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Can you still get the benefits that a credit card usually gives you (miles, points, etc., the ability of hiring a car, booking a hotel - do you require a CC to book a hotel or only to hire a car?) but not have to worry at the end of the month for prompt payments by prepaying.

Let's say you live with the absolute minimum of credit line a card can give you (let's say 1000) but you still want to live a good life. You get the idea.

Will my account be closed if I make pre-payments?

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Hi superuser, the tone of this "question" is not appropriate, can you edit it to be more neutral? –  C. Ross Jan 7 '13 at 18:39
    
Agreed; bordering on " a rant disguised as a question: “______ sucks, am I right?”' .. refer to the FAQ. Please note this site is not your typical discussion forum; it is a place to get specific questions answered. –  Chris W. Rea Jan 7 '13 at 19:36
    
I don't know about Eastern Europe, but I have an account that's more than 20 years old. Only once has there been any interest charged and that was promptly removed when I yelped about the situation (it was their mistake, they failed to pull a payment they were supposed to.) –  Loren Pechtel Jan 8 '13 at 2:44
    
Post edited. Just a quick note: in this thread the Germans' bank accounts with credit cards were closed down for no reason. From the big German bank, Commerzbank's online branch, Comdirect. In German. Google Translate helps. –  investor Jan 8 '13 at 3:11

3 Answers 3

This way you deny them their main source of income: the possibility of charging interest on you.

You're naive and funny. You want to give them a free loan, and think that you're doing something bad to them. Really? Is that what you think?

The main source of income of the credit card companies is not the possibility of charging interest on you. How possibility can be a source of any income at all? No. Their main source of income is merchant fees. Interest on you is something they enjoy having but can live very well without (they wouldn't give grace periods otherwise, would they?).

You need to understand that if you pay off your statements in full every month - you can only benefit from using your credit cards. You'll be getting (instead of giving, as in your plan) a free loan, and you'll be getting additional benefits such as rewards, cash-backs, and the convenience of aggregating and managing your charges.

By the way I even heard examples that credit card companies closed accounts for prompt payers who payed their balances in full every month.

Indeed strange. I don't know what's going in Eastern Europe, but in some other places where I've lived charging interest on credit card is such a rare occasion, that most people don't even know that such a possibility exists.

Why it's such a stupid world that you actually need credit to hire a car/book a hotel if you are against the institution of credit?

Because when you hire a car or book hotel, you're opening a line of credit. You're allowed to use their property, watch their movies, use their phone, destroy their bathroom and steal their towels. If you don't give them your credit card ahead of time - how can they be sure you're going to pay for all of that? Some places allow cash deposits with additional assurances for those without credit cards, but you have to understand that you have to put something to back that line of credit that you're getting from the hotel/car rental company.

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A large US banking company in the 90s promised a group of customers for a card that they would never ever pay an annual fee. This meant that a large percentage of their customers paid in full each month (goodbye interest income), they also didn't use the card very much. They got the card in case in the future all the cards with better terms were only available with large fees. Rumors were that that the cost of creating the statement each month and mailing them cost more than the fees gained by the one or two small times each customer used the card in a month. The company regretted the promise. –  mhoran_psprep Jan 7 '13 at 11:13
    
@mhoran_psprep - A card issuer can cancel an account and doesn't really need a reason to do so. For the accounts you cite, it would be easy to review the account profitability and every few months, eliminate certain customers. –  JoeTaxpayer Jan 7 '13 at 17:34
    
@JoeTaxpayer A card issuer can cancel an account Maybe in the US. But how about the EU? That is the question. –  investor Jan 7 '13 at 17:49
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@superuser I believe the EU consists of more than 20 different countries with different laws, you have to check your local laws. In the US the credit cards and banks are generally governed by the Federal law, but even here in some states terms and conditions may be different than in others. –  littleadv Jan 7 '13 at 18:33
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@Muro I worked in this industry, so I do know what I'm talking about. I'd like to see some references. I didn't work in this industry in the US, but rather closer to the OP both geographically and geopolitically, so while in the US the interest does provide higher percentage of the overall income, my answer to the OP still stands. –  littleadv Jan 7 '13 at 21:43

Pre-loading only makes sense if you want to use the Credit Card for cash advances. This is typically a terrible idea, however, I have a card that charges no exchange fees and in some countries it's the most efficient way to get cash. In this case the grace period doesn't apply and the only way to avoid exorbitant and very convoluted charges is to pre-load the card. This needs to be a short term transaction, most card issuers will refund any pre-load after while.

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This is the point. I'm also thinking about the ATM free cash advances some cards offer. –  investor Jan 7 '13 at 18:55
    
@superuser don't they have debit/ATM cards in your country? Why do you need to use credit card for ATM? –  littleadv Jan 7 '13 at 20:06
    
Check this for example! Their credit card credit card gives better ATM fees than their very own debit card. –  investor Jan 8 '13 at 2:23

The effort it would take to maintain a credit balance on the account is far greater than the effort of simply paying the card in full each month. In the US, there's a grace period, no interest at all is charged if the bill is paid in full soon after receipt.

Your idea can easily backfire. The bank can decide they wish to refund the positive balance, and you might not have accounted for it when charging the next purchase.

Either way, your idea sounds like a lot of effort with literally nothing to be gained.

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