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 Replies: 26 / Views: 2,518 |
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Pillar of the Community
United States
986 Posts |
I was reading through an old John Reich Journal and saw a recommendation by the author of an article to have large lines of credit available at all times. Now, I'm too young to have any credit whatsoever, but has anyone here ever had any first hand experience using credit card checks (and the like) to buy expensive coins? The author of the article was no wannabe, seeing as he has 109 out of 118 varieties for early flowing hair and bust dollars.
Also, if I'm not mistaken Pittman assembled one of the greatest collections of all time, and using credit played a major role in his success. Correct me if I'm wrong here, but I think he took out a loan on his house in order to buy coins from the Farouk sale in the '50s.
So...do you think that using credit to buy expensive coins is a good or bad idea? (this is using those low-interest credit card checks assuming that you can pay off the credit before the big interest hits)
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Valued Member
United States
129 Posts |
I personally would say it's a bad Idea myself- but that's just me lol :)
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Pillar of the Community
United States
1327 Posts |
I would not use a credit card to buy any coins, especally for a large purchase. I feel if you can not aford it then what also I know most dealer will do layaway. But I do no there are people out there who are good with credit card and can get them paid off in a month or in a short amount of time. I have got myself in to much trouble with them so I no longer have any credit card. I use a debit card to buy my stuff from online dealer and the US mint.
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Forum Mom
 United States
5877 Posts |
I would not recommend using credit for coins to add to a collection, but it is a necessity when purchasing for resale. If done right, coins purchased on credit can be sold before the bill comes due and paid from the proceeds. This means that very little working capital is necessary.
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Pillar of the Community
United States
2600 Posts |
Buying on credit for ownership is folly. Using credit to purchase inventory with a known distribution channel and reasonable gross margin is free enterprise and what America was built on. Knowing the difference is what separates credit card debit from capitalism.
Jim
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Pillar of the Community
United States
560 Posts |
There is nothing wrong with using credit if you are responsible and know what you are doing. Never say never...There is a time and place for everything.
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Pillar of the Community
United States
675 Posts |
In the situation that you mentioned you were talking about using the credit card checks and then paying them off before the higher interest hits. Those usually have a low interest rate for 6 months or so. The only thing to be careful of with the checks is that they usually have pretty high transaction fees associated with using them, in addition to the interest. So it would be important to read the fineprint for hidden fees. (I worked for a credit card company for 1 1/2 years a few years ago, so I have seen the fees).
The key is to use the credit responsibly, and if you can get it paid off quickly then you will not only have the coins, but will have improved your credit rating for the future.
Thundercoin
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Valued Member
United States
287 Posts |
Wise use of a credit card is essential to good money management. I personally would not buy coins with credit cards. If you do use the credit card to buy coins, you do have one advantage that is you have the coin in hand and if you need to sell it to pay the off the card, you can.
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Pillar of the Community
United States
2540 Posts |
Sure, Pittman did take a loan on his house, but, all things considered, even then he was nuts.
But his family sure did well in the bargain.
However, if you can't afford the coin, don't buy it.
Credit is not cheap.
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Valued Member
United States
470 Posts |
I use credit cards for all purchaes. It's a convenience factor when buying over the Internet. Just make sure that you have the cash in the bank to pay off the bill in full when the payment comes due. Never carry a balance.
Also, never ever use those credit card checks. You know the ones they send you in the mail with your statement every now and then. When you use those, they are treated like a cash advance and NOT a credit card purchase. Interest starts accruing IMMEDIATELY. Tear them up into little pieces as soon as they arrive.
Hopefully, one day you will be well established in the world and won't be living paycheck to paycheck, although that's how many people still live all during their lives. Once established, sure you can use credit to leverage the market and win big but it's only for those who can afford to lose and there are not many of those.
Coins are coins ..make sure you have money for food, shelter, clothing and utilities first. If you need to use credit for those ...don't be buying any coins on credit.
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Pillar of the Community
 United States
5953 Posts |
If you do not have the money on hand then you cannot afford the coin. that being said I have used 0% interest Credit card checks to buy coins but only when I have had the funds to pay off the balance if you get 3 months interest free credit on a check that can be a significant amount of interest in a money market account. So the few times I have gone over the $1000 mark for coins It has paid to use credit card checks.
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Pillar of the Community
United States
830 Posts |
I look at coin collecting as a hobby, and items for a coin collection should only come from real disposable income, certainly not bought on credit.
Now, if you're an investor rather than a collector, go for it.
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Pillar of the Community
United States
1840 Posts |
It would make sense for the author to hold large lines of credit due to the nature of his collection. I would assume that a flowing hair collection would cost quite a bit and be fairly hard to come by compared to other coins. By keeping a large line of credit the author doesn't have to leave large sums of money in a checking account that yeilds almost no interest. Besides, should two desired rare coins become available around the same time he would still be able to purchase them for his collection even if the actual funds were not immediately available.
Unless you aspire to collect only the rarest of coins and money is not an option, I would not worry about keeping open large lines of credit.
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Valued Member
United States
397 Posts |
I always use my American Express card to purchase coins. However I also always pay the full balance each month. I have even purchased vehicles with my Amex card. If I ever have a problem with the purchase, Amex is behind me, and will make the vendor prove it was right, or issue a credit. I also use the points earned to travel for free. (25,000 in purchases equals a free RT ticket anywhere in the US) Credit is like a car. Use it wisely, and it will serve you well. Be reckless with it, and it will kill you. Like others said. ALWAYS pay off balances each month, or the high interest will get you. MM  PS: As a little bonus, those of us that pay off each month, actually will receive LESS junk from CC companies, because they really do not want us for customers. I actually was turned down once and the lady actually said it was because I paid off balances to fast.....Crazy huh? Edited by morganman
01/03/2007 1:06 pm
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Valued Member
United States
414 Posts |
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Pillar of the Community
United States
1203 Posts |
fengk, I may be wrong, but I really don't think that John Reich was recommending the use of credit cards. As back in the 'good old days' the term 'lines of credit' only meant that you had already been approved for any ammount you could have needed to make a pruchase. So have I ever bought a coin with a credit card? NO. Have I bought coin(s) with an extended line of credit? Yes and it worked perfectly and safely. All it took was a telephone call and I walked out with the coin(s) that I had wanted. Simple as that. |
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Replies: 26 / Views: 2,518 |
Posted 01/02/2007 10:36 pm
