DO NOT cut up your credit cards!

sjdfw

Silver Member
#41
I only have one card now. Over the past 20 yrs, I'd pick up an occasional line of credit for 0% offers, but closed them out when they were done. I don't plan to do that anymore because it's really just a hassle and I prefer to pay cash anyway. I have an air miles card, so when I do family travel this summer, I suspect I'll save upwards of $3k. They can be beneficial if used correctly, but unfortunately in the wrong hands, people can spiral downward real quick. I am thinking of opening a new BofA rewards card, just so I can separate my work card from my personal card. My company doesn't provide a card for us.
 

Geck

Platinum Member
#42
I didn't pay anything for the iPad.
I didn't pay to use the credit card.
I did not pay interest on money I used on the card.

Yet I had enough points to get a $600 prepaid Credit card, to buy my iPad with.

While I try to stay away from store credit cards there are exceptions.
We also use Target Card and get 5% off of all purchases. When Target stops that program we will stop using the card.
We also have a Macy's card because they offer 20% off occasionally, for card holders.

Like I said we had over $800 in Hotels stays free... three stays included a free breakfast...(albeit a Hotel Buffett breakfast which is hit or miss).

The only cost is to spend a few moments looking up the accounts, verifying purchases, and making payments.

I met my wife in Australia and we got married in 2004. She came to the US with zero credit. Using credit cards, by 2010 my wife had a FICO of over 780. Of course we had to pay a fee for the first card, but that was just for one year to get her established.

My point is to use credit to your advantage... don't be afraid of it. Banks want you to use it.

I'm not saying people should not cut up any cards and not close any accounts. I heard Dave Ramsey on the radio saying to have NO CREDIT CARDs and to only use an ATM card or cash instead.

That is just stupid in lots of ways, this is a credit world, learn to use it to your advantage.



I think you are missing the point. What you are saying would be like telling a drug addict to go ahead and stay on oxycontin for their pain. After all that is what it's for. we live in a world where we can take a pill for our pain. The drug addict can't do that. The person who has debt problems can't and shouldn't use credit cards because they can't manage debt like you can. I agree with you for most people having some form of credit is helpful. Debt used wisely can be very helpful but left unchecked and in the wrong hands could be devastating. Ramsey is speaking to those people. Mind you once again I'm not a big fan of Dave Ramsey's teachings but for some it works well.

I have friends who cash their paychecks and put money in envelopes at home to pay for different bills. These are professional people who make good money. To me this is childish but it works for them, they pay their bills don't have massive debt so hey, that's great.
 

Geck

Platinum Member
#43
I didn't pay anything for the iPad.
I didn't pay to use the credit card.
I did not pay interest on money I used on the card.

Yet I had enough points to get a $600 prepaid Credit card, to buy my iPad with.

While I try to stay away from store credit cards there are exceptions.
We also use Target Card and get 5% off of all purchases. When Target stops that program we will stop using the card.
We also have a Macy's card because they offer 20% off occasionally, for card holders.

Like I said we had over $800 in Hotels stays free... three stays included a free breakfast...(albeit a Hotel Buffett breakfast which is hit or miss).

The only cost is to spend a few moments looking up the accounts, verifying purchases, and making payments.

I met my wife in Australia and we got married in 2004. She came to the US with zero credit. Using credit cards, by 2010 my wife had a FICO of over 780. Of course we had to pay a fee for the first card, but that was just for one year to get her established.

My point is to use credit to your advantage... don't be afraid of it. Banks want you to use it.

I'm not saying people should not cut up any cards and not close any accounts. I heard Dave Ramsey on the radio saying to have NO CREDIT CARDs and to only use an ATM card or cash instead.

That is just stupid in lots of ways, this is a credit world, learn to use it to your advantage.
credit card companies love people like you. my guess is that you spent way more than $600 on your card to earn enough points to get that $600 gift card.
 

Chris1771

Silver Member
#44
credit card companies love people like you. my guess is that you spent way more than $600 on your card to earn enough points to get that $600 gift card.
If it was stuff he was going to buy anyway then who cares? If he was buying extra stuff just to get points then it makes no sense. That's not what he and others are saying in this thread.
 
#45
credit card companies love people like you. my guess is that you spent way more than $600 on your card to earn enough points to get that $600 gift card.
No, they actually don't.
They don't love "customers" who pay off their full balance monthly.
The term I've heard them actually use for our types is "deadbeat". We don't make them any money in fees.
 

MacFrisco

Diamond Member
#46
credit card companies love people like you. my guess is that you spent way more than $600 on your card to earn enough points to get that $600 gift card.
Your right. The CC Companies do love me, so do the banks because they get a percentage of every dollar I spend.

And I don't know exactly what I spent to get the $600 gift card, I'm sure it was over $15,000.

That money was groceries, gas, clothes, eating out, entertainment and gifts. Money I was going to spend anyway.
And I paid it off each month so there were no interest payment either.

If people want to live by cash alone its no skin off of my back.
In my opinion its not smart, but then like you said some people can't manage credit.

I hear people on the radio talking about living a cash only life because they read a book and I want to yell at them to read up on FICO and how it affects your whole life! One day these cash only people will find they have no credit, that an employer passed them over, that they pay $50 a month more in car insurance, and/or homeowners insurance, all because someone didn't tell them that FICO scores disappear when you live a cash only life.

You don't need 10 credit cards and closing accounts while using one or two is great way to simplify things, but don't close them just before you buy a house it will cost you money in higher interest.
Just closing a credit card hurts your credit score, but many people think its the other way around.

Everyone has to do what works for them, but at least read on FICO and what happens when you live cash only, don't take my word for it and certainly don't take the word of someone trying to make money selling a book.
 

kenny6

Gold Member
#48
No, they actually don't.
They don't love "customers" who pay off their full balance monthly.
The term I've heard them actually use for our types is "deadbeat". We don't make them any money in fees.
They might not make money in late fees etc. but they do make a percentage of every dollar you charge to that card whether you pay it off or not so they are still making some money off of you.....more than your cash back award so they come out ahead.

You also come out ahead if you are paying it off every month so I guess it's a win-win.
 
#49
Dave is wrong about credit cards. It is stupid not to have one to rent cars, pay for hotel rooms and other larger expenses. Carrying around a lot cash is stupid and using a debit card is even worse.

Why risk exposing account to fraud and have it drained when you can used a credit card to protect yourself.


If you are financially responsible and pay your bill each month credit cards are the way to go.
A separate debit card account for Travel and online orders takes care of that.
 
#50
How long has it been since you looked at your credit score?

An all cash system can leave you with NO CREDIT SCORE in just 18 months.

Of course you have to use what works for you, but if you ask your car insurance company you might be paying more due to the fact you no longer have a credit score.

The people who made FICO, the Fair Isaac Corp., will tell you that FICO was designed to show how you use credit.

If you are not using it, eventually you won't have a score.

If you are okay with that then more power to you.

I am just spreading the word that not using credit does not make your FICO score better.
I get a report every 90 days. I do have a house payment, and will finance a vehicle if its zero interest, but debt to income ratio is much more important than credit card use.
 
#51
A separate debit card account for Travel and online orders takes care of that.
That still exposes your cash to fraud. Let the bank be exposed via a credit card. Plus if you travel a fair bit you have will need a fair bit of cash in that account to deal with all the holds as they take a few days to clear.

If you can manage a budget credit cards are much better than debit cards for just about any purchase but especially travel and online purchases.
 

Allen

Silver Member
#53
Don't know my FICO score. Don't care.
CC is much simpler to manage expenses than cash, check or debit.
I don't let FICO wag the dog.
 
#55
Interesting thread, seems like it could be boiled down significantly:

Dave Ramsey has a great program for getting people out of debt.

Once out of debt, if you're the type of person who is addicted (as in, literally can't help yourself) to buying things you can't afford on credit, the best solution will probably be to cut up those cards. It may hurt your FICO score, but probably won't cost as much as running your debt back up.

If you're the type of person who has good financial discipline, you're better off using those cards to your advantage. This works so long as you just use the cards for things you'd have paid cash for anyway.
 

Tooleman

Diamond Member
#58
I know people that had some savings, but crap hit the fan.. Ate up the reserves and then went for the credit cards..

If they didn't have the cards, it would have forced them to adjust sooner..

All I am saying, is that even the most disciplined can be temped if things go bad.. So just remove it from the equation..