Thursday, December 08, 2005

The Seven Phases Of Credit Card Maturity

Phase 1: no credit cards of your own (me until 1989)

Phase 2: low-limit cards in college + minimum payments - who cares about interest expense... it's all about cash flow! (1989 - 1992)

Phase 3 (optional) : can't make monthly minimum payments (a.k.a. wreck your credit) - don't answer the phone because Discover is calling (1992 -1993)

Phase 4: slowly start paying down credit card balances - credit still sucks and all of your consumer lending expenses are way too high (car, mortgage, etc.) (1993 - 1994)

Phase 4.5: you hate all forms of credit and resolve to pay cash (I skipped this one)

Phase 5: use credit cards as a convenience but always pay them off every month - this is where my parents live (1994 - 1999)

Phase 6: start getting reward & miles cards - charge like crazy, receive unusable miles & fret about it (1999 - 2002)

Phase 7: seek out cash-back cards and attempt to use them exclusively (a.k.a. easy money) (2002 - present)

Phase 7 is netting me about $1,100 per year of tax free savings and an extra month's float on $2-4k of expenses. The float's annual value is between $50 - 100 (based on my tax-free muni sweep interest in my E*Trade account).

Some would argue that using balance transfer offers to arbitrage interest rates could be a Phase 8, but I don't like the effort and potential credit score risk.

As soon as I figure out how to link you to my favorite cards, I'll post a follow-up


At 1:58 PM, Blogger ncnblog said...

I think I am stuck at 4.5...

At 2:05 PM, Blogger Early Riser said...

It's not a bad thing to be at 4.5 if it makes you feel better about your own unique financial position.

I'm lucky enough to have the cash flow and saving to pay-off my bills every month without exception. I haven't paid non-mortgage interest (auto, CC, etc.) in at least 3 years.

At 7:14 PM, Blogger Mortgage Center said...

Hey, you have a great blog here! I'm definitely going to bookmark you!

I have a mortgage calc site/blog. It pretty much covers mortgage calc related stuff.

Come and check it out if you get time :-)

At 8:04 AM, Blogger Credit Center said...

Hey, you have a great blog here! I'm definitely going to bookmark you!

I have a credit cards for bad credit site/blog. It pretty much covers credit cards for bad credit related stuff.

Come and check it out if you get time :-)

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At 5:05 AM, Anonymous Plastic Card said...

Nice))))). Very helpful information for all credit cards user.

At 1:18 PM, Anonymous viagra said...

Very helpful tips, Im planning to acquire one CC, but I'm still wondering the cons..

At 10:37 AM, Anonymous Anonymous said...

this sucks.

At 12:45 PM, Anonymous PENNY STOCK INVESTMENTS said...

Credit is best avoided.


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