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A warning about paying off the entire balance each month. Due to the recession, credit card companies are now closing many accounts with zero balances, to help reduce their maintenance costs and also to limit future losses. You will get no warning.....just a letter telling you that you can no longer use the card. Closing a credit card account (whether it's your idea or not), can hurt your credit score. If you only have one card, ANY card, and wish to keep it for emergencies, it is advised to always keep a small balance on the account.
Good luck to all.
We've been doing this for years. We've been paying everything we can with a rewards card, and paying the balance in full every month. Actually, we have a few rewards cards. They have a limit on how much you can get back, so once we've gotten all we can from one, we put it away and move on to the next.
If we didn't have enough cash and discipline, we could get in trouble. But like I said, we've been doing it for years with no problems.
The idea is that if you're writing checks to pay all the bills, you're simply changing who you write the check to and you're only writing one check. I think people get into trouble when they don't "set aside" that money. Perhaps each time a bill is paid with the credit card, that exact amount should be deducted from the checkbook. That approach might work for some people who are only a little challenged with self-control.
Thank you, Natasha, for beginning this with a warning.
I understand what you are suggesting, and it will work fine for those few that during this financially hard time can still afford to and will discipline themselves to pay off their credit card each month. But what scares me about this advice is that 9.5 out of 10 people that try this (though they have the best of intentions) will not be able to pay off their credit card at the end of the month. Now they're even more in over their heads than before.
Please,please be honest with yourself and figure out whether or not this is a good idea that you can really do before you try this. If not, as Natasha points out, you are defeating your purpose; not only that you are digging yourself an even deeper hole with more debt.
We all think we can outsmart the credit card companies and take advantage of their offers with no damage to ourselves, but that thought is what they are "banking on".
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