topic Using Credit Cards Dangerously in Rebuilding Your Credit

Using Credit Cards Dangerously

Anonymous — Thu, 03 Dec 2009 20:22:00 GMT

I am just getting over a bankruptcy and I'm slowly re-building my credit. Today I was shocked to receive this letter from my property management. They have a contest going on for tennants to pay their rent by a credit card or e-payment and even have a contest going on for this. See link:

pay rent contest

California isn't busting with job opportunities and unemployement is really high here. I realize property management is hurting and want to entice tennants with this, but I feel it's a stupid risky game they're playing at a time when things are bad. Using credit cards is like playing russian roulette.

I don't know maybe I am wrong for saying this and old fashion. But what is wrong with a check or better yet paying on line with your own bank or credit union?

Message Edited by llecs on 12-03-2009 03:22 PM

Re: Using Credit Cards Dangerously

laz98 — Thu, 03 Dec 2009 20:51:03 GMT

i don't think there is anything wrong with the forms of payment you suggested, but i don't think paying your rent with a credit card is catastrophic, either.

Re: Using Credit Cards Dangerously

Anonymous — Thu, 03 Dec 2009 21:33:36 GMT

Maybe I'm wrong. But I just had to deal with a bankruptcy and credit to me is too valuable to be doing something like that. If you have a job that's ok, but if you're not working and your on EDD that could be disastrous. Maybe I am just too overly cautious. Thanks anyway

Re: Using Credit Cards Dangerously

MarineVietVet — Thu, 03 Dec 2009 21:59:14 GMT

@Anonymous wrote:
Maybe I'm wrong. But I just had to deal with a bankruptcy and credit to me is too valuable to be doing something like that. If you have a job that's ok, but if you're not working and your on EDD that could be disastrous. Maybe I am just too overly cautious. Thanks anyway

To me it's not so important what credit is used for, i.e. rent payments, groceries, water bill, etc. It's how you manage that credit that determines your financial security. I understand your caution because I also have been through a BK but credit if used correctly is not a bad thing. It takes constant discipline but it can be managed successfully.

Re: Using Credit Cards Dangerously

haulingthescoreup — Fri, 04 Dec 2009 03:42:12 GMT

+1

It's all in where you're coming from. If you're not yet comfortable using credit for everyday matters, and that's perfectly understandable , then it makes sense to avoid this "opportunity."

On the other hand, my employer is trying to force me to relocate, and you'd better believe that i am looking at apartments that allow me to pay by CC. If I use my PenFed, I get 1.25% cash back each month. On a $1000/ month rent, that's $12.50 per month rebated to my account. I won't get rich on that, but it will buy me a bottle of Ecco Domani Pinot Grigio to celebrate another month of life, plus a Granny Smith apple to slice up, and a little Havarti cheese, and that's not bad.

I am by no means making light of your situation. it's very important to be super-conservative and super-protective of your credit when you've gone through what you have. But things do often change on down the line, and you might one day see how you can make some money off of offers like this.

Re: Using Credit Cards Dangerously

RobertEG — Fri, 04 Dec 2009 05:21:03 GMT

Most will allow you to enroll for direct deposit monthly from your checking account, avoiding the CC middle man. Do they offer this option?

Re: Using Credit Cards Dangerously

Anonymous — Fri, 04 Dec 2009 13:58:01 GMT

I understand that most of you must do this type of thing. It's all new to me, as a older person it's risky, but I do understand what you're saying and how you could benefit.

To Robert--> I believe there is that option to enroll in direct deposit and yes they do take it from my checking account.

I am going to look further into this. It's not that I'm trying to be a stuffed shirt or anything. It's just I had a bad experience and it left a bad taste in my mouth. I'm more cautious about anyone dipping into my bank account today unless I know exactly what's being done.

It was a hard pill to swallow having to go bankrupted on just Bank Accounts, sitting in the creditors meeting and being chewed out like a child, losing all credit except for a few and feeling like a total moron. Couldn't justify myself, couldn't explain, didn't have the representation that I "thought" I paid for and when I left I got sick and had to run to the ladies room. I felt so angry that I couldn't defend myself and explain. But now I feel a bit better, cleansed out so to speak of all those revolving accounts that dropped me due to the bankruptcy, made me glad to be rid of them. Now I want to be in "control" and not have creditors in control of me, especially banks, Bank of America especially.

So I truly appreciate the advice given here. Maybe I shouldn't be so fearful of things and try it out and if it doesn't work stop it and go back to the old fashion way of paying via check.

I just think at times we are too free to hand over our private information to others in a world that is so untrustworthy today.

Re: Using Credit Cards Dangerously

Anonymous — Fri, 04 Dec 2009 14:44:27 GMT

@Anonymous wrote:
I understand that most of you must do this type of thing. It's all new to me, as a older person it's risky, but I do understand what you're saying and how you could benefit.

To Robert--> I believe there is that option to enroll in direct deposit and yes they do take it from my checking account.

I am going to look further into this. It's not that I'm trying to be a stuffed shirt or anything. It's just I had a bad experience and it left a bad taste in my mouth. I'm more cautious about anyone dipping into my bank account today unless I know exactly what's being done.

It was a hard pill to swallow having to go bankrupted on just Bank Accounts, sitting in the creditors meeting and being chewed out like a child, losing all credit except for a few and feeling like a total moron. Couldn't justify myself, couldn't explain, didn't have the representation that I "thought" I paid for and when I left I got sick and had to run to the ladies room. I felt so angry that I couldn't defend myself and explain. But now I feel a bit better, cleansed out so to speak of all those revolving accounts that dropped me due to the bankruptcy, made me glad to be rid of them. Now I want to be in "control" and not have creditors in control of me, especially banks, Bank of America especially.

So I truly appreciate the advice given here. Maybe I shouldn't be so fearful of things and try it out and if it doesn't work stop it and go back to the old fashion way of paying via check.

I just think at times we are too free to hand over our private information to others in a world that is so untrustworthy today.

IMO, paying rent is less risky than eating out, movies and other truly discretionary spending. If you have the income to pay the rent, then you have the money to pay the credit card which you used to "transact" the rent.

Risk comes from spening credit beyond means and income. For many, using a credit card is a convenience of consolidation, a protection and a reward opportunity. It offers better consumer protections and a single place to pay all the bills at the end of the month.

I agree that if somebody is without income, paying rent on CC's and continues in that pattern, eventually the result is bad. But then again so is not paying rent at all.

Financial management is financial management. Either somebody is living within means or they are not. The form of payment has nothing to do with it, other than some are seduced into spending beyond means with credit.

And therin lies the challenge. To learn to use credit, not abuse credit. To maximize your cashflow, reduce your expenses (including interest) and being efficient in time and resources. Hopefully to accumulate wealth, not trinkets bought on credit without means to pay later.

I use my CC's for everything that possibly can be. Any recurring bill I try to pay with a CC. I use a reward card whenever and wherever possible.

But to those who are uncomfortable....I wouldn't suggest operating outside of that zone.

IMO

Re: Using Credit Cards Dangerously

haulingthescoreup — Sat, 05 Dec 2009 05:25:55 GMT

maggie88 wrote:

I understand that most of you must do this type of thing. It's all new to me, as a older person it's risky, but I do understand what you're saying and how you could benefit.

To Robert--> I believe there is that option to enroll in direct deposit and yes they do take it from my checking account.

I am going to look further into this. It's not that I'm trying to be a stuffed shirt or anything. It's just I had a bad experience and it left a bad taste in my mouth. I'm more cautious about anyone dipping into my bank account today unless I know exactly what's being done.

It was a hard pill to swallow having to go bankrupted on just Bank Accounts, sitting in the creditors meeting and being chewed out like a child, losing all credit except for a few and feeling like a total moron. Couldn't justify myself, couldn't explain, didn't have the representation that I "thought" I paid for and when I left I got sick and had to run to the ladies room. I felt so angry that I couldn't defend myself and explain. But now I feel a bit better, cleansed out so to speak of all those revolving accounts that dropped me due to the bankruptcy, made me glad to be rid of them. Now I want to be in "control" and not have creditors in control of me, especially banks, Bank of America especially.

So I truly appreciate the advice given here. Maybe I shouldn't be so fearful of things and try it out and if it doesn't work stop it and go back to the old fashion way of paying via check.

I just think at times we are too free to hand over our private information to others in a world that is so untrustworthy today.

I completely understand, and what an awful experience to have gone through. And I'm sorry that your representation (BK lawyer?) left you hanging high and dry.

I'm certainly one of the older members here --just turned 55 --so I look at things long and hard, with a lot of suspicion. I try hard not to fall for the latest shiny bauble coming my way. But as txjohn said, if you've already budgeted to make your monthly rent, it's pretty low-risk to put it on a CC. You can check your CC account online each day, and the moment the rent charge posts, you can pay it off, then and there. If you have a card that gives rewards, there's a lot to be said for doing this.

But in the end, again, it comes back to your own comfort level. Don't do things now that will make you lie in bed at night and stare at the ceiling. But at the same time, don't write off future options that might make more sense to you once you've gotten your feet back under you. One of my favorite phrases: decide not to decide. Wait, and see where you are three months from now, and six months, and twelve months.

it's all time, and process, and healing. Hang in there, it all gets better!

Re: Using Credit Cards Dangerously

MarineVietVet — Sat, 05 Dec 2009 06:15:51 GMT

I'm certainly one of the older members here --just turned 55

You're only 55? I'm almost 59. Do you really think we are some of the oldest here??????

I'm sure we've both aged gracefully.

Re: Using Credit Cards Dangerously

StartinOver — Sat, 05 Dec 2009 08:03:55 GMT

Whenever I see pay by credit card I whip out my Visa debit card and make the payment . Can you do that? That way it will come directly out of your checking account. After all, they can be run as credit or debit, as you choose.

Re: Using Credit Cards Dangerously

marty56 — Sat, 05 Dec 2009 13:44:38 GMT

@MarineVietVet wrote:

I'm certainly one of the older members here --just turned 55

You're only 55? I'm almost 59. Do you really think we are some of the oldest here??????

I'm sure we've both aged gracefully.

LOL Being 53 I guess I'm the baby of the group.

A Safe plan for those who have gotten in trouble with CCs before (like me) would be to use the debit card as their primary puchase card. I use my Sams card when I am in Sams or Walmart but never charge more than I can PIF. I use my other cards every other month or so just to show activity, If I need to make a major puchase, look for 0% or no payments or no interest finance.

Another thing that helps me to to always update a budget spreadsheet after every purchase and deduct the amount from my checking account balance, or the balance on the paycheck that will be used to make the payment.

Re: Using Credit Cards Dangerously

Anonymous — Sat, 05 Dec 2009 14:13:26 GMT

That would be a better Idea in my book to use the debit card to pay, but these managers where I live are not up with that, that's a great idea though. It would certainly make life more easier and keep trees from being cut down by wasting paper on checks.

Now for the gal who said she's the youngest here or the oldest .... I think I got you two gals beat out. I'm 62 ...

Re: Using Credit Cards Dangerously

Anonymous — Sat, 05 Dec 2009 14:38:50 GMT

Hi Haulingupthescore:

First, it was a paralegal not a lawyer that was with me at this meeting. He was more interested in his messages on his blackberry than helping his clients. And the person giving me flack was a FBI Agent.

Well not to make lightly of age here. I'm 62 ...lol so I'm the oldest in the group. But I'm glad I'm with all of you regardless.

Ok on a serious note and about this question of mine. Having the money is no problem. I have the money and I'm always on time with rent etc. It's just that I was always taught in financial classes not to lean on credit cards for things such as rent and groceries. Yes most are responsible and pay their balances on time. Yet there the few that carry them over and it could get out of hand. The other argument all of you could say it that it's a great way prove you've paid. I totally agree.

It's not that I have a problem with using credit cards to pay for rent. My point is this....when things are not secure, meaning job losses and other insecurities this past year, using cc would be risky. That's what I was trying to say. Not everyone is secure and not everyone has their ducks in a row and well all of you know the rest.

I like the idea of a debit card. That was a fantastic idea. Simple.

Thanks Hauling and others...this has been an eye opener. I know it will get better in time.

Have a great weekend all of you.