Daily Archives: October 28, 2011

Frugal Parents: Using Credit Cards as Debit Cards

(Photo source)

This is a series I put together to share my parents’ frugal habits. My family grew up poor, but it never felt like it to my sisters and I. It was only when I grew older that I realized how much my parents had to scrimp and save, in order to give my sisters and I the life we have now. Some of these stories are funny, some sad and I hope that some may also warm your heart.

I got my first credit card in first or second year university.  My parents had warned me against signing up for a credit card with some random company and insisted I didn’t need a credit card.  I refused to take “no” for an answer, and they brought me to our TD Canada Trust branch to talk to an advisor to open a credit card.

Of course, I got the “Student Green Visa” with a $500 limit. I was ecstatic! 🙂

I didn’t know a thing about what a credit card was.  I just really wanted to “build up my credit”. When I didn’t even know what it really meant.

My parents knew that I could get into big trouble with a credit card, but they also knew that I would get one sooner or later.  So, instead of having me figure out things the hard way, they just me that I could use a credit card but I had to pay it off IN FULL every month.

When I asked my dad about the “minimum payment” amount, he told me to ignore it and pay it in full.  That was the ONLY way to use a credit card.

And so, that’s what I did.  For all of my university career.  I paid off my credit card each and every month.  To me, it was like getting a month of free loan that I had to pay back the next month.

It wasn’t until my first in year into working full-time that I realized that a credit card was a loan that I could take as long as I want to payback (at ~19% interest!).  That’s when I realized how easily I could have slipped up and got myself into a lot of debt, if I wasn’t careful.

My parents use their credit cards as debit cards, paying them off every month in full.  And that’s what they taught me, too.  Even though, I didn’t know the full capabilities at the time I started using my credit card, I think it was for the best.

When did you get your first credit card?  Did you fully understand what a credit card was?  And did you pay them off in full every month?



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