attn: finance nerdz

[pv4]

sup gaiz. want to ask advice on general life (again).

looking into getting a credit card. want to use it as security incase i run across an unexpected bill that i don't have cash-on-hand for, want to use it to increase my credit history, and want to use it to get heaps of frequent flyer points.

need to just get some clarification, that the internet isn't really spelling out for me.

looking into this kind of card: http://www.americanexpress.com/austr...CPID=100036881

amex qantas discovery card. no annual card fee, frequent flyer points for every dollar spent, etc. up to 44days interest free.

so just say i use this for every purchase i make from hereonin. if i keep on top of what i spent, when, and paid the card off in full by the due date, will the credit card cost me absolutely nothing? if i stay on top of it organisation-wise, will it be just like paying for it with my bank account but i get the added advantages of gaining a good credit history, getting points, etc?

when/where does the idea of getting a credit card turn bad? is it just if i don't pay by the right time, and interest/debt fxxxs me over?

cheers to everyone of all sized ears

[boz-monaut]

so just say i use this for every purchase i make from hereonin. if i keep on top of what i spent, when, and paid the card off in full by the due date, will the credit card cost me absolutely nothing?

correct - pay it off by the end of each month and you won't pay interest (you may pay a surcharge on purchases though, particularly on AMEX)

if i stay on top of it organisation-wise, will it be just like paying for it with my bank account but i get the added advantages of gaining a good credit history, getting points, etc?

yes, this is the way it works out - I use my AMEX/VISA account as you would with a regular bank account with eftpos and pay it off prior to the end of each month - I now have enough points for a return flight to Europe

when/where does the idea of getting a credit card turn bad? is it just if i don't pay by the right time, and interest/debt fxxxs me over?

any debt is bad when you can't pay it - if you can pay your card off each month then you're sweet - if you can't even pay off the minimum payment, then you're ****ed

set a very low credit limit (less than 1/3 your month's salary) and you'll be fine

[plague]

Quick answer, yes and no.
I have a Qantas Amex for work stuff. Card is free and interest free period means you won't pay extras if you clear it within the 55 days. Problem is most merchants (petrol stations/retailers/airlines) will charge you extra to use Amex (generally 1.5-3%).
Don't ever get a credit card to rack up frequent flyer points it isn't really worth it (on phone so can't type out all the reasons but if you want to know more let me know).

Your best bet for getting a credit card is to go for a low interest, fee free visa or mastercard from any of the major banks (pretty much all of them will have one). They won't have an awards program but as I said its not worth it.
Hope that helps.
If you want any other info let me know. I use credit cards a lot so have spent way too much time sussing them out.

[russjaybee]

I'm also looking at doing this, looking at the commonwealth bank Awards option that comes with amex + mastercard cc's.

This is a good option IF YOU CAN HANDLE YOUR CASH.
If you only ever buy what you can afford then you wont get in trouble

[snake]

so just say i use this for every purchase i make from hereonin. if i keep on top of what i spent, when, and paid the card off in full by the due date, will the credit card cost me absolutely nothing? if i stay on top of it organisation-wise, will it be just like paying for it with my bank account but i get the added advantages of gaining a good credit history, getting points, etc?

some places charge a credit card surcharge on top of normal costs. taxi's do this, as do some restaurants and retailers. obviously on these occasions, you lose out cos you might end up paying a few dollars more than if you just payed cash.

some retailers, particularly electrical (best example, glenn geary) and homeware will give a slight discount if paying cash (eftpos is cash), so you'll be behind if you do this too.

i wouldn't use getting points as a motivator for getting a credit card - they literally amount to bugger all. i regularly had 1000+ points at the end of each month with an old card, ant this was worth about $4-5. the points will only be useful if you are a big spender, and were going to spend big, anyway. otherwise, imo, they are just a ploy to suck people in. most people aren't as disciplined as you intend to be (i've tried to be, but always found times were i would slip up), hence they make they're money anyway.

yes, this is the way it works out - I use my AMEX/VISA account as you would with a regular bank account with eftpos and pay it off prior to the end of each month - I now have enough points for a return flight to Europe

how long did it take you to save up these points? out of interest, how much did you end up spending to accrue them?

[plague]

Edit: yeah, wot Boz sed.

[pv4]

the frequent flyers points isn't the main motivator behind me getting one, i just figure if i'm forking out coin like i would any other day, getting a reward for it is better than getting sfa. but the surchages, i'll definately look out for. makes complete sense.

thanks for the info guys. i only plan on using it for things that i could afford anyway, so don't plan on being caught out. the only time this wouldn't be the case is if something ridiculous got thrown my way & i didn't have the coin to pay for it, which is the main reason i want to look into one.

[russjaybee]

I have no idea how but my parents have swindled multiple trips to NZ from Frequent Flyer points, will investigate.

[boz-monaut]

how long did it take you to save up these points?

three years or so

out of interest, how much did you end up spending to accrue them?

lots and lots, three years of groceries, bills, shopping - but not more than I would have by using a regular credit card or eftpos - i.e. any time there is a surcharge I pay some other way

[Jetmaster]

Agree with all. As an older sweat, I've had my Gold Mastercard for many years - you get into a routine of paying everything with it and paying the full balance each month. Costs me nothing, apart from the odd "service fee" merchants pass on. It's been linked to Flybuys for a long time too, because it is NAB you get points for all transactions. I manage a gift or a night away each year at least. I also have free travel insurance and extended warranty cover on all purchases.

I rarely have more than $20 in my wallet these days !

[q-money]

never get a credit card if you live in a sharehouse with shitcunce that can't pay bills on time, as you end up being the poor schleb picking up everyone else's bills

also never live in a sharehouse with stoners

[Skirt Boy]

never get a credit card if you live in a sharehouse with shitcunce that can't pay bills on time, as you end up being the poor schleb picking up everyone else's bills

also never live in a sharehouse with stoners

Never live in a share house with chicks period.

Never live in a share house ****ing period.

Back on topic.

If you manage to live now without a credit card why not just get a VISA Debit card?

[belchardo]

other way of looking at credit history (at least in my opinion) is that clearly having a solid savings base when you go for a deposit for whatever means you are probably a good proposition

[hawk]

get ready to get on the gold river. maybe wait till it getz below 1k/oz

[toad]

OK so I have been wondering for a while if these credit card points are legit or not really worthwhile. I currently have a credit card with no points system but a low annual fee because I am quite sceptical of such schemes and thought that the lower fees would more than balance out any points I might "earn", but I'm thinking that I might be wrong. The difference in annual fees is about $60.

Let's have a look at the numbers using Qantas flights as an example. A return trip to Heathrow costs 128,000 points and typically costs about $2000. So each point is worth about $0.015. With AmEx, you get 1 point for every $1 you spend, but only for every $2 you spend with Visa. If we assume you use AmEx, you'll need to spend $60/$0.015 = $4000 per year on the card to "break even" (see assumptions below) at a spend: point ratio of 1:1. If you are paying for most of your bills, groceries etc. with this system then obviously you would easily be spending that sort of money over a year (likely a few or many times over). As an example, let's say you spend an average of $400/week on your card, then you'd spend $20000/year and have $300 worth of points. See you at the Emirates in 6 years bro.

So, on the surface of it, such a scheme may in fact be worthwhile. Additionally, there are often promotions with various places so if you are sensible you might even get points at a ratio of better than 1:1. Maybe boz can provide some insight as to his average point:spend ratio over a few years?

However, there are a lot of assumptions I have made which probably falsely inflate the utility of the points. I've assumed that:
- you are using the points on something that you might spend money on anyway
- you are not getting charged AmEx surcharges (realistically, if you do what boz does and don't use it where you'd be getting charged a surcharge, this would have an impact of the total number of points you'd earn).
- I've ignored that using points can be a PITA sometimes (my understanding is that flights are allocated a certain amount of "points seats" and so even if a flight is not full it might be full for people wanting to use points).
- you will inevitably not use 100% of all points you earn and this needs to be accounted for.
- you don't fall into the trap of buying stuff you don't need just because they are doing a "2 for 1" points promotion or something, which would almost certainly not be worthwhile under any circumstances unless it was something you were going to buy anyway.
- you never forget to pay your credit card balance and accrue interest.

There is also some non-zero probability that you will decide that you are not earning points quickly enough and end up changing to a low-fee card at some stage in the future and that will mean you've wasted $60 every year that you were on the rewards scheme.



-------------

Summary: probably go for the card with the points if you feel like you'll be spending enough to make it worthwhile, and have the discipline to use it "wisely"*. I'll probably change my card based on all of that so someone tell me if i've made any miscalculations.

* everyone thinks they are but not everyone is

[belchardo]

http://www.choice.com.au/reviews-and...dit-cards.aspx

advice from Choice.

[pv4]

I'm thinking the same as you, toad. just waiting for the documents to come through of the mrs changing her name (alpha male over here, sup) and then we're going to get a points-related card. as I said in the OP, I want a credit card as security (i don't have one atm). the points thing, I just feel like if I'm buying things I would have anyway, why not get rewarded for it.

I think we're going with woolworths everyday rewards frequent flyer MasterCard. we shop at woolies each week & fill our cars up with fuel at Woolies caltexs. $89 annual. it's 1point:$1, but 2points:$1 after spending $30. living life as normal, in a certain amount of years getting free flights make it sound pretty good to me.

[belchardo]

giving all your personal data to woolworths....

[pv4]

giving all your personal data to woolworths....

chances are between financial institutes, club memberships, etc etc - woolies or coles already have all our personal data

[plague]

giving all your personal data to woolworths....

I think this post belongs over in the conspiracies thread.