CitiBank to customers - we gave you a card, USE IT OR ELSE

Greebo said:
3. is cheaper because you can get some of the interchange fee refunded via rewards programs;
- Sure if you still have a card that does those - those are falling like flies and fees for people who pay off monthly are starting to show up now
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To the contrary, some of my rewards have increased recently.

Greebo said:
6. is safer, because if the cardholder faces an unexpected liquidity crisis, she can shift from transactional to revolving credit. Cardholders have the option of making partial payments with little penalty.
- That's not safety that's delaying a problem, and then the liquidity crisis person is getting bills they can't pay and accumulating high interest charges on debts they "used to live on" as the ship was crashing.
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In my eyes, having to pay a large interest rate on the money, if you need it, is better than not having access to it at all.
 
Greg Bockelman said:
You don't have to be rich to not use credit cards.
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True. I was thinking of credit card as credit, and unfortunately, to never use credit, one must be rich.

Buying cars, getting utilities hooked up, etc. all require credit.
 
SkyHog said:
True. I was thinking of credit card as credit, and unfortunately, to never use credit, one must be rich.

Buying cars, getting utilities hooked up, etc. all require credit.
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Buying cars really doesn't need credit -- nor do you need to be rich.
 
SkyHog said:
I use a real credit card for that now, just to avoid that fee (and it is a fee, I lose interest for the entire period that money is missing).
Click to expand...

That's a very wise thing to do.

Banks deliberately do a terrible job of explaining the difference between "debit" and "credit" cards -- but they are NOT the same. We have had hotel guests book $800 worth of suites, hold them using their "debit" card (without telling us they were using a debit card -- and my staff back then didn't think to ask) -- and then bounce checks all over town because the "hold" exceeded what they *thought* was in their checking account.

When you make a reservation we (and every other hotel) automatically "preauthorize" your card for the amount of the reservation. With a credit card, this preauthorization comes off of your available credit. Since most people have oodles in available credit, a preauthorization has essentially no effect on them.

A DEBIT card, on the other hand, is wired directly into your checking account. A preauthorization of $800 "freezes" that money in your account. We don't have access to it (until you check in) -- but neither do you from the moment we run the authorization. (This is really one of the biggest banking scams going, IMHO. They are using this "float" to make money, without regard or your permission.)

Unless you've got gobs of money in the bank (and don't care if it's locked up for as long as ten days), you should never, never, NEVER use a debit card for reservations of any kind, be it hotel, motel, rental car, RV rental, etc.

Even though it's really not our concern, we now ask every single reservation (well, except for on-line reservations, of course) whether they're using a "credit or debit" card, basically just to protect people from themselves.
 
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Everskyward said:
To the contrary, some of my rewards have increased recently.
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Yours may have. That doesn't disprove what I said. I am hearing daily about programs being dropped etc.

In my eyes, having to pay a large interest rate on the money, if you need it, is better than not having access to it at all.
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Having access to it then being unable to pay it for an extended period, being sued, and declaring bankruptcy is not, IMO, "better" than simply having to deal with being broke earlier.

Borrowing in a crisis is not a sound financial plan.
 
Everskyward said:
I'm not too fond of companies that don't take AMEX since my company credit card is an AMEX. If I go somewhere that doesn't take AMEX I have to put it on my own Visa or MC and wait to get reimbursed. If it's a hotel that doesn't take AMEX I would write down on the trip report not to go back.
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I know. That's precisely why, earlier this year we started accepting AMEX again, after having thrown them out back in 2003, when they jacked their rates higher than everyone elses. In the worst economy of our lives, I didn't feel we could jeopardize even a single reservation.

Another reason to hate AMEX: They "net" their fees out of each charge, as opposed to simply charging us one lump sum each month as every other credit card does. In other words, if your suite cost $100, and I record that $100 in my accounting software, AMEX will only give us $96.50. Now imagine dozens of such transactions, sprinkled randomly into a checking account monthly statement containing hundreds of transactions -- and now imagine yourself balancing your checkbook. It rapidly becomes incredibly difficult to do.

Now, you might say, why not just record each AMEX charge with a 3.5% reduction built-in? Great idea -- except if the card is from overseas, or some sort of wacky gift card, or the moon is blue, AMEX will charge a DIFFERENT rate -- and all of those best-laid plans go out the window.

Did I mention that I hate AMEX? :frown2:
 
SkyHog said:
True. I was thinking of credit card as credit, and unfortunately, to never use credit, one must be rich.

Buying cars, getting utilities hooked up, etc. all require credit.
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No, they don't.
 
Jay Honeck said:
Unless you've got gobs of money in the bank (and don't care if it's locked up for as long as ten days), you should never, never, NEVER use a debit card for reservations of any kind, be it hotel, motel, rental car, RV rental, etc.
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Define "gobs" please?
 
Greebo said:
Having access to it then being unable to pay it for an extended period, being sued, and declaring bankruptcy is not, IMO, "better" than simply having to deal with being broke earlier.
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How does not paying off your balance immediately equate with being sued and declaring bankruptcy? Not everyone goes down that road. I would say only a small percentage do. Meanwhile, having credit allows you to buy time to pay your bills off.

Greebo said:
Borrowing in a crisis is not a sound financial plan.
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Your solution would be what? You're probably going to say to not get into a financial crisis in the first place, but stuff happens. I'm guessing it's easy for you (and for me) to say that you would never get into that position but we are both older and more established than many other people.
 
Trapper John said:
Why would anyone pay cash if the purchase price is the same on a credit card/check card/debit card?

You set your rates and charge your customers. Presumably, you're astute enough to recognize the interchange fee as a cost of doing business and include that in your rate.
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To be fair, we should be able to offer a "cash discount" instead.
 
dmccormack said:
Is there a hotel that accepts cash???
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Sure. We take good, old-fashioned American money for the suite, and then preauthorize $50 on your credit card as a damage deposit.

If you don't have a credit card, we simply put a $50 cash deposit in the safe, and check the suite for damage before issuing a refund at check-out time.
 
Everskyward said:
How does not paying off your balance immediately equate with being sued and declaring bankruptcy? Not everyone goes down that road. I would say only a small percentage do. Meanwhile, having credit allows you to buy time to pay your bills off.
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Yes but it also increases risk - substantially.

Your solution would be what? You're probably going to say to not get into a financial crisis in the first place, but stuff happens. I'm guessing it's easy for you (and for me) to say that you would never get into that position but we are both older and more established than many other people.
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Think about what you're saying, Everskyward. Stuff happens. If you get into financial trouble - loss of income or whatever - you can't guarantee you'll be able to get out of it before the bill comes due. STUFF HAPPENS. It's gonna rain!

You know how many people in BK were borrowing to get buy until things got better, until time ran out? It's disheartening.

Borrowing MORE money when you're in trouble increases the chances of turning the rain into a hailstorm.

You do whatever you can to avoid the crisis in the first place. No consumer debt - emergency fund of 3-6 months of expenses - proper insurance - etc. You get your finances in order now so when murphy does come knocking you have as much murphy repellant as possible.
 
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Greebo said:
Define "gobs" please?
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"Gobs" = a high enough balance in your checking account to be able to absorb the preauthorization "hold" (whatever that amount may be) PLUS any bills you need to pay in the next 10 days or so.

For some people, that can be as little as $100. For others, $10K wouldn't do it.
 
Greebo said:
Yes but it also increases risk - substantially.



Think about what you're saying, Nick. Stuff happens. If you get into financial trouble - loss of income or whatever - you can't guarantee you'll be able to get out of it before the bill comes due. STUFF HAPPENS. It's gonna rain!

You know how many people in BK were borrowing to get buy until things got better, until time ran out? It's disheartening.

Borrowing MORE money when you're in trouble increases the chances of turning the rain into a hailstorm.

You do whatever you can to avoid the crisis in the first place. No consumer debt - emergency fund of 3-6 months of expenses - proper insurance - etc. You get your finances in order now so when murphy does come knocking you have as much murphy repellant as possible.
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That was Mari, not me. I happen to agree with you for the most part.
 
Jay Honeck said:
"Gobs" = a high enough balance in your checking account to be able to absorb the preauthorization "hold" (whatever that amount may be) PLUS any bills you need to pay in the next 10 days or so.

For some people, that can be as little as $100. For others, $10K wouldn't do it.
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Well, for hte 10k people, I hope they had the income to justify it in the first place. ;)

What we do is figure out our planned costs for a month for some things, and the year for others. We put allocations aside every payday into each category and keep that in savings. When we travel, we have cash in the vacation fund for the trip - so we move it into checking and we go traveling.

It isn't HARD stuff to figure out. It's just hard to develop the kind of discipline to DO it - at first.

After a while, however, it becomes second nature.
 
Greebo said:
Well, for hte 10k people, I hope they had the income to justify it in the first place. ;)

What we do is figure out our planned costs for a month for some things, and the year for others. We put allocations aside every payday into each category and keep that in savings. When we travel, we have cash in the vacation fund for the trip - so we move it into checking and we go traveling.

It isn't HARD stuff to figure out. It's just hard to develop the kind of discipline to DO it - at first.

After a while, however, it becomes second nature.
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That's actually not a bad idea. Right now, my fiance and I budget month to month, and track expenses against our budget. For big ticket items, we have a separate, unbudgeted area. Maybe we should add an annual budget too.
 
SkyHog said:
That's actually not a bad idea. Right now, my fiance and I budget month to month, and track expenses against our budget. For big ticket items, we have a separate, unbudgeted area. Maybe we should add an annual budget too.
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It works well for us. For example we have an annual bill for my life insurance of $1,500. We put $125/mo into savings and note that on the insurance fund. When the bill comes due, the money is there, no sweat.

We don't spend it if it isn't allocated in a category - and moving money between categories requires a unanimous vote of the budget committee (her and me).
 
Greebo said:
Yes but it also increases risk - substantially.
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It may increase risk but I doubt it's that substantial. I know people who sometimes run a credit card balance and they don't seem to have any trouble handling it.

Greebo said:
Think about what you're saying, Nick. Stuff happens. If you get into financial trouble - loss of income or whatever - you can't guarantee you'll be able to get out of it before the bill comes due. STUFF HAPPENS. It's gonna rain!

You know how many people in BK were borrowing to get buy until things got better, until time ran out? It's disheartening.

Borrowing MORE money when you're in trouble increases the chances of turning the rain into a hailstorm.

You do whatever you can to avoid the crisis in the first place. No consumer debt - emergency fund of 3-6 months of expenses - proper insurance - etc. You get your finances in order now so when murphy does come knocking you have as much murphy repellant as possible.
Click to expand...
Actually that was me and not Nick who wrote that.

I agree with the idea of being prepared but I think having access to credit is one more way to be prepared. I just don't understand this evangelical zeal some people have against using credit.
 
Greebo said:
Well, for hte 10k people, I hope they had the income to justify it in the first place. ;)

What we do is figure out our planned costs for a month for some things, and the year for others. We put allocations aside every payday into each category and keep that in savings. When we travel, we have cash in the vacation fund for the trip - so we move it into checking and we go traveling.

It isn't HARD stuff to figure out. It's just hard to develop the kind of discipline to DO it - at first.

After a while, however, it becomes second nature.
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That might work for some people. Personally, I don't like to make it that complicated.

I just watch my balance, realize I want X amount for emergencies, and if my balance is ever trending down instead of trending up I seriously cut back.

The more money you save -- the more you want to save. Once you get past living month to month it's rather easy to never be in that position again. I agree that credit cards can be abused and I think they can be used usefully. There are too many variables to make a definite statement.
 
Jay - the weird thing is, these days, using cash generates suspicion. Pay for a $300 hotel charge with cash? Must be a dealer. Or a terrorist. Crazy - legal tender raises suspicions.

Me? I use my credit card for anything and everything. I try to go cash-free, or cash-lite, in my daily activities.

As Mari pointed out, it's not a big deal if you don't assume credit line = free money. I spend only what I intend to, only as much as I would otherwise spend cash on. Bills are paid off on time every month. The card companies make TONS of money off me as it is. No need for them to skim interest or late fees off me too.
 
flyersfan31 said:
Me? I use my credit card for anything and everything. I try to go cash-free, or cash-lite, in my daily activities.

As Mari pointed out, it's not a big deal if you don't assume credit line = free money. I spend only what I intend to, only as much as I would otherwise spend cash on. Bills are paid off on time every month. The card companies make TONS of money off me as it is. No need for them to skim interest or late fees off me too.
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Now the strange thing about that is that I've heard people will spend more per transaction when using a credit card than when paying with cold, hard cash. Behavioral finance big time:

http://seekingalpha.com/article/203...s-how-credit-cards-encourage-you-to-overspend


It's why casinos use chips. Makes you think you're not actually betting "money."
 
rpadula said:
Now the strange thing about that is that I've heard people will spend more per transaction when using a credit card than when paying with cold, hard cash. Behavioral finance big time:

http://seekingalpha.com/article/203...s-how-credit-cards-encourage-you-to-overspend


It's why casinos use chips. Makes you think you're not actually betting "money."
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Oh, I absolutely believe that. I had a big discussion with my MIL on why she insisted on using a debit card. She was convinced she would spend more than she had. And you know what? She probably would.

I don't spend any more than I would spend cash. I don't really find that a challenge. Others seem not to have the same discipline.
 
Funny.

Poster I saw today at the MRF terminal building listed a number of things to watch for as indicators of terrorists and drug dealers. Some were pretty obvious, like leaving guards around airplanes, inartfully-altered N-Numbers and amateurish extra fuel tanks.

But they also listed a couple that stood out - one was possession of charts for Mexico, Canada or Central American countries. Huh?

The other was, paying for fuel and services with (gasp!) cash money.

The inmates... you know...
 
Everskyward said:
It may increase risk but I doubt it's that substantial. I know people who sometimes run a credit card balance and they don't seem to have any trouble handling it.

Actually that was me and not Nick who wrote that.

I agree with the idea of being prepared but I think having access to credit is one more way to be prepared. I just don't understand this evangelical zeal some people have against using credit.
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Spend as much time as I do talking to people who thought the same way as you do until they used said credit in a crisis and then it all just got worse - and you'll understand.

In my view, it's the fram oil filter concept - pay now, or pay later. I refuse to do anything to voluntarily choose to pay later. Sometimes things happen and you have no choice - but when I have one, it'll always be pay now.
 
Greebo said:
Spend as much time as I do talking to people who thought the same way as you do until they used said credit in a crisis and then it all just got worse - and you'll understand.
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I'll have to admit that I don't talk to people much about their financial affairs, none of my business and all that. However, I can't say that I've known that many people who have declared personal bankruptcy, at least to my knowledge, and I know a lot of people who use credit cards. Really I think it's up to the individual. Some people have more self-control than others, but even so it's not for me to say whether they should be using credit or not.
 
Not in the category of "employed" these days, I only have catastrophic medical insurance. Hence I pay cash for all office visits and such. Had minor surgery on my toe this week - a hefty 50% discount for cash. Not check. Not credit card. Just peeling off the bills. My dentist is the stingiest - I only get 5% discount for cash. Everyone else is 40-60% discount for cash.

Do I have credit cards? Sure - 3 of 'em. One never leaves the house is is used only for online and telephone purchases.

Debit cards are basically for those who cannot qualify for a credit card and for parents to keep the kids' spending in check.
 
murphey said:
Debit cards are basically for those who cannot qualify for a credit card and for parents to keep the kids' spending in check.
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Hm, I can easily qualify for a credit card, and have two or three. I surely don't have parents tracking my spending, and I love my debit card. It is about the only thing I use.
 
murphey said:
Debit cards are basically for those who cannot qualify for a credit card and for parents to keep the kids' spending in check.
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Well, I qualify for any credit I want and at 50 years old my parents don't look into my finances anymore.:rolleyes:

I use my debit card for convenience.
 
Ghery said:
It's great to use the card and pay it in full each month and not care what the interest rate it. Cash is great, too, but have you every tried to pay at the pump with cash? :D
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Yes...I once used a pump in California that took cash. I thought it was pretty neat, but haven't run into one since.
 
No credit cards, no debt except my home mortgage. I have two debit cards, one personal, one business. My business is also debt free. The only thing I am lacking is income. Life would be sooo much better with an income. Thank God our government feels things are getting better. I'm quivering with anticipation.

John
 
kkoran said:
Yes...I once used a pump in California that took cash. I thought it was pretty neat, but haven't run into one since.
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If one drops a credit card and the wind blows it away or if someone is a klutz and loses it, they just cancel that card and use another one. If it's cash, that money is GONE. When you're talking $300+ refueling stops and have half a dozen fuel stops in a row before restocking the funds, losing that kind of cash or looking like a target for hooligans is not funny in the least...well, it's not funny for those of us who don't have a couple gold and platinum bricks laying around on our dinner table just for fun. YMMV.

If it's done sensibly and rationally, credit card = cash.
Pay off the credit cards in full each month.
Put enough funds in your bank account to pay the full amount off each month before using the card. Inadequate or no funds in the bank account = unusable card.
Treat the card as unlosable cash ONLY.
Then expect credit card companies to cancel you every so often and call you a deadbeat because you won't pay their criminal sky high interest rates.

Or maybe I'm just an idiot that doesn't know what I'm doing though I appear to have been doing it very successfully for a long time now.
 
Everskyward said:
I'm not too fond of companies that don't take AMEX since my company credit card is an AMEX. If I go somewhere that doesn't take AMEX I have to put it on my own Visa or MC and wait to get reimbursed. If it's a hotel that doesn't take AMEX I would write down on the trip report not to go back.
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I am in the same boat as you. Company card is Amex, businesses that don't take Amex get on my lists of places to not go back to.
 
Greebo said:
Well, for hte 10k people, I hope they had the income to justify it in the first place. ;)

What we do is figure out our planned costs for a month for some things, and the year for others. We put allocations aside every payday into each category and keep that in savings. When we travel, we have cash in the vacation fund for the trip - so we move it into checking and we go traveling.

It isn't HARD stuff to figure out. It's just hard to develop the kind of discipline to DO it - at first.

After a while, however, it becomes second nature.
Click to expand...
That is exactly what I do. It is amazing how much you can save that way. I even have a category for emergency fund that over the years is now up into the high 5 figures. It would be into the six figure area but with a couple of illnesses and deaths in the family it kept it down. But it was nice to be able to use it to just pick up and travel a lot down to Florida to take care fo the family members.
 
I look at credit like I look at firearms: powerful tools that, when used responsibly and in an educated manner, make for an enjoyable, safe, and rewarding life experience.

Cheers,

-Andrew
 
fgcason said:
Or maybe I'm just an idiot that doesn't know what I'm doing though I appear to have been doing it very successfully for a long time now.
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No, you are and educated user who is leveraging credit to mitigate risk and smooth out cash flow. That's the smartest use of credit I've ever heard of.
 
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