Best way to use a CREDIT CARD

dranzer01

im just trying to figure out the differences....

so each time you use your credit card, you are paying interest?

personally, id rather just use the amex how i would a bank account card and then pay it off every 29th of each month - in all honesty.......

Cornucopia

dranzer01 wrote: »

im just trying to figure out the differences....

so each time you use your credit card, you are paying interest?

No. There may be a few unusual CCs where you always pay interest, but most of them provide an interest-free period for new purchases, so that if you always pay the bill in full, you never pay any interest.

personally, id rather just use the amex how i would a bank account card and then pay it off every 29th of each month - in all honesty.......

You can do exactly the same with most credit cards. Depending on which Amex you have, you may well have a credit card rather than a charge card, anyway.

jamesd

LuSiVe wrote: »

Paying interest when you don't have to is stupid.

Or profitable. It depends on what you're using the money for. I've at times and currently been entirely happy to pay both credit card and overdraft interest because I was and am making more than the amount I'm paying for the credit. Though of course this isn't generally at typical credit card rates, but rather on inexpensive deals. I'm content to do interest paying deals sometimes because it increases the amount I can invest profitably. Or just because it keeps up the amount that is covered by a 0% offer instead of having the borrowed amount at 0% reduce with each monthly minimum payment.

glentoran99 wrote: »

Many also pay interest on their cards but I challenge you to find one that chooses to pay interest when they can afford to pay it off, its totally illogical

You've found one. It's not illogical, it's profitable. The interest cost is lower than the interest I get from investments. Not as low as 0% for a fee deals but still profitable when I'm making 12% or so interest before tax (or sometimes 10% tax exempt) plus possible capital gains on top.

glentoran99 wrote: »

the thread is about the best way to use credit cards and the best way if you can is not to pay any interest.

That's not quite what this thread is about but it's simply not true that the best way to use credit cards is not to pay any interest. Provided you're stoozing or getting sufficient other valuable benefits in return. In my case that's something over £7000 a year of extra income from cards before costs. I'm not going to complain about a bit of interest with that much extra money coming in, provided the marginal cost is lower than the profit.

glentoran99 wrote: »

However you seem to be advocating paying interest when you could pay off the full balance.

I have savings and investments readily accessible that are worth more than three times my current credit card total balance. I still don't pay the cards off, because it is more profitable to maintain the balances at the costs I'm paying to do that. For example, I just invested around half of my card balance at 12% interest rate instead of using that money to pay off cards. On top of that 12% I expect to make significant capital gains on resale of the investment I've made.

The best ways to use cards, for those who don't spend recklessly, can be to stooze and make extra money courtesy of cheap credit from banks.

That isn't for everyone and for someone who it's not for, then the best way is to maximise use to get Consumer Credit Act Protection but avoid paying interest or fees, unless the fees let you make more money than the cost or the credit cost is lower than the gain from paying it. For example, buying things when they are cheap can save much more than interest sometimes, depending on the purchase price reduction and the interest cost.

jamesd

dranzer01 wrote: »

What is the best way to use a credit card to boost ones credit?... as I have every intention on paying the total sum in full every single month

It depends on what you mean by "boost ones credit".

If you mean "increase credit scores used by credit providers when I apply" then regular spending each month on a card or three and paying off the whole balance each month will be the way to go. Beyond around three cards the benefit from more cards starts to drop and adding a personal loan or other form of credit can help. You don't need to keep the whole loan balance, you can rapidly pay off most of it so that all you get until the end of the term is a Pound or so a month direct debit and minimal interest cost on such a low balance. The different type of credit is because variety of credit sources is a factor.

If you mean "boost the amount of credit I have available" then you need to drop the pay off in full each month part. Accumulating and maintaining balances close to the credit limit is the way to go, combined with more cards and doing the same with them. 0% for purchase deals are often an inexpensive way to do this, for those who can get them. Balance transfer deals usually have fees but it might be worth paying the fee, depending on your timeline and use of the money.

If you mean "maximise the value of credit cards" then instead you should consider stoozing or stocking up on non-perishable goods or freezable goods at times when they are cheap, using either 0% or cheap cards that cost less than the gain from the well timed purchases. Stoozing, either into safe accounts or into investments can be quite profitable and I'm anticipating making in excess of £7,000 this year from investment-based stoozing, before costs like balance transfer fees and interest, both of which are not high enough to eliminate a substantial profit for me.

Many people when considering "best" use of credit cards just consider the simple spend and pay off each month case without getting into the more creative uses that can make or save significant amounts of money. That's fine if that's their preference but you should decide for yourself whether you want to make or save money or just do the straightforward thing.