According to PBS Frontline, the term “deadbeat” is commonly used in the credit card industry in the following sense:
“Deadbeat:” Although “deadbeat” normally means “one who does not pay one’s debts,” [Source], the word has taken on a new meaning for credit card companies. For them, “deadbeat” means someone who avoids interest and fees by paying her/his account balance in full each month rather than paying the minimum amount and carrying a balance. Credit card companies do not earn much from these cardholders. About 55 million Americans pay their bills in full each month.
Now, let’s see why it can be tough.
Here is a snapshot of a part of our bank account summary after the first week of this month:
It shows the payments we have made to credit card companies early this month. The sum of all those payments comes to $3753.66. Without getting into details about our student salaries, let me convey our feelings about these payments in a concise manner: OUCH!
A few payments went towards credit cards carrying 0% APR balances, but most went towards cards that had purchasing charges (we charged some big ticket *needed* items on credit cards last month). Although unpleasant, the *ouch-factor* didn’t unsettle us too much because most of the expenses were anticipated…some of them were budgeted, and rest will be *post-budgeted* in the months to come (I will talk about our concept of *post-budgeting* in different post in future). There was also some digging into emergency funds.
It’s tough to part with that kind of money at once, but after my insightful fight against debt in the past, I have developed a habit of paying off the entire balance on all the credit cards at the end of the month (or within the first couple of days in the following month), irrespective of whether the due date is near or not, and irrespective of whether the statement is ready or not. As a result, our purchase balances on all credit cards are reset to zero at the start of every month. Since this habit, I don’t remember the last time we paid interest to credit card companies. 
Of course this paying-entire-balance stuff does not apply to the 0% APR balances (those balances don’t cost us anything).
So yeah, it was hard and all, but as they say - you got to do what you go to do…and we want to be deadbeats for the rest of our lives, so that’s what we got to do.
Feels good to be among the 55 millions folks who don’t get much love from credit card companies.
Are you a deadbeat too? Do you have (or had) a tough time being one?
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I am the deadest beat who ever beat. They all hate me because I never have a balance to transfer and I pay everything in full all the time.
Oh well. Can’t please everyone.
This month (May) I’m going to be making total payments of just under $13k to my credit cards. (I paid my taxes in April with one of my cc’s, and that’s over $9k worth.) Yes, I have enough money in the bank to cover it…. just barely.
I am very much a deadbeat…. I haven’t carried a balance in over a year now. I am tempted to roll over a bit of that $12k (maybe $2k) with a no-fee balance transfer to get an extra month to pay it off, but eh. I may as well pay it off now, since I can afford to.
I’ve been a deadbeat ever since I got my first student AMEX card.
Question, though. Do credit card companies ding your credit score if you are a perpetual deadbeat who never carries a balance? I have heard before it is good to carry a small balance over just to get in their good graces every once in a while. Yea/nay?
Golbguru,
Even though I pay on time, the credit card companies still make money from charging merchants 2-3% of the purchase I make on the card. That’s why I ask for a cash discount on large purchases. Most retailers are happy to give the 2-3% to the customer instead of the credit card company.
Lem and I do the same thing with our credit cards every month also. It’s great saving money on interest eventhough a lot of people do take it forgranted that all this extra cash can be saved.
Lem takes it to the extreme though. He buys something from his credit card, goes home, signs in on the internet and pays it right away. These credit card companies will never get another extra cent from him. It’s a good practice.
Sharon is right. During my early twenties, I was like most young punks who abused their credit cards with useless purchases. Since I’m older (and somewhat less childish), paying off those evil credit cards is an obession I don’t take lightly.
Being a deadbeat is my dream… I was unhappy once to make a debt on my student credit card and since then interest doesn’t free me. I know credit card companies are happy to have me and it irritates me even more to realize that they got me by deception when at college yet…
i’m afraid of credit cards. well, maybe i should say i’m afraid of what i will do if i had a credit card. i would buy air. i really would. my 19 year old has a credit card and i still cannot understand how the credit union gave an unemployed college student a credit card. once that happened i realized this is a very crazy world we live in!
i’m usually a deadbeat. for a few months i was even worse than a deadbeat. i had a refund from a cancelled hotel reservation. at at the same time, for about 4 months, my internet provider seemed to be *refunding* money instead of charging me. so for a few months there, i had a negative balance.
i finally said to my husband…”honey, i think i need to start using my credit card so that they don’t notice this.”
haha. unfortunately they stopped doing this…
All: I am glad to know so many deadbeats read this blog.
Keep it up guys.
Bamatone: As far as I know, you just need to keep the card *active* so that the credit card company doesn’t close your account. To specifically answer your questions:
- No, your credit score will not be hurt if you are a perpetual deadbeat.
- You don’t need to “carry a balance”; even paying the entire balance off after you get your statement counts as being *active*.
Super Saver: It’s true you can get discounts with cash …but such transaction are rare (with the kind of lifestyle we live) ..our *big ticket* items are usually airline tickets, hotel bookings and stuff. Once we saved our bother quite a bit of money by negotiating a cash deal - but in the last 3 years that was the only cash-discount occasion.
So basically, we just try to use the credit cards in the best possible manner.
Sharon & Lem: Lem’s obsession is healthy. However, he has often complained that one of you has another obsession - too much swiping of credit cards.
I am glad Lem is in control. 
Tanyetta: “i still cannot understand how the credit union gave an unemployed college student a credit card.” - that’s how the credit card companies make their money. With 55 million people being deadbeats, they must be looking for someone else.
Shannon: Negative balances …I wish they paid you some interest on it - did they?
I do not have a credit card therfore, Im not categorize in this.
But as for you, Golbguru seems like that way you pay credit cards, you should not care to have one.
You must just charge cards for fun!
Well its all about planning payments:)
Hey, I’m in the “Deadbeat Club” too! I pay off all of my non-0% cards every month, everytime. I just think of them as 30-day interest-free loans. These CC companies have been making tons of money using questionable practices for years. It’s time for the consumers to get smart and “take advantage” of these companies. Turn the tide on them.
Be sure to look at the fine print! There are many websites that have great credit card deals. Be sure to look at the details after their big headline print! If it makes sense for you, go for it (especially the cash back ones!)
I am a deadbeat. I used to think that being a deadbeat affects my credit. Then I realized, it was not that but plain fact that I didn’t have much credit history.
So now I am a religious deadbeat. Like you, I pay off the current balance on both cards every 20th of each month.
I am also a deadbeat. I take it a step further though. I transfer the entire balance of card A to card B (no fee on transfers - don’t worry). (For every dollar transfered I am SUPPOSED to get points for travel/merchandise - see rant below). I then pay off the entire balance of card B within a day or two of the transfers. The result is virtually no interest on either card. To sweeten the deal I get a percentage back on card A transactions.
—- Start Rant —-
Card B no longer wants to give me my points. I am in compliance with all written documentation that I can find on the matter. They are basically saying that points are up to them. Is that fair? What should I do? All I want are my points to book a flight for myself, my wife and my 4 month old to visit the G-parents. Worst comes to worst I will keep card B open with a 0 balance (bad for them and better than closing) and use card A to buy the tickets.
—- End Rant —-
Rather Not Say at the Moment: “They are basically saying that points are up to them. Is that fair? What should I do?” - Technically, the credit card company may be on the legally safe side here. All rewards/promotions always come with a fine print that means something like this “The offer can be withdrawn at any moment” - and they don’t have to even give you anything in writing about the change.
Is it fair? No, absolutely not, but that’s how things are. The best thing you can do is to call up their customer service and politely ask them if they can reinstate your reward points. Generally, if it’s not a policy decision, it might depend on the person who handles your account - try a few nice words and see if it works some magic on him/her.
By the way, you were lucky to get such an offer in the first place. Usually, most cash backs/reward points, etc. are not applicable on balance transfers - probably that’s what they realized after a while and rescinded your offer.
It’s not a good customer satisfaction model and we would like to know which company has done this - so that other people don’t fall for such an offer.
So, in conclusion, try your sweet talk on the CS representative and see if it works; if it doesn’t, just let it go.
As a rule I am a deadbeat in the CC industry sense of the word. I recently subscribed to a credit rating reporting program through Discover and found my rating to be 775 to 790. I wondered why is it not 850. I have had a spotless record and my debt to earnings ratio is within industry standards. So I checked the box that advised how to improve score. It told me to make minumum payments on one of my accounts for a few months. I tried it for a couple of months but I cringed when I see the finance charge. So I gave up and paid it off. My credit rating still remains excellent, but will the 850 ever be attainable?
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