Credit Cards
analog_tape
604 Posts
Do you belive in paying off your credit card asap or making payments if you have a low interest rate?
analog_tape
604 Posts
Comments
Suze Orman switched up her advice for the bad economy---now she says pay the minimum and save your liquid funds. But I think that if paying it off is within reach, always makes more sense to do it.
great perks, ie. the other day one of my dogs chewed a pair of my 200 dollar loafers purchased 10 days ago. I called amex, let them know and they credited me back the 200 dollars as part of their protection plan.
unless you are a stock market genius, it is always better to pay it off in full. most people's cc interest rate is upwards of 9%.
While I agree with this, does a debit card have the same ranking as a credit card when trying to amass a higher FICO score?
I just read a headline that indicated that if you are under 21, you can dream on about a credit card at all! Which is a huge shift from when I was a youngster, and they were pretty much handing them out gratis in the Student Union. This got a lot of us in financial trouble (FREE MONEY!), so I am not mad that it's harder to come by, but on the flipside, everything is based on these numbers and young people will just have to wait it out wether they are responsible or not.
No. They're aren't credit it all. They do nothing for your score. They're more like plastic checks.
I saw an old lady writing a check at the Goodwill last week, and it was strange because I realized that EVERYONE used to write checks all the time, now you rarely see it. It took forever too, because they have to go through so many more steps to verify the damn things now.
Remember writing a check for a .45 cent pack of gum back in the day? Yeah, me neither.
That's potentially bad advice. You're on point with the interest rate vs. investment return argument (particularly now) but to make a blanket statement that one should pay off their credit card no matter what is bad.
Reason being, your financial well-being is all about cash flow. Paying off all of your debts but leaving you with zero in reserves is bad. Assuming you are one of the many wage workers, if you lose your job with no reserves you're more than likely screwed. Most people have minimums (i.e. rent/mortgage, food, insurance) that have to be met.
Suze Orman doesn't do much for me but I think she is right in saying that for many people (again, can't say it's good for ALL people) paying the minimums (or paying down) debts as opposed to just dropping a huge chunk of your savings is a bad idea.
Case in point - I could clear out some of my debts if I wanted to. But I kept a good amount of reserves in case I lost my job - which I did. I'm glad I kept the reserves. I can continue making payments into the future while preserving my credit. And down the road I can pay off those chunks if I want to.
Plus, it's still very easy to get 0% (+ 3% BT now unfortunately) for 12mo or so on credit. Transfer your balances and let it ride - it's a minimal cost, savings and CDs are in the 2s for now.
It really all comes around to being a form of insurance.
totally agree
F*ck a FICO score.
But, no, you're right that a debit card does nothing to build good credit, and I'm sure there are important advantages to that for a lot of people. At this point in my life, though, I've purchased a home without sweating a FICO score, and I pay my bills on time, so I don't really see anything much bigger on the horizon that a FICO score is going to stand in the way of.
F*ck a FICO score.
But, no, you're right that a debit card does nothing to build good credit, and I'm sure there are important advantages to that for a lot of people. At this point in my life, though, I've purchased a home without sweating a FICO score, and I pay my bills on time, so I don't really see anything much bigger on the horizon that a FICO score is going to stand in the way of.
I don't care for debt. Paid off the house in 15 years despite people trying to explain to me how having mortgage debt is a good thing.
Back around the first of the year banks were saying there would be no CC debit meltdown.
They said that they had tightened their lending standards and were no longer aggressively marketing cards.
Yet I was still receiving 3-4 solicitations a week in the mail. They seem to have slowed down now though.
Banks did the same thing with CC debit as they did with mortgages, bundling, packaging, slicing and selling them and derivatives based on them. I'm not sure why there has not been more of a meltdown around CC debit.
The big diff is CC are unsecured loans and mortgages are secured.