Comments on: Radically Re-Thinking Credit Cards: Part Two

By: Jacob Marta

Jacob Marta — Thu, 28 Jan 2010 17:45:46 +0000

Credit Card Chaser.
I first and foremost would suggest auto payments, but not using credit cards. If you are using credit cards and trying to float the loan and pay on time every month setting up autopayments can easily backfire.

Make sure the auto payment is set up through the credit card company, not from your bank to the credit card. The credit card The due date is never consistent and there is no way to account for that in the autopayment using your bank account. If you tell the credit card company to auto deduct the payment and they fail to do so then you can easily dispute the late payment.

Question is, do they even offer you that option?

By: Jim Miller

Jim Miller — Wed, 28 Oct 2009 19:14:24 +0000

Dave, if I pay off all (14) of my cards and keep them open won’t that show up on a credit report that my debt to credit ratio is in a very good position? Right now I have abour $150.000 in credit with my cards I will pay them off in the next 3 years with out a problem. if there still open dosen’t this look better then 2 cards at say $16.000?

By: Kari

Kari — Sun, 25 Oct 2009 01:47:04 +0000

David, my highest limit credit card just increased my rate to 22% (that’s nearly double). Would you still recommend this be one of the cards I keep? If I need to use my card and end up carrying a balance, I certainly don’t want to pay 22% APR.

By: Credit Card Chaser

Credit Card Chaser — Thu, 22 Oct 2009 02:30:43 +0000

One good idea to implement if one wants to go ahead with the “cut up or freeze” strategy and you don’t want to get those cards canceled because of not being used is to A) Set up a couple of bills every month to be paid automatically every month from the card and then B) Schedule your credit card to be paid off in full every month automatically from your checking account (which is incidentally what one should be doing anyway with a rewards card for as many of their purchases as possible but this is a good strategy in this situation as well).

By: John

John — Thu, 22 Oct 2009 01:33:32 +0000

Hence you need the debit card. If, when traveling, you are using your credit as a primary spending source and something goes wrong (fraud or theft) you have the debit to access your account.

By: Matt Jabs

Matt Jabs — Wed, 21 Oct 2009 23:56:20 +0000

@John: What about withdrawing cash from your bank account?

By: John

John — Wed, 21 Oct 2009 21:27:06 +0000

I have had the misfortune of having to replace my debit card twice due to fraud. Whenever a fraudulent charge occurs with my debit card it takes me no less than 5 days to receive a replacement debit card. That’s a week without access to your own funds! With a credit card you still have a access to cash with your debit, plus American Express overnighted my last replacement card after my wallet took a trip into the ocean. Being responsible leaves little risk when utilizing a credit card and can allow you just one more option during an emergency.

By: Laurie McLachlan

Laurie McLachlan — Wed, 21 Oct 2009 20:23:07 +0000

I agree with Jacob that debit cards offer the same convenience as credit cards and as Part I of this article pointed out, you’ll likely spend less when you use a debit card instead of a credit card. More on that here:
http://blog.perkstreet.com/trap-2/

By: Jacob Marta

Jacob Marta — Wed, 21 Oct 2009 20:10:02 +0000

David, you have a well reasoned article here. However, let me politely counter some of the benefits you mention.

Let me start with saying I have not used a personal nor business credit card in over 8 years.

Fraud protection. Yes, credit cards can provide this. However, my business credit card provides the same. I did meet with my bank to make sure the protections are in place. Last month when my debt card was declined I found out it was due to a suspicious (but legitimate) charge.

Leverage in disputes with merchants. I think this is a valid point when the issue is poor service/product and fraud is not involved.

Travel insurance. Plans backed by your card may be convenient, however they are weak. Like all insurance products you need to customize it for your needs. Ask your travel agent for your own policy that meets your specific needs.

I travel extensively worldwide. I have used my Debit card in deep Mexico, North Africa and Croatia. Debit cards with a visa/MC backing are accepted virtually everywhere credit cards are. I have only run into a $100 deposit when renting a car here or there.

Credit Score. The credit scoring system was created by bankers and insurance companies to do one thing. Optimize profits. A credit score for consumers allow us to do what? Borrow more money. I would argue that we should not be using short term debt instruments and instead saving, investing and paying cash for normal expenses.

Just the opinion from somebody who has lived without credit cards.