How I Learned to Use Credit Cards - Part 2 - Interest and Fees

Posted on December 30th, 2007 in Credit / Debt by planner

Early on I never put much on my credit cards.  I wasn’t spending that much.  So when the payments came due they were small.  One time I spent more than I noticed, more than I had free when the statement came.  When my statement came I was close to having enough to pay the whole balance but not quite there.

Without quite understanding how credit cards worked I decided to save up and pay off the balance in one shot instead of sending little payments.  In my blissful ignorance I threw away the statement and figured that soon enough I would have the full amount and send it all in at once.  Whoops!  Of course I forgot to send any payment until the next statement came.  Not only was the balance bigger, but all sorts of interest and fees were on there.  That was an expensive lesson.

A while later I was up to using several credit cards and getting rewards for them.  I would pay them all off each month and file the bills away.  All of the cards had different grace periods and cycle dates.  So there were statements coming in several times a month, and payments due several times a month.  Wouldn’t you know I confused the dates and ended up with one payment early and another late.  I didn’t even notice until the next statements came in.

Late payment fees again, interest charges again.  This time I knew a bit more and thought I was doing everything right.  I called the companies and tried to sort things out.  The late payment fee was forgiven.  I changed the dates on my accounts so that they were a bit more in line.  I set up a system for myself of gathering all the bills in one place and paying them in two big batches.  It’s better to get it all done with less work and fuss.  Some payments are early, none are late, and there is way less room for error.

How I Learned to Use Credit Cards - Part 1 - Reward Cards

Posted on December 12th, 2007 in Credit / Debt by planner

Back when I was getting my first credit cards all I needed to know was what I got as a bonus when I signed up.  At that time it was shirts and hats.  If I liked the little prize I was happy to sign up.  When I went to the store I pulled a card out.  If they didn’t take that one I just pulled out a different one.  Eventually I realized that you only need so many cards, and there are problems with having too many.

Next I realized that not only could you put off paying for something for a month, but some companies even rewarded you for using their card.  I had a discover card so it became my card of choice.  I used it for everything.  When I went to get my rewards they seemed low.  It turns out that up to 2% back was hard to get to, and probably impossible for me at the time since I wasn’t spending all that much money.

With my spending increasing each year my rewards were building up.  Good news for me when they had the double your reward program in place.  A friend of mine had a mastercard earning a steady 1% on everything and thought I should switch.  I never stopped to crunch the numbers, but I figured that since I was reaching 2% at the end of the year, and doubling all of it, I was probably coming out a bit ahead of 1%.

Then discover started removing the rewards I liked.  The double rewards were in things I didn’t want.  I still had reward money sitting in my account, so I chose the best rewards and cashed out.  Then I got one of the 1% mastercards.  When the 5% gas/grocery rewards cards got popular I got one of them.  When they changed my account to a 2% version they changed my account numbers.  Since I had to update my account numbers everywhere I moved on again to the chase freedom 3% on top three select categories.