When I listen to Clark Howard (a local consumer advocate) I sometimes wonder if I’m alone in my approach to credit in particular and spending in general.
I’ve had a credit card since I was in my late teens. My perception of the word “credit” in the name “credit card” was always that the Credit really only extended as far as the grace period from when I purchased the item until when payment was due on the account.
I have never held a balance on a credit card.
When my wife and I started living together we actually merged our finances at that time and I undertook to manage the household finances.
In the arena of credit we had only two rules, we would discuss big purchases, and that we would make no purchases on a credit card that would not be fully funded by the time the credit card bill was due.
Everybody needs a safety net, these days mine is provided by a home equity line of credit. Something that can be dipped into should an emergency arise or if you have a project to do and it makes more sense to do it now and pay for it in arrears (such as a tremendous sale on something that you were already planning, and saving, to purchase).
Back, before I owned a home, my local bank was able to make available to me a $5,000 line of unsecured revolving credit. This was MASSIVELY better than relying on my credit card for such debt as the interest rate was more in line with a car loan than that of a loan shark which, I’m sorry to say, is the nicest thing I can say about credit card interest rates.
So we live within our means.
I also receive with disgust those awful Cash Advance Checks. I have some sitting in front of me right now. I honestly cannot see anything good about them. You get charged a premium to take out the money and you begin paying an insane rate of interest on them immediately. Certainly you pay more than you could ever hope to earn in all but the riskiest stock ventures. In my house those Cash Advance Checks are immediately consigned to the shredder along with a few choice words directed toward the marketers responsible for them.
I have my credit card set up to pay off in full, automatically, directly from my bank account so that I do not have to risk the check going astray in the mail (this has happened before).
For any other bills that I need to pay, I pay those immediately when I receive the bill. Why gamble that I won’t forget about it and miss the due date? The interest I may earn, even when interest was in full integer digits, was always puny and never worth the risk.
The amount of money that I have saved in not paying late fees and not pissing it away in ridiculous interest charges can easily buy me my nice new computer system several times over.
So how do *you* handle your credit and why? I know that there are cool deals out there where people can get money interest free for a period. So they take it and invest it, paying it back before it is due.