Frugal Parents: Using Credit Cards as Debit Cards

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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?



Filed under Frugal Parents

18 responses to “Frugal Parents: Using Credit Cards as Debit Cards

  1. Great post! My mom was the same way. She said that credit card companies hate customers like her who always pay on time and in full because they never make any money in interest!

    • That’s true! But when a credit card company tries to use that against me (for promotion, rates, etc.), I kindly remind them of the fee that they get from the retailers every time I charge something to my card.

  2. I knew they could be problematic, so I used to go home and e-transfer the exact amount of money I had spent onto the card before the purchase was even posted. Oh to be 19 again! The fact that it was a high interest loan never really crossed my mind.

    • Wow. That is some discipline.

      If I did that, I probably would have spent less on my credit card. I always fooled myself since my balance from my bank statements, of course didn’t account for the unpaid amount of my credit card.

  3. I pay mine off every week, excepting larger purchases which I leave till the end of the month.

    I used to make a note in my cellphone everytime I made purchases on my Visa and keeping a running tally (i’m no good with receipts, and CC transactions take a while to process and show up online). But I’m not that anal anymore.

    • I usually pay mine off every month, although I would like to do it more often.

      One time this back fired on me because I overpaid. My credit card didn’t update and I forgot that I had already paid it.

  4. LC

    I got my first credit card at age 19. Oh, and then another at age 19. That was silly. And you know I never pay my balance in full, lol… but I will one day! When the big balance is finally gone.

    Your parents are my credit card heroes! I hope to teach my future kids the same lessons, one day. Thanks for sharing 🙂

    • Yea, it was a good lesson.

      I think that I wasn’t ready for a credit card and what it meant at the time. If they really told me it was “free” money, I would have not paid attention about the 19.99% interest compounded monthly part. So it’s a good thing that I didn’t really know what a credit card was.

  5. My dad told me NEVER to carry a balance, and I listened because I was afraid of the debt (and him!). So I’ve always used my credit cards like debit cards – I got my first one at 19 and I’m 25 now. Great post!

    • Thanks.

      LOL “My dad told me NEVER to carry a balance, and I listened because I was afraid of the debt (and him!).” I was afraid of my dad, too and that’s why I listened to him.

      Thanks to him, I’m not in any consumer debt! 🙂

  6. I got my first credit card when I was 19. Mine was also a student card and it had a $500 limit. In fact I still have this card today. I don’t use it anymore but it’s my oldest credit card so I am keeping it for credit history purposes. It’s current limit is once again $500 for the reason that I don’t use anymore. Shortly after I got the card, I thought it was so cool that the bank figured I was trustworthy enough to give me one and thought at the time that cash advances were the same as if I charged a purchase on it (so I would have a 21 day grace period to pay)…right, I learned quickly that cash advance meant I would be required to pay interest on, the whopping 19.99%, as soon as the cash was in my hand. Needless to say that I have never taken cash withdrawal on any of my credit cards since and I don’t ever intend to. I have always paid off my credit card each month outside of couple of glitches.

    • Cash withdrawals are expensive.

      I’ve never used a cash withdrawal. But i have used those “Visa Cheques” before – since I didn’t have any cheques at the time. Little did I know that they worked exactly the same was as a cash advance. 😦

  7. Pingback: today’s my birthday | the last seven days | finance.. what?

  8. Just like me and mine 🙂 Exact conversation.

  9. My parents were the same as well. I feel so lucky that they taught me that or I could’ve wound up in a whole lot of debt.

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