Never had a CC?
Never. Either has my wife. I just use my Debit Card.
Are you and Mrs Crazy Exclusive Brethren?
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Maybe? I never found the need to spend what I couldn’t spend with my own cash.
If you use it properly it is your own cash. I hate owing money on CC’s so we will purchase everything and pay all bills by CC and then each week I will pay it off. I can see how people can be hurt by them though and know many who only ever make the minimum payment each month, that’s just bad and can get you in serious debt
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I’m the same - everything on credit card and paid off in full on the due date, not a day earlier or later. I’ve never really gone down the points route though until last year. Always opted for no frills credit cards with no fees.
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Interesting.
And that is a sound approach. Living within your means has never got anyone into trouble but as others have pointed out, sensible people like you + Mrs Crazy are the very people who should be taking advantage of the benefits that some credit cards provide. Because you have your act together. As an example, you could end up with air fares each year for the two of you just by spending what you do now. And as another incentive, people like you already subsidise people who use credit. Ever noticed how Coles don’t give you a discount for using your own money on the weekly shop? Use a CC (linked to a store loyalty card for extra points) for routine purchases, pay it off in full before it is due and you’ll be surprised at how many points you can accumulate in a year. Another benefit is it helps to manage your personal cash flow. Presumably you have a mortgage? (You’re a Millennial? Of course you do. Probably a big one, too), keep your incoming money in an offset account linked to your mortgage, use the CC for routine purchases and you will be saving on interest payments as well.
You sound disciplined. Disciplined people do well with credit. Don’t fear it, embrace it. Embrace the benefits of credit.
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Can you explain this part? To me it seems like you’re using your credit card to pay your bills etc and then paying the credit card off at the end of the work. Why not just use cash to pay it off in the first place? Obviously I understand people that can’t afford it but you clearly seem to have a lot of money (apologise if it’s an assumption.)
Or is it literally just for trying to get points? I know you’re getting points but wouldn’t you still be paying (some) interest or fees? To me it seems like a lot of effort for little reward. Each to their own.
One thing that still burns me to this day though is I didn’t pay the correct amount owing at the end of the month while ago now. I couldn’t be bothered making another payment for the few cents I was out - thought for such a low amount, that it wouldn’t be any interest when I came to pay the next month. Didn’t realise the carnts charge you the full interest on the amount that was owing and not just the amount left to be paid. Lesson learnt. Hindsight suggests I should have called the bank to waive the fee but I never did.
Simply put - look at it as an interest free loan for the month.
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Further to this, most large retailers and reputable utility providers don’t put a surcharge on purchases or bill payments, as long as your card isn’t too funky (Amex, Diners Club). Purchase as usual on the CC, pay the bill before the due date so you don’t pay any interest and you’re on your way to Fiji this time next year.
Look I don’t disagree with you, I’ve just never believed in credit cards, have never used them so I don’t understand them or how they work. When I met the wife she used to spend every dollar she had each week, no concept of savings really. But she was just 20, so few do at that age. I can certainly understand how it can help people that need money now that don’t have it, especially as a fair few people get paid every two weeks and run low in cash.
We are both very disciplined with money. But it doesn’t feel like we’re doing anything special, just putting money into different accounts and minimising our spending. Neither of us have amazing paying jobs, my wife wouldn’t earn too much above minimum, but we’re both miles ahead in bills. We get a power bill and we have enough in that account to cover the new few bills still. My mobile bill of $75 each month already has $150 in it before the first bill comes. We met around 5 years ago, got married 2.5 years ago and had almost nothing again (weddings are expensive) and will have 50K in savings by the end of the month. Also paid off two cars in that time. We have a very good grasp of our cash flow and always know what it’s doing, I’ve never considered the need for a CC.
I’m 28 and the wife is 26, we had plans of building/buying a house within the next year or two, but we’ll see how it goes. The wife also wants a baby. I’m not having a go at anyone that has CC’s I’m honestly more curious especially from the people who have heaps of cash but still use CC’s.
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We have a CC just as an emergency option. (Shared - two cards, one acct)
Sometimes cops it on the last day or two before payday. Always gets paid off pronto. Free, easy credit has its uses.
Our priority is the mortgage, and we use that as essentially our savings as well. Big bills (car rego, insurance etc) come straight out of there. EDIT: which is a better option than an offset acct. for us, by far. Do your sums on that one.
As in they charge you more to have an offset account? Thought those days were over now and it’s much the same same. They used to have mortgage withdraw fees but they’ve been scrapped by most banks I would have thought.
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There’s absolutely nothing wrong with what you are doing but you are simply missing out on exploiting the banks systems which are not really designed for people like yourself who are disciplined with money. You said earlier you use a debit card so its not like paying without cash is foreign to you & you use direct debits for paying bills & recurring fees so credit cards for people who use them wisely is absolutely no different. You simply pay all of the same bills with the credit card & then setup with the bank to have the outstanding amount paid onto your credit card on the due date each month. Therefore instead of the money being debited after each transaction you make 1 payment per month. The trade off is that you earn points for every dollar you spend on the CC. If you play the system & move CC provider every year or so you can also get bonus sign on points. These points can add up to pay for flights, goods or vouchers. All you need to work out is are you spending enough to accumulate more value in points than what you pay in fees.
Lets say for example your combined spending per year is 50K - that includes all bills, recurring fees, restaurants, fuel or anything that you could charge to a CC. On most basic cards with rewards thats 50,000 points. You can cash that in for $250 Coles voucher for example. Some cards have sign on bonuses up to 100K points - thats $500 off the bat. If you use them for flights you usually get even better dollar value so 100K points in some cases can save you say $1000 on a flight. As you get older, most likely earn more & spend more on your cards you can save up points over a few years & possibly have enough points to get flights & accom all covered. Again you can do this while never paying a cent in interest by paying off the card in full every month just as you would using a debit card. The only thing it costs you is annual fees which again need to be offset against how many points you will earn & their value (not all rewards programs are equal).
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Worse interest rate, plus fees, on the loans that have offset account.
There’s a plethora of mortgages on the market that allow you either lots of or unlimited withdrawals above a certain limit (normally $500), better rate and zero fee.
EDIT: this is from the two times we’ve looked at it - c 2012 and end of last year. All advice is general…
Heres a tip.
ring up, your bank and say your looking to switch your home loan to another competitor.
They will most likely drop your rate by .5% and you dont have to do a thing.
My mother in-law is always raving on about credit cars to earn frequent flyer points etc, as has paid for there overseas holidays.
Can anyone recommend a good one with a low annual fee?
I currently have a HSBC Credit card with $0 annual fee and a Virgin - now Westpac credit card with no Annual fee.
Am i missing out?
If they’re giving you 0.5% off over the phone, you were probably paying 0.75 or 1.0% too much.
If they’re close to best available, they’ll tell you to jump.
Everyone should re-negotiate every 2-3 years. The bastards all creep the rates up over time.
It had been 5 years and my once competitive rate was no longer competitive.
I wanted to change to HSBC - but they said didnt do loans in Tassie but at least their rate, helped reduce mine. Also got the latest 0.25% cut as well.
I remember my first credit card back in 1974; it was BankCard that was sent out unsolicited to everyone who had a Bank Account; and some that didn’t.
My limit was $300, so I went to the Bank took out the $300 and it was the deposit on our first home!!
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