A thought on credit cards

Where is the flaw in using the 40-60 day interest free period that CC* offers to buy your expences whilst you use a high interest savings account to offset some of the debt after 30 days (assuming interest is paid monthly)?

The outcome of this is buying things for a 'discount' by using the interest accrued to pay for your purchases. You make more in interest the less you dip into the account and paying with it then and there.

*CC has no annual fees or any reoccuring fees to use said CC

 

There is no flaw.
There is only the need for financial discipline.
It works a treat.

 

i agree with wrcmad, financial discipline is the key. That is why i (unfortunately) need to pay interest on my cc.
If i pay it off then my household feels rich and feels the need to spend (apparently, even if it is on things that we 'need' - like a shower or hot water system ) so the cc gets racked up again. The effect is increased spending if i pay it off each month.

I have learnt to keep the limit extremely low as a result to keep down the interest paid.

 

As long as you keep to the above and repay before the end of interest free period, you are safe.

 

I think that having one with a small limit is good for back up funds. Working in finance I see too many people extending there limits and paying intrest only and never the balance. I agree discipline is the key with any line of credit

 

And by high interest you mean 4%.

 

Some 'savvy' property investing guys I know have their salary sent straight to the offset and use the credit card for all their expenses and pay it off from the offset a few days before the interest free period ends, saves more in interest payments than what they earn in the bank

 

It's not just for savvy property types. Also a good way for people to pay down their PPOR mortgage.

 

CC is the devil's tool

 

Try renting a car, renting a hotel room , booking a plane ticket or buying online without one.

I couldn't do my job and earn my pay without one.

I make sure i control the CC, i don't let the CC control me.

 

I have two credit cards linked to an account which is attached to the same rewards program.

Had them both almost two years now (due for replacement actually) and never paid even $0.01 in interest. My money from wages sits in a different bank account with the highest savings rate I can get (which is only about 4% at the moment I think). I transfer the money across at the end of each month when the previous months bill is due and keep doing this over and over.

I get the benefits of the credit card in that I never need to carry cash with me. Also, if money is ever stolen from the credit card through any kind of fraud or misuse, it's not my money, it's the banks, so I am never out of pocket as they will always just credit it back and chase up someone else for it.

The annual fee is high ($150/yr), but ALL my expense goes through the card so I get back almost double this amount in the rewards I claim back with the points I earn.

Credit cards MAKES me money.

They're not the devils tool, they're a very very handy, useful and sometimes profitable tool. The problem with any credit card is the person who owns it and their impulsive nature.

 

I also used to get enough air miles to get two long haul return tickets per year with my cc rewards program and never ever had to pay any interest as full payment was taken from my account on a monthly basis, however the point is to figure out how many people are making good use of credit cards like yourself versus how many people are struggling to pay their CC debt, I have a feeling that ratio is pretty high.

Not all bank cards are credit cards, you can easily survive with a debit card and be able to buy whatever you want with it providing you have enough money in your account.

 

1:1000

And that's probably being generous.

Self control and self responsibility are at an all time low.

 

I don't know whether it's a WA thing or not, but the hotel i stay in each week will not accept a debit card, neither will the rental car mob at Perth airport?

 

When renting a car or booking a hotel room, there is a pre-authorization payment that needs to be done on the card where the amount is actually kept on hold until checkout, its like a security deposit, they seem to think that this operation is possible only on credit cards, I'm not an expert but I have used my debit cards several time on hotel rooms booking and car hire, I rented a car from Avis at Perth airport last week with my debit card and didn't have any issue.

 

Your just not trustworthy

 

Your just not trustworthy

 

That's because they need a cc in order to steal from you via their fraudulent "insurance" agreements which you take out with them. Reading the fineprint reveals that it's no insurance at all - just a money making racket :lol:

 

That's why I put savvy in inverted commas, my friends with PPOR's say that kind of stuff is for the professionals and not applicable to them
Same for when I tell them other things like to get a PAYG variation to help decrease interest paid and increase cashflow, they don't think it's allowed for the normal investor and don't look into it any further regardless of what I say!

 

I hate how some hotels not only take a copy of the credit card when you check in so they can charge you if you do a runner/damage etc but how they also try to take a photocopy AND want a photocopy of your drivers licence. Always push back on that sort of rubbish even if the poor pleb tries the line "But sir, it's our policy". A driver's licence is 100 points ID nowadays. If they don't relent, just say you don't drive. Once when someone did the credit card photocopy thing while I wasn't paying attention I calmly picked up the sheaf of check-in papers while chatting to them, tore it off and ripped it up. It's totally unnecessary.

Perth hotels seem to be the most frequent abusers for some reason (or maybe I just keep picking the wrong hotels in Perth ).