credit card

[jackspratjr]

I have three credit cards, al three are interest free for 1 year and are maxed out. I have enough capital to pay off two of them, one for $300.00 and one for $500.00. They have about 6 months before interst kicks in. I have enough money to see me thru the end of the month. I have been useing them for end of month expenses. MY QUESTION: would I be better off paying them off and still keep them for end of monht expenses or let them ride and keep my cash for same? jackspratjr

[JoshuaHeckathorn]

First, you shouldn't be maxing out these cards, even if they are 0% interest. Just as an FYI- the fact that you are maxing them out is really hurting your credit scores.

I don't see anything wrong with utilizing the 0% promo to its full extent if you're making a large purchase or something that you want to pay over the next 6 months, but it's not like you can make a lot of money off this $800 by sitting it in a CD or an online savings account. I would say take the $800 and pay off the balances as much as possible. You may even want to pay all 3 down so you're not utilizing more than about 30% of your available credit limit on each card, which will help improve your overall credit.

[jackspratjr]

Thanks Josh,

I was kinda leaning that way, but you know how it is with 'bird in the hand etc"

good advice

again thanks

[crazyskunk82]

If you're using them for end of the month expenses, does that mean you spend more than you make? Or do you just save that money and not pay off your balances?

From my personal experience, I always told myself I'd pay them off before that window of 0% ended. And when that time came, I always spent the money on things I wanted instead. And then the interest tacked on. It never went well.

Nowadays, if I had the cash to pay a balance on anything, I'd pay it and be free of it.
Then use my cash to save and invest instead of paying interest to banks. That's just my thought, I don't know your situation thoroughly.

-Andy

[dczech09]

This is exactly why banks like to offer 0%. You charge the money and then eventually get bit with interest.

Pay off the balance. There is no reason to keep that balance.

Next question, and perhaps most importantly, why are using credit cards for end of month expenses? It sounds like you are spending more than you make. You also hinted that if you use the cash on hand to pay off the balance, you will have to use the credit cards for end of months expenses cuz you won't anymore cash on hand. Unless I am completely missing something, it sounds like you have a spending issue and need to get that under control.

You need to get on a budget and use your own money for end of month expenses. DO NOT use a credit card for that; many well-intentioned people have done this and got in trouble with interest. All it takes is one unexpected expense to throw your plan off-kilter.

Credit cards should be used for one thing: to facilitate a transaction when you already have the cash on hand. They can also be good for sharpening your scissors :P

[disneysteve]

I agree with the others. Pay off the cards and stop using them to buy things you can't afford. If you don't already have the money on hand to pay the bill in full when it comes, don't use the card. And never charge more than 20-30% of the credit line, even if it is at 0%, because it screws up your credit score.

[guidemesingapore]

I too agree with disneysteve.

[wincrasher]

Actually you have zero interest on every credit card.

My Amex card statement resets on the 3rd and the bill is due on the 28th. So any charges made on the 4th and after are on the next month's statement and are due on the 28th that follows.

So in effect, you are using their money for 6 weeks interest free.

If you are doing that, or something like it, you can hold on to your money longer. That's not to say over spend, but your normal expenses. Especially if you are not there yet with your EF. But you need to get there and not do juggling acts like this.

Often times I find myself waiting to buy something on the 4th, just so I don't have to pay for it for 6 more weeks. Do I need to do that? Nope, but why not?

[GrimJack]

Check out NerdWallet - kind of a fun tool to play with.

[jackspratjr]

Originally Posted by crazyskunk82

If you're using them for end of the month expenses, does that mean you spend more than you make? Or do you just save that money and not pay off your balances?

From my personal experience, I always told myself I'd pay them off before that window of 0% ended. And when that time came, I always spent the money on things I wanted instead. And then the interest tacked on. It never went well.

Nowadays, if I had the cash to pay a balance on anything, I'd pay it and be free of it.
Then use my cash to save and invest instead of paying interest to banks. That's just my thought, I don't know your situation thoroughly.

-Andy

I am on social security and some times a bill is due before I get my check, then I use the card to pay off that bill, if I don't have the cash

[jackspratjr]

Andy,
let me try to explain that again. Usually I have some cash left at the end of the month. But if a grocery trip is called far, I may be short, then is when I would use the C.C. and I admit the zero percent was an enticement since I had a year to pay it off. But I am inclined to now pay the cards off and start over with a zero balance on the cards. Which way to go pay off early or keep my cash?

[maat55]

Personally, I would treat the cards the way you should. That means that I would not pay them off if I know that I am going to have to borrow from them later. You never use credits cards for borrowing, period.

I would keep my cash, use it as sparingly as possible for current needs and start figuring out how to payoff the cards for good.

This method is all about forming proper mental habbits. You are using your cards as a crutch, you need to stop doing this.

With this said, you need to decide for yourself whether you are strong enough to not blow the cash you currently have, if you are not confident, you should payoff the cards and try hard not to borrow from them later.

Ultimately, you need to stop spending more than you make. If you did not have these cards, you would find this easier. Again, you do not use cards for borrowing, not for just one month or one day. You should have in savings more than you spend on a card.

[disneysteve]

Originally Posted by jackspratjr

I am on social security and some times a bill is due before I get my check, then I use the card to pay off that bill, if I don't have the cash

Originally Posted by maat55

you need to stop spending more than you make.

I totally agree with maat. If your check is your only income and it isn't lasting you for the whole month, that's a major problem. You either need to find a way to supplement your income or find places where you can trim your spending. You've got to balance your budget. You also need to build a reserve so that you aren't living check to check.

[jackspratjr]

Hey everyone,

Ireally appreciate the feed back. I have decided to pay off 2 of the 3 cards ($800) this month and then work on the $1000.00 next month. Not all at once on the $1000.00 one but maybe half.

I was leaning that way but just needed a shove.

[JoshuaHeckathorn]

Originally Posted by jackspratjr

Hey everyone,

Ireally appreciate the feed back. I have decided to pay off 2 of the 3 cards ($800) this month and then work on the $1000.00 next month. Not all at once on the $1000.00 one but maybe half.

I was leaning that way but just needed a shove.

Good decision- make sure you don't cut it too close with the last card. I would make sure it's completely paid off at least a month before the 0% interest promo ends.

[jackspratjr]

every body,


I really appreciate your listening to me and the words of wisdom. I WILL heed your advice and again, thanks

[Frugal]

I agree, it is never good to max out cards. I would personally pay them off as quickly as possible, if it were me. Don't know more details of your situation, however.