Credit Cards

[AGDee]

I agree that credit cards CAN be evil, but they aren't evil if you pay it off every month and don't pay interest. It seems to me that people who have the discipline to save 3-6 months of expenses, then you also have the discipline to use your credit cards with restraint. If you think of credit card availability as cash availability, then you probably aren't a person who is able to save up 3-6 months of expenses. There are situations where using your debit card can severely limit your available cash flow, especially if you have to travel for work. Scenario: You are staying at a hotel for work and when you check in, they put a certain dollar amount on hold as pending, for incidentals. I've had this amount be as much as $50 a day. So you're there Sunday-Friday and they've put your hotel bill plus this pending $250 on your bill. You had to rent a car too and they put a $300 deposit hold on the car, even though the total rental bill is $150.00 for the week. So there, you have $400, plus your $900.00 hotel bill and your $150.00 car bill all coming out of your checking account but it won't be reimbursed for a couple weeks.

The next week, same thing, different city. So by now, you've got $3000 of your own money tied up (because you paid cash for all your meals too). I'd much rather toss that all on a card and pay it the minute I get reimbursed than to pay it out up front, taking money from savings to cover it and losing the interest I'd be earning on it.

Or, like I said, when I was doing my bathroom and had the cash to pay for everything but put it on my Lowe's Visa so that I got $40 back to buy more of the things I needed. I paid it off before I even got the bill. I know people at work who used a credit card to pay for day care that was being reimbursed through their FSA dependent care account. They got massive frequent flier miles doing that and never paid a dime in interest.

Bottom line is.. you can't succumb to the temptation to use for anything you don't have the cash to pay for. Too many people can't do that. You have to know yourself and your own limits.

All that said, hypo and I have been discussing her getting a student card in case of real emergencies with her several states away and no convenient way to get her money. For years she has had a VisaBuxx teen card which is like a secure card that I could put funds on right from my checking account. The bank we have her VisaBuxx card from is no longer going to participate in the program so we have to find a new option. Her having that card has been wonderful for us because I could put cash on it and she could go school clothes shopping, buy gas, pick up groceries for me, etc. I could transfer money to it online and it was immediately available to her. There was no annual fee but there was a $2.00 fee each time I put cash on it, so we tried to anticipate her needs in advance and put exactly what we needed on it. I felt better about her having that than carrying a bunch of cash around with her. She used it when she went to Europe and I could monitor how she was spending her money and whether she would need more. It was great when she was in NYC last summer and she could use it for her baggage fees and taxi's to and from the airport without carrying huge amounts of cash. We loved that card and I'm sad that it's going away!

[knight_shadow]

Originally Posted by AGDee

All that said, hypo and I have been discussing her getting a student card in case of real emergencies with her several states away and no convenient way to get her money. For years she has had a VisaBuxx teen card which is like a secure card that I could put funds on right from my checking account. The bank we have her VisaBuxx card from is no longer going to participate in the program so we have to find a new option. Her having that card has been wonderful for us because I could put cash on it and she could go school clothes shopping, buy gas, pick up groceries for me, etc. I could transfer money to it online and it was immediately available to her. There was no annual fee but there was a $2.00 fee each time I put cash on it, so we tried to anticipate her needs in advance and put exactly what we needed on it. I felt better about her having that than carrying a bunch of cash around with her. She used it when she went to Europe and I could monitor how she was spending her money and whether she would need more. It was great when she was in NYC last summer and she could use it for her baggage fees and taxi's to and from the airport without carrying huge amounts of cash. We loved that card and I'm sad that it's going away!

If you want to stick with the prepaid debit card option, you may consider the AMEX prepaid card. I use it (I don't like paying bills from my checking -- all bills/"bar" money is on the prepaid) and there's no annual fee or reload fee (unless you reload using Greendot/MoneyPak).

ETA:

The card I use says it also builds your AMEX history (read: not credit history) so they can have an idea how you manage money, should you ever apply for one of their cards.

There's also a teen card, if you want to check that out.

[ADqtPiMel]

I think it's ridiculous to say there's no reason to have a credit card. Just because people misuse them all the time doesn't make them horrible.

My parents opened a credit card in my name when I was young and used it to pay bills, and then paid it off in full every month without fail. They gave me the physical card when I turned 18 and took over paying for everything myself. So as a young adult, I had a nice long established credit history. I still pay off the card in full (almost) every month and I have outstanding credit scores.

Obviously this wouldn't work for everyone -- I've always been really responsible. My parents did this same procedure for both of my younger siblings and it worked well for the middle sister and me. The youngest has required more parental oversight in her finances.

[amanda6035]

Originally Posted by ADqtPiMel

My parents opened a credit card in my name...

You do realize that this is identity theft, right?

[ADqtPiMel]

Originally Posted by amanda6035

You do realize that this is identity theft, right?

You're insane. It was a card joined with their account, and I took it over when I turned 18.

[KSUViolet06]

Originally Posted by amanda6035

You do realize that this is identity theft, right?

No. Totally different.

Your parents weren't on your accounts when you weren't old enough to have them on your own?

[MysticCat]

Originally Posted by knight_shadow

FYP, for clarity's sake

Thx.

[psusue]

Originally Posted by knight_shadow

That's the gas station, not the card. If you pay at the pump, gas stations will sometimes preauthorize a set amount that will get cleared up when they submit their receipts for processing.

You can get around this by going inside and paying up front.

Thank you so much for this. I'd always wondered why it did this (my car can't even take more than 10 gallons of gas at a time, so the $75 hold is absurd for me) but now I'll do that instead. Debit it (with my pin) or go inside. Thanks!

[amanda6035]

Originally Posted by KSUViolet06

No. Totally different.

Your parents weren't on your accounts when you weren't old enough to have them on your own?

No, it's not totally different. Parents getting credit cards on behalf of their child, with or without his/her consent is identity theft.

I didn't have a CREDIT card until I was 19 years old and in the military (and I got it on my own). When I was 16, in high school, and working a part time job, I had a checking account with an ATM only card. My mother's name was on that checking account because I was a minor. There was no "credit" involved at all.

[SOPi_Jawbreaker]

Originally Posted by amanda6035

Parents getting credit cards on behalf of their child, with or without his/her consent is identity theft.

This happened to a former co-worker's husband. He was John Jr and his dad was John Sr. A credit card company sent an application for Jr to Sr's house by mistake. The mom and dad filled out the application and got a credit card in their son's name and then maxed out the credit card buying new furniture and going on a lavish vacation. When the son found out, he didn't want to press charges against his parents and he ended up paying off the charges over the next several months (because his parents couldn't afford to pay it). My co-worker was not happy about her husband having to pay for what his parents had done. She referred to his parents as the outlaws instead the in-laws. She also said if she has kids, she would not name her kid John III because it makes it identity theft by family even easier.