Making CC's work for me

[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

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.

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]

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]

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.