View Full Version : considering credit card
I am moving towards a better credit rating and all that (recalling that I pretty much lost it all in the recession, not getting a job, foreclosure, and related bankruptcy). So the BK has been paid off for a year, my apartment complex is reporting our rental payments to credit bureaus, my cell phone bill is also reported and always on time. Meanwhile I have an older car with some hail damage and I may need to rent a car at some time to get repairs done, plus I do worry about emergency. I have money saved in a credit union but I have to go there if I need it, and a second checking account that I keep around $50 in, just in case I lose my debit card or something.
I think I need to know my credit score. My bank and credit union both have decent cards but I am nervous to see my credit score. Otherwise there are the 'rebuild your credit' cards. I think I am doing better than that at least. There is a deal at my credit union, if you get a financial check up then you get a free annual parks pass! That may be my best first step. Any pitfalls to avoid that you guys know of in getting a credit card after many years without one?
We haven't had a credit card in at least 8 years and have absolutely no desire to attain one. After taking years to dig ourselves out of debt, the idea of borrowing money (which is what you are doing when you use a credit card) to buy something that isn't of urgent need, just doesn't make financial sense.
I really love the financial intergrity I have from living well below our means and having ample savings for emergencies (6 months of living expenses) and saved funds for expected expenses such as annual vet bills, insurance premiums, home heating oil, property taxes etc. As well as sinking funds for things such as car repairs, dental work, emergency vet care and home repairs. Sinking funds is currently sitting at 3 months of living expenses and growing (though it is growing very slowly). I also keep an emergency $50 bill on me. Getting to this point took time, but was so worth it.
Generally speaking I pay cash for everything. From gasoline, to groceries, vacation rentals, used cars and even my mobile home. Very rarely do I pull out a debit card. I have a plan for every dollar and a budget and stay within it. It is far easier to track when it is cash and much harder to overspend when you have to pull out bills vs swiping a debit card.
We do use a debit card for things that require it. I have rented a car, hotel rooms and cabins using a debit card that has a visa logo on it, on more than one occassion and not had an issue. Though most hotels are happy to take cash and sometimes offer room discounts when I do.
We have a debit card attatched to our emergency fund should we need to access the money quickly (like for a a car repair as we are traveling). But we do not touch that otherwise and replace the money asap. The sinking funds account is linked to our checking so we can transfer money from one to the other with a secure network connection. With those two things in place we have not had a need for a credit cards.
To be honest I am not worried about building credit as we have no desire to actually use credit again if we can help it. Cash on the barrel head is so much more satisfying and I sleep better knowing we don't own anybody.
Money talks in a way that credit does not. Over the years I have gotten deals on services for home repairs, discounts at the hardware store, a better price on a used car and better room rates at a hotel.
Planning for annual expense such as insurances (home and car) end up lower as well when I have saved up to pay the full amount in one payment. They add a charge when you spred it out to quarterly payments.
I will say buying our mobile home with cash was interesting. The realtor and the title company both were not used to it and we had to have a few forms redone because they sent us the standard forms used when a lender is involved.
As for pit falls. It is too easy to over spend if you are using a credit card. It is harder to let go of cash and you are far more likely to put off a major purchase if you are paying cash and consider it more carefully compared to pulling out a credit card to pay for it.
ToomuchStuff
9-24-17, 1:08am
You took the debt gamble before and failed to pay it back (house), or were a slow payer (bankruptcy). Now your wanting to give your information to companies that want to market you, as a product, and provide them with information that could affect your ID? (how is the Equifax hack going to affect you)
Chicken lady
9-24-17, 6:12am
Gee, came here straight from talking about guns. Turns out these are similar subjects.
why do you want the credit card and how do you intend to use it? What did you learn from the bankruptcy? Do you have good self control when it comes to purchases?
i do not have enough money in the bank to buy food and pay property taxes for the rest of my life, so I can come up with a scenario where I end up in bankruptcy. I don't think everybody who goes through that is irresponsible or foolish.
so, back to the actual credit card. Have the financial check up. They will give you good information and they will also try to sell you "products". do not sign up for any products. Including a credit card. If any of the products sounds interesting, say "that sounds interesting. Do you have printed information on that that I can take home and look over?" And do that. Especially don't sign up for any products that give you something if you sign up "today". Those are designed to keep you from using your brain.
a few years ago I got a credit card in my name only. The bank based it on my annual salary and imho the limit was far too high. I use it anywhere the cc price is the same as cash and I pay it off every month. It gives me cash back, so effectively my purchases are cheaper by using the cc.
the current bill is the only one where I have not had the cash in my checking account before using the credit card. Dh and I opened a low interest home equity line for big purchases for the addition. I paid for the counters with my cc, effectively getting a "discount" and then wrote the cc a check from the h.e. Line when the cc bill was due a month later (saving a month of h.e. interest) however, I wrote the check for $500 less because $500/month is supposed to come out of my paycheck until the h.e. Line is paid off (dh makes a payment also) and I now can't pay my sept cc bill until I get my sept paycheck. I am $300 short. But I knew that. And the paycheck comes direct deposit 4 days before the cc is due and I can transfer the funds immediately online. And the $500 was already earmarked, so actually I would have had $200 more than I needed to pay for what I bought In September if I hadn't played the "get discount/save interest" game. The sept. Paycheck is for buying things in October.
if that is confusing to you - don't do stuff like that.
additional note to the anti-credit people, the interest on the h.e. Line is lower than the % currently being earned on our investments. Should that change, we could pay it off. Technically, it would be financially smarter to invest the $500/month and not pay down the h.e. Line beyond the minimum payments, but that makes me nervous, so we continue our normal savings rate and pay off the debt asap. (Also, if I wasn't "buying counters" I would be more likely to buy something else)
Several years ago, my husband and I had debt--about half of it medical--of about 30000.
What we did was sell our house and move to a cheaper foreclosure house, and used that to pay off the medical debt.
We got rid of all credit cards.
WE worked on getting rid of all debt, and paid cash for everything. That meant living without heat or airconditioning in the foreclosure house for two years. We just did not have the cash to buy a heat/cooling system.
After several years of this, out of debt and with savings, I got a credit card. He did not--he was the one with the historically bad credit; when we met, he was being told to enter bankruptcy, but I paid off his debts (that is for another post, haha) and he started over.
After getting us into debt again, I told him that his way was not working for me and if he wanted to stay married, we had to get rid of the debt.
Now, after 10 years of this way of doing things, he does have a Lowes credit card. His credit score is over 800.
So maybe if you want a credit card, a dept store card like Lowes would do the trick with the credit. Get it for something like Lowes that will not tempt you to put gas and groceries on it. Make small purchases and pay them off each month--that is what he did.
I don't think I would get a general credit card with a bankruptcy in my past. It is way too tempting. I already use my credit card more than I should--too easy to buy from Amazon, for example,a nd it's stuff I "need"--but if I have cash, I will do without even stuff I "need."
Every CC in this house is paid off every month. On infrequent occasions we may push a small percentage of the bill to the next month until that expense is reimbursed. But it is taken care of then. There is no charge that lasts longer than two billing cycles and we're not putting thousands of dollars a month on credit.
For us, having credit cards is a convenience, not an income stream.
One of them has given us enough airline miles over the last couple of years to fly us (or someone we designate, like our less-well-off in-laws) somewhere we need to be. If it's us flying and we need to rent a car or book a room at our destination, a CC gets the job done conveniently and ahead of time. We've paid virtually no interest on our cards and pay no annual fees for them.
It's far easier to buy on-line with a CC than a debit card and CCs comes with more consumer protections than debit cards do. In another thread on this site, we've been discussing the use of credit checks as filters for job applicants. No mortgage, no car loan, no CC? Probably poor or no credit (and, hence, no job offer); credit ratings deteriorate if you don't use credit.
Certainly ever single reason we use CCs could be answered by, "Yeah, well, we don't need that" Fine. We do. Or we want it.
Everyone has to do what everyone has to do. If getting a CC opens Pandora's box for you, don't get one. Or get one you have to prepay before you can use it (like a prepaid mobile-phone plan). Just be aware that, like just about everything else, managing credit has pluses and minuses. Running away from credit completely or treating it like a second job or a big raise has its price. Which is okay if you know what the price is and that you want to pay it.
ToomuchStuff
9-24-17, 10:06am
WE worked on getting rid of all debt, and paid cash for everything. That meant living without heat or airconditioning in the foreclosure house for two years. We just did not have the cash to buy a heat/cooling system.
So maybe if you want a credit card, a dept store card like Lowes would do the trick with the credit. Get it for something like Lowes that will not tempt you to put gas and groceries on it. Make small purchases and pay them off each month--that is what he did.
I have been receiving for some time, offers for cash back, to start buying gas and groceries via the card. I know it gives them more direct target marketing information, but do wonder how many people fall into the using up stuff, way before the bill comes thing.
As a side question (threadjack), where did you live and how cold did it get? What did you do for heat, or to keep things like pipes from freezing?
It's far easier to buy on-line with a CC than a debit card and CCs comes with more consumer protections than debit cards do. In another thread on this site, we've been discussing the use of credit checks as filters for job applicants. No mortgage, no car loan, no CC? Probably poor or no credit (and, hence, no job offer); credit ratings deteriorate if you don't use credit.
I would certainly agree that a credit card has more protection (not going to be withdrawn from your account), but I couldn't disagree more about a debit card being harder to use online, then a credit card. It goes through the same system, using numbers just like a credit card does. In fact on mine (and others) debit card, if you choose to run it as a credit card, rather then a debit card, the company doing the sale, pays a higher percentage to the transaction company and if it has one of the typical logo's (Visa/Mastercard), you gain those protections a credit card provides (warranty doubling, etc).
I wonder why you think it is harder to use a debit card? Are you hitting those bank imposed spending limits? I called my CU last year, to transfer money to the checking account to make a large purchase (over $3K). I told the CU what I was doing and she informed me of their card limit, that limits liability and chances of lots of money coming from my account. They overrode that limit for the place I named and the transaction amount, and then dropped it back to their normal limit (think it is $2K a day). This is where dealing with humans, rather then all that electronic banking shines, IMHE.
My credit card has a limit as well. I don't see it as different.
rosarugosa
9-24-17, 10:07am
Everything I've read leads me to believe Zoe Girl has the self discipline to effectively manage a cc at this stage of the game. I think a cc can be a useful tool for many people.
iris lilies
9-24-17, 10:13am
For us, it is a simple tool and we pay it off each month. I cant imagine carrying fistfuls of cash all over Europe. A cc was essential there.
ApatheticNoMore
9-24-17, 10:49am
Yea Zoe Girl seems responsible enough with money to manage a credit card well (but that's for her to ask herself really because only she really knows), the only warning is if one doesn't buy anything online now, a credit card will make buying online oh so easy, which may still be in budget but is something to be aware of. But a credit card is safer against identity theft than a debit card.
Thanks all, for those who don't know the history my houseand lost $100K in value, i had a $9 hr job with a master's degree and the bankruptcy was to protect myself from my ex threatening to sue me, all due to the recession. I still have student loans to clean up from that but making some progress. I am not in any way taking this as my financial mistakes, i feel i have done a great job being frugal to deal with it all.
The credit card is for my piece of mind around car repairs or medical, the only health insurance offered to me has a $2K amount i pay before they start to kick in. If i am very sick or hurt getting to a savings account at the credit union is just one more stress. That and the car breaking down with no one to call actually stress me out a lot. My son goofed up parking my car last week and it was towed, cost him a lot, and i was worried because there is no way i can miss work, which ranges from 6:15 am to 6 pm. I don't think i want one with fancy rewards because that would tempt me to use it and perhaps over use it
We are very happy with our Chase Amazon Visa card. Terrific accessible customer service. No matter how careful you are there will be problems and you want quick and easy fixes. Immediately viewable charges online to make sure of amounts and keep track. My hubby knows in less than 5 minutes when I have charged any amount. Credits on Amazon.
Previous to this card, we had a Discover (still do) but there were still those places who dont accept Discover and since hubby uses Amazon a lot, the above was a good idea.
Even if you always have your card in your possession, your info can be stolen. Happened to my minlaw. Her cc could not be viewed in detail online like ours so no one knew of the problem until the CC company closed the account. Took one phone call and then filling out the legal forms later sent but she got a new card in 7 days. She was embarrassed and then frightened. Since we keep track, this would not have happened to us but we would have been on the phone immediately to the CC company as soon as a strange charge appeared.
Note: in your case credits are not as important as payment terms and interest rate. Check carefully and be aware they can change.
We are very happy with our Chase Amazon Visa card. Terrific accessible customer service. No matter how careful you are there will be problems and you want quick and easy fixes. Immediately viewable charges online to make sure of amounts and keep track. My hubby knows in less than 5 minutes when I have charged any amount. Credits on Amazon.
Previous to this card, we had a Discover (still do) but there were still those places who dont accept Discover and since hubby uses Amazon a lot, the above was a good idea.
Even if you always have your card in your possession, your info can be stolen. Happened to my minlaw. Her cc could not be viewed in detail online like ours so no one knew of the problem until the CC company closed the account. Took one phone call and then filling out the legal forms later sent but she got a new card in 7 days. She was embarrassed and then frightened. Since we keep track, this would not have happened to us but we would have been on the phone immediately to the CC company as soon as a strange charge appeared.
Note: in your case credits are not as important as payment terms and interest rate. Check carefully and be aware they can change.
I have a Chase Amazon card as well. I keep a (close to ) 0 balance on it. Points are nice - I was able to put my new roof last year on the credit card, got the points, but paid it off 2 days later to avoid interest. I can do the same with my car insurance, so I do.
I know about how much I put on the card every month, so I make automatic biweekly payments out of my bank account. If it is off either way, I'll tweak the payment before it goes out.
Thanks all, for those who don't know the history my houseand lost $100K in value, i had a $9 hr job with a master's degree and the bankruptcy was to protect myself from my ex threatening to sue me, all due to the recession. I still have student loans to clean up from that but making some progress. I am not in any way taking this as my financial mistakes, i feel i have done a great job being frugal to deal with it all.
The credit card is for my piece of mind around car repairs or medical, the only health insurance offered to me has a $2K amount i pay before they start to kick in. If i am very sick or hurt getting to a savings account at the credit union is just one more stress. That and the car breaking down with no one to call actually stress me out a lot. My son goofed up parking my car last week and it was towed, cost him a lot, and i was worried because there is no way i can miss work, which ranges from 6:15 am to 6 pm. I don't think i want one with fancy rewards because that would tempt me to use it and perhaps over use it
But I thought you had the cd ladder for the emergency fund-- wouldn't that cover the emergency car repair? I'd be scared to go into debt for that, given the amount of interest the cards charge.
I have my emergency cd ladder at ALLY, with a money account with check writing privileges that has a debit card. What if you put your emergency money into that configuration--wouldn't that accomplish what you are worried about accomplishing?
My cd ladder is actually IRA funds, i do have $3K in a money market but that is in a credit union with no debit card attached to any account.
I still feel best with the credit card idea. It is the most versatile for the emergencies I am thinking of and my situation as single and without a lot of work flexibility or generations of friends and family here. When others think lf emergencies they may realize their job is not one that will fall apart if they miss or are late, or their partner can always give them a ride. Each situation is unique
Would your car emergency or medical emergency be more than 3k? Because if you accumulate cc debt more than that, and you can't repay it, then youhave another emergency, which is the accumulation of more debt.
I've had a credit card since shortly after I started working, and I've used it and misused it over the years. Along with my home equity, it got me through some lean times, but I ended up with thousands to pay off, too. Now I use it more wisely, and keep it paid off. I'm glad I have ready credit, even though I have sufficient savings now to tap in case of emergencies. I think having one can be a Good Thing, as long as you're responsible about it.
I would certainly agree that a credit card has more protection (not going to be withdrawn from your account), but I couldn't disagree more about a debit card being harder to use online, then a credit card.
I was referring more to the protections of using a CC over a DC. And maybe it's old experience on my part, but until chipped cards came in, DCs at point of sale required entering a PIN number that CCs did not require. Chipped card PINs have equalized that, I think.
I'm also not aware of DCs that let you accumulate points or such, either. Maybe I just don't pay enough attention to the world of credit and these things exist. I guess I haven't found using a CC to be broken so I'm not looking to fix it. :)
I was referring more to the protections of using a CC over a DC. And maybe it's old experience on my part, but until chipped cards came in, DCs at point of sale required entering a PIN number that CCs did not require. Chipped card PINs have equalized that, I think.
I'm also not aware of DCs that let you accumulate points or such, either. Maybe I just don't pay enough attention to the world of credit and these things exist. I guess I haven't found using a CC to be broken so I'm not looking to fix it. :)
To me the difference is in what they can do, rather than how they work. Both can do the same thing with respect to the physical act of buying. But with the cc you are borrowing money. If you have had a problem in the past with being in debt, spending more than you should, outspending your income (I have at times had those problems) then the debit card is preferable because you can't do that. To my way of thinking, going into debt on a cc for a medical problem is not a good idea--you will then have a lot more to pay back because of the high interest charged by the card. I think the idea of the card providing security is something of an illusion.
ToomuchStuff
9-26-17, 1:18am
I was referring more to the protections of using a CC over a DC. And maybe it's old experience on my part, but until chipped cards came in, DCs at point of sale required entering a PIN number that CCs did not require. Chipped card PINs have equalized that, I think.
They required a pin, to use them through the debit card system. You didn't need a pin, to run them through the CC system, which will still take money from your account, but charges the seller a higher transaction fee (example 1% debit fee/3% credit card fee).
Walmart is actually in a suit over this as they want to be able to FORCE the user to enter their pin number, and lower their fee's, rather then let the user choose to run it through the CC system.
As to points, I have no awareness of those games. I was offered a "points signups" on my CC, and the "benefits" it provided, were NO BENEFITS to me.
flowerseverywhere
9-26-17, 4:05am
Can you get a card with a low limit? Say $1,000 - 2,000. Then only use it each month for say up to $50 worth of groceries or gas and be disciplined in paying it off. Don't let the bank or credit union raise the limit.
We have a low limit card for any internet transactions or to use at a gas pump. Works great. They tried to raise the limit on us the first few years (we would get a letter congratulating us) but we said no.
by the way, our credit union offers a 1.5% cash back card which we use to get occasional grocery or gas gift cards.
Yes i don't need a high limit, i just need to know that if i need to rent a car or go to the dr today i am okay, then i have the 25 days to get to my savings account instead of a very short time. You can actually have one without building up debt, rare but possible
Yes i don't need a high limit, i just need to know that if i need to rent a car or go to the dr today i am okay, then i have the 25 days to get to my savings account instead of a very short time. You can actually have one without building up debt, rare but possible
Would a debit card give you the same sense of security with emergencies? Ally has a money market savings with checking that is paying .9% right now. It has a debit card with it. That is my emergency go to, since it comes out of my emergency fund.
Is the point that you want a credit card to make timely payments and rebuild credit? I guess I am not following why the credit card.
Well I don't see a credit card as something to avoid at all costs. At the time I had my bankruptcy I had a small credit card debt and a dental credit account with a couple hundred owed at 0% and the 2nd mortgage. I was paying the small debts and had a payment plan set up for the 2nd mortgage but then I did a BK instead on legal advice. I spent too much on one eating out in my early 20's and got over that fast! Haven't really had a problem to speak of.
For me it is much easier to make sure I pay a bill every month (such as the credit card) than to put money in emergency fund and keep it there. I will put off the emergency fund most every time, but I will pay that bill. I have had it happen before that once that emergency fund is breached it is all over, but I have always paid my bills (okay when it was $100K due to a recession I could not do that, I paid everything else).
I'm not quite following, but that doesn't matter, if you have figured this out to your satisfaction. I'm lost about paying a bill versus saving the money since you already saved money in emergency fund, but I'm probably just being dense and not seeing what you mean.
Tybee, No, it is just a quirk of mine. I know my mental quirks well, and the emergency fund is mostly from a lump sum many years ago. I have enough issues with my own mental organization that I try to work with my quirks instead of fight them.
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