Making CC's work for me

[bdizzle]

if thats the case how long should i wait before paying it off? for instance if i pay for something on the 1st of the month, how long should i wait b4 paying it in full?

Thanks for all the advice everyone, im taking notes

[disneysteve]

Originally Posted by bdizzle

if thats the case how long should i wait before paying it off? for instance if i pay for something on the 1st of the month, how long should i wait b4 paying it in full?

Thanks for all the advice everyone, im taking notes

I just pay mine when the bill comes. I don't see any reason to pay it before that.

[bdizzle]

Originally Posted by disneysteve

I just pay mine when the bill comes. I don't see any reason to pay it before that.

if u do it when the bill comes, dont they tack on interest to whatever the balance is?

[Scanner]

I agree with not worrying about your credit score too much (although don't entirely dismiss it either).

If the business world only did business with people who had excellent credit scores, they'd be outta business.

As far as furniture selection, nothing too earth shattering - work your way from the most utilized to the least utilized part of your house (usually the dining room).

Consider used furniture too - check the bargain box of your newspaper. There are many people who need to get rid of good furniture and they'll take $.10 on the dollar.

[disneysteve]

Originally Posted by bdizzle

if u do it when the bill comes, dont they tack on interest to whatever the balance is?

No. Credit cards have a grace period, usually about 20 days or so.

For example, let's say my billing period was 1/20 to 2/19. The bill came around 2/26 and payment was due 3/12. As long as the bill was paid in full by 3/12, no interest charges are assessed.

[autoxer]

Originally Posted by bdizzle

if u do it when the bill comes, dont they tack on interest to whatever the balance is?

Check the due date on your bill. My bill usually comes about 2 or 3 weeks before the due date. There is a grace period where you don't accrue interest, unless you carry a balance to the next bill.

[bdizzle]

Originally Posted by disneysteve

No. Credit cards have a grace period, usually about 20 days or so.

For example, let's say my billing period was 1/20 to 2/19. The bill came around 2/26 and payment was due 3/12. As long as the bill was paid in full by 3/12, no interest charges are assessed.

ok thanks makes sense. im gonna check my cards and see what rewards they have on them. i know at least 2 have rewards, but i never use them since i dont shop at those stores often enough.

[disneysteve]

Originally Posted by bdizzle

ok thanks makes sense. im gonna check my cards and see what rewards they have on them. i know at least 2 have rewards, but i never use them since i dont shop at those stores often enough.

Without knowing anymore about you, I'd say to stick with the Target Visa. Target has stuff everyone needs: food, toiletries, paper goods, clothing, office supplies, etc.

Earning rewards at Macy's and Circuit City aren't good IMO because those are almost entirely luxury items.

[kv968]

What you could, and probably should do, is get a copy of your credit report and see what's on there. You can go to AnnualCreditReport and get it for free. This isn't a "scam" site, it's totally legit. The Fair Credit Reporting Act made it mandatory that the three consumer reporting companies (Equifax, TransUnion, Meridian) provide you with a free copy of your credit report, at your request, once every 12 months. This is the secured site the FTC will refer you to.

After you fill out the necessary information, you'll receive your credit report. There is also an option afterwards to get your credit score. This will cost you between something like $5-$9 dollars to do. I recommend you use Equifax if you would like a true FICO score since I think they're the only one who gives a legitimate FICO score. The others are just credit scores (although of the two I ran, Equifax and TranUnion, they were both practically the same number). The three different reporting companies may have slightly different info, but it will give you an idea of what's out there on you credit-wise.

You could run all three at once and get the complete picture but then you'd have to wait a year in order to do it again for free. What I do is get one report every 4 months from a different reporting company. That way I can check my credit practically year-round for free.

[th_tan]

you should try getting a card with 3-5% cash back, use it and pay it off immediately, you can live 3-5% cheaper doing that assuming no membership/annual fees. Your credit should be good enough to get one of those cards once your Fico hits 700+

[LuxLiving]

Playing devil's advocate -

Buy **used** w/cash, invest the difference. Think COMPOUND INTEREST!

Compound Interest Calculator

$5000.00 invested for 41 years (if you're currently 24, the difference until you turn 65 or standard retirement age) at 10% compounded monthly = $296,619.12. Or about $250,000.00 if the interest is compounded only yearly.

I'm not saying to buy shabby goods, but if you could get decent used furniture (which you can by going to auctions* or to antique or high end thrifts) by paying a fraction of the cost and investing the difference then look at what you could have in the end.

Just a thought! And I know it doesn't address the question of making the credit score better for the end purposes of future purchases such as a mortgage, but if you bought for a smaller price and still used the cards as others suggest of charging then paying off before months end you could still use this strategy to be better off financially in the long run.

You say you NEED furniture...I'd say most all of us WANT furniture. It's not a requirement to LIFE. Nothing wrong with wanting it, just trying to help us all remember that our NEEDS are actually few, our WANTS are myriad.

Sorry, OP, I'm not wanting to totally rain out your parade! Just stating some 'truisms' that we can easily forget in these days of slick advertising. We, as a culture, are infomercialed into believing that we must have it all. Each of us have to decide for ourselves where we are wanting to be in the long run. I applaud you for your efforts in making intelligent financial moves at such a young age!

*here we have auction houses that sell NEW furniture as a test market for the furniture manufacturers. I've seen leather couches go for as little as $100 (very late at night) that are then seen in stores for $900 on up to about $3750. I'd say, BUY CHEAP & INVEST THE DIFFERENCE.

on the subject of paying your card account on time...


I pay everything I can electronically and I don't wait for the bill. I know what day the account closes each month, Money reminds me should I forget, and I am on their website transferring the total amount that day.

I sure as heck don't want my credit worthiness in the hands of the U.S. Post Office, if I'm ever late, it's nobody's fault but my own.

[zetta]

Here's a tip that will help with both paying off your credit card in full each month (which will help raise your credit score) and in saving up for the furniture -- use envelope-style budgeting software.

The best ones do a neat trick. Whenever you purchase something with a credit card, say $100 on groceries for this example, and you assign that purchase to the grocery envelope, the software takes the $100 out of the grocery envelope and puts it into the "for credit card bill" envelope. When your bill comes, you have the full amount of the bill already set aside. This prevents you from ever paying interest.

Having the budget means that you'll also have a "furniture" envelope, and you'll be putting some money into it each month. You'll know at any given time how much you have available to spend on furniture.

I use Home Budget Software for Household, Family & Personal Money Management -- it's the most expensive one out there ($120/year subscription), so I'm in the process of looking at the alternatives to see if they are user-friendly enough to suit me.

[zetta]

One thought -- the only time I have ever paid interest on a cc was when my payment arrived late due to a snowstorm. I seem to recall that I got charged interest two months in a row because of this, due to some obscure clause in the fine print. (Can't remember exactly why.) Anybody know if the OP should avoid charging anything in April (after paying off the cards in March) to avoid this?

[bdizzle]

lol you guys must hate buying furniture man. ill take all the furniture comments and place them in the darkest recesses of my mind

Originally Posted by th_tan

you should try getting a card with 3-5% cash back, use it and pay it off immediately, you can live 3-5% cheaper doing that assuming no membership/annual fees. Your credit should be good enough to get one of those cards once your Fico hits 700+

i opened up another savings account and the my bank teller said i got pre-approved (dont know if pre-approved means i got approved or approved to fill out the credit app) for either a platinum or cash rewards card. it pays 1% on every dollar spent yearly. that's about $100/yr depending on my budget which isn't that bad since it's free money. can you recommend a specific card with that high of a percentage? i don't really want to apply for anymore credit right now. i'll use the cards i have now to pay bills get gas, and buy groceries, then once im like 710 or so, i'll try to get one with a lower rate and better rewards. i shop at macy's, target and circuit city, so i'm pretty sure i can use what they're rewards.

Originally Posted by zetta

Here's a tip that will help with both paying off your credit card in full each month (which will help raise your credit score) and in saving up for the furniture -- use envelope-style budgeting software.

The best ones do a neat trick. Whenever you purchase something with a credit card, say $100 on groceries for this example, and you assign that purchase to the grocery envelope, the software takes the $100 out of the grocery envelope and puts it into the "for credit card bill" envelope. When your bill comes, you have the full amount of the bill already set aside. This prevents you from ever paying interest.

Having the budget means that you'll also have a "furniture" envelope, and you'll be putting some money into it each month. You'll know at any given time how much you have available to spend on furniture.

I use Home Budget Software for Household, Family & Personal Money Management -- it's the most expensive one out there ($120/year subscription), so I'm in the process of looking at the alternatives to see if they are user-friendly enough to suit me.

those financing software suck to me. i just never could get them to do the things i want them to. i tried few versions of money and quicken. i just want something basic, such as monitor my accounts, and pay bills on time, and some basic reporting. just a real basic lightweight app. the "envelope" idea seems really cool tho.

[jIM_Ohio]

Originally Posted by zetta

One thought -- the only time I have ever paid interest on a cc was when my payment arrived late due to a snowstorm. I seem to recall that I got charged interest two months in a row because of this, due to some obscure clause in the fine print. (Can't remember exactly why.) Anybody know if the OP should avoid charging anything in April (after paying off the cards in March) to avoid this?

if the bill was due jan 15 and you "paid" it jan 16, you started accruing interest. You got bill in Feb and paid the interest from Jan 16 to Feb 15. If you sent bill in Feb 10, you still accrued interest between "statement closing date" and "payment received date" which you saw on your March statement.

The easiest way around this is to call the CC company and ask what the payoff balance is (including accrued interest).

CC companies compound interest daily.

The reason this does not happen with car loans and house loans is because those types of notes compound monthly.

[zetta]

if the bill was due jan 15 and you "paid" it jan 16, you started accruing interest. You got bill in Feb and paid the interest from Jan 16 to Feb 15. If you sent bill in Feb 10, you still accrued interest between "statement closing date" and "payment received date" which you saw on your March statement.

That makes sense. I remember being really ticked at the time -- I understood paying interest on the money that was due Jan 15, but I had thought the new charges from Jan 16 to Feb 15 wouldn't acrue interest because the bill for Feb was paid during the grace period. Luckily I almost all my bills electronically now so it's not an issue.

those financing software suck to me. i just never could get them to do the things i want them to. i tried few versions of money and quicken. i just want something basic, such as monitor my accounts, and pay bills on time, and some basic reporting. just a real basic lightweight app. the "envelope" idea seems really cool tho.

The envelope-style software is very different from money and quicken -- I agree those are rotten for trying to stick to a budget. Here's my blog entry with a list of envelope-style ones. One of them is even free if you just want to try out the concept: Zetta's Striving to Get Rich Slow - Archive for the 'Envelope-style software' Category

[click4credit]

If your not going to buy the furniture until you have saved enough money to pay for it in full then you could simply use your current credit card and then pay the balance in full before the bill is due. That way you would incur no interest and get up to 55 days extra interest free from when you purchase the furniture to paying the bill off.
The interest rates for your cards are very high though so you should be able to do better than that. Maybe wait a couple of months to see if your credit score goes up and when you do apply on apply for one at a time. If you apply for several cards it could dent your credit score.

[disneysaver]

Originally Posted by zetta

The best ones do a neat trick. Whenever you purchase something with a credit card, say $100 on groceries for this example, and you assign that purchase to the grocery envelope, the software takes the $100 out of the grocery envelope and puts it into the "for credit card bill" envelope. When your bill comes, you have the full amount of the bill already set aside. This prevents you from ever paying interest.

This is kindof like what I do, only I use my checkbook. I pretty much charge everything for the rewards. I write the charge in my checkbook as if I had written a check, and deduct the amount from my balance. When it's time to pay the CC bill I have the money in my account. When I'm out of money in my checkbook I quit charging!

[PetMom]

I think furniture is a worthwhile investment especially
when you get what you really want.

We were at a point where I was ready to move out
of our home, I wanted a change. Surprisingly, a
new set of furniture of what we really wanted
made the whole interior seem
new and different.

If you are able to pay cash for furniture as
we were offer a lower price right there. They
should be able to come down on the price
if you are paying cash (as explained in the
posts about the 0% interest charge). Of course,
the best route would be to shop around for
a good sale and offer a lower paid in full price.