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Credit cards that offer rewards muddies up the waters here a lot. In that case, it's smarter to put the $400 on the card (and pay it off before paying interest)
by thaumaturgy 7y ago
Credit cards that offer rewards muddies up the waters here a lot. In that case, it's smarter to put the $400 on the card (and pay it off before paying interest) for the 1.5% discount or the air miles or whatever.
- perennate 7y agoI don't believe it muddies things at all. A sub-quote from wilg's quote: > 61 percent of adults say they would cover it with cash, savings, _or a credit card paid off at the next statement_ If some of the other 39% pay with a credit card, they are saying they would carry a balance and pay interest.
- olliej 7y agoIf you’re on the bottom rung I’m guessing your interest rate is >20%, (the max is apparently 29.9%). Divide by 12 and one month of interest rate is as much, if not more, than 1.5% cash back. Using debt to save money depends on starting with a reasonable amount of money.
- ac29 7y ago> put the $400 on the card (and pay it off before paying interest) Depending where you are in the credit cycle, it could be ~30-50 days before incurring any interest.
- olliej 7y agothat "without interest" bit is not dependent on where you are in the cycle: it's 30-50 days from the last point of zero balance. And of course 30 days without interest is basically "you pay it off in a months time". I realized that another part of my problem with this column is of course that "using debt" for many people means a payday loan, which seem to be forever relabelling their "service" to avoid being called a 30%/week credit line.
- robjan 7y agoWhen you pay your credit card, it clears the balance on a first in first out basis. So if I spend 1k today then 1k in 30 days time, I only have to pay 1k to clear the statement balance and avoid paying interest.