Does it make sense to use my credit card this way?

[kkkuron]

I just signed up and I am hoping to find a lot of information and help on this board.
Our problem is that we are just coming out of a big financial crisis as my boyfriend just found a new job and we are hopefully getting assistance with child care cost from the state. I also took a small second job working from home which will bring in additional $400 a month and I am looking for another part time job working from home as we speak … well or as I type lol.
I am working very hard towards paying off our debt and I was wondering if someone can tell me if my plan makes sense.

First of all, I needed a way to lower my monthly expenses so I decided to pay Car Insurance, Internet and Electricity (which is a total of $271) on my Credit Card and I pay the exact amount off right away with my debit card. This way, I don’t have to pay the minimum payment for that credit card ($160) and I am getting money back in rewards on my account.

Now I have $160 available to spend on something else, correct? I know it probably would be better ot pay the credit card off but this credit card has the highest amount among my credit cards and I want to pay off the lower credit cards first.

So is this a good idea? Or should I not do this and just find another way to lower monthly expenses? I appreciate any help.

[herdjohnson]

I just signed up and I am hoping to find a lot of information and help on this board.
Our problem is that we are just coming out of a big financial crisis as my boyfriend just found a new job and we are hopefully getting assistance with child care cost from the state. I also took a small second job working from home which will bring in additional $400 a month and I am looking for another part time job working from home as we speak … well or as I type lol.
I am working very hard towards paying off our debt and I was wondering if someone can tell me if my plan makes sense.

First of all, I needed a way to lower my monthly expenses so I decided to pay Car Insurance, Internet and Electricity (which is a total of $271) on my Credit Card and I pay the exact amount off right away with my debit card. This way, I don’t have to pay the minimum payment for that credit card ($160) and I am getting money back in rewards on my account.

Now I have $160 available to spend on something else, correct? I know it probably would be better ot pay the credit card off but this credit card has the highest amount among my credit cards and I want to pay off the lower credit cards first.

So is this a good idea? Or should I not do this and just find another way to lower monthly expenses? I appreciate any help.

If you were going to do this, I would at a minimum pay the 271 + the interest on that credit card for the month. Otherwise, your balance on that card is going to increase every month, compounding the interest. You don't want to increase the balance on one card just to decrease it on another.

Also only consider this if you are 100% positive that you will not use this as a crutch. Generally I would recommend shredding any of these cards to remove the temptation while you try to pay them off.

[kkkuron]

If you were going to do this, I would at a minimum pay the 271 + the interest on that credit card for the month. Otherwise, your balance on that card is going to increase every month, compounding the interest. You don't want to increase the balance on one card just to decrease it on another.

Also only consider this if you are 100% positive that you will not use this as a crutch. Generally I would recommend shredding any of these cards to remove the temptation while you try to pay them off.

It is just for 2-3 month until we are doing a little better financially!
I already shredded all my credit cards so I am not using them anymore further.

[Retired To Win]

I did something similar to this a long, long time ago in a galaxy far, far away. But the only reason it worked for me was that I was absolutely disciplined about not treating the difference between the expense I was putting on the credit card and the payment on that card as extra money to spend.

It sounds to me like that -- treating the difference as extra money to spend -- is just what you are thinking of doing. Please don't.

[kkkuron]

I wanted to use the difference to pay other bills ... to lower my credit card debt

[herdjohnson]

I wanted to use the difference to pay other bills ... to lower my credit card debt

Doing this won't lower your credit card debt any faster.

[bjl584]

I just signed up and I am hoping to find a lot of information and help on this board.
Our problem is that we are just coming out of a big financial crisis as my boyfriend just found a new job and we are hopefully getting assistance with child care cost from the state. I also took a small second job working from home which will bring in additional $400 a month and I am looking for another part time job working from home as we speak … well or as I type lol.
I am working very hard towards paying off our debt and I was wondering if someone can tell me if my plan makes sense.

First of all, I needed a way to lower my monthly expenses so I decided to pay Car Insurance, Internet and Electricity (which is a total of $271) on my Credit Card and I pay the exact amount off right away with my debit card. This way, I don’t have to pay the minimum payment for that credit card ($160) and I am getting money back in rewards on my account.

Now I have $160 available to spend on something else, correct? I know it probably would be better ot pay the credit card off but this credit card has the highest amount among my credit cards and I want to pay off the lower credit cards first.

So is this a good idea? Or should I not do this and just find another way to lower monthly expenses? I appreciate any help.

You may earn points, but you'll be paying interest on the card. You probably won't come out ahead.

It would probably make more sense to just throw every extra dollar at the credit card and get it paid off as quickly as possible.

[doingitallwrong]

You'll get the best advice if you list your debts, interest rates, and minimum payments, as well as your monthly income and expenses.

As far as your plan, you say you're looking for a way to lower monthly expenses, so I'm not sure how you think you'd have $160 "extra" -- it sounds as if you don't have enough to pay the $271 and the $160 now. The plan you have would eliminate the $160 from your monthly expenses, but as was pointed out, your balance on that card will grow every month you do this.

For a couple of months, honestly, it probably won't make a huge impact. The problem is that once you start, it's easy to find excuses to keep doing it, and that's when you get into more trouble.

[Nutria]

I just signed up and I am hoping to find a lot of information and help on this board.
Our problem is that we are just coming out of a big financial crisis as my boyfriend just found a new job and we are hopefully getting assistance with child care cost from the state. I also took a small second job working from home which will bring in additional $400 a month and I am looking for another part time job working from home as we speak … well or as I type lol.
I am working very hard towards paying off our debt and I was wondering if someone can tell me if my plan makes sense.

First of all, I needed a way to lower my monthly expenses so I decided to pay Car Insurance, Internet and Electricity (which is a total of $271) on my Credit Card and I pay the exact amount off right away with my debit card. This way, I don’t have to pay the minimum payment for that credit card ($160) and I am getting money back in rewards on my account.

No, because you'd have had to pay for insurance, internet and electricity anyway.

Just because the CC web site says "$0 payment due" doesn't mean that you... don't have to pay anything on it!!! The previous balance and accumulated interest are still accumulating more interest.

Now I have $160 available to spend on something else, correct?

Technically. But that's a fiscal shell game.

I know it probably would be better ot pay the credit card off but this credit card has the highest amount among my credit cards and I want to pay off the lower credit cards first.

But you work hard, are stressed out and deserve some fun, right?

Take only $40/month and go with your bf to a restaurant; that's your monthly treat. Put the rest of it against the CC.

Stick your credit card(s) deep in the back of your sock drawer, and pay everything from your current income (aka checking account). Your bank probably has a bill paying feature, which lets you pay those bills at the click of a mouse. Check Free Web -- which I've used for 20 years -- is even easier.

Make the Debit Card your best friend. Carry it everywhere and use it for everything except big ticket durable goods. Then log into your bank every couple of days to monitor your bank balances.

Also, you need a budget. Go look up Dave Ramsey or the aptly named You Need A Budget. They'll really help you organize your finances. Especially YNAB.

P.S. - Your boyfriend needs to be on board, or it'll be a very stressful situation.

[Ethan60]

You may earn points, but you'll be paying interest on the card. You probably won't come out ahead.

It would probably make more sense to just throw every extra dollar at the credit card and get it paid off as quickly as possible.

You really need to focus on paying it off as quickly as possible.