How do you use your credit cards now?

[iswmle]

I have one credit card that I decided will be used for internet purchases... which I purchase on the net *maybe* once or twice a year (usually during Christmas). I have never been a big internet shopper. I put my monthly MyFico subscription on this card. Then I have a dept store card which I rarely use, and I haven't quite decided what to do with the third card. I was looking at my budget this morning and decided that maybe I could use the card for what I spend on the least... which is surprisingly clothing and eating out.

My frugal living has been paying off... Last month I spent $0 on clothes and $3.77 on eating out (I ate at my job's cafeteria instead of bringing my lunch). I was also thinking of possibly putting my utilities on the third card.

So I am curious how everyone is using their credit cards to help them rebuild credit? What kind of purchases do you use them for and do you PIF or rotate small balance?

PS. I have also told myself NO CASH ADVANCES!! I was never big on them in the past, but after working in the credit card dept I am even more opposed to them now.

[HHM]

I am little further down the road than most on this forum. So I have a rewards credit card (Capital One Venture, 2 miles per $1 spent) and charge all expenses to that card and pay it off each month. Most of my recurring bills are paid with bill pay through my bank (mortgage, utilities, etc). But, unless you have your spending TOTALLY under control, I don't necessarily recommend it (but, if you are emerging from BK, you won't be eligible for these type of cards for several years).

Generally, if you choose to use credit after BK (really, you don't have too), then I recommend what you are doing. Pick 1-3 budget categories and use the card for those purposes. The main one I tell people is use the CC for gas in your car and pay off the card each month. As a practical matter, it can be difficult to pay your utilities with a CC card, I looked into last year, and there was no convenient way to do it, at least where I am, and I think doing so is over kill.

[AngelinaCatHub]

I have one card. A credit/debit card. I use the credit side only as it still stops working once I'm down to no money in my account. You have more legal rights using the credit side. A debit side is like a check it's gone. Otherwise I care less about credit as I am not going to use it. Perhaps one day if I cannot purchase a good used car (I only buy diesels) I may use credit for a car payment. Credit cards are a slippery slope to trouble again. It is rare to not have the temptation but at least some have that lesson learned. 'Hub

[Logan]

I am little further down the road than most on this forum. So I have a rewards credit card (Capital One Venture, 2 miles per $1 spent) and charge all expenses to that card and pay it off each month. Most of my recurring bills are paid with bill pay through my bank (mortgage, utilities, etc). But, unless you have your spending TOTALLY under control, I don't necessarily recommend it (but, if you are emerging from BK, you won't be eligible for these type of cards for several years).

Generally, if you choose to use credit after BK (really, you don't have too), then I recommend what you are doing. Pick 1-3 budget categories and use the card for those purposes. The main one I tell people is use the CC for gas in your car and pay off the card each month. As a practical matter, it can be difficult to pay your utilities with a CC card, I looked into last year, and there was no convenient way to do it, at least where I am, and I think doing so is over kill.

I also have the Capital One Venture (just over 2 years out of BK and was sent an offer and approved) but I use my wife's USAA card. We get 1.25% back and if I go through the USAA website for purchases I get even more back.
We charge everything. Since I get 1.25% cashback I get a nice credit in January. Last year we started in April with this card and we got $400 back in January. Also, my checking account get 3% interest so floating the money on a credit card earns me more interest.

Example: We just bought airline tickets for my inlaws at $1541. We get the cashback of about 1.25% and I'll be earning 45 days of interest on that money if I had used a debit card. That means I'll get back about $18+ in rewards and $4+ in interest.

Logan

[Amy26]

I have a good selection of cards that I rotate activity on. I mainly use most of them for subscription charges that get paid off monthly. If I carry any kind of balance it goes on my Navy cards which have higher limits.

We just got an american express rewards gold card that I might start paying our utility bills through and rent because it has excellent rewards. Like Logan said, if you have a nice card with a good rewards program... put everything through it.

[renefaye]

I agree with the statement of "credit cards are the slippery slope" of trouble again. Some people have complete control while others don't. And, it might be a great temptation to say you will pay it off each month, and then don't. I don't think a credit card is a good thing......it's too tempting to get things before you actually earn the money to pay for stuff. Sometimes folks wind back up on the same hill they just got off of. I would only use the credit card for EMERGENCIES only, and only 1 credit card. Just my opinion.

[Logan]

I posted that I had the same card as HHM. I was mistaken. The Capital One rewards I have gives cash back. 2% for gas and groceries and 1% for everything else. I recommend it for anyone looking for a rewards card with cash back. I'm sure the Cap One Venture is good also for travel rewards.

[Amy26]

I agree with the statement of "credit cards are the slippery slope" of trouble again. Some people have complete control while others don't. And, it might be a great temptation to say you will pay it off each month, and then don't. I don't think a credit card is a good thing......it's too tempting to get things before you actually earn the money to pay for stuff. Sometimes folks wind back up on the same hill they just got off of. I would only use the credit card for EMERGENCIES only, and only 1 credit card. Just my opinion.

Yup, everyone needs to manage their credit how they see fit and know themselves and how they can handle credit. It might be a slippery slope but certainly easy to navigate if you have the proper footing.

[iswmle]

I am curious, but for those of you suggesting credit not be used after BK is this the same advice you would give for those looking to buy a house in the next 7-10 years? That is the situation I am in, and the only real reason why I'm interested in rebuilding my credit. Frankly, if I had a mortgage with a locked in rate I would probably care less about rebuilding credit for years to come.

My two main goals right now: build my savings, build my credit. Building my savings is actually more important to me right now than building credit, and I am starting from the bottom. I am still working on building my 3 months emergency funds. I truly have no interest in rotating a balance with cc's or spending on things I can't currently afford... that would cut into my savings and I'm determined to meet goals.

[thereshope]

I have a secured card for internet purchases which has a $300 limit, but I pay off the balance as soon as it posts. Occasionally, I'll wait for the bill and then pay it off so I'm showing good payment history on my credit report. I have a unsecured Capital One that I will use for travel or business travel if necessary, (that was one of my fears, if I was asked to travel for work, which would likely be overseas) so I need to build up the credit limit. I got a nice bonus this year and put the whole thing (minus the taxes taken out) in the bank so I have finally started to build quite a bit of savings. Also, I'm a diehard believer in a monthly budget, I use it faithfully and stick to it. But I know getting my credit score will take time.

[Amy26]

Hehe, me too! I'm an excel geek with my money... I have each pay cycle mapped out and I do what if scenarios and I always know where its going and when I get raises etc, I can usually figure out how much my check is going to go up within a few dollars. I guess that's why I focused my information technology career in finance... lol. I suck at math but I really like mapping out everything and having a plan and knowing where all my money is going.

I am glad that I'm like that though... we owed the gov't about 4,000 dollars on our taxes this year but I had absolutely no problem planning out my funds and putting money away and was able to file my taxes early in March PIF.

[IBroke]

So I am curious how everyone is using their credit cards to help them rebuild credit? What kind of purchases do you use them for and do you PIF or rotate small balance?

Right now, I have 5 CCs - 3 new ones obtained right after discharge and 2 that survived BK. In the past, I didn't care much about the balance. I only made sure they didn't go over their limit and that I made the payment on time.
Recently, I started to pay each card off prior to the closing-date to find out how far I could elevate my credit-score. The first card already reported a $0-balance and my score on Equifax increased by 16 points. One of my cards is an HSBC Orchard card and I discovered that they don't report the statement-balance but the balance on the account on the last business day of each month.

I use my cards on virtually all sorts of purchases. Once in a while, I use them on ATMs as well. 4 cards have a CL of $300 each, the 5th card has a $600 CL. These balances are sufficient for me and I can keep them under control. 2 of the cards are secured.
The $600 CC is the card where I'm going to leave a small balance (below 9% of the CL) in order to get the best credit-utilization. Currently, my credit-reports are reflecting a CC-usage of $717 of $1,800 (about 40%), spreaded over 4 of my 5 accounts. When I'm done, it should be something like $50 of $1,800 (2-3%) on only one account. Let's see what happens then..

I was thinking about paying our utility-bills with one of my CCs, but here in Florida - especially in the summer - the electricity-bill already exceeds the CL of 4 of my 5 cards...

So 9 out of 10 times, I'm using my CCs either on gas or groceries.

[IBroke]

I am curious, but for those of you suggesting credit not be used after BK is this the same advice you would give for those looking to buy a house in the next 7-10 years?

Maybe I'm the wrong guy to ask since I'm suggesting to re-establish credit after BK anyway but if you are planning on buying a house in a couple of years, NOT rebuilding credit can cost you - in several ways (approval and interest-rate).

[TwentyTwelve]

I have one card that I use sporadically and pay off immediately. Typically I use it only if I have to rent a car, hotel, etc.

[Amy26]

If you play around with the balances on your cards, it is interesting to see that actually having zero debt reporting on the cards lowers your scores. This is assuming that you have reached the top of the bucket where nothing else you can do will raise your scores. I found that if I have zero balances on all my cards I lost about 6 points. If I have anything over zero ... sometimes like .50 cents even, I get those 6 points back. Credit is so screwy...