Does a charge card cultivate accountability?

[mjb59463]

Hey everyone,
Had this question and wanted to get some perspective on it. Ever since digging myself out of debt, I've been PIFing the credit cards I use as daily drivers. Currently sitting at about 3% util. At this point in my life, thanks to the lessons I learned the hard way about being careful with spending and managing my income appropriately, I've been giving priority to this.

Now, credit cards allow you to carry a balance. It's not advised, but there are times in life when it may happen. It's convenient in the sense that if you do need to make a large purchase, you have the ability to pay it off over time. I got in trouble because of this ability and my mentality at the time.

My question is: for those seeking to cultivate a greater sense of financial responsibility, should they consider using a charge card for day to day purchases instead of a credit card? In my mind, doing this would force you to PIF and pay greater attention to the purchases you make.

The downside is: If you can't PIF immediately, you're basically screwed.

I'd appreciate your thoughts on this course of action, because it's one I'm considering taking.

[Anonymous]

i was definitely in that boat of reckless spending and credit wrecking. last year i decided to get my stuff together and clean up my act. This year as began to finish paying of my credit card i decided to jump in and took my targeted bonus for Amex PRG. i definitely have noticed that since its a PIF card ive been wayyyyyy more reluctant to purchase things that otherwise would have been a quick swipe without much after thought. and granted i know that i could just have done the same thing with any credit card, but i feel like if i would have the knowledge in my head that i still have the option to pay it off over one or two months i would rationalize in my head why i suddenly need to buy this item that i problably dont need and shouldnt by. However with a charge card i have set it in my head that i have no choice but to pay it off no questions asked. either way yeah i definitely think that charge cards cultivate accountability. Sorry for the long post

[wasCB14]

I have a Platinum for perks and like it.

I don't see how using one helps prevent overspending, though. Every now and then you'll see a thread about someone who overspent and suddenly wants/needs to carry a balance on one. Plus, NPSL limits are often higher than traditional credit limits. There's plenty of room to get yourself into trouble.

If overspending is really a problem, using cash may be best in some circumstances.

[DeeBee78]

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@mjb59463 wrote:

Hey everyone,
Had this question and wanted to get some perspective on it. Ever since digging myself out of debt, I've been PIFing the credit cards I use as daily drivers. Currently sitting at about 3% util. At this point in my life, thanks to the lessons I learned the hard way about being careful with spending and managing my income appropriately, I've been giving priority to this.

Now, credit cards allow you to carry a balance. It's not advised, but there are times in life when it may happen. It's convenient in the sense that if you do need to make a large purchase, you have the ability to pay it off over time. I got in trouble because of this ability and my mentality at the time.

My question is: for those seeking to cultivate a greater sense of financial responsibility, should they consider using a charge card for day to day purchases instead of a credit card? In my mind, doing this would force you to PIF and pay greater attention to the purchases you make.

The downside is: If you can't PIF immediately, you're basically screwed.

I'd appreciate your thoughts on this course of action, because it's one I'm considering taking.

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It took years for me to rebuild (non-BK here), and I'm very protective of my credit scores and utilization. Part of my rebuild was obtaining my golden goose - Amex cards. 

I finally got my PRG in February, and have been using it religiously to build a positive history with Amex, and to keep myself in line. There are so many times that I want to put a purchase on one of my cards, but I dutifully pull out my PRG instead. 

It stings a bit to pay over $1,000 at a time to Amex, when I have cards at 0% intro APR's, but I know myself. If I use my cards I'll get into the habit of spending more than I can pay off in a month, start making smaller and smaller payments, and end up in ridiculous amounts of debt. The PRG keeps me grounded, because if I don't pay it in full, I'll ruin what I've worked so hard to rebuild.

Credit cards still have their place in my spending. I recently had to put $5K of purchases on my 0% cards, and I'm thankful to have them, and the time to spend paying them off over the next 6-12 months. 

[Anonymous]

@DeeBee78 wrote:

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It took years for me to rebuild (non-BK here), and I'm very protective of my credit scores and utilization. Part of my rebuild was obtaining my golden goose - Amex cards. 

I finally got my PRG in February, and have been using it religiously to build a positive history with Amex, and to keep myself in line. There are so many times that I want to put a purchase on one of my cards, but I dutifully pull out my PRG instead. 

It stings a bit to pay over $1,000 at a time to Amex, when I have cards at 0% intro APR's, but I know myself. If I use my cards I'll get into the habit of spending more than I can pay off in a month, start making smaller and smaller payments, and end up in ridiculous amounts of debt. The PRG keeps me grounded, because if I don't pay it in full, I'll ruin what I've worked so hard to rebuild.

Credit cards still have their place in my spending. I recently had to put $5K of purchases on my 0% cards, and I'm thankful to have them, and the time to spend paying them off over the next 6-12 months. 

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couldnt have said it any better. i think everything aside its all your own mindset. there will be people that see NO PRESET SPENDING LIMIT and suddenly start charging everything to their charge card, while there will be others that dont need any type of card to be responsible.... in the end the only thing that can make a difference is knowledge people post on forums like these, there will be people that learn from others mistakes there will be people that dont pay any mind. 

[Revelate]

I think if you've found a method that works for you, I wouldn't go changing it unless there was a quantifiable time or financial gain in doing so.

The time managing a charge card is identical to that of managing a credit card, so unless there's a financial reward in terms of long term rewards/perks (short term bonus chasing not withstanding) I don't see where it makes any rational sense to try to go to a charge card on the theory it might promote additional responsibility.

I really doubt it will as you're already modelling the behavior you need anyway, and it's just as easy to backslide on a charge card I suspect.

[Anonymous]

still rather new to the system, but for the most part yes. I'm young, and I use the charge cards to keep myself in check because I know if I miss a payment I am screwed. The PRG is my daily driver atm, and though the perks aren't as good as the chase trifecta, I feel like its good habit building for me atm before my revolvers reach higher limits.

[Anonymous]

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@Revelate wrote:

I think if you've found a method that works for you, I wouldn't go changing it unless there was a quantifiable time or financial gain in doing so.

The time managing a charge card is identical to that of managing a credit card, so unless there's a financial reward in terms of long term rewards/perks (short term bonus chasing not withstanding) I don't see where it makes any rational sense to try to go to a charge card on the theory it might promote additional responsibility.

I really doubt it will as you're already modelling the behavior you need anyway, and it's just as easy to backslide on a charge card I suspect.

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I agree.   I would also think that it's not just eeryday spending, you would need to close all credit cards to avoid temptation there, and, as Rev suggests, defaulting on a charge card is as easy (and even easier) than doing so on a credit card (where you might be able to meet minimums for much longer).

So if it really is a problem (and it doesn't sound like it is for you), stick to cash (or debit tied to a small bank account)

[Blackswizz750]

For me, I have considered a charge and obtained one. Its just an Basic Amex Green card but I put stuff on it I buy anyway with debit or cash. I have gotten tired of looking for ATM's and paying fees so the green has kept me from doing that. Also, with credit cards if I need to make a large purchase I can and pay in full or over  a couple months if needbe. Also, I am paying down what credit card debt I do have an have a charges keeps me in line. I second guess stuff I used to put on my credit cards(no matter how small).

[Anonymous]

I think setting mental rules is enough.  But do whatever works best for you.  A charge card doesn't offer complete security because it's still NPSL and whatever you can't pay at the end of the month could easily just be BT'd to a different card.

The way I do it is all living expenses including food, etc are PIF.  Any large purchases that I make I use 0% APR on those on a different card and stretch it out.  Even If I have the cash, I'll finance them anyway.  I'd rather have my money in the bank, then big purchases paid off little by little are much less of a psychological hit.