Uhm This should be required learning. Why Credit Cards Are A Scam - Honest Ads
- Thread starter Merv
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Same basically, Cept I pay off once a week, I don't even let it stand. I don't believe in that style of debt
I have a couple cards - one is just to get 0% financing when I have a big purchase at best buy and the other is a general card that got out of hand. My wife and I are staying pretty ok paying on it but it's taking a long time to get to real progress. Luckily my car is nearly paid off and I'm hoping that can help considerably...we will see though.
Card is part of the cost of doing business. If you don't take cards I am not buying from you, simple as that. I don't even have cash and can barely remember the last time I used any. I just use cards for the simplicity, security and rewards.
I pay it off every Friday. Helps me budget and identify expenses real quick and make sure there's nothing fishy. $0 debt and thousands of dollars in rewards that I will be using very soon for travel. Two week Spain all paid trip? Yep.
There's a difference between contactless and chip and PIN.
That said, I have literally zero idea why anyone would want to go back to the days before either. If it's an inexpensive purchase them contactless is quicker than signing was, and if it's an expensive purchase then chip and PIN is far more secure than signing was. As someone who used to work in retail back in the day I would never have dared reject a signature unless it looked literally NOTHING like it. It wasn't secure at all.
i think the delays are two fold, a lack of reliable high speed internet infrastructure, also domestic payment software that is not as mature as in other places where chipped cards have been in use for some time.
Spending 5 minutes on the Internet would teach you how credit cards work and how you should or should not use them so I don't really feel any sympathy for people getting into credit card debts by buying a new TV or a PS5 when they don't have the money to do so.
It's different if you have a medical emergency or you car breaks down and you need to have it fixed to go to work, but you'd probably have to go into debt anyway, so it's not really the credit card's fault.
It's different if you have a medical emergency or you car breaks down and you need to have it fixed to go to work, but you'd probably have to go into debt anyway, so it's not really the credit card's fault.
Oh I'm not disputing that it's possible. But I'd never recommend it. Not worth the risk IMO.
profit that comes at the cost of the financial ruin of others
perfectly put
Your step by step guide works well provided you have some way to guarantee that life will never throw you a curveball. Step 2 becomes a lot harder when you're suddenly hit with unexpected medical bills, repair bills, etc. That's when the credit card company gets you
Always hated the concept of CC especially since my father taught me that they are the devil(they are) unfortunately he has always been bad with money, and I get why he stays away from them. Luckily for me I'm the opposite, and when I realized I was leaving free money on the table for things that I have to pay for Food/Gas i got one. If I dont have the cash on hand to pay for something, I'm not buying it regardless.
I've been on the bad side of credit cards. I hear about people going crazy with credit after college, having fun buying toys they can't afford and digging themselves in a hole and ruining their credit. I wish that's how I ruined my credit, that sounds fun :) In my case, I needed credit cards to pay for emergencies, since I didn't make enough money to build up a savings nor did I think of the concept of an emergency fund even when I could afford it. Then I lost my job and couldn't get a new one for months, and needed those credit cards to survive... that happened a couple times. And during those times of unemployment I of course couldn't make all my payments, so my credit rating got royally hosed, so the only cards I could get were high interest ones with low maximum balances. But I needed them, and they kept sending me offers, so I got more of them.
But here's what's crazy: I eventually worked at improving my credit score and paying off the cards as I could, and they started giving me higher maximum balances and offering me better cards; I played the credit card ponzi shuffle, moving balances from high interest cards to temporary zero interest cards to pay them off faster, and got cards I didn't need because one of the best ways to improve your credit rating is to get another credit card, the more unused credit you have the better. So now if you add it all up I literally have $50,000 in available credit I could spend!
But here's what's crazy: I eventually worked at improving my credit score and paying off the cards as I could, and they started giving me higher maximum balances and offering me better cards; I played the credit card ponzi shuffle, moving balances from high interest cards to temporary zero interest cards to pay them off faster, and got cards I didn't need because one of the best ways to improve your credit rating is to get another credit card, the more unused credit you have the better. So now if you add it all up I literally have $50,000 in available credit I could spend!
I don't have to carry cash. Transactions are quick. I get money back. My monthly spending is easy to see and visualize for budgeting. I don't pay interest because I only spend money that I have. I'm not tempted to make impulse buys like some seem to be. My credit score has been above 800 for years just from using my credit card.
They are only a viable 'tool' if a decent proportion of those who use them are being exploited though.
If everyone just used them as a 'tool' to gather those 'points' for trips to Hawaii etc... then the 'points' wouldn't exist.
I'm not saying it's bad to use them for the points, just that their benefits only exist because of their wider 'scam'.
Taking out a loan is very different than using a credit card. I don't know if you've ever bought a house, but getting a mortgage is a time consuming process. They verify your employer, assets, and look for any inconsistencies that might make them question if you can pay them back. Mortgages are secured loans, so if you stop making payments, their only real recourse is to force you to sell the underlying security and get as much as they can that way. Mortgage companies in general want you to make your payments, as they stand to lose out if you can't pay them back.
Furthermore, the terms of the mortgage are fixed. At the point that you sign the document, you have a defined repayment structure over the lifetime of your loan. They can charge you a penalty if you're late, but it doesn't alter the principal balance of the loan or the interest rate. You can't make a partial payment and add the rest onto your loan balance. But there's no way your payments can change unless you and the mortgage holder agree (typically refinancing or recasting the loan).
Credit cards are a whole different beast - as long as you pay off everything at the end of the billing cycle, there's no interest. But the option to make a minimum payment of less than the full amount gets people into trouble, along with penalty APRs that go above 25% if you don't make payments in full. If you don't pay in full, there's no immediate consequence, like losing your house or your car - the amount you owe just goes up thanks to the insane interest rate. Some people don't notice it, since their minimum payment isn't going up by much, but it's easy for that to snowball into serious amounts of money before people start paying attention to it.
And of course, the other aspect is the business model. Banks tend to want people to make their loan payments, whereas credit card companies stand to make far more money if people make minimum payments on their bills, effectively making short term loans at outrageous interest rates.
Was this infamous story about a couple making just about every conceivable bad choice posted? So many of the poor decisions talk about how easy it was to get loans, credit, etc. without any plan to pay it off. Credit cards and debt are serious. They can be used to move forward, but you can't just ignore it and let it get ahead of you.
www.wealthsimple.com
And remember, when you see people around you who seem to have things that you don't, don't be jealous. They may be up to their eyeballs in debt that you don't have as well. I know people with household incomes well below mine who spend way more than we do. They have little saving, no retirement, and are in real danger of an unplanned life event wiping them out.
Debt: A Love Story | Wealthsimple
In exchange for anonymity, one couple told us the brutal details of their life in the grip of an epic cycle of debt.
www.wealthsimple.com
And remember, when you see people around you who seem to have things that you don't, don't be jealous. They may be up to their eyeballs in debt that you don't have as well. I know people with household incomes well below mine who spend way more than we do. They have little saving, no retirement, and are in real danger of an unplanned life event wiping them out.
I agree with your last sentence. Because how can I be constantly in the red and constantly be in debt and also paying off my card every month? I've never carried a balance in my life. I guess any purchase on a credit card is technically debt since you're not handing over the money immediately, but it's short-term, zero-interest debt that only benefits me, and it's definitely not putting me "in the red." With the rewards, and the fact that zero-interest "debt" actually makes you money as long as your economy/currency isn't deflating, it's actually putting me in the black.
Credit cards and the whole idea of credit is inherently predetory. Whose idea was to make it so that the only way we could ever get a car, rent a place, own a home, or pay a medical bill was to amass debt? Why is it that when I don't use my credit card for a long period of time because I've finally managed to make a decent income that my credit score actually drops? Credit cards are predetory by nature cause the whole system is predetory.
The US credit system is absolute trash.
It rewards people that don't need it and punishes those that do need it.
Like most "American" systems.
America basically has no contactless cards. And if you do have one, almost nowhere has a contactless reader. The "chip" they're talking about here is classic chip and PIN technology, which hasn't even been adopted properly; nobody uses or knows their PIN.
Money is very weird here.
I'm a homeowner. A mortgage is probably the loan that's least like a credit card, I dunno why everyone keeps jumping to that first lol. But there's still quite a bit in common in principle.
This is an interesting point. The "default" for a mortgage is to pay the maximum amount of interest based on the loan amount and interest rate agreed upon, and it all happens upfront, so they force you to think about it a bit more. It's also a structure of immediate, regular penalties that culminate in a catastrophic one, vs. a more subtle penalty that's not advertised as such, and that builds over time. Seems like there's some behavioral psychology at play here.
Most of this is technically true of your mortgage as well though, it's just that people are OK with making "minimum" payments every month because that's how what we've been taught to expect out of a mortgage (it's the default, as I mention above). A lot of mortgages (sadly, not all) allow you to pay extra at any point, which reduces your total interest paid over the life of the mortgage since the extra goes directly against your principal, just like how you can pay off your CC faster (or immediately) to reduce or eliminate interest.
So maybe I had this wrong, and people treat their CC too much like other loans and immediately default to handling them with minimum monthly payments?
Bingo.
Credit card or not spend/budget within your means and you'll be fine.
Reality is credit cards exist and can be useful tools to establish, maintain, and build credit.
They can also be huge pitfalls for those with little fiscal acumen or discipline.
Reality is credit cards exist and can be useful tools to establish, maintain, and build credit.
They can also be huge pitfalls for those with little fiscal acumen or discipline.
This is one thing I do like about AMEX and a reason I went with them as my only card for like a decade - most of their primary cards are just 'charge' cards, you couldn't roll over any debt and every user of the card had to pay off the balance in full each month. Their profit came from charging higher merchant fees and the yearly card fee (from like $90/yr for green card to $450/yr for platinum) rather than interest.
They did add the ability to roll over individual charges on the cards about 10 years ago - you can't roll over the whole card and restrictions vary based on card, and even then the interest rate on those rolled over items is surprisingly low.
I know merchants disliked AMEX for a combination of the higher merchant fees and how they would side with cardholders in disputes pretty much always, but at least for the fees part it seems like modern payment systems like Square have upended that issue. AMEX also does have normal credit cards but it still seems to be a minority part of their business.
I do have a VISA and Mastercard nowadays as well - Mastercard was a backup if AMEX wasn't taken. VISA we got as a shared card (though the AMEX is also shared) just to have each network on hand.
They're useful tools but no doubt there's a lot of predatory behavior on part of the companies. It gets me that I get offers for cards touting all these crazy features and rewards, sign up bonuses and such, introductory APRs of a few percent, then the fine print says a variable APR of up to like 26%. It's insane. It's like the higher your credit score the worse APRs the credit cards you get offered.
They did add the ability to roll over individual charges on the cards about 10 years ago - you can't roll over the whole card and restrictions vary based on card, and even then the interest rate on those rolled over items is surprisingly low.
I know merchants disliked AMEX for a combination of the higher merchant fees and how they would side with cardholders in disputes pretty much always, but at least for the fees part it seems like modern payment systems like Square have upended that issue. AMEX also does have normal credit cards but it still seems to be a minority part of their business.
I do have a VISA and Mastercard nowadays as well - Mastercard was a backup if AMEX wasn't taken. VISA we got as a shared card (though the AMEX is also shared) just to have each network on hand.
They're useful tools but no doubt there's a lot of predatory behavior on part of the companies. It gets me that I get offers for cards touting all these crazy features and rewards, sign up bonuses and such, introductory APRs of a few percent, then the fine print says a variable APR of up to like 26%. It's insane. It's like the higher your credit score the worse APRs the credit cards you get offered.
Growing up in a poor community, it's a fact of life that credit cards are traps. Never get a credit card (or take out loans). It's also a fact that at age 3X, they're all wondering why their credit is so bad and why they can't do anything with it.
Credit is a bogus system in a lot of ways, and it's very punishing to people who try to live conservatively with low incomes.
My mother has a credit card only because she wants one in case of an emergency. She refuses to learn how to use it at a store or at the gas pump. She's only ever purchased things in cash and knows that to be the only way to do things. She bought her last car with cash (check) from the guy down the road.
My sister tanked her credit by defaulting on her student loans and it was just like a "well what did I tell ya?" from my mother.
Society has so many holes in it.
Credit is a bogus system in a lot of ways, and it's very punishing to people who try to live conservatively with low incomes.
My mother has a credit card only because she wants one in case of an emergency. She refuses to learn how to use it at a store or at the gas pump. She's only ever purchased things in cash and knows that to be the only way to do things. She bought her last car with cash (check) from the guy down the road.
My sister tanked her credit by defaulting on her student loans and it was just like a "well what did I tell ya?" from my mother.
Society has so many holes in it.
well since paying someone to handle my money is out of my economic range and my crippling spending addiction makes me blackout while shopping I don't know how I should continue on.
That sucks. I just got $200 for renewing my car registration and car insurance by paying with a new credit card.
I was in germany for a while and they were confused for a second when I explained to them my US card didn't have contact-less payment but my previous older card did. Everything just moved to chip instead. I suppose the chip is far more secure but yeah, a weird step backwards.
I guess most people here have never used credit cards for a large unexpected expenses, emergencies or home renovation - or have businesses that buy products or advertising or credit cards that need to be carried until an account gets paid.
In my life experience it's absolutely valuable to manage your cash through use of credit cards. of course this does not mean to abuse but I don't have issue carrying a balance on occasion
Do people here have 7k just sitting in a bank when you need a new ac or something?
In my life experience it's absolutely valuable to manage your cash through use of credit cards. of course this does not mean to abuse but I don't have issue carrying a balance on occasion
Do people here have 7k just sitting in a bank when you need a new ac or something?
This. Credit cards aren't a "scam", they're a tool. If you can't handle the responsibility, don't get one. Let the rest of us benefit.
I have two credit cards that I only use for credit building purposes, and I pay the balance off every month. It's also nice to have them for an emergency situation.
Yes. I have a savings account purely for home and auto emergencies. It's one of the best things you can do for peace of mind. It took a lot of work to build it but it was totally worth it.
Yes. I have a savings account purely for home and auto emergencies. It's one of the best things you can do for peace of mind. It took a lot of work to build it but it was totally worth it.
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Can someone explain to me the benefit of having multiple credit cards?
I use Creditkarma to monitor my credit, which is excellent (780+), and the only thing it ever points out to me as a "negative" is that I have less than 10 accounts on my history. I only have one credit card, through my bank, that I've had since I was 15, and I mostly use it for large purchases that would otherwise take too much out of my checking account (which I keep low as to avoid completely frivolous spending and motivate me to move more into savings). I do not pay it off completely every month, as I was told (by a former BofA employee who handled credit accounts) that maintaining some balance on the card was better than none. My father also suggested maybe I get another credit card, one with an actual rewards system, to help my credit go even higher.
I rent my home, my car is paid off, and I have no outstanding loan debt. Just kinda feels like getting another CC is pointless to me at this time (if ever). Is it mostly taking advantage of the rewards? What would I do with my bank CC then? Just occasionally use it?
I use Creditkarma to monitor my credit, which is excellent (780+), and the only thing it ever points out to me as a "negative" is that I have less than 10 accounts on my history. I only have one credit card, through my bank, that I've had since I was 15, and I mostly use it for large purchases that would otherwise take too much out of my checking account (which I keep low as to avoid completely frivolous spending and motivate me to move more into savings). I do not pay it off completely every month, as I was told (by a former BofA employee who handled credit accounts) that maintaining some balance on the card was better than none. My father also suggested maybe I get another credit card, one with an actual rewards system, to help my credit go even higher.
I rent my home, my car is paid off, and I have no outstanding loan debt. Just kinda feels like getting another CC is pointless to me at this time (if ever). Is it mostly taking advantage of the rewards? What would I do with my bank CC then? Just occasionally use it?
This is absolutely, 100% false.
You do not need to carry debt on a credit card in America to increase your credit score. You can increase your score simply by using a card.
People really should learn how the system works before making stuff up about it.
Credit offers more immediate protection (and other benefits) than debit.
No. Rewards cards are paid for be merchant fees.
Hell, for years AmEx was a charge card (had to pay in full every month) vs a credit card. It was still profitable.
Why does AmEx have the best benefits and why do some places not take it? Because it usually charges the highest merchant fees.
If you charge enough to offset the yearly fees, either Sapphire is great. If you don't charge that much, just get the branded card for your airline.
I feel sorry for their parents and children. They've made impressively bad decisions about everything.Was this infamous story about a couple making just about every conceivable bad choice posted?
Debt: A Love Story | Wealthsimple
In exchange for anonymity, one couple told us the brutal details of their life in the grip of an epic cycle of debt.
damn homie I was hoping you were offering your expertise as a money manager for people with mental blocks regarding money. maybe I need to find an Anonymous group/AA
There wouldn't be anything to benefit from if there wasn't a sizeable amount of people in debt to the credit card company.
There are multiple benefits to having more than one credit card. First, get credit cards that have higher rewards for different types of purchases. I have one I always use for gas, for instance (except when Discover rotates to 5% on gas stations because that's better). Second, if you have more credit cards and pay them in full every month it boosts your credit score. Third, it increases the amount of credit available to you, which makes it easier to stay under 10% utilization rate across your credit cards to further boost your credit score.
That BofA employee is a dumbass. You absolutely do not need to carry a balance ever to increase your credit score. They are 100% wrong.
A big reason I use my CC for everything beyond rewards is that it will show me how much I've spent in an easily digestible way, allowing me to track spending and keep under my monthly budget.
If I was exclusively using my debit card it would probably result in me spending more than I do now due to losing track.
If I was exclusively using my debit card it would probably result in me spending more than I do now due to losing track.
I don't understand. You'd still see your bank statement for debit card as well?
I do, but I've been fortunate and had good jobs that have let me build up reserves like that.
For larger home renovations, like when I replaced my roof or got my furnace/heat pump replaced, used a HELOC. You'll pay a far lower interest rates in those cases, since the loan is secured by your house. You can still route it through your CC for maximum benefit - charge the whole thing to your card, and then use the money from the loan to pay off the card. Easy points/cashback, and you're not paying 20+% to do so.
CC are not scams, but there is a severe lack of education on finances and for those with no self control, CC may not be for them.
However there's definitely a lot of benefits to using it. Besides the cash back people have mentioned, a lot of them have other perks like doubling the warranty of the purchased item... or providing free insurance on car rentals when traveling, or being able to do charge backs on fraudulent charges.
If you can handle them, yes there's a lot of benefits.
However there's definitely a lot of benefits to using it. Besides the cash back people have mentioned, a lot of them have other perks like doubling the warranty of the purchased item... or providing free insurance on car rentals when traveling, or being able to do charge backs on fraudulent charges.
If you can handle them, yes there's a lot of benefits.