Teach me about credit cards

[echidna]

Well the phone is monthly, but I don't know the exact date it will come out of direct debit, it could come on a low wage week or right after we pay bills. Same for the electricity and water, which are quarterly. We are waiting for the water bill, we don't even know when that is, we haven't gotten one since we moved in in November. With the electricity bill, we have peak, shoulder and off peak periods, all with different cost rates. So I can only work it out by the maximum, but its all so confusing.

Can you prepay a credit card? Like pay money to it when you aren't owing anything?

[paradise lost]

Well the phone is monthly, but I don't know the exact date it will come out of direct debit, it could come on a low wage week or right after we pay bills. Same for the electricity and water, which are quarterly. We are waiting for the water bill, we don't even know when that is, we haven't gotten one since we moved in in November. With the electricity bill, we have peak, shoulder and off peak periods, all with different cost rates. So I can only work it out by the maximum, but its all so confusing.

You will be able to work out the rates hun or else how could THEY work them out to bill you? I had economy 7 in my old place which means 7 hours at night have a different rate. Here the first 670 kWh of each quarter are 7.5pence each and all the rest are 3.5pence each. It IS confusing but it is totally doable and once you're on top of it you'll feel much better and more in control.

Can you prepay a credit card? Like pay money to it when you aren't owing anything?

You can yes, but they won't pay you ANY interest - you'd be far better putting the money into a savings account where it can accrue interest and having the direct debits going out of that.

Bx

[echidna]

Well I do know the electricity bill is coming sometime in March. I'll get DF to get the receipts/emails from the last bills, so I can add it to the calendar on the fridge where I work out the finances. I guess I got a bit slack in the last couple of weeks, probably since I went to the doctor and went on antidepressants. I'll get back into keeping track of things, but DF really needs to save or give me money and I can save.

WRT prepaying on a CC, it would be when I don't quite have enough money before the bill is due, and the owing part would be on the CC. Say the electricity is $300, and I have $170, we put $170 on the CC and pay the bill with the CC, of a $1000 limit we'd only be owing $130 plus interest.

I think I'll leave the credit card until later, and just preplan all the finances. DF thinks I stress about money too much. For good reason! He doesn't worry at all! And I keep telling him and trying to get him to know what is happening with our money.

[paradise lost]

Well I do know the electricity bill is coming sometime in March. I'll get DF to get the receipts/emails from the last bills, so I can add it to the calendar on the fridge where I work out the finances. I guess I got a bit slack in the last couple of weeks, probably since I went to the doctor and went on antidepressants. I'll get back into keeping track of things, but DF really needs to save or give me money and I can save.

WRT prepaying on a CC, it would be when I don't quite have enough money before the bill is due, and the owing part would be on the CC. Say the electricity is $300, and I have $170, we put $170 on the CC and pay the bill with the CC, of a $1000 limit we'd only be owing $130 plus interest.

I think I'll leave the credit card until later, and just preplan all the finances. DF thinks I stress about money too much. For good reason! He doesn't worry at all! And I keep telling him and trying to get him to know what is happening with our money.

As Dach said above, almost ALL companies will enter a re-payment or pre-payment agreement with those who are living on restricted means. It would be better to pay the electricity $170 and then agree with them the schedule on paying the further $130 because they WON'T charge you interest for that. You could even arrange to pay the set repayment amount EVERY week as Dach suggested, so that when the bill next comes it is already half or mainly paid.

As a general rule you NEVER accumulate debt to pay debts unless you are forced to. And when i say forced to i mean you will be homeless unless you pay a whack of rent right NOW. Utility companies only charge penalties when you don't tell them what you're doing (i.e. when you neither pay the bill nor tell them when and how you plan to). Overall it will be far cheaper to pay the electricity company what you owe than risk oweing it longer and accumulating more debt on a CC.

I'm sorry about the depression. I had depression for several years about a decade ago and i found that the 2 problems of 1) feeling so overwhelmed by simple or not-so-simple tasks that i ended up avoiding or ignoring them, and 2) feeling utterly out of control with everything, fed into one another so the more overwhelmed i felt the less i did and the less i did the more overwhelmed i felt. I think that whatever your DF thinks you are both wise and mature to be really thinking about your money situation. The difference between struggling and managing is just what you DO with your money. I have friends who don't manage their money and no matter how much they have it's not enough - they just manage it badly and never QUITE get on top of the things they need to pay.

Bx

[Malyna]

I wouldn't get a credit card - they only mess up the budget and get you into more debt.

Most electricity providers allow you to make a fortnightly payment, so if your electricity bill is $300 a quarter, just divide it by the number of pays you get over a quarter ($50 a fortnight) - then you don't need to worry about paying those bills. I think you need to need to get a float up in the account to cover the full amount of the bill (depending when you start).Telstra used to do it, but I think you have to ask them about it.

Everytime I've got a credit card and bought things I thought I needed, its just turned out to be a nightmare trying to find the extra money to repay the debt. I would save money every time - although like folks have said if it is an emergency, they are handy in that respect.

The only way to be a saver is to save money and go without until you can afford it. It is surprising how little you 'really need' when you have to save up for it.

Some credit unions do christmas club accounts, where you can put in x amount a fortnight for a year (which might help you budget for your wedding). Of course you can access the money early, but it can help you save.

My experience with reward cards is that they are crap! You need to spend up big to get any 'rewards' and by the time you have done that, with the interest you could have just gone out to the shops and bought exactly what you wanted (rather than just got what brand the credit company had done a deal with).

Go for a no frills card if you need to, with the lowest annual cost, and then put it in a HUGE block of ice in the freezer and don't go near it! Why give some large company your hard earned cash, in the form of interest! Put it in your pocket!!

[Ca Plane Pour Moi]

From the sounds of it, I'd say you're doing the right thing in not getting a card and saving instead. Some people can work CCs and others can't. Sometimes it's circumstances (as in your case, from what I understand) and sometimes it's people - DH can't work one well. Which is why I have one and keep it hidden from him.

The crux of the matter is, if you impulse buy and can't pay off every month then DON'T get a card. The few times I haven't been able to pay off my card is because DH found it and spent it! It's hidden and passworded even more now.

If you do daily shopping with a CC but pay it off in full every month and it helps your budget (ie I pay mine off when I get paid and so don't have to worry about a food budget - and earn interest on the savings and current account without having to transfer money out all the time) then get one. But if you want it for something big and pay it off later - tbh if you really can't save then a bank loan is better for you.

I'd say if you have the money to pay bills in the bank, then by all means pay them with a CC if it makes your life easier - but ALWAYS make sure you have the money in the bank before you put it on the CC! Then DON'T spend that earmarked money. I can do that - I earmark five hundred pounds a month for the CC and any extra I put in the savings. DH can't do that: he sees we have seven hundred in the bank and he spends seven hundred. Which is why I do the finances and he isn't allowed to check the balances any more, especially not just after payday but pre-direct debits!

Can you organise all the finances in your house? Even if it means only letting your DF having a set amount of cash a week and that's it rather than a card for a bit, it may be a good thing. Get on top of the finances and they run fairly smoothly.

Best of luck to you.

[echidna]

I have talked and talked and talked to DF and he just doesn't understand what the big deal is. I can budget much better if I pay all of the bills on the CC and just have that balance to pay back. It makes it easier, because everything comes at a different time. Rent is a Wednesday, health fund is every second Monday, my pay is every second Monday, DF gets paid Tuesday nights, engagement ring payment is the 10th of every month, electricity isn't for another 8 weeks, internet is around about the 14th of the month and phone is around about the 16th. Its all over the place, making finances so hard to keep on top of.

FIL said that he will loan us money when needed and we will pay him back. He proposed we set up a regular savings and also send him a small amount each pay to accumulate and we use that when we're desperate. But I tallied up all of our finances and it would be worse to do that, as we don't have much room to move. Having a credit card means we're able to use that money then and there if we're desperate, rather than waiting a few days for a bank transfer.

I emailed FIL about it all (talked to him this morning too) and I'm sure he will figure out what is best. DF and I both failed to qualify for a CC, but together our finances cover it. So FIL would get one in his name and I will get the secondary card to pay the bills. I am not treating it as free money though, as almost all of our wages would go onto the CC to balance out the bill payments. Currently, when we don't have enough finances to cover a direct debit, we get overdraft fees with our banks. That is much worse than paying interest on a credit card. Mine is $30 a day when I'm in the red. I have already paid three overdraft fees in the last few weeks, and its really upsetting me.