Strongly considering switching everything possible to CC, would make my personal accounting system much easier then the current
Might be obvious, but this is a US question I assume? These systems work differently in Europe.
Yes it is. Very American system. Here in Estonia, to get loans you need proven income and must show your expenses are low enough to allow taking on debt. In the US, you need a ton of history with credit cards and smaller loans I guess, till you can get a mortgage.
The German system is pretty much: never pay late and get no hit. So no credit history is as good as always punctual. So I have never in my life taken on debt as a matter of principle but I would be able to at my convenience.
No. That won’t help you build your credit. Having credit available is surprisingly more important than using it. What you need is bills in your name, bank account, lease you’re on, recurring payments to something like a phone that is auto-pay, direct deposit paycheck, and 100% on-time payments.
Your credit card should be paid off entirely every month or twice-monthly.
That said, if there is no credit card fee, you can often benefit from credit card rewards. I would say use the credit card as much as you want, gaining “points,” as long as you can always pay it off.
Paycheck and auto billing to the same checking account. A seprate general use checking accout thats linked to my debit card, so I have to explicitly move money out of the billing account to spend it. Plus a savings account.
CC is for emergency purchases between paychecks, online purchases, or the rare CC required transaction such as rental equipment (Home Depot for example requires a CC, no other options).
That’s a good plan, but OP is specifically asking about building credit.
If they know that they can afford to pay off all of their expenses, then using a credit card for all expenses and then paying the credit card off at the end of every month (which can be set to auto-pay) is much more effective.
If they don’t know that for certain, then having (for example) one or two small, consistent bills per month on the credit card which they know they can pay off and which they have set to auto-pay would be a better idea.
Ideally, OP would have a credit card which offers some accumulative benefit (for example, a card which gives you points to spend on travel). That benefit can help offset any expense that using a credit card garners, such as if there is a 3% fee for paying a bill with a credit card (common because this is what Visa charges merchants to process payments).
Ideally, you would not use credit cards explicitly for emergency purposes because this will not help you to build credit, will mean that you are only using your credit card when you can’t afford it (this is how people get trapped in CC debt), and your credit limit will not increase. If you truly want to have a credit card on hand for emergency purposes, you want to build up your line of credit (through regularly using and paying it off) so that you can actually manage a significant expense if/when the time comes. It also gives the added benefit of having higher credit available to you (without using it all), which is good for improving your credit score.
Also, better credit cards (which require better credit to obtain) have better benefits and these can become pretty significant over time, whether it’s in the form of points you can spend or other benefits you might get such as customer service which actually does go out of their way to help you when any sort of issue arises.
Also, you cannot do a chargeback on a debit card. If you get scammed or otherwise taken advantage of financially while using a credit card, you can get your money back. You cannot with debit/cash.
I grew up being told that you should avoid credit cards at all cost and the advice was bad. Avoid credit cards if you cannot afford to pay your bills or if you know that you are someone who will overspend.
That’s what I do. I know my monthly income, and everything gets put on the same card each month so I have a dead simple budget to keep track of. Plus all my payments are on virtual cards, so I don’t care about the number getting stolen in a data breach, they’re all locked by vendor. And I can shut off any virtual card any time I want if a company doesn’t want me to cancel.
Side bonus, I use the cash back as our xmas fund. I know friends that use the miles instead.
As I understand it,
Pro: if your card number is stolen and used, it’s much easier to recover the lost money (than with a debit card)
Con: it’s an additional company that is profiling you.
You may want to read more about how credit scores work and how to build credit in the US.
Reporting a payment (such as rent or utilities) to a credit bureau doesn’t always require charging it to a credit card or paying fees.Not sure how any of that works outside the US.
You generally don’t get any benefit to your credit score in the US from paying utility (or housing or medical, etc) bills. If you pay it using a credit card, you do get a benefit due to you technically paying off debt.
Not really.
What I do is I pay all of my bills that do not have fees attached to them for being paid with a credit card with a credit card.
I then pay off that credit card every month.
If it has a fee attached to it, like for instance my water bill, they want $3.95 to pay with a credit card, I just pay with direct bank transfer.
The goal is to save money. By doing this I get points back and I build my credit history of months and months and years of spending and paying, showing that I am a reliable consumer.
All told, the points and everything else on my credit cards nets me something like $300 a year, so it’s not groundbreaking, but my credit score is 837.
If you would have to pay for the privilege of using a credit card, then it’s not worth it to use a credit card.
I have a comparable score and my credit card gives me thousands of dollars in benefits every year because I pay for almost everything with it and then pay it off every month.
