Mar 3, 2011

Do You Use a Credit Card? (Janssen)

Some people (including financial gurus) are extremely anti-credit card. And I get that. It's easy to spend money you don't really have, the interest rates are killer, and the minimum payments mean you could be still paying for your gallon of 2% years from now.

But . . . we use a credit card.

Bart had one when we got married and had never once carried a balance on it. I'd never been a credit card user previously.

Five years later, I can tell you that a credit card works well for us. I like the security of a credit card (if your cash gets stolen or accidentally thrown away or lost, you're just out of luck - not so with a credit card). I like that I can account for every penny spent on it by checking my online statement rather than thinking "didn't I have a $20 in here yesterday?"

I know, also, that this is fairly uncommon, but it's HARDER for me to spend with a credit card than it is with cash. With cash, I have no paper trail - I can pay and be done. With a credit card, not only do I have to think about my purchase when I make it, but I have to think about it again every single time I look at the statement and then when I pay it (can you tell I look at our statement many times a month?).

We have a Southwest credit card and we put absolutely everything on it - gas, groceries, our cell phone bill, the internet bill. If I could pay our rent on it, I would (well, technically, I believe I can but it would be $25 a month, so that clearly would be a bad call). We get probably two free round-trip tickets a year on it, which definitely makes it worth the $59 fee to us (I called to see if they'd waive it. They would not).

For us, it works.

What about you? Do you use a credit card? Avoid them like the plague?


Melanie said...

I used to use my credit card for everything - and I still have two - but I've switched to using my debit card. I like that the withdrawal is more immediate, making my balance more accurate. Even though I budget, it was still hard for me to keep track of what my account balances were when I used the credit card and money was taken out of my account in the middle of one month or another month's purchases.

I earn cash back by using my debit card, so that works for me.

the Danosaur said...

We put everything on a rewards credit card, too, and pay off the balance every month. I also like the security that comes with a credit card ($0 fraud liability, etc.). And like you said, it is a nightmare to try to keep track of cash. (According to my books we should have $100 or so in cash floating around somewhere, but we can only account for half of that. I'm sure the rest is loose change.)

G said...

Basically ditto to everything you said. Love having a credit card. We use a Costco AmEx and earn great rebates on it with no fee. Another thing you didn't mention - though it's not much - the longer the money stays in MY account, the better. A credit card lets me earn interest on my money (on average) about 2 weeks longer than I otherwise would have (assuming you have that money in an interest earning account).

Kayla said...

I feel way more accountable when it comes to our credit card. The cash I earned from working last year was SO easy to spend in large amounts. Just pulled it out of my wallet and it was gone and I have no idea where it went (well, kind of). But credit card statements are forever.

Freckles in April | a modest clothing blog

Anonymous said...

Another good reason to use a credit card, and pay it off each month, is that it helps to establish a great credit score and credit history for you. One of my friends could not buy a home because she didn’t have any credit history. It wasn’t bad, it was just not present.

KatieTX said...

I love using a credit card. The Chase Freedom is awesome. No annual fees. The points system is great and on certain categories you get 5% back!I put every expenditure I can on it. Spending about $1000 a month on it, I annually get over $500 in rewards. Also, if used properly it is really helpful when trying to get a loan. My fiance and I are already pre-approved for a mortgage (we are only 24) because are credit scores are near 800. Obviously I think credit cards are a great choice as long as you pay them off every single month! Don't spend money you don't have. Just found this it!

Merry said...

We basically use our credit cards for gas, or when Dave goes to the store, since he doesn't have a debit card that connects to my checking account. So they have fairly limited use.

I have a question. You have to pay $59 a year just to have the credit card? Or is the $59 fee for the conversion of expenses into flying points?

Rachel said...

I feel the exact same way about cash- no accountability because it leaves no trail! Whenever we have cash we almosts immediately use it as fun money. I also love that I get rewarded (albeit slowly) for using my credit card. Works for me!

Janssen said...

Merry, it's really the same thing. It's $59 to have the card and then it automatically transfers to flight credits.

Melissa said...

We use our c.c. for large purchases that we don't want to shell out immediately, but are very selective. For example, we didn't want to deplete our entire savings account for my husbands masters degree so we planned, budgeted, figured out when we would be able to pay it off and then put it on the credit card rather than getting a student load (we get rewards that way). We call Wells Fargo once a year, argue that we have amazing credit and show competitive offers and they always give us a one year trial of 0 percent interest so it works for us and we never keep a balance on it for longer than 6 months before paying it off in full.

Kath said...

I used to have a credit card with a balance and I used to have other debt.

Started following Dave Ramsey's philosophy and now I use a mixture of debit card (for cell bill & insurance) and cash for everything else.

I establish a monthly budget and when I get paid every two weeks I withdraw the amount of cash I need. Once it's gone, it's gone.

As for not having a good enough credit score, when I had debt my score was really high. Now that I've been debt free for almost a year (March 22), I imagine my credit score is dwindling. That's ok, tho - I'm saving up to pay cash for my next house.

I realize it MAY take me awhile to buy that house, but I think the wait will be worth not having a monthly mortgage payment.

preethi said...

Ditto ditto ditto. Credit cards are SO much better than cash in my book. We usually do cash rewards with either Chase Freedom (current quarter is 5% back on groceries) or Pentagon Federal (always 5% back on gas). We've also done airline rewards, saving us over $1000 on a trip to Africa.

Sarah said...

We use Fidelity Amex for everything we can. It accrues cashback that gets put into Aaron's IRA. It's an easy way to save for retirement while in grad school with no actual income.

Catherine said...

We use our cc for the exact reason and it works well for us. We have a budget that tracks how much we've spent in each category. We love the rewards we get with our airline cc.