Don't ever use credit cards!

KarEntropy

Sigh. I was about to post this in Smartso's thread about saving money but I thought everyone should read this.

I got a credit card last year in an attempt to scrounge up some cash to invest in a website. Like a lot of others I got burned and was left with $500 of debt, plus the $600 of my own I invested. Sure my cash is gone but I still have $500 to pay off. This summer wasnt particulary filled with money making for me and now im back in school with more important bills to take care of. MBNA SUCKS, they hit you with late charges even when you pay on time and they have unforgiving support people.

I know many people at SFU who are heavy into debt, more than me. One person is over $2500 because shes stupid and used it for a ton of clothes and other stupid shit. Sure $500 may not be alot compared to be people in debt over $10,000 but its a slippery slope.

I guess what Im getting at here is use credit cards as little as possible. Theyre ok for situations when you have an 1/16th tank of gas left, 50 miles to go and $2 in your pockets. My advice for good credit is once in a while buy somthing you already have the cash for on credit and pay the bill in full when the end of the month comes around.

Heed my warning: By careful with credit cards.

noname

I have 3 credit cards and two department store cards and I seem to be doing okay. I was in debt at one point though. But that was the result of purchasing a car. In the end, it's all about self control.

NukeChem

Indeed. I'm pretty well at the point now where even though I have two cards, I almost never use them. Mainly when I go to the ferry to go to the Island. I have a bad habit of forgetting to withdraw money at the bank machine, so I just use the CC to get on. :)

Malakaiii

I don't make big purchases on my credit cards unless I'm sure I can pay them off before they are overdue. They can screw you big time with late charges (as you mentioned), but also with wrecking your credit rating.

If you don't have the money, you don't have it. Credit cards aren't a way to borrow money, but to defer spending it for a few weeks. If you need to borrow money, get a loan!

luxferre

use credit cards like cash. Dont use it if u cant afford to pay it off.

Credit card interest is usually 18.5-19% so its not smart at all to get money this way. You'll b able to get loans for cheaper.

I have 5 or 6 cards, and I never run into any problem at all.

Malakaiii, there's one thought I gotta convince u to change. It's the big ticket items you need to use a credit card to purchase (just make sure u have cash sitting in ur bank to pay it off) I know my cards have a 1 yr warrenty attached to most of my purchases (I use RBC cards) AND they usually will solve disputes with the merchant if any arises (this is wut they do to make money) Im not sure about anywhere else, but I never buy big ticket items anymore using cash... because it's kinda like an extra insurance on ur purchases

All in all, they're ur best friend (when it comes to monetary issues) if u use em correctly

NukeChem

Yeah, those interest rates are just killer, WTF, is it perpetually 1979 for these guys? :tongue:

imelting

its all discipline, if u cant budget properly and know ur limits, best to stay away

KarEntropy

You guys are right, it is about self control...you really have to be able to manage your money well. It sucks to see so many hardworking students having to learn this the hard way though I thought I'd share so that others (I'm mainly worried about the first years) won't make the same mistake.

Its like a downward spiral that just doesnt end. I've seen people start with 500 then they increase your limit to 1000 and even 1500. Before you realize it , you have no way to pay it off then you resort to getting a line of credit, or worse, you spend your student loan money to pay off the credit card bills. Im lucky my dad bailed me out I feel so free.

BryanL

Oh man, this thread makes me cry! My two credit cards are near max and I am trying to work as much as I can to pay it off :(

I know its my fault so I have no one to blame but myself.

nipples

dont use your credit card as credit. use it as your debit card. ie. if you have 200 in your account that you want to use for shopping, only put 200 on your credit card.
so far, i have 4 credit cards and only use the one that will give me the most air miles.

like the other ppl have said, it's all about self control. just keep reminding yourself that it's not really your money...that's why it's called credit.

nipples

but i must say...if you are lucky enough to get a prime + 1% card...DONT miss a payment. i'm loving it right now.

Malakaiii

One other thing is some cards offer a cash-back option too. I have a Mosaik card that donates money to the SPCA and also has cash-back. So I can look forward to a ~$50 cheque every January! And I just use it for bills I'd be paying anyway, so that works quite well.

Steven

Use credit cards only when you need to or you have a great sense of planning and discipline. Credit cards are just methods by the bank to fish people in so they have a chance of earning interest from you.

I see so many people falling for their tricks and now become slaves to banks.. makes me sad when I see them like that. And it makes me even sadder that more and more people are doing it! They just don't learn their lessons! People, please go learn how money works.. its should be considered a necessity nowadays.

Last time I read in Vancouver Sun.. the title says "Canada has become a nation of savers-turned-spenders". And it talks about how at least half of the Canadian population feel they are a paycheque or two away from poverty.. why? Because of credit cards.. and we have a joke in the finance industry that the new ATM machine is your home. They just use all their equity and get money out of their homes and put themselves in bigger debts. No wonder they feel they are only a paycheque or two away from poverty.. I'm not surprised. haha.

NukeChem

Yeah. Incomes after adjusting for inflation have only just started rising after flatlining for about 20 years in the 1980s and 1990s.

In the here and now, though, it's really easy (as I found a few years back) to watch your credit limit go up and think, gee, I have all this spending room and the minimum payments are $50 a month.

Thing is, try paying $50 a month on a $2500 debt and it barely eats the interest. Ugh.

One thing that helps, though, is if you have a card and it gives reward-type points or whatever, and you have the cash for something, put whatever you're buying on the card, then go home, hit your online banking, and put that exact amount as a payment on the card. You get the reward points, you're inside the grace window for being interest-free on the purchase, and your credit stays good.

nipples

problem is that if you never use ur credit cards or cut them up, you have no credit.

a friend of mine was like that...she couldnt even go rent movies at the age of 23. only recently did she get a bay card. ...and yeah...is it true you can use your bay card as a normal creditcard????? i see ppl doing that at work and i'm like...WTF this isnt the bay you idiot!

noname

^ I believe the HBC card is just a department card. I know you can use it at Esso and HBC's group of companies.

I work for a bank and I see people pay hundred of dollars of interest each month at 28.8% per year. And these people are not exactly young too. They're in their 40's to 50's. On the other hand, I feel bad for borrowing money at 3.9% per year. So don't feel too bad.