Debit cards

[poundwise]

Re: Debit cards

that is a goal i have, and i'm working on it!

You and me too sister.

Actually, I do have a credit card that I use for purchases even though it is still a debt that I am paying on.

What I do is, at the first of the month, I send a large payment to the card. What this payment actually represents is my gas, grocery, and a few other budgeted items money for the month. Then, I use the card for gas and groceries, etc., over the course of the month, spending no more than the amount of that 'payment.' That saves me some significant interest over the course of the month. Later in the month, I also send in my regular payment which includes any extra I send as part of debt repayment plan.

[Broken Arrow]

Re: Debit cards

Poundwise, your arguments involving the risk of using debt cards is half the reason why I've switched over to a credit card for everyday use. That way, none of my money is touched, and I just have to dispute the fraudulent charges.

Of course, there are obvious, more hazardous downsides to credit cards. For example, I believe if an individual is having a hard time with their spending, tracking it, or carry a sizeable balance on their credit card, then I believe it would be better to use a debit card for the time being. A very good friend of mine is like that. He doesn't track his spending, and... probably doesn't even care actually. Right now, he's got like 4 maxed out credit cards and was constantly getting dinged for it. Personally, I am GLAD and even surprised that he's cut up all of his credit cards and has resorted to a debit card instead.

I too have used my debt card for the above reasons. I only started using credit cards again earlier this year, now that I track every penny and carry no balance.

[tinapbeana]

Re: Debit cards

You and me too sister.

Actually, I do have a credit card that I use for purchases even though it is still a debt that I am paying on.

i think that's where i'm getting hung up: part of me really doesn't want to use my CC for monthly expenses until i've managed to pay it down to a responsible level and kept it there.

[poundwise]

Re: Debit cards

Poundwise, your arguments involving the risk of using debt cards is half the reason why I've switched over to a credit card for everyday use. That way, none of my money is touched, and I just have to dispute the fraudulent charges.

Of course, there are obvious, more hazardous downsides to credit cards. For example, I believe if an individual is having a hard time with their spending, tracking it, or carry a sizeable balance on their credit card, then I believe it would be better to use a debit card for the time being. A very good friend of mine is like that. He doesn't track his spending, and... probably doesn't even care actually. Right now, he's got like 4 maxed out credit cards and was constantly getting dinged for it. Personally, I am GLAD and even surprised that he's cut up all of his credit cards and has resorted to a debit card instead.

I too have used my debt card for the above reasons. I only started using credit cards again earlier this year, now that I track every penny and carry no balance.

Absolutely. My Dad was much the same way. He uses a debit card now and it has changed how he spends in a very positive way. Of course, that is not the only change he made but his and your friend's example in this regard illustrates a legitimate benefit for many on the use of debit cards.

[poundwise]

Re: Debit cards

i think that's where i'm getting hung up: part of me really doesn't want to use my CC for monthly expenses until i've managed to pay it down to a responsible level and kept it there.

I completely understand, however, consider this:

Anytime you can reduce the balance of the card account you are saving money. Since I started doing this, I have paid the same 'regular payment' (not the minimum asked for by the card company) and a substantial amount more of my payment goes to the principal instead of interest because I lower the balance a significant amount for at least half of the cycle.

Note that an important part of this is that I pay (put the money toward the card) FIRST. I also keep this 'payment' (which really isn't a bona-fide payment of debt) separate from my 'real payment' (which is my debt-repayment plan mandated amount to pay on the account each month.)

[tinapbeana]

Re: Debit cards

I completely understand, however, consider this:
Anytime you can reduce the balance of the card account you are saving money. Since I started doing this, I have paid the same 'regular payment' (not the minimum asked for by the card company) and a substantial amount more of my payment goes to the principal instead of interest because I lower the balance a significant amount for at least half of the cycle.

Note that an important part of this is that I pay (put the money toward the card) FIRST. I also keep this 'payment' (which really isn't a bona-fide payment of debt) separate from my 'real payment' (which is my debt-repayment plan mandated amount to pay on the account each month.)

i was thinking along those lines and how the lower avg daily balance could work to my benefit, so i'm going to have to ponder this one for a bit.

my other concern actually has nothing to do with me, it's DH if he sees me start using the CC. he has no issue borrowing from peter to pay paul, and the 'cash only' diet our household has been on the past couple of weeks has been working fairly well. if i start using the CC for things like groceries, i envision him going 3 yr old on me (like going postal you know!) in the store...

maybe i could just use it for actual bills: cell, elec, cable... hmmm, will have to crunch some numbers...