SmittenCake Posted July 11, 2023 Posted July 11, 2023 What would you consider to be pros and cons of using credit cards
Daddy Posted July 11, 2023 Posted July 11, 2023 I only spend the money I actually have so the concept of a credit card is useless to me. But I remember the last thread about this, the US girlies somewhat NEED to use one to have a good score, or something?
Aston Martin Posted July 11, 2023 Posted July 11, 2023 Pros: less fees for things like booking a hotel or renting a car Cons: they can wreck you financially
dussel_06 Posted July 11, 2023 Posted July 11, 2023 Credit cards is bad news. Don’t. You will think you have more money than you actually have. Banks are the most evil institution in this capitalist world. They will find ways to charge you more. 1 1
sh0ckw4ves Posted July 11, 2023 Posted July 11, 2023 Pros: You can build your credit score, you usually get rewards with them (Cashback, early access to concerts or something, discounts at other places or airmiles), better security in case of a scam/credit card clone etc. Cons: You can rack up debt thinking that you can spend money you don't have, if you don't make a payment in full you usually pay interest (more than you need to) If you find a credit card with a good reward scheme and manage your spending to pay it off in full there is no downsides to a credit card. It's the most secure way to pay and you could get Cashback all while building your credit
Fastlane Posted July 11, 2023 Posted July 11, 2023 Cons – having tried it once, you will not be able to deny yourself this pleasure. There is a risky permissiveness in spending.
brenda-walsh Posted July 11, 2023 Posted July 11, 2023 pros: you have more money to spend cons: you have more money to spend
Rotunda Posted July 11, 2023 Posted July 11, 2023 I grew up with a Dave Ramsey Dad, so neither me nor my siblings have credit cards. My partner does have credit cards though, so a lot of times we’ll place purchases on his cards for the perks/points. Credit cards and credit scores can be tricky. If you have impulse control issues or budgeting issues, it’s very easy to end up spending more money than you have. Interest rates are also a thing that has to be navigated, as you can end up paying a lot more than you originally intended to. On the other hand, credit cards can be really beneficial when it comes to accumulating points/rewards that can be used to buy other goods and services. A new trend I’ve been seeing is people putting all of their wedding expenses on their credit card, then using the points to cover the Honeymoon. Having a good credit history is also valuable as certain jobs, apartments, etc. will check it. If you’re smart/do your research, credit cards can be very good for you. Not all debt is bad. However, a lot of people (especially in the US where so many people live above their means) either don’t know how to navigate the system well or don’t have the impulse control to.
ATRL Administrator Ryan Posted July 11, 2023 ATRL Administrator Posted July 11, 2023 12 minutes ago, SmittenCake said: What would you consider to be pros and cons of using credit cards The pro is it teaches you to manage your money and know your limits with an effective plan to either space out payments or pay it off immediately. The cons are the predatory lending practices companies use to go after people with low credit scores, trapping you into a high APR, monthly or yearly fees and providing little off-ramps onto better cards. I have three main cards I use — my Apple Card (general purchases), JPMC Amazon (mainly for my gaming and any Amazon purchases) and my Capital One Venture X for traveling (flying or even ride shares bc of the rewards). My others I use for subscriptions with a autopay so they stay active but I don’t use them for much. Helps keep my oldest accounts active because it helps with the credit score. 1
Tropez Posted July 11, 2023 Posted July 11, 2023 9 minutes ago, dussel_06 said: Credit cards is bad news. Don’t. You will think you have more money than you actually have. Banks are the most evil institution in this capitalist world. They will find ways to charge you more. This is financially horrible advice. And I suggest no one take it. Credit cards are actually extremely effective at building your credit. If you pay your card in full every month once your statement arrives. It will show you are a good lender. You need to have good credit to own a home, rent an apartment, or even open a loan to start a business. Credit cards can also be used as insurance on purchases. If you bought something with your card it’s automatically insured. Also if someone used your debit card. That’s a major issue for you. If someone used your credit card. You can get your money back much easier.
harwee Posted July 11, 2023 Posted July 11, 2023 fastest to build your credit score, also easiest to destroy it.
Katamari Posted July 11, 2023 Posted July 11, 2023 i just use my credit card on food or vending machine so pretty good so far debit card is for online spending tho that's your money
Katamari Posted July 11, 2023 Posted July 11, 2023 this thread is reminding me of that one episode of Thats so raven where Cory bought a bunch of stuff on a credit card ran up an insane bill don't be like cory
Domination Posted July 11, 2023 Posted July 11, 2023 18 minutes ago, dussel_06 said: Credit cards is bad news. Don’t. You will think you have more money than you actually have. Banks are the most evil institution in this capitalist world. They will find ways to charge you more. I grew up with parents who had this mindset along with others in this thread. It can be true for some people but utilizing credit (read: debt) is almost required for a lot of people to achieve some level of material well-being in the US (houses, cars, business loans, etc.) OT: First thing to know, credit in the US is very different than it is in Europe. When I moved to a big city for the first time when I was 19 I had no credit and was asked to pay several thousands in deposits for every apartment I looked at. Credit history is required for most people to do anything in this country and this becomes more so true with each passing year. I have 5 credit cards, my 3 primary ones being Chase, and am able to get a few thousand dollars of value out of them every year. The key to credit cards is you need to be diligent about your cash flow and make sure you’re not overspending. The second you carry a balance on your card (i.e. you don’t pay your card in full) any value you get from the card goes out the window with the exception of emergencies. The most important thing to realize about credit/debt is that it is not created equal. Mortgage rates right now are between 6-8%, which is extremely high for the housing market and it has slowed the market down considerably. Now compare this to a credit card that has an APY anywhere between 19-29% (!!!). The point being that credit cards are very powerful if you do your research and make good, thoughtful habits with them. If you make a habit of carrying a balance and over spending, you will be in inescapable debt for years.
dussel_06 Posted July 11, 2023 Posted July 11, 2023 14 minutes ago, Tropez said: This is financially horrible advice. And I suggest no one take it. Credit cards are actually extremely effective at building your credit. If you pay your card in full every month once your statement arrives. It will show you are a good lender. You need to have good credit to own a home, rent an apartment, or even open a loan to start a business. Credit cards can also be used as insurance on purchases. If you bought something with your card it’s automatically insured. Also if someone used your debit card. That’s a major issue for you. If someone used your credit card. You can get your money back much easier. If you can pay you spending in full, what’s the use of credit card. Just spend when you have the money. Purchasing items in advance or paying in installment are habits of a person with poor money management and impulse control. And credit cards are their rabbit hole and eventual end. If you want good credit, take a loan. No bank will deny a car loan if you have a good salary. If you missed payments for credit cards for whatever reasons or just paid the minimum, it will do more harm than good on your credit score. And a default credit card can affect your chances of a loan forever. Avoid.
Tropez Posted July 11, 2023 Posted July 11, 2023 Just now, dussel_06 said: If you can pay you spending in full, what’s the use of credit card. Just spend when you have the money. Purchasing items in advance or paying in installment are habits of a person with poor money management and impulse control. And credit cards are their rabbit hole and eventual end. If you want good credit, take a loan. No bank will deny a car loan if you have a good salary. If you missed payments for credit cards for whatever reasons or just paid the minimum, it will do more harm than good on your credit score. And a default credit card can affect your chances of a loan forever. Avoid. Credit cards a literally a loan. Your whole point is not great financial advice at all. What you’re saying is someone who is maxing out their cards, a don’t pay on time. That’s not different from anyone else who spends more than they have with out a credit card. If you have no proof of being able to pay back, no credit history, etc your credit score is actually taking a hit.
harwee Posted July 11, 2023 Posted July 11, 2023 There's some cultural differences going on in the last few posts above. In the US and other countries that resemble most western system, building credit history is very important bec that's literally what they look at everywhere. But in other countries, a salary (like dussel mentioned above) as well as collateral is more or just as important. So in those countries, they look at credit cards in a very negative way. And honestly with good reason, credit card companies are generally trash. That is the reason why millions in the US is trapped, credit card companies are manipulative.
perfect blue Posted July 11, 2023 Posted July 11, 2023 I have like a $50k credit limit in total between 5-7 cards. Using them to pay fixed expenses like utility bills (and immediately paying them off) has built my credit score from nothing and given me thousands of dollars in air travel. I live in the U.S. where credit cards are kind of required to build a credit score.
fauxtography Posted July 11, 2023 Posted July 11, 2023 28 minutes ago, dussel_06 said: If you can pay you spending in full, what’s the use of credit card. Just spend when you have the money. Purchasing items in advance or paying in installment are habits of a person with poor money management and impulse control. And credit cards are their rabbit hole and eventual end. If you want good credit, take a loan. No bank will deny a car loan if you have a good salary. If you missed payments for credit cards for whatever reasons or just paid the minimum, it will do more harm than good on your credit score. And a default credit card can affect your chances of a loan forever. Avoid. If any of y'all are young and live in the US do NOT listen to this user You will have MUCH more difficulties financially in your future (new car, house purchase etc) without building your credit. No doubt if you try to qualify for a home you will be either rejected or charged insanely up the ass for not having a credit history. Quote If you want good credit, take a loan. No bank will deny a car loan if you have a good salary. Without credit you will absolutely pay more interest that way. Don't even get me started on a mortgage. Quote If you missed payments for credit cards for whatever reasons or just paid the minimum, it will do more harm than good on your credit score. While obviously this will impact your credit score and you don't want to do it, it is absolutely fixable within months assuming you tackle/focus on it financially. The best way to approach credit is to do it strategically. If you're worried about spending too much or falling victim to them, find a card that offers a fixed cap. Or get a card that is specific to one use that you're less likely to abuse. (Like a store card) 2
HEAVYONIT Posted July 11, 2023 Posted July 11, 2023 (edited) Awesome benefits depending on the card you have. I’ve been able to take many free international flights and save a lot of money on several others by the points accrued. The key is to pay the card off immediately. If you just want a credit card because you don’t have money to buy **** that you want, don’t do it. The monthly interest fees will kill you. Edited July 11, 2023 by Black Jesus
katykater Posted July 11, 2023 Posted July 11, 2023 (edited) It depends on the country/system/society you live in. Rebuilding after WWII has convinced Northwestern Europe to control your money closely and avoid overspending, debt traps,... Back in the 90s the teachers could ask the entire class whose parents have a credit card. It was like 1/10 of the households had a credit card. After the Financial Crisis (2008-2009) the banks started asking their customers if they want credit cards. Money is created as debt, not as value. The more loans are created, the more money is in the economy. To speed up the money creation, the banks promoted more debt to the masses. The majority of European credit cards are charge cards (pay it off after the next paycheck). You have to search for the few banks in the country offering actual credit (keeping the debt for more than a month and having to pay interest). If you see a European VISA or MasterCard, it functions like American Express for people who can pay it off after the next paycheck. There is no such thing as credit score in European countries. They will calculate income, expenses,... and in countries like Germany it is common to save 1/3 of the price of a house before you can ask for a mortgage. If you want to buy a 300k euro house, you have to save 100k euro. You need high enough income and spending discipline to be able to save 100k euro. This is why there weren't millions of home foreclosures in Northwestern Europe. My personal experience: MasterCard Gold and American Express Platinum Pros: insurances that could make purchases on the Internet safer, extend warranties, save on buying insurance on every ticket I buy,... perks in the airport like lounge access, fast lane,... and perks at hotels Cons: MasterCard Gold costs me 50 euro per year American Express Platinum costs me 780 euro per year and I'm not traveling as much as expected What I want to change: Replace MasterCard Gold with a free VISA card (no monthly fee) at another bank. It's a backup card for all the places that doesn't accept American Express. During my travel I saw the difference between VISA and MasterCard. In rural England, it's VISA territory not accepting MasterCard. Downgrade American Express Platinum to American Express Gold to cut the costs down to 240 euro per year, 4 airport lounge visits per year is more fitting and the new free Amazon Prime perk is more useful for watching movies, series and faster shipping. Credit cards aren't risky for me. My spending is way below the monthly paychecks. Edited July 11, 2023 by katykater
DamianSolo Posted July 11, 2023 Posted July 11, 2023 They're great for the benefits that they offer with cash back rewards and such. The way I look at it, you're making money by spending money—with the right type of credit card. You have to use them intelligently, though. They only really have cons if you don't know how to use them and are always maxing them out—which is the last thing you want to do. I look at my credit card as being an extension of my bank account, not an outside source of additional money to spend, per se. I make money off of it with the cashback rewards I have. I'm only spending on what I would have otherwise spent on anyway. It's all about saving and managing your finances wisely.
cockatoo Posted July 11, 2023 Posted July 11, 2023 If you're an adult in a lot of Europe or the US you need to have a credit card if you ever want to be considered for a loan like a mortgage or something. I never spend more than £1k on mine a month and I've got it set up to pay my credit card statement in full every month by direct debit. That way I never owe these ******* anything but I get the benefit of a better credit rating. If you're worried about spending too much on it then only use it for things like monthly subscriptions and then just continue using your debit card for everything else.
Recommended Posts