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

By: JEM

JEM — Mon, 26 Oct 2009 16:39:29 +0000

By the way, I have never carried a balance…ever.

By: JEM

JEM — Mon, 26 Oct 2009 16:39:08 +0000

I am sick of people saying you spend more on cc’s. This may be true for some and not true for others. This is not a hard and fast rule. I didn’t have a cc my first two years of marriage and have now had one for about 2 years. Our spending has stayed the same. (We buy what we need.) and we make about 300.00 bucks a year for spending the money we had to spend anyway. I love it. the last two years it has paid for all our christmas presents.

By: Matt Jabs

Matt Jabs — Wed, 21 Oct 2009 23:34:53 +0000

Thanks for the words of encouragement D.

Some may think I’m crazy, some may think I’m an idiot, still others will think I’m awesome… I think I’m doing the right thing for my situation.

Here’s the cool thing about not caring about our FICO: they’re still going to go up, or at least stay where they are. Here’s why:

We have two mortgages on credit, two student loans on credit, and a Lending Club loan on credit. We repay all of them on time every month… always have, and Lord-willing… always will.

So as I thumb my nose at the CC banks and their tangled and undesirable scoring system… I will retain and maybe even increase my score.

I call that, “beautiful irony.”

By: David Weliver

David Weliver — Wed, 21 Oct 2009 21:26:59 +0000

Well put, Matt.

Basically, I wish I had the balls to not care about my credit!

I’m hanging onto the fact that I’ll apply for a mortgage in a few years—I really hope not to borrow money for anything else.

I don’t deny that credit scores are basically “I love debt” scores, and I think it’s crappy that we need to take all these weird steps to play into the system, but I guess, for now, I’m sucking it up and playing along.

I commend you for taking such a gutsy stand!

By: Matt Jabs

Matt Jabs — Wed, 21 Oct 2009 21:12:51 +0000

I totally get the info in this post.

Here is a brief synopsis of my sitch:

We have no credit card debt. We have no temptation to use them, and have no problem setting them aside or using them responsibly. We choose not to use them for reasons that go beyond finances. We kept one card open, but we don’t use it either.

Okay, you’re probably with me so far… but here is where I’m going to lose you:

We don’t care about our FICO score.

Lost you didn’t I? I know there are all kinds of reason why we should care… but… we don’t. I know only about 5% of people will understand this point of view. The other 95% do not need to list the 15 reasons why you need FICO… we already know them. We still don’t care.

I could go on about how we are never going to borrow money again, or how we don’t care about how FICO effects our insurance premiums… but the most concise explanation I can give in an already long blog comment is to say that it is a form of protest against an industry that we do not believe in.

Ahhhh… deep breath Matt.

Good post David!

By: David Weliver

David Weliver — Wed, 21 Oct 2009 16:00:28 +0000

That’s a great insight, Stephanie; thanks. I can see why people treat cash that way (and hence feel they spend more cash than with credit).

Personally, I know I fall for the “I don’t have to pay for this for another month” trap when I pay with credit. Even though I’m gonna pay the bill in full, I still find it easier to buy something with my credit card than I do with a debit card—if the money’s coming directly out of my checking, I *really* think about it in a way I don’t with credit.

What I think people’s reactions to this article will show is that how we spend and use credit cards is very personal. I hope, however, that these two articles provide an alternative to many “all or nothing” strategies I’ve come across!

By: Stephanie PTY

Stephanie PTY — Wed, 21 Oct 2009 15:48:57 +0000

Honestly, I spend more with cash than I do with my credit card. I noticed this trend in myself years ago, and I’ve had other people tell me they feel that way as well. The way I understand it in myself is that money in my checking account is “bill” money – it’s there for paying my loans and my car insurance and my credit card bill (that I pay off monthly). So even when I spend with a credit card, I have an acute understanding of the fact that the money will be coming out of my “bill” money.

But cash? I can’t pay my bills with cash! None of them will accept cash! So if there’s cash in my wallet, it always feels like fun money. I can’t keep more than a little cash in my wallet, or it will get spent on really frivolous things. I hardly ever buy anything frivolous with my credit card, though.

I covered the studies that say you spend more with a credit card on my blog as well, but I came to different conclusions: http://poorerthanyou.com/2007/10/12/do-we-spend-more-when-we-use-swipe-plastic/

So for me personally, I’m going to continue to use my credit card for everything, because that’s how I best control my own spending.

By: David Weliver

David Weliver — Tue, 20 Oct 2009 23:36:50 +0000

@Briana, thanks for sharing your story. Sounds like you watched the video and are onto part two. @Joel…hold up, part two tomorrow is gonna cover that. The strategy doesn’t say to just leave the two cards open and not use them. You’re gonna use ‘em, just in a very specific way.

By: Credit Card Chaser

Credit Card Chaser — Tue, 20 Oct 2009 21:48:32 +0000

The one thing to keep in mind if one decides to go the “cut up or freeze” of credit cards strategy is that most card issuers will cancel a credit card with no warning if the cards havent been used for a while. It is best to use the cards to purchase a few small things here and there and just pay them off rather than not using them at all otherwise they could all be canceled without warning and your credit score would take a hit.

By: Briana

Briana — Tue, 20 Oct 2009 17:25:09 +0000

This is exactly the conclusion we came to. We went to the bank to apply for a debt consolidation loan when we were trying to get our cards under control, but they would only do it at a relatively high interest rate, and only if we would commit to canceling a certain number of cards and/or reducing credit limits. I understand why, but we decided instead to do a transfer to a card with a temporary low rate and stop using multiple cards. Now almost everything goes on just one or two cards, so it’s easier to track. We still have the credit lines open, but we rarely use the other cards. We have almost paid off all our credit card debt too!

I think the impact on our credit score of following the bank’s advice would have been pretty terrible. Firming up your self-discipline (or physically cutting up the cards you intend not to use, if discipline is a problem) without closing the accounts seems like a better plan.