Do you carry credit card debt?

[TrekMD]

I use them for everything to get my reward points. Pay off each month.

[+LS650]

I have a line of credit with the bank; the interest rate is prime plus 1%. If I can't pay off the credit card in full, I pay it off with the credit line - at least then my interest rate is a lit lower!

[+wood_jl]

No credit card debt here. BUt it wasn't always that way.

 

However, when I was young and got my first one, I remember racking it up and learning how hard it was to pay off; learning to live within one's means is a lesson learned the hard way for a dumb kid.

 

Personally, I couldn't see trying to get by without one today, not with all the interests (video games/computers/accessories/vehicle accessories) I like to mail-order. Ditto for car rental, hotel, airline tickets, and Netflix/Redbox. Oh, and gasoline, so I don't have to line up behind idiots buying cigarettes and beer and pay for gasoline at the pump. That's about all I've ever used it for. Other than the convenience, it's not worth much since they're not paying YOU.

 

Credit cards are not "evil" and something to be avoided; they are a great convenience IF USED RESPONSIBLY, in which case you get the convenience for FREE. However, if everyone used them responsibly and there were no fees/interest collected, then even responsible users would probably be socked with fees.

[Cebus Capucinis]

I have one credit card with only a $300 limit. My credit is good and I could probably get another, but whenever they call and want me to increase my limit or open another account I say "No thank you, just keep it at the $300 limit please." I do carry a small balance every month but always make at least a $100 (33%) payment each month if I can't just completely pay it off -- which is 99% of the time. The only time the balance has gone over that $100 payment allowance is emergencies.

 

I think it's great because I can use it without worrying too much -- if I max it out, I'm only $300 in the hole, and that's really easy to pay off. It lets me use credit responsibly and keep payment history up while not going crazy and racking up tons of debt.

 

If anyone is considering credit but is scared of it, this is a good option. You can always ask your credit provider (I'd suggest getting a card through your bank) to set a low limit like $200 or something.

[Miss 2600]

I was told by several people that it is actually better for your credit score to not pay off your credit card bill completely every month but to let a little bit of your bill roll over to the next month. Does anyone know if that is true and if it makes a significant difference?

[+FujiSkunk]

I was told by several people that it is actually better for your credit score to not pay off your credit card bill completely every month but to let a little bit of your bill roll over to the next month. Does anyone know if that is true and if it makes a significant difference?

 

I haven't heard that, and honestly that sounds like credit card company propaganda to me. Keeping a balance means more interest for them.

 

What I have heard is that if you have a credit card with a lot of history, it is better to keep that card active and make at least an occasional purchase on it, than to cancel it or let it close. For whatever stupid reason, credit histories only count active accounts, so a lot of your credit trustworthiness goes away when a card is cancelled.

 

But I'd still pay it off in full each month.

Edited June 8, 2010 by FujiSkunk

[Crazy Climber]

I was told by several people that it is actually better for your credit score to not pay off your credit card bill completely every month but to let a little bit of your bill roll over to the next month. Does anyone know if that is true and if it makes a significant difference?

Not sure but me and the Wife have several credit cards with balances and are credit is crazy good. I don't remember our scores off hand but everytime I tell people they always ask how the hell we got it that high. Our Platinum cards have $100,000 limits and we do NOT make a ton of money at our jobs, we have both just always had a lot of CC's since we were teenagers and always made the required payments on time. We have never had them completely paid off so maybe a balance does help. I do know when I was getting my first house my mortgage guy said NOT to pay off or close any credit cards completely but to make sure they were no higher than 25% of the maximum balance so we could get the best interest rate. That is just what he said, no idea if it matters. Oh and to answer the main question, yes, I (we) carry credit card debt. Probably a total of 15k which is too much but I think me and my Wife thought my job would be doing a lot better at this point. Lately we are just making minimum payments. I have taken a second job on though (ugh) so within a year or two we should be good. I (again, we) just can't buy all the fun stuff we are used to. Could be worse I guess

[Cebus Capucinis]

It's a bunch of BS when you hear that carrying a small balance over helps credit. Credit card companies have pushed for that for years so that you'll pay more interest, just like FujiSkunk says!

 

Credit card companies don't report end-of-month balance to the credit bureaus; they are required to calculate payments due and interest by your 'average daily balance' -- if you pay your card off in full, you don't get any interest accrued, obviously, but if you carry over a balance of $5 but you had $1500 on your card for the other 29 days of the month, the interest charged will be on the average balance closer to that $1500. That's part of why people get so pissed when they see how much interest gets charged and go "HOW CAN YOU CHARGE $250 ON A $5 BALANCE" -- well, because it's not the end balance that's getting accumulated interest. This is one of the things financial reform is working on and it differs from company to company but it's generally a shady practice some companies use. In the credit agreement they will have something that states that you are getting interest due to your ADB instead of your end balance -- in these instances, the only equation they use for interest on end balance is 'is it zero'? If it's zero no interest, if it's greater than zero, go to the average daily balance calculation to figure out how much interest to add on. Some cards don't do that -- I would assume any credit card granted by a small local bank won't -- but the big ones always do.

 

It's one of the ways credit cards have gotten special treatment in terms of regulation. Loans are required by law to report the total balance due at the end of the month because it's a fixed-payment system. Interest is always the same unless you miss a payment, etc. -- you always know what your balance is. Credit cards, because their balance fluctuates, are not regulated in such a way and were more open-ended for their policies. This allowed them to do what I call 'grey math' to squeeze more money out of people. Late fees that are equal to 300% interest? Sure, that's allowable, because it's not "interest", per se, it's a "fee". Average daily balance? Well, we "have" to calculate it that way because we are charging based on usage, not on a total amount due -- things like that. It's pretty ludicrous the way some credit cards function like this, doing whatever they can to squeeze that extra couple (or thousands usually) dollars out of a person.

 

I have lots of credit card horror stories from a friend that worked at Capital One. Pretty crazy stuff that company does -- strangely despite this they're who I have my card through! Working directly with credit at Macy's also opened my eyes a LOT to how credit works. Let's just say that the Credit Reform Act of 2010 was a very, very, very good thing for a lot of average citizens.

 

The same goes for credit reporting. Credit card companies report every month to the credit bureaus (and even then they're spotty about it, but more on that later): Average daily balance for that month and whether your payments are up to date. If they are not up to date, the credit company reports how late they are in a 30 day segment -- 30/60/90/120. Anything over 120 and they're going to try to close the account and turn it over to a debt collector, mostly. They cannot report it being 30 days overdue until it is actually 30 days overdue -- they can charge late fees out the ass (which is one of their shadier practices that earns them 10x what interest gets them) but they cannot report it until it is 30 days overdue. They also have a permanent on-file of when the account was open, if it is still open, and how long it has been open. Like FujiSkunk says, credit grantors are more interested in your payment history and the length of time you've had the accounts than anything else. If they see you have a $5000 balance card that's been open for 20 years with an average daily balance of $200, well your credit score is likely in the 800s. This is also how they calculate available credit, like CrazyClimber is saying. The total amount available minus your average daily balance = your average credit usage. You don't want to carry over a balance, but like Crazy Climber is saying, they will look at what percentage of your card you are using on average. The 'sweet spot' is 20-30%. You should only be using 20-30% of your total available limit on your cards every month and that will help you build credit fastest. It shows a consistent history of responsibly having it available but wisely not using it.

 

That's sometimes where people get confused -- they mix up having 20-30% only being used to having 20-30% as an ending balance to carry over. The terms are confusing a bit but what they really mean is only using 20-30% of that total limit.

 

A lot of people don't watch their credit report regularly (I didn't until last year, when I started seriously looking into repairing my credit score) and because of this, credit card companies in particular are really iffy about reporting these things. They may not report your late payment at all sometimes, though this is not the norm. The norm is even if it's only 5 days late, they'll report it as 30 days late. It's a tactic to put them in a better bargaining position for you to pay off the debt. If you're not watching your credit report closely and following your payment history, your credit can go completely down the crapper without you even knowing it because they're reporting it inaccurately.

 

This is what happened to me: I got my first credit report last year and looked at the information on it, trying to see what I could "fix" quickest by getting a constant payment history down. What I noticed was that for about 6 months my credit card company was reporting a full, on-time payment for one month, then the next reporting the debt 60 days overdue, rinse, repeat! So every other month I was somehow magically 60 days overdue for a payment. Obviously this makes absolutely no logical sense -- if they reported the payment as 'on time' the previous month, the most I could possibly be overdue would be 30 days, not 60. I highlighted and marked all the payments and reported them to the credit bureau. After about a week I got a letter saying that the payments had been changed to 'on time' for those months -- which they had been. The company was inaccurately reporting my payment history for whatever reason!

 

Basically my words of wisdom: Look at your credit report and look at it closely and regularly. If you see any discrepancies whatsoever and you have proof that it's wrong, call 'em out on it and report it to the bureaus as an inaccuracy. The worst thing that can happen to someone is to have severely damaged credit because a company is either lying or is just inaccurate in their records.

[doubleminor]

I don't have a ridiculous amount of credit owed, but more than I'd like to have.

 

Always have had good credit, so the amount hasn't hurt my score.

[tsgthesportsgamer]

Yes, unfortunately I have quite a bit of debt (somewhere around $2,300). It's all dumb choices made about five years ago when I got the itch to spend my entire CC balance. Dumb dumb dumb. It'll be paid off quicker once I finally land a nice f/t gig, right now I'm juggling a couple pt'ers. Haven't used credit in two years or so.

[Video]

Yes, but only a little. Probably not more than a few hundred dollars. Believe it or not, it actually helps your credit score to have debt, but only if it's being regularly paid.

[marthbrightblade]

Some card debt around a grand, but, huge student loans that seem to have been following me around for many years now.

[Protoplasym]

If it wasn't for plastic, I'd be stuck with a ton of 'not as described' items, with zero recourse for getting my money back. If it wasn't for credit, I wouldn't have gotten into collecting... WAY too many people who purposefully misgrade items in the hopes of making a sale with no recourse for lying about description. The one time I did a guy a favor and paid with a check, and a few of the items came with issues... and of course, since I basically paid with cash, he was unwilling to make good on the issues.

 

Credit is the only way to keep strangers in check when buying online.

 

 

credit

credit

[OBO]

Well... I do not have a credit card but a debit card, by choice.

It's taken right away from my bank account, but I'm protected just like with the credit card in case of issue when buying.

 

Ah yeah, and no credit at all (which explains I do not have a car nor owns my flat). I've been traumatized by seeing my parents into debt when I was a kid.

[Protoplasym]

Well... I do not have a credit card but a debit card, by choice.

It's taken right away from my bank account, but I'm protected just like with the credit card in case of issue when buying.

 

Ah yeah, and no credit at all (which explains I do not have a car nor owns my flat). I've been traumatized by seeing my parents into debt when I was a kid.

 

The best bet is to 'always' use credit, never debit. Having to ask the bank to 'get your money back' is different than disputing a charge 'that you might or might not pay for'.

 

In the end, debit is only cheaper for the Bank and doesn't offer any true benefit to the customer.

[HatefulGravey]

I finished college debt free, and when I was done I just decided to stay that way. So far so good. I have never had, nor to I intend to have, a credit card. I have been able to pay cash for every car I have purchased so far as well. The side effect is I don't have a lot of credit, but I don't really have a lot of need for it either. I'll need it to buy a house, but a sizeable down payment will help with that too .

[Thomas Jentzsch]

Credit Cards are stupid. Convenient but stupid. IMHO.

 

You pay the company for what? Giving up your privacy (they may know more about you than Facebook)? Pay more for the stuff (on average that is, where do you think their profit comes from)? Get into debt without noticing? Switch off your brain and buy things you do not need? Feeling happy after wasting your money?

 

Credits cards are a perfect invention. But not for the users!

[bomberpunk]

no credit cards here. if i don't have the money in my bank account, i don't buy it.

[OBO]

@bomberpunk

 

Basically, that's what I apply too :

"If you can't afford it, don't buy it"

(ok, for buying an appartment or a house, there's no other way than asking a credit line)

[ram-head]

nope, i only spend what i can aford to pay off.

[+wood_jl]

Amazing spread of opinions, on credit cards.

 

 

I submit that it is UP TO YOU to behave responsibly, and use the credit card wisely. If you do that, you will come out on top. It should be obvious what I mean by "use it wisely" and if you disagree, then I'll let you have the argument, as there's nothing for me to win in an argument with you.

 

 

The only thing I'll say is this: Credit cards are fantastic tools, when USED RESPONISBLY. If you can't use one responsibly, then that's on you, and you shoud be asking yourself "Why?' You don't have to be a genius to use one responsibly. You only need be responsible, and that doesn't require genius.

[shadow460]

No CC debt, but I have one card that's prepaid. I can load it with whatever amount I need and the use it. That way I'm never tempted to overspend and get myself in a jam, but I do have the convenience of the card.

[ram-head]

Buying a house without credit is absolutely possible. Credit is overrated. It is a more respected and direct process. Normally agents will accept an offer that is 95% of the listing price and a hefty deposit. Depending on your wit, buying with cash can offer some esteemed perks like paid title insurance, escrow fee, liensThe biggest bonus of all is selecting your own closing date! The key is to consolidate all your funds into one bank account. Closing the deal is also faster with cash. A little off topic, but an advantageous response that is warranted to the previous post.

[Protoplasym]

Amazing spread of opinions, on credit cards.

 

 

I submit that it is UP TO YOU to behave responsibly, and use the credit card wisely. If you do that, you will come out on top. It should be obvious what I mean by "use it wisely" and if you disagree, then I'll let you have the argument, as there's nothing for me to win in an argument with you.

 

 

The only thing I'll say is this: Credit cards are fantastic tools, when USED RESPONISBLY. If you can't use one responsibly, then that's on you, and you shoud be asking yourself "Why?' You don't have to be a genius to use one responsibly. You only need be responsible, and that doesn't require genius.

 

Buying a house without credit is absolutely possible. Credit is overrated. It is a more respected and direct process. Normally agents will accept an offer that is 95% of the listing price and a hefty deposit. Depending on your wit, buying with cash can offer some esteemed perks like paid title insurance, escrow fee, liensThe biggest bonus of all is selecting your own closing date! The key is to consolidate all your funds into one bank account. Closing the deal is also faster with cash. A little off topic, but an advantageous response that is warranted to the previous post.

 

Both solid posts!

[ram-head]

If it wasn't for plastic, I'd be stuck with a ton of 'not as described' items, with zero recourse for getting my money back. If it wasn't for credit, I wouldn't have gotten into collecting... WAY too many people who purposefully misgrade items in the hopes of making a sale with no recourse for lying about description. The one time I did a guy a favor and paid with a check, and a few of the items came with issues... and of course, since I basically paid with cash, he was unwilling to make good on the issues.

 

Credit is the only way to keep strangers in check when buying online.

 

 

credit

credit

 

Thanks, I do what I can. O, that reminds me of something I read not too long ago about shady merchant selling ill describe merchandise.

 

If a company is shady and incurs too many customer backlashes with credit card complaints, also known as chargebacks then that said merchant will lose their merchant credit account.

 

Here is the flip side, which got me from the article - if memory serves me right. Customers have to be careful of the amount of customer disputes they make about businesses. It was said that making too many credit card chargebacks might not be healthy for your credit history.

 

Credit card fraud is costing banks/lenders in the billions each year. So they want to fight back, so remember this before you pick up the phone and ask for a chargeback. Or take heart when you are online and you click that button to dispute the purchase. Credit card companies are understandably skittish about sicko charge off happy customers. Next time you apply for a credit card account, don't be alarmed if you need to make a full financial disclosure in the way as if you were asking for a home loan. weird?! but possibly true. More so, there were stories about random ppl who were asked to submit a FBI check before being granted a new credit card account. Happened both with many merchants and customers.

 

Call me wrong or inaccurate, but I wouldn’t want to test the validity of the article.

 

I don't really like anyone in my business like that... So I always use Cash CAsh CASh.... lol