Yup. Funnel your money thru credit and only profit. Don't be a dumbass with debt!
Uhm This should be required learning. Why Credit Cards Are A Scam - Honest Ads
- Thread starter Merv
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Everyone should learn to take advantage of cash back/points/promotions and all that to their advantage but you can do that from taking part on a message board/forum like MyFico's, you don't need a class to know to not spend more than you can afford pay off when it's due, my mother knows that and she's an anti-science Trump supporting dumbfuck.
That said, I started way late and I'm glad I got over my impulsive shit before I got mine. It's also never been easier to keep track of your spending and balances thanks to apps and shit.
Only time I've carried a balance (and the only reason I would) was to make use of the 0% APR promotion on the Amex (along with $350 in bonuses) I got in July last year when I built my new PC and bought a 3090 and still I basically only split the payments in two for what was spent on that card, you also sure as shit don't want to carry over a balance when a promotion like that runs out. I use my cards for everything instead of cash, I rarely carry more than $10 anymore, I have more in coins (mostly dollar coins) in my car that's there in case I forget my wallet and phone or for tips, not that I eat out or anything because you know, Covid.
It's not that hard to have it work for you and avoid pretty obvious pratfalls like over spending and paying interest, scammy annual fees, not all of them are I'm more referring to cards that are more on the "credit building" side like Credit One who are extremely predatory and scummy on top of being owned by a collection agency, if you need to build credit you're much, much better off getting a secured credit card from Discover or a credit union. Not going nuts with the applications for a bunch of cards (and probably getting a bunch of denials) that don't offer anything or retail exclusive store cards that barely get used which a lot of people end up doing because they've generally been easier to get. Only apply for new credit when you need it and only then if there's a good incentive behind it.
Also avoid listening to grifting boomers like D@ve R@msey which I have a feeling the writer of that video at Cracked was a follower of.
That said, I started way late and I'm glad I got over my impulsive shit before I got mine. It's also never been easier to keep track of your spending and balances thanks to apps and shit.
Only time I've carried a balance (and the only reason I would) was to make use of the 0% APR promotion on the Amex (along with $350 in bonuses) I got in July last year when I built my new PC and bought a 3090 and still I basically only split the payments in two for what was spent on that card, you also sure as shit don't want to carry over a balance when a promotion like that runs out. I use my cards for everything instead of cash, I rarely carry more than $10 anymore, I have more in coins (mostly dollar coins) in my car that's there in case I forget my wallet and phone or for tips, not that I eat out or anything because you know, Covid.
It's not that hard to have it work for you and avoid pretty obvious pratfalls like over spending and paying interest, scammy annual fees, not all of them are I'm more referring to cards that are more on the "credit building" side like Credit One who are extremely predatory and scummy on top of being owned by a collection agency, if you need to build credit you're much, much better off getting a secured credit card from Discover or a credit union. Not going nuts with the applications for a bunch of cards (and probably getting a bunch of denials) that don't offer anything or retail exclusive store cards that barely get used which a lot of people end up doing because they've generally been easier to get. Only apply for new credit when you need it and only then if there's a good incentive behind it.
Also avoid listening to grifting boomers like D@ve R@msey which I have a feeling the writer of that video at Cracked was a follower of.
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My mother was so bad with credit cards that I waited way too late to get a credit card. So now my limits are really low and I can only get basic cards and I'm just now doing the "use your credit card like a debit card" thing and I just cashed in some rewards points. I can't wait until I'm able to open up those really awesome cards. I want to take advantage of cash back.
This discussion has come up around here several times before. As always, there are loads of people popping in to inform everyone else that credit cards are so much better than cash or debit as long as you use them responsibly, and that the benefits are great and they never have any trouble paying back because they never spend more than they can pay back in a month anyway.
How good for you.
You are directly benefiting from a system that literally ruins millions of lives. You are the acceptable risk the credit card companies take so that they can get to the whales, the vulnerable people who will end up suffering under a mountain of debt for the rest of their lives. And if something unexpected and expensive happens in your life, leaving you temporarily vulnerable, then you're this close to getting permanently fucked.
But hey, enjoy those cashbacks!
The people who use credit cards responsibly are probably in the majority while the ones who get fucked over by them are in the minority. That doesn't make things right. Credit cards are under various levels of strict regulation in other countries because of how predatory they are.
The worst part about American credit cards is how you're basically forced to use them because the banks control everything. The video in the OP touches on this. If you haven't got a credit card that is constantly slightly in the red and being paid off every month, you can wave goodbye to your chances of getting a house or a car. Why? Because somehow the banks have managed to convince you that the only way they can know if you're a responsible payer is by forcing you to be constantly in debt. I know this is the normal for you Americans here and that this doesn't sound that weird to you. Let me assure you that it sounds absolutely batshit crazy to many (most?) of us who live elsewhere.
Once you repeat something often enough, it starts to make sense. Even if it doesn't.
How good for you.
You are directly benefiting from a system that literally ruins millions of lives. You are the acceptable risk the credit card companies take so that they can get to the whales, the vulnerable people who will end up suffering under a mountain of debt for the rest of their lives. And if something unexpected and expensive happens in your life, leaving you temporarily vulnerable, then you're this close to getting permanently fucked.
But hey, enjoy those cashbacks!
The people who use credit cards responsibly are probably in the majority while the ones who get fucked over by them are in the minority. That doesn't make things right. Credit cards are under various levels of strict regulation in other countries because of how predatory they are.
The worst part about American credit cards is how you're basically forced to use them because the banks control everything. The video in the OP touches on this. If you haven't got a credit card that is constantly slightly in the red and being paid off every month, you can wave goodbye to your chances of getting a house or a car. Why? Because somehow the banks have managed to convince you that the only way they can know if you're a responsible payer is by forcing you to be constantly in debt. I know this is the normal for you Americans here and that this doesn't sound that weird to you. Let me assure you that it sounds absolutely batshit crazy to many (most?) of us who live elsewhere.
Once you repeat something often enough, it starts to make sense. Even if it doesn't.
When I first got my American Express card I paid it off the same day every month. Then they decided to change the due date for my monthly payment without telling me, and I didn't notice until I saw that I had late payment charges a couple of months in a row (which I was able to get reversed). Verdict: Definitely a scam!
Now I pay it off every two weeks.
Now I pay it off every two weeks.
The rewards are subsidized, in part, by the interest payments of people who don't use the credit cards "responsibly". Debt is good business, banks would not offer these things if it wasn't.
The "never carry a balance" advice, while well intentioned and effective on an individual level would rapidly disappear as a strategy if everyone adopted it. In stonks, we would say the trade "got crowded".
On a more macro level, I wonder what the ramifications of a debtless culture would be on the US economy considering how much of our discretionary spending is fueled by debt. Chinese culture, for example, is not big on debt so they had to be coaxed into adopting credit cards as consumerism ramped up. I'm given to understand credit card debt is more common now in China. Alas.
The "never carry a balance" advice, while well intentioned and effective on an individual level would rapidly disappear as a strategy if everyone adopted it. In stonks, we would say the trade "got crowded".
On a more macro level, I wonder what the ramifications of a debtless culture would be on the US economy considering how much of our discretionary spending is fueled by debt. Chinese culture, for example, is not big on debt so they had to be coaxed into adopting credit cards as consumerism ramped up. I'm given to understand credit card debt is more common now in China. Alas.
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Calling credit cards a scam is a bit much. It comes down to personal responsibility. If you drive up a balance on that card, then don't be surprised when interest rates kick in.
I only use my credit card for phone bill and some extraneous purchases that I can afford, since I pay online and I am more comfortable with CC Information than giving my debit info. That's it.
I only use my credit card for phone bill and some extraneous purchases that I can afford, since I pay online and I am more comfortable with CC Information than giving my debit info. That's it.
I've always been surprised by how that credit system works in the US (and I don't know if the rest of the world is the same).
Here if you need let's say a mortgage they ask your to show your income and working status and your bank file to check your saving history and the such. But we don't have the same type of credit score. I've used my credit card 5 times tops in my entire life. I have an account with a little everyday money with a debit card and that's what I use.
Banks try to push you HARD into using credit instead of debit tho.
Here if you need let's say a mortgage they ask your to show your income and working status and your bank file to check your saving history and the such. But we don't have the same type of credit score. I've used my credit card 5 times tops in my entire life. I have an account with a little everyday money with a debit card and that's what I use.
Banks try to push you HARD into using credit instead of debit tho.
big "hOw DOeS MonEy WoRk" vibes. I have an 815 credit score and have never had debt. Debt you can cover with cash isn't actually debt
Don't get mad at us for taking advantage of shitty corporations. Yes, the system is fucked and should be massively overhauled. Us bleeding them of some cash or airline tickets didn't create the problem and isn't what is incentivizing them to fuck over people.
Unfortunately, you need credit to buy anything big such as a house. The key is to pay it off and always think of what cash you actually have available when making purchases. With few exceptions, never spend money that you don't have.
I spent most my life not using credit cards until about 3 years ago. I now have about 10, with the limit ranging from 300-2000. The only one I have a large balance is my care credit card, had some dental work a few months back that was like 2000 out of pocket. Can't really afford 2 grand at once so I've been paying double the minimum but there is no interest if I pay with in 18 months. The other cards are mostly zero balances except like 3, think between those 3 I have like 1000 balance. The other cards I don't really touch just have them to have a higher credit for my credit score.
But in the last 3 years my credit score went from like 450 to 720, but since the 2000 dental charge its back down to about 660. Was still able to get a "new" used car and my previous interest amount was like 27% now its 5.5% So I may not be using them in the ideal way but I am in a better situation now than before I had them.
But in the last 3 years my credit score went from like 450 to 720, but since the 2000 dental charge its back down to about 660. Was still able to get a "new" used car and my previous interest amount was like 27% now its 5.5% So I may not be using them in the ideal way but I am in a better situation now than before I had them.
This is more accurate in why they give out the cash back, points and cash back incentives, a large portion (granted it's mostly a distant second to interest) of their revenue comes from transaction fees. I don't have many in the way of smaller, family owned businesses that I go to but when I've used my card at the one or two I do they charge small fee to cover it.
It feels that most of the points are mostly about USA though the main point of cashback existing only by making purchases more expensive (due to fees that shops have to pay) still sticks. I wonder how people would react if bills included the card fees like they do with taxes.
Credit cards everywhere are viciously stupid. Credit cards in the U.S. are especially viciously stupid.
If you're wealthy and can pay off your cards every month, they often offer free money! That's fun!
If you cannot afford to pay them off every month, you should not own one. Ever. Stop. Don't do it.
If you're wealthy and can pay off your cards every month, they often offer free money! That's fun!
If you cannot afford to pay them off every month, you should not own one. Ever. Stop. Don't do it.
No, the rewards are completely subsidized by the merchant processing fees. The interest and other fees is just additional profit.
For most reward credit cards, the percentage hovers somewhere around 2-3% per transaction plus a set amount per swipe, usually in the $.05-$.10 range. Debit cards are capped at 0.05% + $0.21 per transaction.
They don't lose money at all, the retailer is the one paying for your rewards, if anything, which is a cost built into the pricing model for each product.
These kind of videos are why I avoided credit cards my entire 20's and had virtually no credit when it came time to finance a house and get a car, which screwed me. Ever since I learned how to responsibly use credit (treat it like a debit, always pay off balance, collect rewards on my everyday purchases like groceries, gas, streaming services, bills, never use it to buy something I dont have the cash on hand for), my score jumped way up and I get rewards. I also more easily track my spending using my credit card apps.
I just activated a new card with my largest credit limit to date that I will only use to get the signup bonus and help keep my credit utilization low. And I like having the peace of mind that if I ever did run into an emergency (something always in the back of my mind as a homeowner that has had appliances die out of nowhere), I have the 0% APR for 18 months. But beyond that, once I collect my signup bonus by spending $500 in three months on stuff I already buy (groceries, really) then I'm putting it away.
They should be teaching people how to use credit, not trying to convince them that it's a scam that should be avoided entirely. Not establishing credit history can come back to bite you.
I just activated a new card with my largest credit limit to date that I will only use to get the signup bonus and help keep my credit utilization low. And I like having the peace of mind that if I ever did run into an emergency (something always in the back of my mind as a homeowner that has had appliances die out of nowhere), I have the 0% APR for 18 months. But beyond that, once I collect my signup bonus by spending $500 in three months on stuff I already buy (groceries, really) then I'm putting it away.
They should be teaching people how to use credit, not trying to convince them that it's a scam that should be avoided entirely. Not establishing credit history can come back to bite you.
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I remember watching that video a few years ago. Still cracks me up.
I use my credit card for the cash back rewards and building credit. Who doesn't like free money?
Yes, its dumb to determine credit worthiness is being in debt, but I need to build my credit if I ever need to finance an auto loan or mortgage down the line.
Keep tabs on how much is charged per month and I pay off the balance in full. Be responsible and don't buy anything you can't afford. Keep balance at 0 and literally profit off your rewards card.
I use my credit card for the cash back rewards and building credit. Who doesn't like free money?
Yes, its dumb to determine credit worthiness is being in debt, but I need to build my credit if I ever need to finance an auto loan or mortgage down the line.
Keep tabs on how much is charged per month and I pay off the balance in full. Be responsible and don't buy anything you can't afford. Keep balance at 0 and literally profit off your rewards card.
If everyone were to use the CC as is advised in this thread, won't the CC company go bankrupt? Aren't the advantages the 'smart' people earn paid by those who fell for the 'it's sort of free money' line of thought?
No because they still also make tens of billions on transaction fees that they charge merchants, it's their second largest source of revenue.
Oh I would absolutely love it if people were aware of the card fees. Would instantly shift the minds of sooooo many people.
Like many things, credit cards are a society-level scam.
From what I understand, CC companies earn a profit off the merchants that accept them as payment options and could subsist just from those fees alone. They are taking a cut of the vast majority of all transactions made in the country.
The interest and fees they rack up from debt are just bonuses.
Yeah, the US sounds like a dystopian nightmare when you read stuff like this lol
A Credit card is a fantastic way to track your spending and get rewards for it.
Just don't use it for credit
Just don't use it for credit
I'm against predatory loaning but equating lending with interest to outright usury is dangerous too.
sometimes your washing machine breaks and you can't afford a new one bd micro loans don't exist and it makes sense topay the interest over the time loss on going to the laundromat.
But on the otherhand everyone here saying they do it for the points and never pay interest are being held up mostly by the people shackled in debt.
will also when Covidhit and was unsure of my job security I got asecond card. Having a little credit can make you feel safe too
fuck capitalism tho
sometimes your washing machine breaks and you can't afford a new one bd micro loans don't exist and it makes sense topay the interest over the time loss on going to the laundromat.
But on the otherhand everyone here saying they do it for the points and never pay interest are being held up mostly by the people shackled in debt.
will also when Covidhit and was unsure of my job security I got asecond card. Having a little credit can make you feel safe too
fuck capitalism tho
What you holier than thou european people don't seem to understand is that America is uniquely different and what works for you will never work here. In the end it's just a tool like any other. You just have to be responsible about it. Sure some people get hurt but that's on them, If you know what you are doing it's a perfectly safe tool. That's why I'm never giving up my guns.
Many people with credit cards spends spend spend and come away surprised when they see the bill after a spree "I spent that much already?", but then they have the money to just pay it off or cover it with their monthly income.
Good with money they say, or just making money so they can weather it. But if you're living paycheck to paycheck everything is different surrounding credit cards. That's when you actually have to make decisions, and where "I'll work more hours this week and pay extra" false risk assessments come in.
If I was to look for a CC to build up air travel miles with, what card should I look for? I don't want to pay an annual fee, APR doesn't matter because I pay my balance in full every month and my credit score currently is over 800.
No one here thinks it's normal; everyone is well aware of how batshit stupid it all is. But people have realized that, in the meantime, we're going to have to exploit it as much as it exploits us.
That means that if I have a credit card with a $5000 balance and I only spend $500 a month, I keep spending $500 a month, but use the credit card instead and just pay the bill at the end of the month. That may also mean allowing a $100 purchase drag on a month or two on a card with low interest and with cashback before paying it off. It might mean getting two cards and using one, paying it off, and then switching to another card the next month and paying it off, and then going back to the first one.
It's all ridiculous, we know it's ridiculous, but we do it because the system hasn't changed yet.
credit card companies are able to provide this service to you on the backs of people who don't or can't do this
Then why is everyone in this thread who benefits from them trying to convince everyone else it's not a racket? 'cause it sure sounds like a racket.
Yep.
Videos like the one in the OP are the exact sort of scaremongering that further cripples financial literacy among people who could otherwise be taking advantage of the small, few perks of the system at their disposal.
As mentioned upthread, the card companies pocket a certain percentage of every transaction made from the vendor. Like if you pay for an Amazon purchase with your Visa card, then Visa is going to be pocketing some of the money from Amazon. Even though I've never carried a balance or paid any fees in my ~20 years of using credit cards, my card issuer has made a whole lot of bank off of the things that I've purchased with it.
It's why places like gas stations and small independent shops often have a minimum purchase amount required if you're paying by card; otherwise they'd actually lose money on the transaction because a greater portion of it is going to the card company. It's also part of the reason why you couldn't buy game DLC in straight-up USD at the start and had to buy larger sums of "store points" to exchange for DLC instead; the prices on a lot of the microtransactions in the early days were $1 or less, and the bulk of that would've been eaten up in card fees if bought directly.
That's exactly what I do. I jump between two credit cards after paying them off, then going back to the first one.
I mean I guess if you have no self control/can't pay it off every month? But that's an entirely different issue. Problem is a lot of people can't get a decent credit card cause they have no credit, trapping them in a vicious cycle.
Our household literally uses our credit cards for everything cause we get paid to use them.
Like even my insurance for car/home is on credit card lol.
We've gone on three international vacations fully paid by rewards/cash back, along with countless other purchases (most recently a 75" Sony, thanks Capital One!).
We have certain cards for certain things as well...bills/restaurants/home improvement is one, gas/grocery/pharmacy another, a general no category, and a travel card.
99% of all purchases are done on the first two...sounds more complicated than it is.
Not sure about the US (I imagine the barrier of entry is lower and comes with even better rewards) but in Canada it's almost impossible to be denied a credit card. Although if you are denied, I feel that it's prob for your own protection as the companies are predatory AF.
Our household literally uses our credit cards for everything cause we get paid to use them.
Like even my insurance for car/home is on credit card lol.
We've gone on three international vacations fully paid by rewards/cash back, along with countless other purchases (most recently a 75" Sony, thanks Capital One!).
We have certain cards for certain things as well...bills/restaurants/home improvement is one, gas/grocery/pharmacy another, a general no category, and a travel card.
99% of all purchases are done on the first two...sounds more complicated than it is.
Not sure about the US (I imagine the barrier of entry is lower and comes with even better rewards) but in Canada it's almost impossible to be denied a credit card. Although if you are denied, I feel that it's prob for your own protection as the companies are predatory AF.
I will continue to use a credit card but there are reasons in that video should convince everyone in this thread that there should be some institutional changes.
It is safe to say that credit has been mostly harmful for the average citizen.
It is safe to say that credit has been mostly harmful for the average citizen.
Credit cards are worth it to me simply for not having my debit card stolen from some transaction. I'd much rather have credit stolen and flagged to be reversed than have my debit stolen and lose actual cash.
It's good to see so many responsible people here.
But cards are frequently given to people least able to pay them back in full each month. Those debts start small, with an ever increasing in limit, right up until the point that the card user is doing nothing but servicing part of the debt and then spending what they paid off. Usually just to survive.
So yeah they are a tool, but usually the wrong tool.
But cards are frequently given to people least able to pay them back in full each month. Those debts start small, with an ever increasing in limit, right up until the point that the card user is doing nothing but servicing part of the debt and then spending what they paid off. Usually just to survive.
So yeah they are a tool, but usually the wrong tool.
I remember being told "credit cards are evil. You'll screw yourself over if you get one" as a kid/teenager. I often wonder if that contributed to payday loan companies success.
Payday loan companies make credit cards seem like bargains in comparison. Only 28.8%? What a steal!
Payday loan companies make credit cards seem like bargains in comparison. Only 28.8%? What a steal!
But who uses cash in 2021? Literally the only place I've used cash in over a year is the magic mushroom shop.
A large part of the population is not financially literate and for those people credit cards can be a scam. I don't think the solution is not to get a credit card though, but instead the solution is to get financially literate.
In this context, cash means money on hand or in the bank, as opposed to credit.