 GMT

@Anonymous wrote:
@Kree wrote:
As a fellow minmaxer I understand the joy of maximizing rewards, while minimizing interest. And at the surface it would appear paying in full is the best option.

However, lets look at things a little deeper. A good benchmark for investments is 7% return on average. A good balance transfer offer is 0% apr for 18 months with 3% transfer fee.

1000 dollars charged, then transfered, over 18 months would cost you 30 dollars.

That same 1000 dollars invested over 18 months should earn you 110 dollars.

So by paying in full immediately, you could be losing 80 dollar per 1000 dollars spent.
The OP's debt payment habit is excellent. He/she's feeling the immediate "pain" of debt, this is crucial for strong personal finance habits. Sure, floating the debt a little longer can earn you a tiny bit more of interest (in high yield savings, for example), but I really like the discipline of hating the pain of debt -- this will save you tons of money problems that crush the small amount of interest you could earn. There has been a lot of study on the "friction" of purchasing. The more friction, the less we spend. Pure cash is the most friction in modern society, with checks and debit cards being next. Something like one click purchasing or mobile pay is the least friction. Credit cards fall somewhere in the middle. Like it or not, we tend to spend more on credit cards even when paying the balance in full after the statement hits. There is something that happens in the brain when using a credit card that you convince yourself you don't have to worry about it for awhile, whereas cash is immediate pain, and a debit card you know it's coming directly out of your cash. Also, cards pyschologically separate you from cash -- this is why casinos use chips instead of pure cash, your mind tricks itself into thinking its just play money. I consider myself a personal finance ninja, and I open about 15 credit cards a year, but even I know I'm susceptible to this psychological flaw and I'm on guard againt it. Dave Ramsey is absolutely correct on this.

Regarding your investment example above, this is very dangerous thinking for several reasons. First, the market averages 7% (after inflation) over a very long period of time (think 30+ years), not short term. So comparing the CC interest over a year to short term stock market performance is extremely risky thinking. Second, you should never invest with debt, it's an extremely bad habit and will get you in financial trouble. Staying out of CC debt should be a top priority for anyone motivated by personal finance. The only "good debt" is a mortgage.

Intersting subject with payment 'friction'. I disagree with your "dangerous" statement in the second paragraph though. While you are correct that the average is a mean over many years, This is not a one time strategy. most people continue to make purchases over a lifetime, so the average can be used as a comparison. I do agree that investing with debt is a bad habit, and I had been making the assumption that lose could be covered through other means. I will update my original post.

Re: I Have a Credit Card Confession

Anonymous — Tue, 13 Nov 2018 16:45:10 GMT

@Kree wrote:
While you are correct that the average is a mean over many years, This is not a one time strategy.

So you plan to do this for 30 or more years? Keep balance transfering? Sounds like a headache to make a very slim margin while staying in debt. I would never advise doing this, and I think it's bad to recommend it to others.

Re: I Have a Credit Card Confession

MakingProgress — Tue, 13 Nov 2018 20:38:06 GMT

@grower1 wrote:
I feel like I can only discuss this here, as friends or DH would call me 1st world problems.

So this afternoon I was talking on the phone to my mom, she expressed some major concerns with her current bed/bedroom setup and I agreed that she needed new furnishings. I promtly set out online to find her a new bedroom set, mattress, box sping, pillows, comforter set, delivery with set up etc. She lives in another state, so I had to send her many photos until she decided on everything.

This whole time I was thinking about which card I would charge it to, which card would give me the most time to pay it off before the next statement cut (thus keeping my utilization low) and which card I could harvest the most points with. I was all strategy.

Everything was going according to plan, we picked out all of the items she wanted. I decided to myself that I would pay it off in 3rds, 3 big payments and be done with it by early in the new year 2019. However when the pending charges showed up on my account about 30 minutes later, I paid the whole balance in full, sigh.

I don't have the bravery to let my credit...actually be a credit. I have to pay off everything the moment that I see it. To make matters worse, I do AZEO because I do see a slight point benefit from it, but even carrying a $5-$20 amount makes me feel uneasy. Does anyone one else feel this way? I'm addcited to paying bills and can't rest if anything is unpaid. I'm suffering from some sort of my fico illness

When I was rebuilding I was like you, I had one AU card, Lowes, a Cap One Platnimum $500 limit, and a Cap One QS $300 limit. Basicly I was suing the QS and paying it off weekly, If I got to close to my limit I would use the Plat. I let my $10.99 netflix sub post to the Plat monthly with the others showing as Zero.

Once I got my other cards AZEO became a lot less important as I was not planning on apping for anything. I will be instituting AZEO again 40-60 days before I app again.

I carry a balance on my Discover right now at 0%, and my Lowes at 0%, both will be paid 1 month before the 0% expires. My other cards I pay my current balance on the payment due date, then don't use the card again until the statment cuts so that a 0 balance reports. Occasionally I will post a balance on them because there was a pending charge when I made my payment.

I feel like I am having a heart attack on a monthly basis when I pay my Citi DC as that is my daily driver. Seeing a high balance can be scarey until I tell myself I already have the money set aside to pay it.

I track my spending through Microsoft Money. So each purchase is logged on the approiate account, and I have a transfer from my checking to each CC sitting there with the amount I need to pay to bring the account to 0. So when I look at my checking account the money is gone, but I only actually send it to the CC account once a month.

Re: I Have a Credit Card Confession

Kree — Tue, 13 Nov 2018 22:04:48 GMT

@Anonymous wrote:
@Kree wrote:
While you are correct that the average is a mean over many years, This is not a one time strategy.
So you plan to do this for 30 or more years? Keep balance transfering? Sounds like a headache to make a very slim margin while staying in debt. I would never advise doing this, and I think it's bad to recommend it to others.

No Mate, OP expressed remorse over not having the courage to use credit as credit. I offered an alternative worldview that might allow OP to worry less about paying off credit immediately, as paying off credit immediately is not necessarily in OP's best interest, expecially if it appears that OP's only compelling reason is to save money on interest

I chose an extremely simplistic scenario to illustrate my point, by the very nature of being a model, the scenario cannot possibly account for all variables. We don't look at a picture of an egg and say "That's not an egg, it isn't three-dimensional". But for the purpose of clarity let me attemp to restate, in a less enlightening way.

"Not all debt is bad. "

Now leave well enough alone, because we are not doing OP any good filling up the threat with a side conversation over economic models.

Re: I Have a Credit Card Confession

Anonymous — Wed, 14 Nov 2018 00:45:28 GMT

Sorry Kree, I'm still not understanding your point at all, and I think you have given very poor financial advice which can be dangerous. The only reason I'm calling this out is that sometimes people take poor advice from random internet people from these types of forums. The OP's habit of paying off debt quickly is a suberp financial habit.

Re: I Have a Credit Card Confession

Anonymous — Wed, 14 Nov 2018 01:31:43 GMT

that's a good "problem" to have haha. i'm the complete opposite and carry balances on all of my cards but i don't let my util go over 9%