JD at Get Rich Slowly has written an excellent guide on credit cards. If you are instead looking to choose a credit card see Index Credit Cards.
JD doesn't seem to believe in using credit cards. I do. I think they allow the use of a general finance principle: why pay someone today when I can pay them later with no interest. By that I mean paying the bill at the end of the month. You pay no interest if you pay your card off every billing session and you get a month's worth of interest at the bank.
Personally I recommend paying off monthly for most people. Personally I like to get 0% interest cards (usually a year with no interest). I accumulate the cash in a bank account (HSBC at 5.05%) instead of paying the bill. (I pay down enough of the bill that I have an adaquete amount of credit left.) Before the 0% interest offer expires I pay the amount in full out of the bank account, having earned a year's worth of interest on my spending. One caveat, if you don't have the restraint to actually move the money to a seperate account you should pay the bill monthly and each time you purcahse something either set it aside in a different account or at least keep track of it (in notepad or Quicken) so that you know your "real balance."
The Guide covers the important questions:
- What should I be wary of when getting a credit card?
- What do all of these terms mean? I can't understand the application.
- Is it safe to pay bills with a credit card?
- How do I cancel a credit card?
- How can I get a late fee waived?
- How do I stop credit card offers from coming in the mail?
- How many credit cards to people carry?
- How can I play the credit card arbitrage game?
- How can I get a FREE copy of my credit report?
- How do I dispute credit report errors?
- How does a credit score work?
- How can I improve my credit score?
- I have a lot of credit card debt — how do I pay it off?
- Where can I find more information on credit and credit cards?
No comments:
Post a Comment