Preferred method of payment

[Kennigit]

theft

 

[Zelig]

Depends:

Rent - cheque.
Anywhere where I can get a discount for paying with cash instead of plastic - cash
Grocery, Gas & Entertainment purchases - 4% return credit card.
Restaurants - 4% card unless we're splitting and everyone is paying cash, then cash.
Other purchases - 2% return credit card.
USD purchases - Paypal via 2% return card.

Credit card with air miles... paid off every 15 days.

Why would you pay off so often? Unless your limit is too low, you don't gain anything by paying any sooner than the statement due date.

It used to be debit or credit card, but lately i've been concerned about the existence of a record of every item i've ever purchased. i've switched over to cash mostly now.

You should be more concerned about Google first.

Isn't it difficult to keep track of your spending when you pay by credit card? Because I have to draw my money I always check my balance, it helps limit stupid impulse buys

I don't have stupid impulse buys, unless I'm buying groceries, it typically takes me at least days of research to figure out the best deal on the best product available, and if the best deal isn't available, I'll wait until it happens.

Aren't postdated cheques strictly illegal?

No, but neither recipients nor banks have a legal obligation to wait until the date to process them.

Do you guys all pay off your cards every month to avoid interest or to build credit.

I'm just asking because it doesn't really build your credit score to pay it off every month. Certainly not as much as maintaining a balance.

It's fine to pay off lines of revolving credit every month, they're calculated differently into score than loans, and the total calculation for type of credit is only 10% of the total score. Your score is affected by revolving credit by the proportion of your available credit that you use - you maximize this portion of the score by getting your credit limits as high as possible on as many sources of credit as possible. (Not that you should do this, for various other reasons.)

 

[hobbsyoyo]

All of the financial gurus I have ever seen all say it is best to maintain a small balance on a credit card rather than paying it all off every month

 

[Quintillus]

For ordinary stuff I'm buying at a store, I generally buy with either a credit card (which I pay off every month), or less often, with a debit card. A fair amount of the time I use a debit card, it's to get cash back, since the store with cash back is really close, and the bank less so. Sometimes I pay in cash, too, and I'm more likely to do so if it's a small amount of money or I have a glut of coins to get rid of and can make exact change.

I'd rather keep no balance on my credit card and pay no interest than any incremental credit score. My parents have managed to get excellent credit doing this, so I know it's possible. And, my credit card, while good in most areas, has a horrendous APR. I don't care since I don't carry a balance, but it's all the more reason not to do so.

I use checks for my car payments and the occasional odd expense like furniture or a housing deposit. I never use them at the store since it's easier to carry plastic or cold hard cash.

Direct withdrawal/deduction is also really handy when you're buying something from your employer (ex. lunch) or for something like monthly housing. I don't set it up for utility bills since I want to see the amount first (never know when someone will add an extra zero or two, one of my friends had 100 grand show up in his bank account that way), but for something that's the same amount every month, it works out well.

Did anyone else when applying for a credit card get asked how they would pay off the debt if you lost you're job? I had no idea what they wanted me to say to that, I mean it would be impossible.

Nope. But, I'd literally just got my job (and hadn't even started yet) at the time. They might have been thinking about a cosigner. I'm not sure if it's as common with credit cards, but with a lot of loans (car, college, house), if you don't have much credit history, they'll want one. I'm surprised (but happy) I didn't need one for my car loan.

Also, if you as a USian, your best bet for getting a first credit card these days is likely to be Discover. And while they get joked about, in practice they're actually accepted at a pretty wide variety of places, and they're also the only credit card that U.S. Customs accepts, for what it's worth.

 

[Zelig]

All of the financial gurus I have ever seen all say it is best to maintain a small balance on a credit card rather than paying it all off every month

They're not real gurus.

See myth 4

 

[DroopyTofu]

I don't have a debit card or a credit card because I'm young, so of course I use cash to pay for everything. Personally I think it makes it easier to track spending and it's much simpler. I'm not sure I'd use a credit card even if I had access to one.

 

[Antilogic]

All of the financial gurus I have ever seen all say it is best to maintain a small balance on a credit card rather than paying it all off every month

Sounds like they are trying to get you to carry a balance and pay interest to the credit card companies. That doesn't sound like something that is good for your personal finance.

 

[Tee Kay]

Cash. Debit card if I have to.

Cheques can be nice.

 

[Borachio]

Do you guys all pay off your cards every month to avoid interest or to build credit.

I'm just asking because it doesn't really build your credit score to pay it off every month. Certainly not as much as maintaining a balance.

This may indeed be true. Though I wouldn't like to say for sure that it is.

But what an expensive way of building a credit score. Just work out how much that is going to cost you. In order to do what? Borrow more to finance consumption through the same system?

Meanwhile, look how much you save overall by not paying interest.

It's a complicated trade-off. Of course if you're applying for a mortgage - which I can accept to all intents and purposes is generally a good idea - a good credit rating is very important. Even more significant to the lender will be your ability to repay, imo. And I'm really not sure how much weight they would give to a person who has maintained a balance on a credit card. Paying it off in full each month would seem to indicate greater financial astuteness to me.

I guess they pay more attention to the absence of a default history than anything else.

edit: I've just seen the myth link above. There you go, then.

 

[Mise]

@Zelig: I'm also concerned about Google, yes.

 

[rugbyLEAGUEfan]

Cash or a Visa debit card, so you can order stuff over the phone or internet but only from savings. Direct deposit from savings account too for bigger amounts because I only keep a small amount in the card.

I have it set up so that my pay goes into a savings account, then every day it sends $40 to the card.

 

[Valka D'Ur]

Depends on the situation. My favorite pizza place won't accept debit cards after midnight on weekends, so I need to keep some cash around.

Some places accept Canadian Tire money, which is handy. I think I'm up to about 35 cents now.

Actually, I spend most of my cash on taxis. Not looking forward to this newfangled plastic money we're being subjected to.

 

[The_J]

Most times cash. Would rather like to pay with plastic, because I find money very unhygienic, but...

It used to be debit or credit card, but lately i've been concerned about the existence of a record of every item i've ever purchased. i've switched over to cash mostly now.

...I'm also concerned about this.
My bank can totally see where I've studied, when I've travelled to my parents, and when I moved.

Paying with cash is more satisfying.

And easier for tracking your expenses yourself.
It's way easier to spend a big sum online, on the game sites or on Amazon, than in RL.
100€ are quickly gone online, but I guess most people would hesitate to spend the same sum if they had it in cash.

 

[Grisu]

I use all of the above for different stuff

- Cash for small amounts (usually up to around 30 Francs)
- Debit card for bigger amounts and most groceries
- Bank transfer for companies that allow it (like my garage, etc.)
- Paypal for small online transactions or transactions with people I don't wholly trust/know
- Credit Card for online transactions with stores I trust

I can't remember the last time I wrote a cheque. I think it was in 2007.

I have never ever written a cheque for myself..back in the 90s when I worked for a bank, I used to write a checque for somebody about once a month and even then it usually was for weird out of country transactions (usually to countries that still exchange pigs or similar as means of payment )

Do you guys all pay off your cards every month to avoid interest or to build credit.

I'm just asking because it doesn't really build your credit score to pay it off every month. Certainly not as much as maintaining a balance.

what good is 'credit score'? My bank automatically settles my credit card bill at the end of the month (so I don't really use it as a credit card).

 

[kochman]

Credit ratings are total BS and the system really needs to be regulated.
It's true you can build your credit by having some debt... but you should try to get that debt on low interest accounts.

1) My air miles credit card, great perk (free flights anywhere anytime)... interest rate, something like 18%.
2) My regular credit card, interest rate something like 4%...
3) Old car loan, around 4%...

Options 2 & 3, preferrably only 3, can help you build credit without requiring giving yourself a swirly.

What's better? Not incurring debt, but using savings to purchase everything.

Example, you want to buy a house, for $100k (nice round number).
If you take out a loan, over the course of 30 yrs, you are going to pay a total somewhere near $200k for that house.
However, if you'd saved up the $100k instead, while you save you are earning interest on your savings. That $100k house actually only cost you $90k, because interest earned made up the other $10k. A $110k difference in your favor... if you can swing it, of course.

People in the US tend to want the biggest house they can "afford" (with a loan), because that's how we're conditioned... get the smallest house you need instead.

 

[LegionSteve]

Regular monthly bills are paid by direct debit from my bank account.

Almost everything else I pay by credit card - I get Tesco points for using it.

 

[say1988]

And easier for tracking your expenses yourself.
It's way easier to spend a big sum online, on the game sites or on Amazon, than in RL.
100€ are quickly gone online, but I guess most people would hesitate to spend the same sum if they had it in cash.

I feel the opposite. It is earier to track purchases made using debit/credit than cash. And I have a tendency to spend more if I have cash in my pocket in little bits here and there.

Example, you want to buy a house, for $100k (nice round number).
If you take out a loan, over the course of 30 yrs, you are going to pay a total somewhere near $200k for that house.
However, if you'd saved up the $100k instead, while you save you are earning interest on your savings. That $100k house actually only cost you $90k, because interest earned made up the other $10k. A $110k difference in your favor... if you can swing it, of course.

That's not exactly complete. By using a mortgage to buy sooner you gain several financial advantages:
You get any increase in value of the property (and it generally trends up) if you put it off a couple years to save you may have to pay $115,000.
You can build up savings to gain interest over the life of the mortgage.
You don't have to pay rent while you save up for a house.
It may take you a decade to save up enough money to buy a house, outright and it a growth market you may never be able to do so. And even if you have the cash on hand to buy outright, you may be better off investing your excess over the downpayment and potentially earning more than the interest rate and as a bonus you let the bank assume much of the risk.

 

[Deaths Advocate]

Cash because BigBrother can't track me so easily.

 

[Borachio]

You can build up savings to gain interest over the life of the mortgage.
.

It makes absolutely no sense to do this, beyond a stash of cash for emergencies. The interest that you get on savings is always going to be less than the interest you pay on the mortgage - unless you know something I don't, of course.

The most sensible procedure is to pay your mortgage off as soon as possible i.e. don't get a mortgage that doesn't let you do this.

The banks borrow short and lend long. You, as a consumer, must work, as far as you are able, against this by borrowing for as short a time as possible. That is if you are interested in maximizing the worth of your earnings - you may not be.

 

[kochman]

That's not exactly complete. By using a mortgage to buy sooner you gain several financial advantages:

Going to dissect this... I think it merits it.
You do get to buy sooner... at a cost of a 100% mark up.

You get any increase in value of the property (and it generally trends up) if you put it off a couple years to save you may have to pay $115,000.

Or, the market could crash on you, you bought high and now have a $100k mortgage on a house worth $50k... Now you are paying, over 30 years, $200k on a house that is worth $5ok... expected to mature at a rate of 5% per year... you got hosed.

You can build up savings to gain interest over the life of the mortgage.

What? This doesn't make sense. Elaborate.

You don't have to pay rent while you save up for a house.

True, but rent is typically lower, you aren't STUCK there for 30 years, etc. You also don't have to pay insurance (sometimes) and real estate taxes...

It may take you a decade to save up enough money to buy a house, outright and it a growth market you may never be able to do so.

The real estate market, when not in a bubble, is generally a 5% growth in value per year... if you can't outperform that in your investment, you don't deserve a house... And, you can also wait to buy low, get a short sale with cash, etc...

And even if you have the cash on hand to buy outright, you may be better off investing your excess over the downpayment and potentially earning more than the interest rate and as a bonus you let the bank assume much of the risk.

Please explain this better... it is confusing.

If you have the cash, you could use it to invest in other things, while you pay a mortgage, and outperform the value added in your housing investment, I think that is what you mean. This is true, but also risky... stock market crashes are way more frequent than housing market crashes. But, still, you should do better over time.
I'd personally like the security of not having a home payment to make, then you've no monthly massive bill, so you can invest with the extra cash on hand...

The idea of being in hock for 30 years freaks me out. I, personally, got hosed when the housing market crashed, so that's part of it.