Using a credit card account to hold small amounts of cash

[aoa321]

Hi all,

Although credit cards cost a lot to service, they are accepted almost everywhere they are very convenient.

My wife and I are trying to seperate a small amount of cash every month to use as personal spending money - for buying small treats like clothes etc.

If I have a credit card with no outstanding balance and put in say €200, I then buy a pair of jeans for €120, the balance on the account is still positive ...€80

Is there any cost involved to me in doing this - or is it just a stupid idea and there is some better way of doing this.

Please note if I don't take the €200 out of the current account at the start of the month chances are it will "disappear", I don't want loads of cash hanging around, and please don't advise me to open yet another savings account !!

 

[Elcato]

Re: Using a credit card account to hold small amounts of cas

Actually afaik the CC company will give you (miniscule) interest while the account is in balance. Why not avail of the 200 as a credit and make sure you pay the money in after the transaction but before the date due ? i.e. Don't pay in 200 in the first month but buy your jeans and then the following month(s) lodge the 200.

 

[Guest]

Re: Using a credit card account to hold small amounts of cas

> Is there any cost involved to me in doing this -

I presume you're aware of the €40 p.a. Government stamp duty on credit cards?

> or is it just a stupid idea and there is some better way of doing this.

One potential problem is that, depending on your discipline and spending habits, you could find yourselves ending up using credit on the card and not just the cash that is "pre-loaded". If you want to avoid this then something like a Laser debit card might be more suitable.

> Please note if I don't take the €200 out of the current account at the start of the month chances are it will "disappear",

I'd be wary of recommending credit cards as a way for people to manage their day to day cashflow unless I knew that they were disciplined enough not to blow the budget (and more) using them. Given what you say above I'm not sure that using a CC in this way is the most suitable approach to cashflow for you. (No offence!).

 

[aoa321]

Re: Using a credit card account to hold small amounts of cas

(No offence!)

thanks for all the helpful replies (no offence taken) - the point is we have to stop using the credit cards for credit !!

 

[Guest]

Re: Using a credit card account to hold small amounts of cas

> the point is we have to stop using the credit cards for credit !!

If you have problems controlling your spending with a CC then I don't think that preloading it with cash for the month is going to help. You might be better off getting rid of the cards if the temptation to go into credit is too much for you to resist. A Laser card on a current account with no overdraft and only limited amounts of spending money (not your life savings!) might be a better idea. These links might also be of general interest in relation to managing debt and establishing sustainable patterns of consumption/spending: