I was Dave Ramsey when Dave Ramsey was still up to his neck in debt and learning his lesson. Like the earlier poster, I've never had a credit card. To the kids, you do NOT have to "establish" credit. What a lie. The first thing I bought on credit was my house. Credit-card issuers are vipers. You don't need them. I graduated college poor yet debt-free. No car or new clothes until I was 25. Invest in yourself and you'll never have to worry about money.
I’ve earned well in excess of a million credit card points, maybe around two million, still have a balance of a few hundred thousand, which has provided me many free international flights (most of which I’ve redeemed for first/business class tickets). Using a credit card has also helped my credit score, and my current mortgage rates are 2.875% and 3.125%. I get a bunch of other perks as well, and I’ve never paid a cent in interest.
What’s the alternative to paying for something online or a large ticket item? Credit cards are awesome and if you’re not using them you’re missing out.
Amazon card for Amazon purchases. 5% back on all purchases—can be cash or used again on Amazon.
Costco is 2% at Costco, 3% on restaurants and travel, and 4% back on gas. Also matches another 2% in Costco purchases as a gift card.
Both above do 1% on everything else.
Apple Card with Apple Pay does 2% on any Apple Pay purchase, which beats the 1%. I think it’s 3% back on Apple purchases, which aren’t frequent but pretty good for when you pay App Store fees and get the odd new computer or phone.
This all adds up for us (family of 4) to over $1k each year easy, probably closer to 1.5k. Ramsey would have you forgo this money to bolster his ideology and because he doesn’t trust his listeners to be responsible. In 20 years with a credit card I think I’ve paid $5 in interest, because of one purchase I needed in grad school that I needed one extra month to pay off. Otherwise we pay it off each month in full.
The best is getting the rewards on reimbursable items. Flights get 3%. One time we had pharmacy fills that we paid about $8k/mo on a credit card for 5 months, reimbursed within two weeks before bill was even due. An easy $400.
Use the tools well.
I agree with your point entirely. Credit card cash back offers can be beneficial.
What I would like to know is more about the Amazon Card. I didn't know they offer 5% ash back on all Amazon purchases (for Prime members). So I looked it up on Amazon and the first page is all terrible user reviews, with the advice to stay away from it.
Has this been your experience?
There’s a crappy Amazon store card thing, and there’s a credit card managed by Chase that you can use everywhere. The former is crappy, the latter is fine.
A disciplined person can take advantage of the current equilibrium in cards as the up-front incentives are determined by the marginal borrower who uses high interest rate debt, not the consumer who uses them as cash substitutes.
My brother and I pay cash for cars. He is always after me to finance the car and get a better deal than a straight cash transaction and then pay off the balance right after the transaction.
He is right, although you need to check for prepayment fees and the ability to prepay.
There is a certain theater involved in extending a loan to seven years so the dealer gets more finance revenue and thus is more willing to discount the car while all the time sitting on the cash. He is much better than me than playing this out (he is a lawyer) and I usually let him lead the way.
I wonder if the dealer still gets the financing commission?
I agree with your point entirely. Credit card cash back offers can be beneficial.
What I would like to know is more about the Amazon Card. I didn't know they offer 5% ash back on all Amazon purchases (for Prime members). So I looked it up on Amazon and the first page is all terrible user reviews, with the advice to stay away from it.
Has this been your experience?
There’s a crappy Amazon store card thing, and there’s a credit card managed by Chase that you can use everywhere. The former is crappy, the latter is fine.
Erik, no. The one that got trash reviews, universally, is the one that is managed by Chase and you can use anywhere.
There’s a crappy Amazon store card thing, and there’s a credit card managed by Chase that you can use everywhere. The former is crappy, the latter is fine.
Erik, no. The one that got trash reviews, universally, is the one that is managed by Chase and you can use anywhere.
I read some of those reviews, all I can say is that they don't reflect my experience at all. I've had that card for a couple years with no problems, works great.
Our Costco VISA pays different percentages for different types of costs. We use it for all available charges and pay it off each month. We get close to $1,700 back each year.
A disciplined person can take advantage of the current equilibrium in cards as the up-front incentives are determined by the marginal borrower who uses high interest rate debt, not the consumer who uses them as cash substitutes.
My brother and I pay cash for cars. He is always after me to finance the car and get a better deal than a straight cash transaction and then pay off the balance right after the transaction.
He is right, although you need to check for prepayment fees and the ability to prepay.
There is a certain theater involved in extending a loan to seven years so the dealer gets more finance revenue and thus is more willing to discount the car while all the time sitting on the cash. He is much better than me than playing this out (he is a lawyer) and I usually let him lead the way.
I wonder if the dealer still gets the financing commission?
The key to the car dealership is to make them think you’re going to finance so they keep knocking money off the principal, assuming they’ll make back more in interest over 6-7 years. Get them to keep dropping the price and then just pay it off. If they know you’re a cash buyer, they won’t work with you on the price anymore. They want the 6-7 year finance.
as far as Dave Ramsey goes, most of his advice is solid and is geared for the people who aren’t very smart with their finances.
I had a few correspondents with one of his financial advisors near me when I first started working. A lot of their advice is aimed at being safe. I made sure to have a 6 month emergency fund saved and to avoid frivolous spending.
His advice on a zero dollar budget is also smart. However, I chose to disagree with their approach on saving for retirement. My company matches $0.75/$100 up to 7% for retirement. Ramsey advised for me not to contribute to my retirement until I paid off my student loans. I also have 2 credit cards that I rack up rewards with and have never paid interest on. On is good for gas while the other is good for everything else.
I have no doubt that ramsey has gotten a lot of folks fiscally sound, but you have to be able to think for yourself as well and be willing to disagree with someone, even if they’re right on most things.
I read some of those reviews, all I can say is that they don't reflect my experience at all. I've had that card for a couple years with no problems, works great.
Same. I've had both. I found the store account to be a hassle. The Amazon Chase card has been no hassle for me. Points show up in my Amazon account to use at checkout, or I can go on the Chase site and transfer them in cash to my account. Everything else is standard credit card fare. I have no idea if the interest rates are good or bad because I never check because I only use the card as a payment method to get rewards and never entertain not paying down my balance.
Scanning these reviews from the above link, 70 are 5 star. The 1-star complaints include:
People who have good credit that got turned down. (Annoying, but doesn't reflect experience after getting approved.)
People complaining about predatory interest rates. (Bad for people who don't pay down.)
People who had fraudulent charges and had trouble overturning them.
The only one germane to me is the last one. Not enough information here to see if this is a problem with Chase or anyone else.
I read some of those reviews, all I can say is that they don't reflect my experience at all. I've had that card for a couple years with no problems, works great.
Same. I've had both. I found the store account to be a hassle. The Amazon Chase card has been no hassle for me. Points show up in my Amazon account to use at checkout, or I can go on the Chase site and transfer them in cash to my account. Everything else is standard credit card fare. I have no idea if the interest rates are good or bad because I never check because I only use the card as a payment method to get rewards and never entertain not paying down my balance.
Scanning these reviews from the above link, 70 are 5 star. The 1-star complaints include:
People who have good credit that got turned down. (Annoying, but doesn't reflect experience after getting approved.)
People complaining about predatory interest rates. (Bad for people who don't pay down.)
People who had fraudulent charges and had trouble overturning them.
The only one germane to me is the last one. Not enough information here to see if this is a problem with Chase or anyone else.
Thank you to you both. Good to know.
I may just try it.
My current card gets 2% cash back on everything, or I should say, 2% cashback to be used to offset any travel costs, and slightly less if used for actual cash. With Covid and less travel, I have amassed thousands of dollars of points.
Same. I've had both. I found the store account to be a hassle. The Amazon Chase card has been no hassle for me. Points show up in my Amazon account to use at checkout, or I can go on the Chase site and transfer them in cash to my account. Everything else is standard credit card fare. I have no idea if the interest rates are good or bad because I never check because I only use the card as a payment method to get rewards and never entertain not paying down my balance.
Scanning these reviews from the above link, 70 are 5 star. The 1-star complaints include:
People who have good credit that got turned down. (Annoying, but doesn't reflect experience after getting approved.)
People complaining about predatory interest rates. (Bad for people who don't pay down.)
People who had fraudulent charges and had trouble overturning them.
The only one germane to me is the last one. Not enough information here to see if this is a problem with Chase or anyone else.
I'm interested in the 5% back on Amazon, but the predatory interest thing turns me off. One guy complained that he paid his balance, less $25 due to an oversight, and got billed for interest for the entire amount for that month and the entire amount the following month. I make purchases every day and I often have purchases pending when I make a payment. I'd only save maybe $200 using an Amazon card.
FWIW, I keep a reminder in Google calendar to pay my credit card bill several days before it's due.
Obviously the credit card companies are not going to stay in business long if all they are doing is handing out hundreds of dollars to all their customers every year. The vast majority carry balances and pay interest. For the regular joe, it's probably wise to not use a card.
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