Credit Cards

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sf

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Are they good or bad?

I'm a horrible credit card junkie. The Bronica kit and Multi Pro are on a card. I reason with myself that it is better to put it on a card and have a year of use @ 0% APR than to NOT have it for a year in order to save up. Why bother saving when you can buy it AND build good credit?

Or is it bad credit?

I think I'm sick, but the camera says otherwise.
 
I have two. I only use them for large purchases (don't want to be walking around with 200 or more euro in my pocket. Yes, I call that "large") and can't use my bank PIN card. And I use them abroad; again because I'm not going to be walking around with large sums of cash. I'm very much aware of when and why I use the cards. They don't come out easily. I guess I'm careful with my money. :)
 
yes. Careful is good. I'm careful in a way. Gear is the only thing I spend money on. It is likely that something else will come into my life very soon. . . . I just don't know what. Either that, or I have to take up smoking again, because the GAS is killing me.

Maybe, if I just pet the Bronica, the sickness will ebb.
 
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I have one that I use for internet purchases only, typically books from Amazon.

There's an automatic 100% payment from my bank account to the card once a month so I never pay interest.
 
I use them for online purchases and pay off the balance when I get the bills. The credit card companies don't make a dime off of me.

I use a debit card for purchases in stores, restaurants etc.

R.J.
 
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Michiel said:
It think is an American thing. Here in Europe most people seem to use debit cards (we spend money we have, instead of money we wished we had :) ).
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Good Advice.

I set up a specific "camera fund" account at my bank with a debit card. All of my photography (and other non essential) purchases come out of that account. Including Internet purchases.

It does help with GAS and gives me a place to save my pennies for larger purchases later.

I just got a bonus at work so half went to the camera fund and half went into household. Looking for a cheap Speed Graphic now :D
 
Nothing wrong with credit cards so long as you pay the monthly balance in full. If you use them to spend money that you don't have you will get into a huge financial mess in a hurry.

Nikon Bob
 
shutterflower said:
Are they good or bad?

I'm a horrible credit card junkie. The Bronica kit and Multi Pro are on a card. I reason with myself that it is better to put it on a card and have a year of use @ 0% APR than to NOT have it for a year in order to save up. Why bother saving when you can buy it AND build good credit?

Or is it bad credit?

I think I'm sick, but the camera says otherwise.
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Credit is a tool like any other. It can work for you or against you. In the USA, you can't get credit to buy a house or a car unless you have a credit history (a good credit history, of course). So one must have credit at some point.

However, most banks make their money by fees. They offer 0% for a year, but be one day late with a payment, and your interest rate jumps way up to something in the area of 23% to 30% (there is no maximum in the US on credit card interest). They know that most people default on the terms and don't get the 0% for very long. That's just one way they 'getcha'.

"Good credit" as an example would be showing a history of managing credit - neither avoiding it nor pursuing it. Maxed-out credit cards are bad. Zero-balance credit cards are bad (to a bank making a home loan, not to you personally). A card with maybe a $5,000 limit and a consistant balance of something like $800 is very, very, good - not paying it off in full each month and paying more than the minimum payment. It shows you make purchases, you pay finance charges, but you don't go over your ability to pay. They like that.

So if your goal is to have 'good credit' then that is the way to do it.

I know that it feels good to pay off all credit cards, cut them up and swear them off. In the USA at this point in history, it is not that great for your credit rating. Using credit and not getting into trouble with it is better.

Best Regards,

Bill Mattocks
 
Just an interesting note - I was at a security seminar last week and the speaker mentioned that debit cards are bad, bad, bad. With a credit card, there is a slight "float" period between charge at point-of-sale and actual "debit" from your credit account (showing up on your account). There is no such float with debit cards. So if you lose your credit card you can avoid any charges easily if you call soon enough (even if you call kinda late you're okay, the credit company just has to work more and there is usually some hold on the funds in your account).

But with a debit card you lose it the second they start charging with that card. It is extremely, extremely difficult to resolve situations like that.

I am seriously considering switching back to using a credit card only with my bank, and setting up a 100% payment each month automatically. Then just get rid of the debit card.

allan
 
kaiyen said:
Just an interesting note - I was at a security seminar last week and the speaker mentioned that debit cards are bad, bad, bad. With a credit card, there is a slight "float" period between charge at point-of-sale and actual "debit" from your credit account (showing up on your account). There is no such float with debit cards. So if you lose your credit card you can avoid any charges easily if you call soon enough (even if you call kinda late you're okay, the credit company just has to work more and there is usually some hold on the funds in your account).

But with a debit card you lose it the second they start charging with that card. It is extremely, extremely difficult to resolve situations like that.

I am seriously considering switching back to using a credit card only with my bank, and setting up a 100% payment each month automatically. Then just get rid of the debit card.

allan
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I never use a debit card for online purchases for that reason. I've heard that you don't get the same protection for a lost debit card that you do with a credit card. It sounds like a good idea if you can do without ATMs and cash back.

R.J.
 
I'm okay with credit cards.. although, I had just purchased a Ricoh GRD and yesterday signed up for a 1 year membership with my local gym.. the next bill will be a shocker!

I've always paid each of my bills in full and I have excellent credit score. So I don't believe that whole strategy thing about purposely not paying in full etc..
 
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bmattock said:
Credit is a tool like any other. It can work for you or against you. In the USA, you can't get credit to buy a house or a car unless you have a credit history (a good credit history, of course). So one must have credit at some point.

However, most banks make their money by fees. They offer 0% for a year, but be one day late with a payment, and your interest rate jumps way up to something in the area of 23% to 30% (there is no maximum in the US on credit card interest). They know that most people default on the terms and don't get the 0% for very long. That's just one way they 'getcha'.

"Good credit" as an example would be showing a history of managing credit - neither avoiding it nor pursuing it. Maxed-out credit cards are bad. Zero-balance credit cards are bad (to a bank making a home loan, not to you personally). A card with maybe a $5,000 limit and a consistant balance of something like $800 is very, very, good - not paying it off in full each month and paying more than the minimum payment. It shows you make purchases, you pay finance charges, but you don't go over your ability to pay. They like that.

So if your goal is to have 'good credit' then that is the way to do it.

I know that it feels good to pay off all credit cards, cut them up and swear them off. In the USA at this point in history, it is not that great for your credit rating. Using credit and not getting into trouble with it is better.

Best Regards,

Bill Mattocks
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"Remember, even if you pay your credit cards in full each month, the balance shown on your credit report may not be $0. Instead, it will reflect your account balance at the time your lender supplied the update to the credit reporting agency."

source: http://www.myfico.com/Products/FICOOne/Sample/Sample_ScoreSimulatorResults.aspx?Simulation=3

Check your FICO score.

R.J.
 
R.J., I'm no expert. But I do work for a very large bank and have a lot of experience getting credit (and going through credit card hell as a younger man). If you don't like my advice, don't take it. I know how to check my credit score.

Best Regards,

Bill Mattocks
 
bmattock said:
R.J., I'm no expert. But I do work for a very large bank and have a lot of experience getting credit (and going through credit card hell as a younger man). If you don't like my advice, don't take it. I know how to check my credit score.

Best Regards,

Bill Mattocks
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I've never accumulated any interest on any of my cards. When I purchased my new car last year, I got a 1% interest rate loan. Banks love me!
 
I saw my sister, who doesn't 'believe' in credit cards, get turned down for a home loan from a primary lender because she had no credit hsitory to speak of. She ended up going to a subprime lender and paid more interest than I do. I have a 5.5% 30 year fixed mortgage on my home with zero down. And not through the bank I work for, either.

But I know nothing about how to get and maintain good credit. So disregard all my comments.

Best Regards,

Bill Mattocks
 
bmattock said:
R.J., I'm no expert. But I do work for a very large bank and have a lot of experience getting credit (and going through credit card hell as a younger man). If you don't like my advice, don't take it. I know how to check my credit score.

Best Regards,

Bill Mattocks
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Sorry, Bill. I meant that George should check his FICO score. As a college student, debt that would affect his FICO score would be car loans, student loans, credit card debt, cell phone bills, utilities and rent. Would an $800 credit card balance be good for his score? :confused: I don't know. If he checks his score periodically he can find out.

R.J.
 
OK, my bad. Sorry. I saw you quoted both of us, so I wasn't sure which of us you meant.

I have been through the good and the bad of credit. I remember getting calls at all hours from collection agents, being threatened with garnishment, etc. I recall credit card companies STILL sending me 'pre-approved' applications even when I could not pay the ones I had.

I've also seen my sister who rejects the concept of credit cards on religious grounds have lots of problems getting credit to buy a car or a house. Now that she finally has a house, her credit is getting better.

It has been my experience, as well as from what I've read, that any credit is better than no credit, but good credit is clearly better than bad credit. Bad credit is not necessarily gained by not paying your bills. You can have your credit score go down by running too close to your maximum - or by not having a balance at all, ever. I've had CC accounts closed on me for not using them, even though I paid a yearly 'membership fee' - REALLY!

The credit industry makes their money from fees. If you never pay fees, you are not their ideal candidate, because they don't get money from you. If you pay fees, but keep your spending under control, then they love you because you are most likely to repay your loan to them AND pay them some interest.

Insurance companies want people who never have claims. Credit card companies want people who spend money on credit cards and pay finance charges without getting themselves in trouble.

It makes sense if you think about it. It is counter-intuitive to us as consumers - we'd rather pay off our balances each month and never pay a fee. But what good are we to the CC industry from THEIR point of view?

Best Regards,

Bill Mattocks
 
bmattock said:
The credit industry makes their money from fees. If you never pay fees, you are not their ideal candidate, because they don't get money from you. If you pay fees, but keep your spending under control, then they love you because you are most likely to repay your loan to them AND pay them some interest.

Insurance companies want people who never have claims. Credit card companies want people who spend money on credit cards and pay finance charges without getting themselves in trouble.

It makes sense if you think about it. It is counter-intuitive to us as consumers - we'd rather pay off our balances each month and never pay a fee. But what good are we to the CC industry from THEIR point of view?

Best Regards,

Bill Mattocks
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It seems like we (those of us who pay our credit card bills in full every month) may not be "ideal" credit customers, but we're at least "half-good" since the credit card folks also collect fees from the merchants when we use those cards.
 
BrianShaw said:
It seems like we (those of us who pay our credit card bills in full every month) may not be "ideal" credit customers, but we're at least "half-good" since the credit card folks also collect fees from the merchants when we use those cards.
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Of course that is true. Consider that if you have one million dollars to loan out, and you can choose whom to loan it to. You want to maximize your investment.

Your prospective borrowers look like this:

1) People who have never borrowed, or at least their record looks that way.
2) People who have borrowed and not repaid.
3) People who have borrowed and repaid, but slowly and under duress.
4) People who have borrowed and repaid, but within the 'grace period'.
5) People who have borrowed and repaid, but while incurring interest charges.
6) People who have borrowed and repaid, but late and paid heavy penalty fees.

They can move from one category to another at any time, but historically, they don't; or if they do move, it is in a downward spiral that takes some time to reach the worst (non-payment) status.

In any case, you will get a 'minimum' payment from the third-part merchants who will administer your cash advances to the borrowers.

Which type of borrower do you want?

On the face of it, number 6 - because they pay you the most and DO repay without incurring extra collection expenses from you.

But if you want to be safer, then number 5 - because you get paid regularly and have a higher chance of being repaid, based on their history.

And that is why there are prime and sub-prime lenders. Each goes after a different niche. There are even lenders that specialize in those new borrowers who have no credit yet - even higher risk, but they charge higher fees as well.

At each level, there is a lender that will make a loan, but they consider the risks and tilt the balance heavily towards themselves.

Which lender would YOU rather be?

Best Regards,

Bill Mattocks
 
bmattock said:
I saw my sister, who doesn't 'believe' in credit cards, get turned down for a home loan from a primary lender because she had no credit hsitory to speak of. She ended up going to a subprime lender and paid more interest than I do. I have a 5.5% 30 year fixed mortgage on my home with zero down. And not through the bank I work for, either.

But I know nothing about how to get and maintain good credit. So disregard all my comments.

Best Regards,

Bill Mattocks
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I use credit cards to make major purchases but I pay off the balance every month. I've been doing this for over 20 years. I checked my FICO score 3 years ago and it was 816. My mortgage is a 15 year, 5.5% fixed rate with no points.

R.J.
 
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