Which credit cards for BIG PURCHASES

Discussion in 'Homesteading Questions' started by farmmaid, Oct 26, 2004.

  1. farmmaid

    farmmaid Well-Known Member Supporter

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    We will be building a home this next spring. This winter we are going to watch the sales to buy the appliances, furnature, etc. as well as all the building materials. I know some cards give you points, air miles, and % of money spent back. What is the best deal? The interest rate does not matter because the things will be paid in full each month....Joan
     
  2. agmantoo

    agmantoo agmantoo Supporter

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    Cabela's Visa gives 1 percent on all purchases and 2 percent on Cabela's merchandise purchases. The refund has to be taken in Cabela's products. Keeps me in some nice work boots and some neat shirts along with some hunting supplies. Be cautious on some of your purchases as the warranties may start at purchase!
     

  3. farmmaid

    farmmaid Well-Known Member Supporter

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    Oh my, hubby would LOVE that card...Joan :)
     
  4. chickflick

    chickflick Well-Known Member

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    Something's rotten in Denmark, honey! If you're paying off the charge each month.. why not just WAIT and pay cash? (I am severely ANTI credit card!! :):) You never know What may happen to you, making you unable to pay. Just use cash and a little bit of patience to possibly 'save your financial soul' so to speak! :):)
     
  5. rzrubek

    rzrubek Flying Z

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    Right ON Chickflick :worship: Go cash, don't play with snakes, you will get bit!!!
     
  6. boxwoods

    boxwoods Well-Known Member

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    most stores pay a premium to be able to use credit cards, some up to 7%. So threaten the store, that you will using the credit card unless he gives you a discount. :) negotiate, twist their arm
     
  7. rambler

    rambler Well-Known Member Supporter

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    The best deal is what you will use. Points are often to buy worthless junk, miles are to fly somewhere during off-peak air times.... Cash back is fine if their are no hidden costs, but you gotta read _all_ the fine print. Most cash-back major cards have annual fees, so you will about break even.

    Nothing wrong with paying cash as others say. Less mind games & deadlines & hidden fees.

    If you are buying from a certain box store, using _their_ card often gets you 'free' cash back & some deals, but then you are tied to that store & they make the money back by getting you to always shop there - you spend 3% more on little items to chase down a 1% cash back deal. Be ware of the no-payment for x months deals, as they have a lot of goofy strings attached - mych fine print, and you make a goof & you are on the hook for all the back-interest and more....

    So, what's the best deal? Careful shopping. :)

    --->Paul
     
  8. fin29

    fin29 Well-Known Member

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    To answer your question, I would go with a gas-related card. We just paid $2.07 for regular unleaded. If you pay your balance each month, there's nothing wrong with using a card to make the most of your purchases. You'll find that most of the people who are so adamantely to cards often have a history of messing up.
     
  9. gccrook

    gccrook Well-Known Member

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    I think the best I have seen is a CITI card that gives 2% back on most purchases, and I think 5% back on gas purchases. We use our Discover for evrything right now, as it gives a % back, and it is convenient to use one card instead of several. It is paid off every month, and I usually make about $180 - $ 250/ year in cash back bonus. Free money is free money. Also lets us see in one place our expenditures for the month, and we can quickly gage our spending.
     
  10. desdawg

    desdawg Well-Known Member

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    Credit Cards are constantly changing. Sometimes they change the terms and the interest rate goes way up. Other times, like now, I am inundated with offers for lower rates on balance transfers because they have money they need to put to work. You have to pay attention and manage your accounts. I never close accounts when I pay them off because within a few months I will get an offer for some good terms to get me back on the dole.
    Home Depot usually has a deal going where if you make a major purchase you have 6 months or a year with no payments and no interest. As long as you pay them up in time you can get what you need and defer payment. Once again management is the key.
    I have used credit cards and credit lines extensively to invest in real estate and to start an excavating business. I don't buy silk shirts and VCR's or trips to the Bahama's. I buy investment properties, materials, trucks, backhoes, etc. and have the ability to pounce when an opportunity presents itself or when an emergency occurs. But I spend many hours managing this stuff. It's my job and my responsibility. Credit is just another tool in the toolbox but you have to stay on top of the game.
     
  11. Gary in ohio

    Gary in ohio Well-Known Member Supporter

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    If your paying it off mnthly then your better off skipping the card.
    Most cash back's have yearly fee's, some dont cover large appliances. Many cash back are only "credits" for specific stores. With a 1% cash back, thats only $10 on $1000 purchase. A late or non-payed off account would quickly eat the $10 in interest fees.

    Read and know every loop hole or just skip it pay cash.
     
  12. Snugglebunny

    Snugglebunny Well-Known Member

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    I'm another one for "Don't get a credit card".

    They may seem like an easy way to stretch your bank account, but then something unexpected happens - you're short one month for some reason - someone gets sick, there's some extra bill or something... next thing you know, you're up to your eyeballs in debt with no way out.

    We declared bankruptcy several months ago because of credit cards. My hubby now insists every so often on "Maybe we should get one 'for emergencies'" and I am adamant about it...NO! NO! NO! Because the moment you get one "For a Rainy Day' or "For emergencies" or "Oh, but we'll pay it off every month" or some other excuse, that's when the trouble starts - an emergency will crop up, or it starts raining more than expected, or for some reason, you won't be able to pay it off.

    They are a trap.

    My hubby got a paypal card instead...he puts money in it every so often for a specific purchase or to use online (NEVER use your debit card online if it is linked to your bank account!! My hubby is an IT Technician.)
     
  13. jassytoo

    jassytoo Well-Known Member Supporter

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    I would not use a card either if you have the cash. If you do use a card however, I would go with the lowest interest rate just in case you can't pay off the bill all at once. You never know, especially when building a home. They always cost more than you think they will.
     
  14. terrythetaod

    terrythetaod Well-Known Member

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    I have to agree with fin29 on this one. I make every purchase possible on a credit card. I've used one for almost 20 years and I pay it off each month and have NEVER paid any interest. My current card pays cash back, so if my credit limit covers it I will charge very large items. I put an ATV on it one time.
     
  15. Ed K

    Ed K Well-Known Member

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    We built a home recently and kind of worked your plan. First we took out a construction loan to build a house. The way the loan works is we have to pay about 6% interest on the amount borrowed balance. To avoid paying that interest we took on some credit cards that were offering 0% interest on balance transfers. Some of them were offering the 0% for as many as six to nine months or for rediculously low minimum payments. We shopped for the largest deferral of interest we could get not for the prize of giveback (although we got some of those too) We paid contractors and suppliers initially through the credit cards (or credit card convenience checks)then as the credit cards lost their 0% interest period we submitted those bills to the bank for them to reimburse us.

    Right now we're cutting up and canceling cards that we're done with. You need really good record keeping if you're using lots of cards. Initially you get more offers for deferrals as you use more credit (the sharks smell the blood and start circling) but then as you go the offers stop coming and some cards start rejecting you. Once you start canceling the cards they start offering you more.

    In general I never carry a monthly balance on a credit card and pay all bills at the end of the month. The answer to the responder who asks why use credit if you pay at the end of the month is because the banks are willing to extend you the 0% offers in hopes you get in trouble. Your job is to stay out of trouble by not missing a payment or otherwise triggering the normal high interest rate.

    As some commenters have noted this scheme is a little scary since at one point you have nearly double the mortgage loan borrowed. I've got no answer to that except that I could never have built my home on a pay-as-you-go basis so I had to try to built it on a pay-the-least-as-you-can-while-you-go-basis. Avoiding interest payments was an important part of that.
     
  16. Snugglebunny

    Snugglebunny Well-Known Member

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    That is a DANGEROUS practice! I say that because there are so many factors out of your control...things happen despite all your good intentions, and sometimes one little thing, one little insignificant purchase can grow into something huge whether you want it to or not, whether you can help it or not.

    When you hold the cash in your hands, then you know exactly what you have, no guesses. Why take risks that aren't necessary? Doesn't life have enough risks of its own without making it more complicated than it already is???
     
  17. Ed K

    Ed K Well-Known Member

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    Bunny,

    I hear you... but building a house unless you have incredible amounts of cash (which I don't) is a series of HUGE RISKS. My loan has my property as collateral. Losing that would be way worse than losing all my money but theres no way around that that I can see. Compounding this was that when I started building the new house I owned a mortgage on the old one. Thankfully I've now sold off the old house and paid off or cancelled the credit cards so now I ONLY one really big financial obligation to pay off that should only take till I'm 70 (30 years from now) If I can find a way I'd like to pay an extra payment a year to knock that back to only 55 years old and 15 years but right now I can't see that starting.
     
  18. Rowdy

    Rowdy Well-Known Member

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    My grandfather was very much against credit cards, but he could see some of the good points of the extra buying power/protection, so he did something some people consider odd.

    Once his credit card came in the mail, he took a canning jar, filled it with water, plopped the card in it, then droped the whole mess into the deep freezer, underneath all the meat.

    Whenever he found something he 'had' to have, he had to go home, dig through all the food, then wait for the water to melt. I guess it gave him plenty of time to think through the idea.


    Rowdy
     
  19. MorrisonCorner

    MorrisonCorner Mansfield, VT for 200 yrs

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    I'm with both Fin and Terry on this. If you keep track of your spending and treat your cc as cash (in other words, you have the cash in an account to cover) the cash back/premium deal cc can reap you generous rewards. We currently use the Amazon.com card, which upon sign up gave us $20 to spend at Amazon, then yields us $25 gift certificates at such a rate they are stacking up on my desk. In fact, they are stacking up so quickly, we're going to shift to a GM card, which accumulates points for 7 years against the purchase of a new GM car or truck.

    Since you just know that in 7 years we're going to need a new truck... :rolleyes:

    My father, a depression baby, never used credit. Ever. At age 55 the man went to secure a mortgage and discovered he had NO credit rating. None. He had substantial assets and he couldn't get a mortgage. They finally gave one to his new wife, a woman with no assets who'd lived on cc'ds her whole life. Dad, who thought he'd done it "right" was furious. And went out and got a mess of credit cards. Which he carefully pays off every month. But he also enjoys playing the "premium game" and stacking up freebies for stuff he'd buy anyway.

    I put everything on credit cards, but I also record ever purchase as it happens. There are no surprises at the end of the month, I know to the penny what the bills will be. Paying cash actually requires less discipline... so if you aren't disciplined, stick with cash. If you are, go with credit cards and collect your premiums.
     
  20. rambler

    rambler Well-Known Member Supporter

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    It seems to come down to how well you manage your money & paperwork. The card companies are trying to get you, and we can play these games to try to get them. Your message makes some good points Ed.

    Those convenience checks do come with a fee - you have to read the fine print. Be sure the check you write & your way of paying it eventually is worth this fee, which can be quite high actually. One I got the fee charged per check written was higher than the regular interest rate - not a good deal.

    Another game they have is interest free purchases for 6 or even 12 months on a special deal. But any other purchases you make will then be at the regular card rate. And if you pay off anything, it will be applied to the oldest (supposedly intrest free) debt. You will be charged full rate for the other purchases, and to get out of that intrest you must pay off the whole card. OOPS if you wereplanning on not paying the big intrest free debt, but wanted to pay off your intrest charging debt. You're stuck now! :eek:

    If one doesn't understand these things, the cards can really cost you a lot in the learning process. But well managed, it can work out for you. Also as you said, secured debt can be called in - like the home loan. The credit card debt is mostly unsecured. If the worst happens, you are better off with the unsecured. Well, it's sure an involved process, but kinda how it works out anyhow. :)

    --->Paul