blkdmnd

Good idea. The credit card debt is probably at least 6% so you are losing money if you are only getting 1-2% in the money market.

Take the money that you would normally allocate to the credit card each month and push it right back into the investment. Once that 6-8% fee is gone each month, you'll have that money also to plow into an investment.

Also, you'll get the benefit of paying off credit card debt and that will look good on your credit rating.

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bermuDa

normally I'd never advocate going into debt, but when buying a car, I don't think it'd be a bad idea to go ahead and take out a loan on it.

It'd be a more gradual drainto your bank account, and as long as your income is decent you should be able to maintain your balance. Paying off a car looks pretty damn good on a credit report... so however you do it, just be sure you can afford it beforehand... i know several young people who are deep in debt cause they stretched themselves beyond their means early in the game.

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scarebearjinx

i have to save for whatever i want; but i need a job first. :P

Cynthetiq

I do the same because skogafoss wants us to get frequent flyer miles. Worked out well because we did our whole Honeymoon flights on frequent flyer miles traipsing across Europe.

but I do try to save before spending... and i try to find a sale to boot.

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ngdawg

Being in debt up to the proverbial eyeballs causes me to 'stash cash' for something I know is coming up. Lately, due to lack of available cash, I have resorted to almost living on plastic. We are currently about $33,000 in debt and it ain't getting smaller.....

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Daniel_

I WANT to save.

But I'm weak.

I buy on credit.

My grandmother pointed out to me many years ago that "You come into the world with nothing, so if you die in debt, you're ahead of the game".

It's a mission.

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ktspktsp

I recently got a credit card. I put most stuff I buy on it and pay it back as soon as I get the statement, to build my credit history.

I'd be pretty scared of using it any other way.

raeanna74

Save up usually. We bought a fridge and othre appliances recently on credit but it was interest free for 5 years and our fridge at the time was leaking on our floor and sucking up the electricity. Otherwise? Save up. We have no credit cards now.

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Seeker

I pay cash for everything.. I'm actually one of those that didn't ever get credit to get a rating to get a credit card.. dizzy times

I use a lay-by/lay-away system to get what I need if I don't have the cash on me straight up, I have been working on getting a credit rating so I can at least get a credit card for emergency use or to at least get a few of the advantages they can offer.. but I would work on the concept that it would have to be paid off when the statement came in.

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RickB

Use credit cards to build up points for other stuff. Pay off at end of month. I do have a car loan that's just about done. Due to falling interest rates these past few years, I called and got the interest rate lowered a few times. The laptop I'm using to write this I purchased from Compusa on one of their promotional "3 years, no interest" plans. I'll probably have it paid off within a year. I get credit card offers all the time so I must have pretty good credit.

gilbert-

I almost always try to save up.. but sometimes it doesn't work and i have to put items on credit.

Ambient1

I have no credit anymore... which is a good thing.

I was never taught personal finance, and my parents were very bad role models... By the time I was 28, I was $60,000 in debt.

I realized that I needed to do something, but I was powerless to stop it. (or so I thought)

I started going to a credit counsellor, and ended up working out a repayment plan. I cut up all my credit cards that day.

I still have about $20,000 left to pay off, but it's worth it for the feeling of relief. It's taken a lot of work for me to get used to using cash. I've never saved for anything before (hard as it may be to believe).

I'm pretty paranoid about money now, and don't really like to spend it at all... which isn't really healthy either. I am working towards re-establishing my credit so that I can by a house, and a CC would be handy for some deals online.

splck

I whack everything on my credit card then pay it off every month. I loath paying interest, but I love flying for next to nothing.

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Dano069

Unfortunately, I've been a crediholic for most of my life. I'm slowly turning that around but it's taking time to overcome bad habits. I'm teaching my kids, cash only, that way you KNOW you can afford it.

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Flip-flop

I’m 21 and I have had a credit card for about a year now. I attend classes full time and work part time about 22 hrs a week. I signed up for the card through a promotion Citibank was doing at my school and have had it pretty much maxed out since. It only has a 500 dollar limit but that’s hard to pay off when you barely bring home a hundred a week and keep using the damn thing . I’ve been reading the TFP finance boards a lot and I’m trying to pay it off. Each week I put about half my pay from work towards the card. I’ll keep the card and probably use it to purchase gas. 350 dollars to go and it’s back to cash for me

fallsauce

As long as you can pay it back on time, use the credit card. 1. You've paid for the priviledge. 2. You can get points, (if you have one of those cards.) 3. Builds up positive credit. 4. Your ATM card probably has a transaction fee.

But if you're asking about hire purchase or something like that, wait for one of those interest-free deals. You're using it much earlier without having to pay anything extra, (of course, you could argue that prices would have dropped by the time you had the cash...)

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Rodney

I guess having a card and paying it off monthly makes sense, if you're looking to gain points. But you'd better have discipline. I don't.

I have never had a straight credit card in my life. I always saved up for what I wanted and put money away. The one time I financed a car, I financed it at the Bank of Dad. As for building credit, I wasn't even on the credit bureaus' radar, as I found out when I bought my first house. The mortgage company was puzzled by that. But I had the down, assets, a good job, and no debt, so I got the loan.

After you get your first home loan, you don't have to worry about credit cards to build credit. The fact that you make monthly home loan payments is good enough.

So: a big credit history isn't necessary to buy a house, if you've got the down and good prospects. And once you buy a house and make payments, your credit is good. So credit cards aren't necessary to build good credit for the one loan you really _need_ to have, so long as you stay out of debt and save your cash.

Stay out of the credit trap. Don't even go there.

Cuatela

I save up...mainly because 1) I don't have a credit card, and 2) credit cards charge interest, which means I actually pay more (which I don't want to do)

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c172g

I pay for everything with my Sony card and get the points for free stuff. I pay it off every month.

If I'm buying something expensive, like a big screen TV, I use their 18 month or 24 month financing and pay every month whatever the fraction of the cost is...but always pay them off on time. If they will let me use their money for a year I do it gladly.

macmanmike6100

only buy if you have the cash...living on a cash basis is nice :-)

of course, the caveat is that you have to be able to afford to live like this

hunnychile

You're one of those people the big credit card companies just adore! Not me - I always pay off my card within the month, except for air tickets or big purchases. Then I over pay and pay it off fast...I hate paying interest! It's usary, IMHO. A dangerous habit for anyone to get hooked in to...

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mingusfingers

I'm pretty sure that he just said the same thing you did. It's worded kinda funny, but you can cancel out the never and not and it's easier that way.

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Blackthorn

One of the best practices you can engage in with respect to getting credit worthiness established is to have a single card and purchase on the card only what you know you can pay off at the end of the month when the bill becomes due. A regular pattern of paying on time and in full will put your credit score in very good standing.

I typically only use a credit card, now anyway, for only large purchases such as vacation travel, or home repairs/upgrades, etc. And at that it's after planning the budget accordingly so that I don't suffer from budget shock. Impulse purchasing on the credit card is a major no-no. Limit shocks to your budget by avoiding temptation to use the magic card.

On the subject of budgets if you don't have one then shame on you. It's a good practice to build a budget even as a college student with limited income.

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Beccarain

Using a credit card and getting the rebates/points/miles/extended warranties, etc. is a great deal . . . as long as you pay it off each month! I buy just about everything on cc, even utility bills that do not charge extra for the service, then pay it off each and every month. It is a great feeling for me to know the credit is available in an emergency.

For those who use debit cards, though, a word of caution . . . if you use it and the vendor makes an error and double charges the card, it may take a few days to get the money refunded to your account (a very dear friend of mine experienced this recently). If the error had occured with a credit card, he could have simply disputed the charge and the credit card company could have resolved it with the vendor.

Free financing is great, too (the 18 months or whatever "interest free") but be absolutely certain to budget for the purchase so it can be paid off entirely at the end of the free interest period! Those lenders through the furniture places probably make a ton sticking it to people who forget or plan poorly . . . read the fine print for the rate that will apply (and the interest is normally charged back to the day of the purchase!)

With cash, I can walk around with the same $60 in my wallet for weeks

StanT

I do both, cars are bought with a loan from my 401k. In effect, I borrow money from myself and pay myself interest. 18 years left on the mortgage. Most other things are paid for using cash, with the exception of home improvement projects. These inevitably go over budget. I've take several 12 months / 0% interest deals from Home Depot. I'd rather deal with payments, than do a half assed job.

MsNobody

If I can't pay for it with cash, I can't afford it. That's my mantra, and it has worked great for me. Now that does exclude homes and cars, but covers everything else.

Destrox

I never purchase somthing that I cannot safely purchase using my debit card at the same time. I simply use the credit card to build up credit.

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Cubby

It depends on the purchase. The new car we are thinking of purchasing will have to be financed somehow..whether a loan or perhaps just leasing the car. Smaller things like video cameras, etc. I'll make sure I have the money first. Then I'll put it on credit card to defer the actual payment by a month and keep the money in an account making some sort of interest. I also get "Visa Points" or Airmiles depending on the credit card.

I always pay my credit card bill. If we don't quite have enough to pay off a credit card we will draw down on our line of credit paying the bank about prime to re-pay instead of the high interest charges on the credit card.

As Destrox says..paying with a credit card when you already have the money (or will have the money by the time the bill is due) helps build up some great credit.

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SaltPork

Credit cards don't necessarily help you build your credit rating. If you have 30 CC's and no balance, it negatively affects your credit rating. You would be better off have a car loan or mortgage, those are the things that will build your credit, not using credit cards. The more you use credit cards, the higher credit risk you are, simple as that.

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BalloonKnots

I do both. I save up AND put it on credit. The rewards points thing really got me hooked. I even pay my monthly bills with credit just to get those points! I just charge everything on my card then pay off the balance each month.

eMOTIONal20

I am one broke-ass college student. I don't even have a summer job yet, and i have a little over $200 to my name....

I still applied for my first credit card the other day.

Very dangerous.

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anti fishstick

this thread is reminding me to check my bank account online... as I don't keep records in my checkbook. And usually know a good estimate of how much money is in the bank at a certain time...

I have one main credit card + a victoria's secret card. I'm thinking of getting another credit card to use as my main one just to see if the APR is better.

Anyway, I tend to put stuff on credit a lot, and use my debit card way too much instead of normal cash... So yes, I put it in credit rather than save up but I try to be aware of how much I'm spending so I don't overspend the amount of money I actually DO have to pay those back with..

Right now, I'm not too concerned because I'll be getting an easy $10/hr. on some tedious crap job (archiving cds) for an ad agency for about a week and then I'll have a part-time job in the summer... Plus my extra student loans. I'm all set. :P

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undeadninjaz

i have only 1 credit card and i use it to pay for everything that i can. however, i pay off every statement completely and i only buy things where i know i'll have the ability to pay it off when the bill comes. it's a student citicard credit card because i got rejected from the "standard" citicard, however, i don't know what the difference is.

right now the card gives me reward dollars. however, after having the card for the past 10 months, i only have $70 in rewards. i'm looking for a card with better rewards like airline miles or vacations or discounts. anyone know anything good?