Credit Card Spending Habits

November 14, 2008 at 12:12 pm (credit cards) (, )

How do you spend your money? I decided last month when I began the debt repayment process to NOT use cash (since I would probably spend more, or potentially lose it), but my debit card exclusively (so that I can look up my spending and enter it into my budget). However, there are certain expenses that I will ONLY put on my credit cards.

This brings up internet spending. I refuse to use my debit card on the internet. There are less safeguards if the card number is stolen; a real credit card has a $50 cap on the liability you face if someone mis-uses your card and spends money that you do not. I don’t want to take that chance with my bank account. So there are a few expenses that I have every month that are credit based:

Netflix – my one and only remaining entertainment expense. At $15 (give or take), that’s a bargain. I couldn’t survive without it. I don’t have TV, I don’t rent videos, I don’t go to the movies.

Clearwire – the only interenet I could get. However, I recently completely my year contract and decided to give it up. That’s $35/month I’m no longer spending. But if I still had it, it would go on the credit card.

Internet hosting fees – I have 3 domains (not this free blog) that I maintain, and they are beyond the basic HTML. They charge me yearly $246, and again, since it’s “on file” I’ve given them this card. I get dinged once a year in July.

I think there are a few other yearly “on file” fees I pay that I use my citibank credit card for. I think as long as I don’t do my normal daily disposal income spending on the credit card I’ll be fine.

The only other time I would use it would be for emergencies when my bank account is empty (and right before I get my next paycheck). But if I do that, I have to promise myself to pay it back 100% on the next billing period. After thinking it through I’m thinking it more and more necessary to have an emergency savings fund for those big last minute purchases so that I don’t end up using the credit card… Yes, that’s what I’ll do! More on how much I’ll make it and how I’ll build it up later.

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2 Comments

  1. 213se said,

    Yes, a separate Savings Account is very useful. I’m particularly interested in why you don’t like using your Debit Card online.

    I have a Debit Card linked to my Current Account, should I change it over to my Credit Card then?

  2. debtmaven said,

    I don’t know for 100% certainty, but I have heard that credit cards have a $50 limit liability for purchases if someone makes an unauthorized purchase. Debit cards, which are tied to your bank account, do not have that protection. If someone uses it unlawfully, it will empty until it reaches a $0 balance (not to mention overdraft fees, and overdraft protection on a savings or other account).

    This was an old problem, but to be honest, I’m not sure if that’s been fixed now that identity theft is a more common problem, or if it’s a bank by bank feature. I’d rather be safe than sorry. That’s why I have my netflix charges go to my credit card and will keep it there. Does anyone have anything else to add or correct? Also, I never use anything BUT a real credit card when paying for anything online (or better yet, use PayPal or something like that which can be tied to your checking account).

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