Budget Vs Credit

[aggressiveGrey]

Yes I've searched my bb threads with some success lol but without answer.

So I have 1/3 of my credit limit in budget (which I bought a washing machine with)

Then I have 2/3 of my limit in straight.

That being said I'm with FNB. I wonder to myself, was I wise using budget, straight seems to be monthly too just with minimum 5% installments without a definite period.

I saw someone else in a different thread say "don't use budget" but without explaining.

What am I missing about certain facts about budget?

What is the general rule of thumb between each.

 

[koffiejunkie]

I think what people mean when they say "don't use budget" is really "don't use your credit card as a short/medium term loan. Why? Because you're being shafted with interest. A credit card is best used if you know you'll pay it in full within the interest-free term.

I've never used budget on a credit card, so maybe I'm missing some important piece of the puzzle, but my understanding is the only difference is in the minimum repayment terms. It makes sense if it's an emergency and you don't have money and need to know that you can parcel out the minimum payments over a long enough period.

I'm going to assume the interest rate is the same. At 5%, the above only really makes sense if the term is longer than 20 months. If you take something on budget for 12 months, the minimum payment would be 8.3% - not sure which takes priority then.

Bottom line is, unless you pay in full every month, credit cards rob you blind. Try to avoid using them for short/medium term finance.

 

[Snyper564]

I think what people mean when they say "don't use budget" is really "don't use your credit card as a short/medium term loan. Why? Because you're being shafted with interest. A credit card is best used if you know you'll pay it in full within the interest-free term.

I've never used budget on a credit card, so maybe I'm missing some important piece of the puzzle, but my understanding is the only difference is in the minimum repayment terms. It makes sense if it's an emergency and you don't have money and need to know that you can parcel out the minimum payments over a long enough period.

I'm going to assume the interest rate is the same. At 5%, the above only really makes sense if the term is longer than 20 months. If you take something on budget for 12 months, the minimum payment would be 8.3% - not sure which takes priority then.

Bottom line is, unless you pay in full every month, credit cards rob you blind. Try to avoid using them for short/medium term finance.

Spot on unless it was an absolute emergency always settle your credit card in full pref that month or at the latest in the interest free period usually 55-60days. Credit cards have some of the highest interest rates there are. Wherever possible rather try and save a few months and buy cash.