How do you guys deal with credit cards with an average income ?

46 comments

1. I charge 99% of purchases on my card. Once a month I go online for five seconds and pay the whole thing off. It’s significantly more convenient than using cash.

2. I use credit cards for nearly every purchase I make for the reward points. I then pay the balance in full every month to avoid accruing interest. Credit cards can be an amazing tool but can also doom you if you let them get out of hand.

3. Explain what a credit card is? Think of it like a loan that you have to pay back (it’s essentially that) but on a card. The loan has a max borrow limit (say you have a $500 limit card, that is the most you can spend on that card). You pay back what you borrowed and can reborrow up to the same limit.

   People use credit cards to build credit (that’s to show companies that you may also borrow or buy from that you can reliably borrow and pay back your debt). Others use it for emergencies in case they don’t have enough of their own funds at the time.

   I’m sure your country has loans, it’s essentially the same thing.

   Edit: Others brought this up but we also get rewards on credit cards. We get cash back, earn points that can be used to redeem flights, hotels, concerts, etc. Credit cards have a lot of protections against fraud as well as perks like travel insurance, rental insurance, membership programs for free, etc.

4. You get charged interest on whatever the balance is monthly. So if you buy something but pay for it before the end of the month you don’t pay anything extra and you usually get some sort of cash back or other reward, which is why a lot of people use them.

   Businesses used them a lot because they might not have the cash on hand to pay for everything they need right then and there, like if I sell a customer of mine some parts they’re going to use them to do something for one of their customers and get paid and then pay me.

5. My income is above average these days but even when it wasn’t, I just bought stuff using my credit card and paid it in full at the end of the month. People use them instead of cash.

   Of course, you run the risk of charging more than you can afford, and then you go into debt (and interest rates on credit card debt can be pretty ruinous) so it’s not always the best idea to use them. But it’s a lot more convenient, and if you budget you should be okay. And a lot of cards give you cash back and rewards for using them, as well.

6. I charge things to my credit card. When it comes time to pay the bill, I pay it, using money I am given by my job.

7. I pay off the full balance every month with money earned from my job.

   It helps build a history of credit, shows you are reliable, and you get points/rewards.

   Consumer protection is also a good plus.

   There’s really no reason to use it over a debit card. I don’t think I’ve used my debit card to purchase something in several years. If my bank replaced my debit card with an ATM only card tomorrow, it wouldn’t impact me at all.

8. I will always buy something with my CC if possible and have autopay setup to pay the full statement at each billing period. Don’t be an idiot and you’ll be fine.

   Online shopping is pretty much exclusively done with a CC now as the CC company will generally have your side on any chargeback dispute should the seller give you any funny business.

9. When you purchase something with a credit card you’re taking out a line of credit as opposed to paying cash up front. Each month you have to make a minimum payment on your credit balance, which is made up of whatever outstanding purchases were made with the card, any fees or penalties you have, and any interest you’ve accrued by failing to make your payments.

   Paying off your purchases in full, or at least paying more than the monthly minimum, improves your credit rating, which goes beyond your credit card and serves to show people like banks or landlords how competent, or incompetent, you are at managing your finances and paying for things on time. Employers can’t see your credit score, but they can access your credit report, which is obviously impacted by credit card usage.

   Any decent credit card will also allow you to earn cash back or accumulate rewards points for smart spending that can be used on anything from airline miles to gift cards.

   Basically, if you have a stable income and you’re not a complete idiot there’s no reason to *not* put most of your expenses on a credit card. If you *don’t* have a stable income or if the concept of paying for things confuses you then you can land yourself in a lot of monetary trouble very quickly.

10. You never spend more than you can afford and you always pay off the total balance every month on time.

    It’s stupid simple but somehow that’s too hard for a lot of people.

11. Tons of rewards. I think it’s dumb not to use them. For example I get 5% back on ALL my Amazon purchases – that really adds up. I currently have $167 there that I can just apply to my balance if I want. I spend about $500-700 a month on Amazon and have it set to pay off my interest-saving balance each month. With that card they also have some good rewards for other places but I really just use that card for Amazon.

    My Discover card I love, because they have good rewards and they have amazing customer service. I don’t do it too often anymore because I have so many cards already, but the rewards for new cards can be really good too. Like spend $1000 in the first three months and get $300. I used to take advantage of those a lot when I was traveling for work a ton where you did reimbursements and I could easily spend $1000 that was immediately paid off.

    ETA, the security is much better IMO. Credit card companies want to keep you around so they will go to bat for you if someone tries to shaft you, and they have very good fraud protection.

12. I have a credit card specifically to fill my tank 5% Cashback, another one for groceries 6% cash back, third one for utilities 5% cash back etc, set your budget and at the end of the month pay them in full. Dont let them get out of hands and you will save money by using them

13. It’s easy. Don’t buy stuff you can’t afford

14. A credit card has a set credit limit with a high interest rate. Say you can take out credit up to $10,000 with an interest rate of 20%. You can then charge pretty much any payment of any size to your CC up to that limit. Retailers pay a processing transaction to the CC company of 1-3%, and some small businesses may charge you a CC fee for transactions under like $10 or something.

    You have a minimum monthly payment you must make or be charged additional fees, but you’ll be charged interest on your remaining balance. You can also pay your balance in full each month and avoid paying any interest or fees, so it basically acts as a free 30-day loan. Every CC usually offers rewards where 1-5% of each transaction becomes points. These points can be traded in for things like airline miles, gift cards, and most CC will give you straight up cash back for your rewards.

15. I use them for literally everything, but I never carry any sort of balance on them. They are set to pay off in full at the end of each month. They are an additional layer of protection in case of fraud. Additionally, you end up reaping a lot of benefits if you use them right.

16. The best way to use them is to always pay them off in full every month. That way there are no additional expenses compared to a debit card but you get better reward benefits, ID fraud protection, and it builds a history of good credit. That last part is because even if you are paying everything off immediately and never actually gathering debt, it is a way of demonstrating financial responsibility so that if you do later want to take out a loan, you have a good credit history and banks feel more confident that they can trust you to pay off your debt. It means larger loans available and lower interest rates on those loans.

17. I put things on the card, and pay it off every paycheck.

    Mostly for the consumer protections, somewhat for the rewards, they’re not that great, and also because they won’t overdraft or anything. I treat it sort of like a buffer, that I flush every two weeks.

18. I set it up to automatically pay the entire balance every month. It’s convenient to use the card, I get cashback from it, and I don’t pay any interest.

19. Credit cards are a tool. You can use them responsibly to take advantage of the perks, or you can use them irresponsibly and dig yourself into a hole of debt.

    The credit card company provides perks, rewards, and other incentives for using the card to try to get you to use them irresponsibly. However, as long as you keep a budget and know your limits, you only get the perks.

    For example, the most common perk is that credit cards give you points for spending money. Standard is 1 point for every $1 spent. Different cards offer different points deals. For example, 2 points per $1 spent on restaurants, 5 points per $1 spent on plane tickets, etc. Sometimes they run specials like “2,000 extra points if you spent $3K over 3 months” or “3pts/$1 for any Starbucks purchases for the next 30 days.”

    Points can be exchanged for rewards. You can either exchange them for cash (at a rate of 1¢ per point), or you can exchange them for things like airline miles, airplane tickets, or free hotel stays (these are a much better exchange rate).

    Higher status cards provide even more perks. For example, a certain brand of credit card may give you access to exclusive airport lounges, automatic elite membership status at hotels, free food at participating restaurants, free gym memberships, a personal on-call travel agent, an annual gift certificate for a certain store, and so on.

    Credit cards will have limits, which is the maximum amount of money you’re allowed to spend with them. Lower status cards have lower limits. Higher status cards have higher limits or no limit.

    You can’t get just any card though. You have to apply for each one and get approved for it. This is based on your income, spending habits, and credit score.

    The more money you have, and the better your credit score, the more exclusive, higher status credit cards you qualify for. However, higher status cards usually come with membership fees, and/or standards you have to meet.

    So as you can see, there are many benefits to using a credit card. As long as you pay off your balance in full every month, it’s basically the same as using cash, but with extra free rewards. This is what a lot of people do. I personally buy everything with my credit cards and then pay them off in full every month.

    However, the trap comes in the form of “minimum amount due.” Let’s say you spent $1000 with your credit card this month and so you have to pay back the credit card company the $1000 in 30 days.

    The credit card company says, “You can either give us the full $1000 now, or you can pay us just $40 now and give us the rest of the money later plus 20% interest.”

    That’s a very slippery slope and people wind up with massive debts.

20. why wouldn’t you use CC’s?? Do you not have to build credit? I only use 10 percent of my credit utilisation, but I spend more than that monthly on the card. So like I will spend over, but pay it off before the statement comes out so that it’s only 10 percent of my utlisation still on balance, then i pay it off when the bill is due. Easy way to build credit and get travel rewards

21. I use a credit card simply due to the fraud protection benefits and for the cash back for each transaction (1-5% depending the category). All of my bills and day to day purchases basically go on a credit card, and at the end of the month I pay off the full balance (you can not do this, but that’s a bad idea as you’ll be charged interest). That enables me to get a good bit of cash back for everyday purchases along with airline miles. I usually can accrue enough over the year I have a free trip or significant discount on airfare + hotel.

22. Costco Visa card with pretty good cash back. I use it for everything and pay it off the first payday of the month. I travel for work and some years I’ve run up enough to get “Cashback” checks just over $1000.

    Someone is paying me to spend money that I’m already going to spend… why would I use cash/bank card/etc?

23. I don’t ever use my debit card, just credit. I pay it off every month and get cash back rewards.

24. I budget how much money I can afford to spend on things per month. There’s the needs budget for things like gas and food, and the wants budget for all the other things. I put pretty much all of those things on my credit card. It gives me rewards points. At the end of the month, I receive the statement and I go online and click a couple of buttons and I pay that statement balance so I don’t owe any interest. I save up all the reward points until there is something I want to use them on, and then I acquire that for free.

25. I pay for most bills and all purchases with card, I’m enrolled with autopay and pay off every month. 1% cash back back. One card 4% back gas purchase. Many people I know earn airline miles.

26. I buy things on credit card, then pay the bill every month. That’s all. It doesn’t necessarily cost extra to do things that way. The added benefit is improving my credit score. A lot of institutions (like banks) put up restrictions to people who have poor credit scores, and the only way to get your score up is to pay back money you owe. I was raised to never spend money I don’t have, so credit cards are just a necessary evil.

27. We put everything on credit cards and always pay it off monthly. We do it for travel points and usually end up with an incredible nearly free vacation every couple years or a bunch of free 3 to 4 night trips throughout the year.

28. I only use credit/charge cards.

    Basically I make my payments then pay off in full each month. That way I accrue no interest.

    The negative of a debit card is if your info is stolen, it is much harder to deal with your money being taken. If it happens to my credit card, we’ll that’s American Expresses money.

    Credit cards also help you build credit which helps for getting loans. They also offer points towards purchases and other rewards programs. My Amex gives me credit towards airline charges, gets me into airport lounges, and provides discounts on products and services when using it.

    The only negative a credit card has is for those who don’t pay off their charges each month and accrue interest. If you don’t do this there are no negatives.

29. **How They Work**

    You use your card to buy things. Once a month, a statement is generated with all of the things you bought the prior month. If you pay it in full, you don’t pay any interest. Otherwise, you’ll start paying interest on your purchases until you fully pay off the balance on your card.

    **Why We Use Them**

    There are three primary reasons to use credit cards of debit cards:

    * Security. Fraudulent transactions happen on occasion, but you generally don’t have to pay them. You report them as fraud and the charges gets removed. If someone gains access to your debit cards, it’s much harder to get the money back. They also have full access to your money instead of only being able to charge up to your credit cards limit.
    * Building Credit. It takes good credit to finance things like homes and cars (unless you want a horribly high interest rate). Using credit cards over time builds this credit. If you’re responsible and always pay your statement balance, you won’t pay anything in interest.
    * Rewards. Credit cards typically have various reward programs. This includes things like cash back, rewards points, and airline miles.

30. I use my credit card for things and then I pay it off.

    I tend to use my credit card for things I want to pay off over several months. Like large pieces of furniture or home repairs. Some people use their credit card for everything and pay it off every month. That’s fine and racks up points, but not how I prefer to handle my finances. So like, someone hit my fence with their car and I need to repair it. It’s going to be over $5k due to the type of fence I want, and the fact that I want it installed deeper than normal since this is the second time my sturdy metal fence has saved my house from getting hit by a car. Anyway, I’ll put it on the credit card and probably pay it off over four months. It’ll cost me a small amount in interest but I don’t mind paying that for the convenience.

31. We use it for absolutely everything we can, then lay them off every month. We get hundreds of dollars in cash back rewards, and have saved thousands or tens of thousands on airline flights through mileage programs.

32. They’re a lot like debit cards, except they offer the ability to spend money you don’t actually have.

    Pay them off regularly, and they’re no different from most other forms of electronic payment.

33. I used to only use a debit card until it got compromised. I then got a credit card and put everything on the card and pay it off monthly via online banking. Easy peasy. It does wonders for your credit score, too.

34. > but no one i know uses credit cards

    Where are you?

35. Just used it like a debit card. As long as you don’t spend more then you can afford they’re not an issue.

36. Pretty much all my purchases are on a CC. I pay it off in full every month so I don’t pay interest. It accumulates points I can use for things and when I was younger and more paycheck to paycheck it smoothed things out so as long as I made enough to cover the month I didn’t need to worry if I’d just been paid or not.

37. I typically only make necessary purchases that can’t wait on mine. Unfortantly I’ve had a few big ones come up all at once. Gas caused me to fall into debt on it. Not terrible debt, but more than I would like.

38. I use only my credit card 99% of the time. At the end of every month I pay the whole balance off. Rinse and repeat.

    I don’t buy things I can’t afford. Easy

39. I treat them like cash and don’t spend more than I can pay off at the end of the month.

40. I use credit cards with rewards as much as possible. You just have to pay them off monthly (which means not spending more than you can afford). The rewards (money back, airline miles, etc.) are a great way to leverage your spending. You must be disciplined about paying off your bill and not carrying a balance, though – otherwise, you’ll end up paying the bank.

41. My CC has points that I can cash out for gift cards.

    I use it for 95% of my purchases and pay it off. Typically I use the gift cards for school/sports clothing for my child.

42. r/persobalfinance

43. I mostly use my debt card and sometimes my credit card. I feel better knowing I have the money to pay for the stuff.

44. Don’t buy more than you can afford, and pay it off before the next month when it accrues interest.

    Just because you have like a $3000 credit line doesn’t mean you need to use all of it.

    Credit cards also have their own dispute and protection systems so it’s probably more secure to pay with a credit card than a debit card, and easier to combat fraudulent charges.

45. I haven’t used cash in over a year, just my credit card.

46. I got mired in debt, realized the mistake, canceled the cards, got put of debt, and never looked back.