Are CCs worth the hassle?

[buzz]

Credit cards may take a measure of competence and discipline, but they are certainly not a hassle.

[disneysteve]

I can, a few years ago I went to purchase a big screen TV (this was before I was handling money properly). Since I knew I had a $5,000 limit on a credit card, I spent $4,000 of it that night.

So you based how much you could "afford" not on how much money you actually had but rather on the available credit on your account. You went out shopping for an item knowing that you had no money to pay for it.

I know that is a very common problem. I guess I am lucky that my brain doesn't work that way. If I didn't have that $4,000 sitting in the bank, I wouldn't have gone looking for a TV, regardless of the available limit on my credit card.

Between our 4 active credit cards, our available credit is in the neighborhood of $100,000. We could get into all kinds of trouble if we wanted to. We just don't. We only charge what we can afford. I can't really explain how we do it. We just do. We have an inherent sense of where we are and how much we have and what we can handle. But I totally get that not everyone works that way.

[disneysteve]

You might have also recently seen this past week that several major airlines are going to cc's for in-flight purchases. In fact, one of them (can't remember which one from the article I read) said that since they started doing this, the average bill for drinks went up significantly.

Some people will use credit to spend recklessly. Others will use it as a tool to better manage and track their spending.

The question is "are CCs worth the hassle?" and I say yes.

[maat55]

I don't think using CC's is smart for people who have not spent some time really understanding their personal finances. It takes discipline to stay out of trouble.

I've recently decided to give CC's a go for paying my normal expenses. I anticipate earning around 50 to 60 a month towards my mortgage. First time I mess up, I intend to stop. But, I am very cautious and expect to do alright.

[ActYourWage]

"I know that is a very common problem. I guess I am lucky that my brain doesn't work that way. If I didn't have that $4,000 sitting in the bank, I wouldn't have gone looking for a TV, regardless of the available limit on my credit card."

Yes, if you had that money in the bank for the purchase I can see using a CC, but before my financial awakening I was blinded and did not see that. I thought if I can afford the montly payment, I can get the product. It's by God's grace I don't think like that anymore. I know my parents almost got burnt using BOA credit card and me having to think about that and worrying to pay it off, even if I have the money now, is a hassle to me.

[PrincessPerky]

Credit cards may take a measure of competence and discipline, but they are certainly not a hassle.

If you ain't got the discipline they certainly are a hassle!

seriously, I do not knock folk who use them wisely, I just don't use mine. right now not knowing if I have enough keeps me not buying, the more I can put off a splurge the better. (I do not write down purchases with debit either, I simply assume there isn't enough to buy more than needed without checking, If/when I check I generally find we have enough for a splurge or two, but if I don't check, I can't splurge...which saves me several splurges a month)

[disneysteve]

I just don't use mine. right now not knowing if I have enough keeps me not buying, the more I can put off a splurge the better.

It sounds like you are equating using a credit card with splurging. Am I reading that correctly? If so, what about using a credit card for routine bills and purchases that you would be making anyway? We use our CC to pay for gas, auto insurance premiums, cable bill, phone bill, internet bill, alarm co. fee, auto registration, auto maintenance and many other things that we'd be paying the exact same amount for regardless of how we paid the bill. The credit card just makes it much easier, provides consumer protection and pays us hundreds of dollars in rewards each year.

[PrincessPerky]

I don't want to 'open the door'..though I certainly understand it can work, I don't trust myself...my current system of not knowing and not being willing to overdraft, keeps me from spending much..so If it ain't broke don't fix it, is my mindset.

[disneysteve]

I don't want to 'open the door'..though I certainly understand it can work, I don't trust myself...my current system of not knowing and not being willing to overdraft, keeps me from spending much..so If it ain't broke don't fix it, is my mindset.

Makes sense.

[LivingAlmostLarge]

I love my CC, and always pay it in full. It's way easier and I'll give you a perfect example.

I reconcile our CC weekly and I can tell you what we are spending all the time. I am never worried about paying it in full. Also I never buy what I normally wouldn't with cash. Treat your CC like a debit card and you'll never go wrong.

So the example?

My DH decides to charge without telling me $4500 worth of stuff. Sure it's a lot and we usually discuss anything over $100. What was it for? Hm...a work conference, hotel, airline ticket, and car rental. What am I going to say?

No honey, don't register with everyone else and book airline tickets together at work and hotel together at work. No honey, we don't have the cash. Yeah right.

So he charged it and I was like Woah $4500 we owe? Well if it had been a debit card he would have overdrafted our account for sure. NO way we have $5k in there, we have it in savings though. BUT we'll have to float the company a loan, so if I'm going to do that until October, you bet I want some float from the CC company!

[LivingAlmostLarge]

"I know that is a very common problem. I guess I am lucky that my brain doesn't work that way. If I didn't have that $4,000 sitting in the bank, I wouldn't have gone looking for a TV, regardless of the available limit on my credit card."

Yes, if you had that money in the bank for the purchase I can see using a CC, but before my financial awakening I was blinded and did not see that. I thought if I can afford the montly payment, I can get the product. It's by God's grace I don't think like that anymore. I know my parents almost got burnt using BOA credit card and me having to think about that and worrying to pay it off, even if I have the money now, is a hassle to me.

Holy Crap! I can't believe that people actually think of charging $4k because they have credit.

That is definitely the difference between people who pay in full every month, I've never thought to myself I have $10k and I can charge $9k. I too have at least $100k in credit available, but I've never thought I had it for use.

I only have whatever cash in the bank to spend and the credit card is the means to pay it.

[disneysteve]

I only have whatever cash in the bank to spend and the credit card is the means to pay it.

Exactly. I don't think of a credit card as a hassle. I think of it as a convenience. It allows me to shop or spend as needed without having to worry how much cash is in my wallet or what the current balance of my checking account is. What would be a big hassle would be NOT having a credit card.

[Snave]

Some people will use credit to spend recklessly. Others will use it as a tool to better manage and track their spending.

The question is "are CCs worth the hassle?" and I say yes.

I was just commenting on you asking to articulate why it was that she would spend more with a cc than with cash. I agree that a cc is useful and I use them. I don't want to say that cash keeps me out of trouble, because I am not reckless with my cc and do pay them off. However, I know that I do spend less when I fork over cash. Whether or not they can afford it, people typically spend more using a cc.

[ActYourWage]

Holy Crap! I can't believe that people actually think of charging $4k because they have credit.

That is definitely the difference between people who pay in full every month, I've never thought to myself I have $10k and I can charge $9k. I too have at least $100k in credit available, but I've never thought I had it for use.

I only have whatever cash in the bank to spend and the credit card is the means to pay it.

Yes, I did charge $4k on credit. That was back when I didn't understand finances. I would venure to say that a lot of people do that. That is why CCs are not worth the hassle. A few rewards a year is not worth it.

[ActYourWage]

I love my CC, and always pay it in full. It's way easier and I'll give you a perfect example.

I reconcile our CC weekly and I can tell you what we are spending all the time. I am never worried about paying it in full. Also I never buy what I normally wouldn't with cash. Treat your CC like a debit card and you'll never go wrong.

So the example?

My DH decides to charge without telling me $4500 worth of stuff. Sure it's a lot and we usually discuss anything over $100. What was it for? Hm...a work conference, hotel, airline ticket, and car rental. What am I going to say?

No honey, don't register with everyone else and book airline tickets together at work and hotel together at work. No honey, we don't have the cash. Yeah right.

So he charged it and I was like Woah $4500 we owe? Well if it had been a debit card he would have overdrafted our account for sure. NO way we have $5k in there, we have it in savings though. BUT we'll have to float the company a loan, so if I'm going to do that until October, you bet I want some float from the CC company!

A budget would fix the cash problem about booking airline tickets and hotels at work. I am sure he knew ahead of time any way. If not, that is where budgeting comes into play.