Comments on: Ten Tips for the Holidays: Avoiding Credit Card Traps

By: Ceri

Ceri — Sun, 09 Dec 2007 16:42:13 +0000

Frugal P. Thanks, seems reasonable.
I like a straightforward approach, I’ll do it!

By: Frugal pursuit

Frugal pursuit — Sun, 09 Dec 2007 16:26:14 +0000

Since paying off my credit card balance (due to poor money management in college), I have paid every bill in full. I made the cash advance mistake once in my college years and never will again. I only carry one credit card, now a rewards card since I pay everything off on time every month. Even though I charge many times each month, I still treat each transaction as part of my spending plan, subtracting the amount from the relevant categories to ensure I do not have a surprise bill at the end of the month.

By: Ceri

Ceri — Fri, 07 Dec 2007 15:55:11 +0000

Any tips on paydown of debt? I have under $10,000 in a single credit card debt…personal. I travel a lot for work and I have everything I need materially, car paid off, mortgage is manageable, bills are manageable but my credit card seems never to go down. It is a low interest card already but still. It is my only debt other than my mortgage. Ideas? Tips? Advice?

By: Free Money Finance

Free Money Finance — Fri, 07 Dec 2007 11:19:38 +0000

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By: thomas

thomas — Thu, 06 Dec 2007 23:36:14 +0000

Nice post, lots of useful information. Have to agree with Jeremy here about point #8. My main card is American Express (Blue Cash), but unfortunately it’s not accepted everywhere so I have to rely on a Visa/Mastercard for backup.

I will say that carrying two cards can be dangerous as you have to keep an eye on twice as many balances. I’ve been suprised once or twice with my CC balance.

By: Jeremy

Jeremy — Thu, 06 Dec 2007 22:43:22 +0000

I would never recommend only carrying one credit card. What happens if it gets declined through no fault of your own? Or if a merchant won’t take that kind of card?

At least half of the time I travel, one of my cards gets deactivated for a “security” alert. The first I hear of it is when the card gets declined. They see charges that don’t correspond to my “usual” behavior and bam, the card is shut off until I call. ALWAYS have a second card on hand.

By: Rev

Rev — Thu, 06 Dec 2007 15:48:11 +0000

Nice post there from Michael I have seen more than one friend fall for that even after I explained that to them and they wouldn’t believe thats how it works.

Also I carry two cards my Amex and a backup for the places that don’t take Amex.

By: Flexo

Flexo — Thu, 06 Dec 2007 14:45:03 +0000

Saving Freak: When you say “You almost always…” what you mean is “On average, most people…” There is a big difference. There is no reason why any one individual should be given advice based on averages, unless you know absolutely nothing about the individual. Individual behavior is hardly ever average. If you’re speaking to a mass audience, sure, but if you have the chance to really evaluate the behavior of an individual, you can give the better advice then saying, “You shouldn’t do this because most people fail.” (This is the biggest problem I have with personal finance advice in general.)

Michael: I agree. The same-as-cash trap can certainly be dangerous, and the store won’t provide you all the details. It can be beaten with full information and controlled behavior (on time payments that meet the issuer’s expectations).

Will “most people” be successful? Probably not. But that’s because “most people” don’t take the time to learn or understand how to do so or aren’t motivated enough to ensure they’re sticking to the rules. The issuers make it tricky and unlikely but not impossible.

By: Mrs. Micah

Mrs. Micah — Thu, 06 Dec 2007 14:01:16 +0000

Good point, Michael–same as cash is a nasty trick. Because nothing’s actually like cash except cash itself. The store wouldn’t offer it if it weren’t a lucrative option for them…

By: Michael B. Rubin

Michael B. Rubin — Thu, 06 Dec 2007 13:53:23 +0000

Regarding # 7. Sometimes the game you describe works well (take the discount and pay off the balance before incurring a single cent of interest). But sometimes it’s linked with a “same as cash” deal. So you leave the store thinking that you won’t have to pay anything for a year or more and you won’t be charged any interest.

Hopefully, most people now realize that they have to pay the whole balance off by the time the grace period is over or interest is collected retroactively since the date of purchase. An incredibly expensive mistake.

But, in addition, you often have to at least make minimum payments every month starting the month after purchase in order to preserve the “same as cash” interest savings. I haven’t found a store that clearly communicates this new wrinkle, yet it winds up giving you another monthly bill and, as important, something new you can easily forget, yet with negative financial consequences. We’re all busy enough already. Pay for it then. If you can’t afford it, there’s plenty of advice out there for you (of which don’t buy it is the most concise and accurate.)

By: The Saving Freak

The Saving Freak — Thu, 06 Dec 2007 13:40:38 +0000

You almost always overspend when using plastic. When McDonald’s started offering plastic as a payment option they saw that people who use cc’s to pay for their meal spent 27% more than those that use cash. Unless you are super thrifty and can control the urge to spend use cash. It keeps you honest every time.