No. of Recommendations: 0
Here's what I do with my credit card. Some of this will make more sense if you understand how I budget and track finances (

(1) Keep the limit fairly low. Even if I'm tempted to buy $10,000 of furniture, I can't use my card for it.
(2) I keep my checking, savings, and credit card with one bank with online banking capability.
(3) When I make a purchase on the credit card, I transfer the amount of the purchase to the savings account immediately, and record the purchase on the credit card and transfer in Quicken.
(4) In Quicken (where I track everything), the deposits for the credit card are kept separate from other short-term savings.
(5) When the bill comes due, I make the payment online from my savings account to my credit card account. I do not have my card set up to automatically debit my savings account in the event a disputed charge shows up.

The benefit here is that I can earn some interest on the funds I will use to pay off the balance (hence taking advantage of the "float" the card offers). Since I keep all accounts at the same bank and take advantage of online payments, I don't have to be worried about whether the transfers to savings went through, or mailing a check far enough ahead of time to avoid late fees. I'd eventually like to repeat this process somewhere where I can earn slightly high interest on the funds in savings, but for now this works well. In the event there is a problem with the purchase I can dispute it via the credit card company (my bank), which is an advantage over using cash. In practice, we use our cards very infrequently (usually just $100-$200/month), so it's not a huge money maker for us.

The other benefit to having a card is that it can serve as an emergency fund mechanism. That is, if an emergency occurs and you do not have a checkbook handy, the credit card can serve as a temporary means through the emergency (obviously, pay the balance off due off at the end of the month).

Hope this helps.
Print the post  


UGC Disclosure Notice Regarding Credit Card Posts
Community board discussions about credit cards are not provided or commissioned by banks who may have advertising relationships with The Motley Fool. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.
TMF Credit Center
The Motley Fool Credit Center arms you with real tools and simple messages, that will help you in every credit situation.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.