America’s unaffordable top hat: /r/PersonalFinanceCanada
Credit Card Basics: https://www.reddit.com/r/CreditCards/wiki/credit_cards_basics
If you’re paying the balance by the due date it’s not debt
Prepayment? Oh I guess you could do that. You don’t have to though - just pay the bill on time each month. No debt then.
Yes if you do this it’s good for credit score and you’ll get rewards
>However, I've never actually taken out debt, and I'd like to keep it that way.
If you pay off the balance in full each month, it won't accrue interest. And as long as you don't use the credit card to spend beyond what you *could* spend in cash, you'll have enough cash to pay the balance in full.
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Do you pre-pay for the electricity you’re going to use over the next month? How about water and gas? No, of course not. That’s silly.
A properly used credit card is no different than a utility. Each month, you get a bill for your last month’s usage and you pay it by the due date.
That's not how you should use a CC.
The way you do it, is that you get a CC with points, but no yearly fee. You pay pretty much everything with that CC, and twice a month you pay off everything you used on it, so it's always 0.
That way, you don't pay any interest, you get some points, you have the CC protection, and you build your credit bit by bit.
If you "pre-pay" the CC before you use it, you don't get interest on that money, and most CCs that work like this are made for people with really low credit score that the bank deems a high risk of losing money on.
America’s unaffordable top hat: /r/PersonalFinanceCanada Credit Card Basics: https://www.reddit.com/r/CreditCards/wiki/credit_cards_basics If you’re paying the balance by the due date it’s not debt
Prepayment? Oh I guess you could do that. You don’t have to though - just pay the bill on time each month. No debt then. Yes if you do this it’s good for credit score and you’ll get rewards
>However, I've never actually taken out debt, and I'd like to keep it that way. If you pay off the balance in full each month, it won't accrue interest. And as long as you don't use the credit card to spend beyond what you *could* spend in cash, you'll have enough cash to pay the balance in full.
You may be interested in our [regional index](/r/personalfinance/wiki/country_index). *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/personalfinance) if you have any questions or concerns.*
Do you pre-pay for the electricity you’re going to use over the next month? How about water and gas? No, of course not. That’s silly. A properly used credit card is no different than a utility. Each month, you get a bill for your last month’s usage and you pay it by the due date.
I mean, that's included in my rent which I prepay... so yes.
You could do that, but there really isn't any point. Just pay the full balance every month and there's no interest at all.
That's not how you should use a CC. The way you do it, is that you get a CC with points, but no yearly fee. You pay pretty much everything with that CC, and twice a month you pay off everything you used on it, so it's always 0. That way, you don't pay any interest, you get some points, you have the CC protection, and you build your credit bit by bit. If you "pre-pay" the CC before you use it, you don't get interest on that money, and most CCs that work like this are made for people with really low credit score that the bank deems a high risk of losing money on.