Managing credit

The most sensible way to manage a credit card debt is to throw all the cash you earn at it but spend up to that amount on credit instead. $500 off your credit balance reduces your interest bills and if you then put $500 of bills on the card they earn an interest free period for that amount. Next month you do it again. The bigger the amount you cycle through the credit card account the less it costs you overall.

Once your card is paid off keep the cash to pay it off every month and make full use of the credit card up to your cash amount.

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Originally Posted by DiscoMick

We're fed up with the ridiculous interest rates on credit cards, so we're starting a new plan.
The cedit card balances have been moved to a new card on a discount rate and the old cards cancelled. The new card will go in the filing cabinet and never come out again except for a life and death emergency. A payment plan is in place to pay to off in a year. Not having it available in our wallets will remove the temptaton to use it.
And we have reorganised our finances so everything will be paid from savings - no exceptions. If the cash isn't there we won't do it. This means my wish list for the Disco will have to wait until the cash is saved. We will still have Visa cards, but they will be savings-only.
We lived this way in Thailand because we were dubious about the rampant credit card fraud over there and it was a good thing, so we know we can do it again.
So, a year from now there will be nil credit card balance, bills will have been paid in cash, some savings will have accumulated and it will all be good. At least, that's the plan. Bring it on.
So, how do others manage credit? Are you doing this, or still using credit cards?

Sent from my GT-P5210 using AULRO mobile app

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Best way to manage credit card is to not have one at all. I haven't had a credit card for many years, and don't want one. Do everything on Visa debit card - and can't spend money that I don't have. (Well, I can if I really want to, as the banks don't hesitate to offer you an "overdraft").

If you think that you are avoiding "credit card fraud" by only using a Visa debit card - sorry to disappoint you, but the fraudsters can get at your money through your Visa account just as easily as through any credit card account. I suppose though, that at least they can't get your money through a Visa debit account if you don't have any money in the account in the first place.

And therein lies the trick. Run two bank accounts - one of which you can only access either via on-line banking or by actually going into the bank. Don't have ANY cards linked to this account. Run a second account linked to your Visa card, and only keep enough money in this account to meet your day to day requirements. If you need to make larger purchases / transactions, transfer enough money into this account first (takes about 2 minutes to do it on-line), then make the transaction. This way, if the fraudsters get access to your account through your Visa details, the most that they can get is the small amount that you have left in there.

I've been stung a couple of times on my Visa debit account. Now I don't leave enough money in there to make it a concern. Anyone who gets hold of the details can only get the small amount that's in there - they can't get at what's in my other account.

Have to admit though that the bank I'm with (BOQ) is very good at picking up on any unauthorized transactions, or even on small "test" transactions where they try it on to see if they have access. In every case that I've had someone get into my account (always from overseas locations) - the bank has detected it and closed access to the account immediately and then notified me. Any money removed from the account has been refunded by the bank on every occasion. The only inconvenience has been that they cancel the Visa card at the same time, and you have to wait for them to issue you with a replacement. You can get around this inconvenience by asking them to issue you with a standard EFTPOS card linked to the same account - that way you can at least go to the pub and buy a beer while waiting for your new Visa card. :D

I only use the EFTPOS card for day to day stuff - the Visa card only gets used for larger purchases / on-line shopping / hire cars etc where you are required to give them a "credit card" imprint.

Yeah, that's good advice. We actually have several accounts for specific purposes. EFTPOS will work on some using Visa savings, but not on all.
The botton line is, we won't be putting anything on credit, it will all come from savings.

I dont have one only a debit mastercard, i see the pro's and con's of using and not using. If you are crap at managing your finances then dont have one, others have shown in previous posts that they can be used to your benefit if managed correctly.

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Originally Posted by bob10

My parents went thru the great depression. They survived. From them I learned: Never have a credit card. Never live above your means. If you need something, save for it , go without until you can afford it. You do not need to live in a mansion, a small shack can be a better family home. Don't be envious of your neighbours possessions, put your time & money into family, not trying to keep up with others. I believe we have moved away from core values, Bob

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Ditto, no credit card here. My motto, "If you can't afford it, don't buy it".

For those who can't do without them, if you want a better deal, i.e. lower interest rate, extended no interest period, ring up your credit card company and tell them you want to cancel your card and see what they will do to keep you.

Seems a lot of people are blaming the credit card for their inability to manage their own finances.

It is the user not the card that causes issues - afterall the card does not twist your arm to buy things you cannot afford.

Blame the person and not the card.

However it is good that some people have acknowledged, at least to themselves that they have an issue and to deal with this have done away with the temptation - have they done away with their mortgage as it is also a ready source of funds through a redraw facility and is nearly as bad as credit card interest, while a much smaller interest rate it applies over a very long period of time so is an expensive way of getting a money fix.

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Originally Posted by garrycol

Seems a lot of people are blaming the credit card for their inability to manage their own finances.

It is the user not the card that causes issues - afterall the card does not twist your arm to buy things you cannot afford.

Blame the person and not the card.

However it is good that some people have acknowledged, at least to themselves that they have an issue and to deal with this have done away with the temptation - have they done away with their mortgage as it is also a ready source of funds through a redraw facility and is nearly as bad as credit card interest, while a much smaller interest rate it applies over a very long period of time so is an expensive way of getting a money fix.

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That is drawing a long bow. To say those who don't bother with credit cards do that because they " have an issue" is just ..... I'm lost for words. A ridiculous statement. I use my debit card very responsibly, & manage our debt very well. Thank you. Bob

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Originally Posted by bob10

That is drawing a long bow. To say those who don't bother with credit cards do that because they " have an issue" is just ..... I'm lost for words. A ridiculous statement. I use my debit card very responsibly, & manage our debt very well. Thank you. Bob

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Think you need to re-read it Bob, I didnt read it as everyone, Garry's comment was alot of people are blaming their C/Card for their financial problems.

If you choose not to have one thats fine.

Cheers Ean

I've got to agree with Garry here. It took a long time for me to realise I'm inept with my finances - credit cards were too much of a temtation for me and I got bitten. They are now gone and being paid off as quick as I can, and I have also had my redraw facility on my mortgage stopped as well.

The only money I can now spend is my own - a wonderful feeling.

Its not about blaming, its about being better organised. That's what we're trying to be. For us, its about using the next five years to prepare for retirement. We plan to retire debt-free with a place to live and money in the bank, so we can wander off and travel.