Thursday, August 2, 2012

Credit Card-Necessary Evil or Necessary Tool

So as I look back, I see numerous errors I have made with my credit card, here are just a few:
  • Purchase my Spring Break Cancun on my C.C.(this doesn't mean Country Club)
  • Do balance transfers with the hope to pay off the bill before interest rate goes up, while still buying stuff on my C.C.
  • Living off my C.C
  • Not keeping track of what I actually spend
Trust me the list could go on, but this hits some pretty major violations on what credit card companies want you to do.  I have since paid off my credit cards, with the help of my wife and have begin using my credit card as a tool.  There are many things I don't like about using a credit card, but I have decided to stick by these 3 major rules:

  1. Keep track of what I am spending
  2. Make sure I have enough money in my checking/savings to pay the bill by the due date
  3. Be very careful, remember how much I dislike Citibank I do not want to give them any money ever
So just recently I went through and put together a spreadsheet on what I spent(We are using the card for Housing expenses only with one exception of our most recent Hawaii Trip).  I noticed that per our savings we are able to cover the entire balance.  So I followed Rule 1 and 2 with paying extra attention to Rule 3.  Now we do need to be very careful because the card was intended to be used for house purchases only, so if there was a Rule #4 I would have violated it.  I did however follow all the rules and know that the balance can be covered. 

The lesson I take out of this is I want to not use my Credit Card ever again and it may be possible in the near future, but as of right now I am treating it like both a Tool and Evil, if I do use a credit card in the future it must be this way!


  1. I like your three major rules (replacing Citibank with Chase in #3) and agree that a C.C. can be both a Tool and Evil. I have always treated my C.C. as a tool and have benefited greatly from using it this way. While adhering to rules #1 and #2, I use my Chase Freedom card and charge every expense that I can to my C.C. to take advantage of Chase's Rewards (clever name: rewards for running up balances - tool or evil?). By doing this, I am "rewarded" with 1-5% cash back which pretty much pays for Christmas presents at the end of the year - you may want to look into Chase's rewards program if Citibank doesn't have one.

    Also, if you want to track your expenses, I suggest Quicken ( is also a good money management website). The software can pull your bank account and C.C. activity from your online account and you can categorize income and expenses. You can then generate reports to see what you are earning and spending. I've used it since high school (yep, I'm an accountant) and track everything monthly. If you plan on tracking all of your expenses (and not just credit card activity), using your C.C. simplifies tracking the expenses because you can download the information from your bank account. If you use cash, it's difficult looking at the ATM receipts and remembering where you spent your hard earned cash.

    My final comment is that if someone is looking into getting a C.C., he/she needs to set ground rules and adhere to those rules so credit card balances stay manageable. I don't think anyone wants to violate rule #3 (insert personal bank) and pay the bank 20-30% interest on C.C. balances.

  2. After reading through everything you wrote, here are my immediate thoughts. Not everyone is like Clint/Accountant/CPA, Clint is smart with his money, Clint is a nerd(that's a good thing).

    I think it is difficult for 75% of average people to control spending and like you said "rewards for running up balances". I have to say I am still and probably will always be on the Credit Cards are evil bandwagon. If a dog bites you in the leg, chances are you are not going to like or pet dogs for quite some time, Citibank=dog that bit me in the leg over and over again.

    As for the rewards, I agree get the best Credit Card rewards program that you can get. As for me I'm still in the category of hating credit cards, so rewards at this point are like getting a free shot of Tequilla from your friend who just woke you up pouring cold water in your face the next morning after drinking till 5 am, it just doesn't feel good.

    Anyone who can do what you say "spend, pay off, get rewards" A London cheers to you sir/madam.