Money 102: Credit Cards

Leslie and Ryan talk today about all different kinds of Credit Cards.  With advice from the past to help all of us navigate the murky waters that is credit and debit.

Audio Only Version

EP-33 Money 102 |Credit CardsLife Admin
00:00 / 49:49

Show Notes & Useful Links

Set the table

The differences between credit and debit accounts, and how to use them. And checks do still exist, so need to know how to write them and balance the accounts 

 

Segment 1: Credit cards: quicker easier, more seductive

  • Apply for a card. Companies will seek you out with enticing deals

  • Cards have a limit, how much you can borrow, and an interest rate, what they charge you for what you borrow. 

    • explain promotional rates and penalty rates

    • explain how the interest compounds—unpaid interest owed becomes principal, upon which the credit card company charges more interest. 

  • They give you a min amount due, which is usually just the interest due plus a little actual principal, sometimes plus anything over your credit limit. 

  • Paying: statement balance, current balance, minimum balance, or other. 

  • Recommend statement or current balance. Avoid using credit cards for credit, even at a 0% promo rate because that just works like a balloon note. 

  • Best to have credit cards for emergencies and building credit score, but use like debit cards

 

Segment 2: Debit cards

  • There is a specific amount of money on the card each month. You can’t spend more than that amount. 

  • Similar: charge cards, which are debit cards tapped directly into your account. Like credit cards that automatically pay the principal. 

  • So much easier to budget with. 

 

 

Segment 3: The old and the new, checking accounts and cash apps

  • Checks are like really slow charge cards. Set up like a savings account but with a signature card. Check books get delivered to you. 

  • Recommended because some businesses still use only checks. 

  • Cover filling out a check. Routing number and account number. You will need those for any auto pays and to set up most cash apps.

  • Banking apps/websites keep the account balanced, but go in and see how it is done. Maybe do manually for a month so you know. Balance - amount of check= new balance. Repeat.  

  • Cash apps tie to your checking account or credit card. Recommend former because a fee, typically 3% gets charged for each transaction. 

  • Tied to your checking account, they work like charge cards. If you only use cash in the app, it is more like a floating debit card. A little harder to really budget with because the balance and transactions are sort of invisible to your primary account unless you have a rhythm of accounting for that balance. 

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