Credit Cards are Good
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Credit Cards are Good
It's a complete misnomer to teach people that credit cards are bad. There are so many benefits to using credit cards over using cash.
1. If you get robbed, they won't get any cash since you don't carry any
2. It's so much easier to track your spending when you put everything on a credit card
3. You get cash back when you use your credit card
4. You build your credit in the process
5. Cash burns a hole in your pocket when you have it on you, credit cards prevent that
As long as you pay your bill off every month then you have no problems.
I think everyone should know how to use a credit card. All this talk about credit cards being bad is a complete misnomer.
1. If you get robbed, they won't get any cash since you don't carry any
2. It's so much easier to track your spending when you put everything on a credit card
3. You get cash back when you use your credit card
4. You build your credit in the process
5. Cash burns a hole in your pocket when you have it on you, credit cards prevent that
As long as you pay your bill off every month then you have no problems.
I think everyone should know how to use a credit card. All this talk about credit cards being bad is a complete misnomer.
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Re: Credit Cards are Good
And I forgot to add another great feature of a credit card. You can dispute charges.
Any charges that you believe are improper based on poor service or poor refund policies can be disputed. So you have an advocate in the credit card company that will help you fight charges that you think are wrong.
You can't do that with cash.
Any charges that you believe are improper based on poor service or poor refund policies can be disputed. So you have an advocate in the credit card company that will help you fight charges that you think are wrong.
You can't do that with cash.
Re: Credit Cards are Good
This is mostly true, but not always.Andymoler58 wrote:It's a complete misnomer to teach people that credit cards are bad. There are so many benefits to using credit cards over using cash.
1. If you get robbed, they won't get any cash since you don't carry any
2. It's so much easier to track your spending when you put everything on a credit card
3. You get cash back when you use your credit card
4. You build your credit in the process
5. Cash burns a hole in your pocket when you have it on you, credit cards prevent that
As long as you pay your bill off every month then you have no problems.
I think everyone should know how to use a credit card. All this talk about credit cards being bad is a complete misnomer.
1. Some people spend more when they use credit cards instead of cash.
2. Some people don't have the discipline to pay off the card in full each month.
It is important for everyone to know themselves and act accordingly.
Re: Credit Cards are Good
Not to mention that my discovery card offers: free extended warranties, free price match, free returns if merchant does not accept them (even if product is used), and purchase protection (if you break it within 90 days or it's stolen, up to $500). True, there are limitations on these and most people never use them. I've used some of these a handful of times. It's saved me in the low hundreds easily.
Oh also- great for free exchange rate for currency.
The only potential drawback for me is... do I perhaps spend more because it doesn't feel like real money? Beats me.
Oh also baggage delay insurance, flight accident insurance, and auto rental insurance.
Oh also- great for free exchange rate for currency.
The only potential drawback for me is... do I perhaps spend more because it doesn't feel like real money? Beats me.
Oh also baggage delay insurance, flight accident insurance, and auto rental insurance.
Re: Credit Cards are Good
Some people do not do well with credit. They cannot seem to internalize that the numbers on the bill are actual money. Those are the sorts of people for which this advice is directed. They do much better with envelopes of cash, just to have the tangible feedback.
Think of it like training wheels for money management. It's not meant for everyone, but it's useful to those for which the advice is intended.
Think of it like training wheels for money management. It's not meant for everyone, but it's useful to those for which the advice is intended.
Re: Credit Cards are Good
These are valid points, but I'd be willing to bet that for most, if not all, people on this forum credit cards are a net positive. While they are definitely problematic for many people, almost by definition, Bogleheads are neither susceptible to spending too much, nor carrying high interest credit card debt.jsl11 wrote: This is mostly true, but not always.
1. Some people spend more when they use credit cards instead of cash.
2. Some people don't have the discipline to pay off the card in full each month.
It is important for everyone to know themselves and act accordingly.
I agree with all the reasons that Andymoler58 listed. For me, earning cash back, easily tracking my spending (Quicken), and protecting myself by being able to dispute charges have me using my credit card as much as possible.
Re: Credit Cards are Good
Most of the people on this forum are not the intended audience of the advice.
Re: Credit Cards are Good
It may be that the "less than most" of the people on this forum have the most to learn, and we all have to learn somewhere/sometime or die eating Alpo.Mudpuppy wrote:Most of the people on this forum are not the intended audience of the advice.
Of course this post may be a shill for the credit industry, but I doubt that.
This may be a knee jerk from another recent post wherein all credit card use was deemed bad.
Back to the OP: Yes, I have annual 4 figures of "credit cards are good" payback over many years from their use, and I will continue to use them for that reason.
Are credit cards all good? Absoflippingutely not.
Re: Credit Cards are Good
Credit cards make you more likely to spend
http://www.jstor.org/discover/10.2307/2 ... 6793928343
Credit cards increase the amount you're willing to spend
http://web.mit.edu/simester/Public/Pape ... vehome.pdf
The kind of credit card impacts how much you spend
http://www.jstor.org/discover/10.2307/2 ... 6793928343
Credit cards change your perception of a product
http://www.jcr-admin.org/files/pressPDF ... rticle.pdf
http://www.jstor.org/discover/10.2307/2 ... 6793928343
Credit cards increase the amount you're willing to spend
http://web.mit.edu/simester/Public/Pape ... vehome.pdf
The kind of credit card impacts how much you spend
http://www.jstor.org/discover/10.2307/2 ... 6793928343
Credit cards change your perception of a product
http://www.jcr-admin.org/files/pressPDF ... rticle.pdf
Re: Credit Cards are Good
Just like stocks they are good for people both upper middle class (or higher) who are also disciplined.
The poor mostly likely will be stuck with "bad" credit cards with poor rewards just as the poor can not afford to put money in the market. The undisciplined spend their fortune instead of investing and over extend themselves credit wise.
Myself and many other bogleheads benefit from this situation. I get a nice 2% cash back on credit card purchases and have never paid a dime in interest on my credit card bill. Other people spend too much and pay interest (subsiding my rewards) or pay in cash (subsiding my rewards considering the merchant charges the same price and does not have to give the cc company a cut) or use a credit card with no rewards (subsiding my rewards).
Just as if wages are stagnant and inflation is outpacing them those who can not invest will be hurt much more. Obviously the true decrease in take home pay hurts more if you live check to check. In my case the decrease might mean cutting back on some luxuries, investing a little less, ect. But that can be more than recuperated with market returns. My net worth could easily increase in this scenario which is not really possible for those living paycheck to paycheck.
The poor mostly likely will be stuck with "bad" credit cards with poor rewards just as the poor can not afford to put money in the market. The undisciplined spend their fortune instead of investing and over extend themselves credit wise.
Myself and many other bogleheads benefit from this situation. I get a nice 2% cash back on credit card purchases and have never paid a dime in interest on my credit card bill. Other people spend too much and pay interest (subsiding my rewards) or pay in cash (subsiding my rewards considering the merchant charges the same price and does not have to give the cc company a cut) or use a credit card with no rewards (subsiding my rewards).
Just as if wages are stagnant and inflation is outpacing them those who can not invest will be hurt much more. Obviously the true decrease in take home pay hurts more if you live check to check. In my case the decrease might mean cutting back on some luxuries, investing a little less, ect. But that can be more than recuperated with market returns. My net worth could easily increase in this scenario which is not really possible for those living paycheck to paycheck.
Re: Credit Cards are Good
This is not a rich/poor issue, it is a good credit / bad credit issue. There are plenty of poor people and those of modest means with good credit, and who use credit cards "successfully".Paul78 wrote:Just like stocks they are good for people both upper middle class (or higher) who are also disciplined.
The poor mostly likely will be stuck with "bad" credit cards with poor rewards just as the poor can not afford to put money in the market. The undisciplined spend their fortune instead of investing and over extend themselves credit wise.
Myself and many other bogleheads benefit from this situation. I get a nice 2% cash back on credit card purchases and have never paid a dime in interest on my credit card bill. Other people spend too much and pay interest (subsiding my rewards) or pay in cash (subsiding my rewards considering the merchant charges the same price and does not have to give the cc company a cut) or use a credit card with no rewards (subsiding my rewards).
Just as if wages are stagnant and inflation is outpacing them those who can not invest will be hurt much more. Obviously the true decrease in take home pay hurts more if you live check to check. In my case the decrease might mean cutting back on some luxuries, investing a little less, ect. But that can be more than recuperated with market returns. My net worth could easily increase in this scenario which is not really possible for those living paycheck to paycheck.
Re: Credit Cards are Good
Any such oversimplification on any topic is probably of little practical beenfit. It's not so much that a given thing is good or bad as much as the individual's usage of said thing. However there are cards out there that target subprime consumers and tend to have AF's and other fees, high APR's, etc.Andymoler58 wrote:It's a complete misnomer to teach people that credit cards are bad.
Everyone should read up on all topics versus relying on a "good/bad" dichotomy as the sole understanding of any given topic.Andymoler58 wrote:I think everyone should know how to use a credit card.
Re: Credit Cards are Good
This is big news. Somebody should post about it!
Seriously, credit cards are neither good nor bad. You list some good reasons to have them and some bogus reasons to have them.
And the operative statement is "If you pay your bill off every month." Many people don't. That's why credit cards dangle things like cash back out there.
JT
Seriously, credit cards are neither good nor bad. You list some good reasons to have them and some bogus reasons to have them.
And the operative statement is "If you pay your bill off every month." Many people don't. That's why credit cards dangle things like cash back out there.
JT
Re: Credit Cards are Good
Sincere question: is this thread actionable? I guess you could get credit cards or cut them up as a result of it, but it seems like it's only capable of becoming an opinion war.
- Tim
- Tim
Re: Credit Cards are Good
Not being good at managing money or being an impulse buyer are good reasons not to use credit cards. However, those are problems that should be addressed and eliminated eventually. No one should just "accept" the fact that they are an impulse buyer and could never manage credit.
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Re: Credit Cards are Good
Technically, it's a misconception, not a misnomer.Andymoler58 wrote:It's a complete misnomer...
"Stay on target! Stay on target!"
- RustyShackleford
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Re: Credit Cards are Good
Yes indeed. I completely trashed a tire on a rental car, and they billed me $100+ for it (understandably). I had to spend an hour or so gathering, scanning, and emailing paperwork, but VISA reimbursed me for the entire amount (without asking me questions with potentially embarrassing answers, like "did you drive the car on any rocky and rutty national forest roads ?").JDot wrote:... auto rental insurance.
Re: Credit Cards are Good
Please do not imply that "the poor" are undisciplined and cannot take advantage of credit and investing. Whether or not credit is a good idea is an issue of an individual's discipline and responsibility, not income level, although income obviously affects the size of credit limits individuals receive.Paul78 wrote:Just like stocks they are good for people both upper middle class (or higher) who are also disciplined.
The poor mostly likely will be stuck with "bad" credit cards with poor rewards just as the poor can not afford to put money in the market. The undisciplined spend their fortune instead of investing and over extend themselves credit wise.
My income puts me in the lowest quintile, but I pay my card balances every month, have a good rewards card, and have a credit score in the high 700s. I fairly happy with the mutual funds I own too, although you seem to think stocks are only good for upper middle class or higher folks.
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Re: Credit Cards are Good
I write as few checks as possible to avoid compromising my account and get lots of cash back instead on my many CCs, 3% on gas and groceries, currently 5% on restaurants and 1.5% on everything else including my electric bill. Plus I got several hundred cash back when I got two of those cards, Chase Freedom and Amex Blue. Once I extinguished all my Discover cash back to buy $40 Shell gas cards for $20 each. Got $300 for a price guarantee on a TV bought just prior to Black Friday and a dishwasher repair just out of warranty paid for. Way too much fun doing this. One time Discover offered us $500 to spend a certain amount each month for eight months. We got that. Also got several hundred dollars when I signed up for a BofA card with 3% and 2% on gas and groceries.
Re: Credit Cards are Good
Credit cards are good, the way many people interact with credit cards is bad. That's what it comes down to I think. The 'research' showing that cards make 'you' spend more etc are like all such research, at best valid in general (and not necessarily even that), of less value if you're not 'most people'. And spending more isn't a bad thing for some people either. I think my natural tendency is to spend too little, though I doubt credit cards change it a whole lot.
I like that my grown (early 20's>30) kids hardly use credit cards, oldest just started. It's probably good to get used to adult life without them, though on this too 'YMMV'. After that, it's really a matter of whether you can control yourself and to what degree you do have to control yourself, which varies with income (yes some high income spend too much and some lower income people are models of financial rectitude, but spending problems are not independent of income: they are worse in general for lower income people, and to say otherwise is happy talk BS, sorry). Rather than 'not being actionable' it's really *only* ultimately actionable on an individual level.
I like that my grown (early 20's>30) kids hardly use credit cards, oldest just started. It's probably good to get used to adult life without them, though on this too 'YMMV'. After that, it's really a matter of whether you can control yourself and to what degree you do have to control yourself, which varies with income (yes some high income spend too much and some lower income people are models of financial rectitude, but spending problems are not independent of income: they are worse in general for lower income people, and to say otherwise is happy talk BS, sorry). Rather than 'not being actionable' it's really *only* ultimately actionable on an individual level.
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Re: Credit Cards are Good
It is considered rude and inconsiderate to not carry cash for robbers. It is a thankless and dangerous profession and you'd just be making their job more difficult.Andymoler58 wrote:It's a complete misnomer to teach people that credit cards are bad. There are so many benefits to using credit cards over using cash.
1. If you get robbed, they won't get any cash since you don't carry any
....
- Frankonomics
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Re: Credit Cards are Good
Another positive... if you lose your credit card (or it gets stolen), you can just cancel it (and not liable for charges). Cash, not so much.
Re: Credit Cards are Good
Credit cards are a tool which when properly used are good.
- backpacker
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Re: Credit Cards are Good
Most published research is falsestevep001 wrote:Credit cards make you more likely to spend
http://www.jstor.org/discover/10.2307/2 ... 6793928343
Credit cards increase the amount you're willing to spend
http://web.mit.edu/simester/Public/Pape ... vehome.pdf
The kind of credit card impacts how much you spend
http://www.jstor.org/discover/10.2307/2 ... 6793928343
Credit cards change your perception of a product
http://www.jcr-admin.org/files/pressPDF ... rticle.pdf
http://journals.plos.org/plosmedicine/a ... ed.0020124
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Re: Credit Cards are Good
I wonder if multi-billion dollar companies are better at selling than we are at not buying.
http://finance.yahoo.com/news/yes-credi ... 53118.html
http://finance.yahoo.com/news/yes-credi ... 53118.html
Re: Credit Cards are Good
I thought we were not doing polling anymore
All that is missing is the final Yes or No count
Oh, credit cards work for me, most of the time I leave the house without cash -- that is one more Yes!
All that is missing is the final Yes or No count
Oh, credit cards work for me, most of the time I leave the house without cash -- that is one more Yes!
Don't it always seem to go * That you don't know what you've got * Till it's gone
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Re: Credit Cards are Good
Another benefit that some may not be aware of (at least most people I have told this to are surprised): Many credit cards offer automatic insurance on rental cars when booked and paid using the credit card.
I always decline the insurance that they try to sell me at the rental car counter. Twice I have had things happen to a rental car in my possession, but both were minor and not true "car accidents" (once my car got hit by either a car or a cart while parked in a grocery store parking lot, the other time the windshield got a small crack in it). Both times I simply submitted all the relevant info to Visa, and notified the rental car company that I was having my credit card company handle the claim. Both times Visa paid the full cost that the rental car company requested, and I paid $0.
I always decline the insurance that they try to sell me at the rental car counter. Twice I have had things happen to a rental car in my possession, but both were minor and not true "car accidents" (once my car got hit by either a car or a cart while parked in a grocery store parking lot, the other time the windshield got a small crack in it). Both times I simply submitted all the relevant info to Visa, and notified the rental car company that I was having my credit card company handle the claim. Both times Visa paid the full cost that the rental car company requested, and I paid $0.
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Re: Credit Cards are Good
I find that i am more loose with my money when it's in cash instead of in a checking account or credit cards.stevep001 wrote:Credit cards make you more likely to spend
http://www.jstor.org/discover/10.2307/2 ... 6793928343
Credit cards increase the amount you're willing to spend
http://web.mit.edu/simester/Public/Pape ... vehome.pdf
The kind of credit card impacts how much you spend
http://www.jstor.org/discover/10.2307/2 ... 6793928343
Credit cards change your perception of a product
http://www.jcr-admin.org/files/pressPDF ... rticle.pdf
- nisiprius
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Re: Credit Cards are Good
Yeah, but that side of the story is well presented by banks and credit card companies spending [insert big number here] dollars a year. No fear of people being inadequately informed of the benefits. On the other hand, there isn't an awful lot of money to be earned by telling people the bad things about credit cards, so that side of the story isn't as frequently or as well presented.Andymoler58 wrote:...It's a complete misnomer to teach people that credit cards are bad...
OK, it's two steps removed but my brother knew someone who had twenty credit cards and had reached the point where she was literally spending all of her salary on the minimum payments. This was a perfectly ordinary, sane, intelligent person. There are probably about 10,000 "people who know people I know" so that's one in ten thousand people who got into dead serious real trouble using credit cards.
I definitely spend more when I'm using a credit card than when I am spending cash. In fact, I spend more when I'm using a credit card than when I'm using a debit card. Is that bad? Maybe not, but it's definitely something to know.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
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Re: Credit Cards are Good
Maybe Credit Card companies know more than we do.nisiprius wrote:Yeah, but that side of the story is well presented by banks and credit card companies spending [insert big number here] dollars a year. No fear of people being inadequately informed of the benefits. On the other hand, there isn't an awful lot of money to be earned by telling people the bad things about credit cards, so that side of the story isn't as frequently or as well presented.Andymoler58 wrote:...It's a complete misnomer to teach people that credit cards are bad...
OK, it's two steps removed but my brother knew someone who had twenty credit cards and had reached the point where she was literally spending all of her salary on the minimum payments. This was a perfectly ordinary, sane, intelligent person. There are probably about 10,000 "people who know people I know" so that's one in ten thousand people who got into dead serious real trouble using credit cards.
I definitely spend more when I'm using a credit card than when I am spending cash. In fact, I spend more when I'm using a credit card than when I'm using a debit card. Is that bad? Maybe not, but it's definitely something to know.
Isn't it their very job 24/7/365 to find ways for us to spend more and actually think we are winning or getting a deal? They're in it to make money and if didn't to that they wouldn't continue offering it.
They actually advertise that spending more money will make you more money and consumers buy into it!
Why are shopping carts bigger? Because grocery stores have found that you spend more when using a larger cart. Thanks Costco.
Why do they offer Free Samples at Stores? Because they see an overall increase in sales when "FREE" stuff is given.
I remember watching a Frontline documentary on the "Card Game" and a Banking Industry insider said the following: "Two greatest marketing ideas are: FREE and ALL YOU CAN EAT. People love that." Then went on to talk about how the FREE Checking really isn't free but brought in new customers because we love free stuff. http://video.pbs.org/video/1342007771/
Re: Credit Cards are Good
Several years ago I cancelled all my credit cards, which were all in good standing and not carrying balances. I will admit that Dave Ramsey was a major influence here, though I don't follow all of his advice.
I had been attempting to budget around the credit cards, but found it nearly impossible. One month, I had to budget almost all of the spendable cash to pay off last month's balance (balances were always paid off in full) and "budget" this month's groceries/gas onto next month's credit card balance. That's not a budget! So I looked back to see what that balance was, among other things: a transmission repair, a vacation, and an impulse trip to IKEA, all of which had occurred almost two months ago. I'm trying to budget money for September and July is hanging over my head! That transmission repair should have hit us hard enough that we would have known better than to set foot in IKEA, but the pain was deferred. Not only was the pain deferred, but we couldn't go back and change the decisions. As long as the revolving balance continued, we were likely to put more stuff on the credit card and pay it with next month's balance because saving up cash was "impossible."
I had enough. We spent three months getting the card balances to "real zero" (not just paid off each month, but paid off with sufficient cash flow to not use them). After about a year of zero balances, a basement remodel went over budget (shocker) and we were back on the credit cards. Grr. We didn't make the hard choice to delay the work, and just charged our way to the end of it. After paying that off, we refinanced our mortgage to a 15-year fixed at 3.25%, using our excellent credit scores. And then, we closed all of the cards. Actually CLOSED THEM. It was hard; it had taken over a year to feel comfortable being without them.
Three years later: no credit cards, juicy emergency fund, regular savings, debit cards, no regrets.
I had been attempting to budget around the credit cards, but found it nearly impossible. One month, I had to budget almost all of the spendable cash to pay off last month's balance (balances were always paid off in full) and "budget" this month's groceries/gas onto next month's credit card balance. That's not a budget! So I looked back to see what that balance was, among other things: a transmission repair, a vacation, and an impulse trip to IKEA, all of which had occurred almost two months ago. I'm trying to budget money for September and July is hanging over my head! That transmission repair should have hit us hard enough that we would have known better than to set foot in IKEA, but the pain was deferred. Not only was the pain deferred, but we couldn't go back and change the decisions. As long as the revolving balance continued, we were likely to put more stuff on the credit card and pay it with next month's balance because saving up cash was "impossible."
I had enough. We spent three months getting the card balances to "real zero" (not just paid off each month, but paid off with sufficient cash flow to not use them). After about a year of zero balances, a basement remodel went over budget (shocker) and we were back on the credit cards. Grr. We didn't make the hard choice to delay the work, and just charged our way to the end of it. After paying that off, we refinanced our mortgage to a 15-year fixed at 3.25%, using our excellent credit scores. And then, we closed all of the cards. Actually CLOSED THEM. It was hard; it had taken over a year to feel comfortable being without them.
Three years later: no credit cards, juicy emergency fund, regular savings, debit cards, no regrets.
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Re: Credit Cards are Good
I see nothing posted about the costs credit cards impose on merchants.
Banks charge merchants an interchange fees for processing the transaction. The cost of these fees are by necessity passed onto consumers (a 'hidden tax' on most goods in the form of higher prices). In essence we have privatized money as a digital service at a cost of 1-2% (net, they charge merchants more but kick back a bit as cash back to some cards).
Is this good or bad, you can decide, but don't pretend credit vs cash as a payment mechanism is free. We all pay for cash via the taxes sent to the treasury, we pay for credit cards in the form of higher prices for goods.
Banks charge merchants an interchange fees for processing the transaction. The cost of these fees are by necessity passed onto consumers (a 'hidden tax' on most goods in the form of higher prices). In essence we have privatized money as a digital service at a cost of 1-2% (net, they charge merchants more but kick back a bit as cash back to some cards).
Is this good or bad, you can decide, but don't pretend credit vs cash as a payment mechanism is free. We all pay for cash via the taxes sent to the treasury, we pay for credit cards in the form of higher prices for goods.
- backpacker
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Re: Credit Cards are Good
Yes, merchants should be allowed to charge credit card users additional fees. Until they do, I use rewards cards to recoup the fees I'm forced to pay the credit card companies.Pizzasteve510 wrote: Is this good or bad, you can decide, but don't pretend credit vs cash as a payment mechanism is free. We all pay for cash via the taxes sent to the treasury, we pay for credit cards in the form of higher prices for goods.
Re: Credit Cards are Good
That's clearly not everyone's experience.Andymoler58 wrote:Cash burns a hole in your pocket when you have it on you, credit cards prevent that
For many folks, using cash limits what they can spend, while they tend to spend more when using credit.
- climber2020
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Re: Credit Cards are Good
It's a complete misnomer to teach people that Alcohol is bad. There are so many benefits to using Alcohol.
1. Alcohol reduces the risk of cardiovascular disease in men and women
2. Alcohol raises levels of high density lipoprotein
3. Gallstone and Diabetes may be less likely to occur by using Alcohol
4. You have a fun time in the process
As long as you don't drink yourself into oblivion and become a completely belligerent raging alcoholic like a significant portion of the world population, then you have no problems.
I think everyone should use Alcohol. All this talk about Alcohol being bad is a complete misnomer.
1. Alcohol reduces the risk of cardiovascular disease in men and women
2. Alcohol raises levels of high density lipoprotein
3. Gallstone and Diabetes may be less likely to occur by using Alcohol
4. You have a fun time in the process
As long as you don't drink yourself into oblivion and become a completely belligerent raging alcoholic like a significant portion of the world population, then you have no problems.
I think everyone should use Alcohol. All this talk about Alcohol being bad is a complete misnomer.
- climber2020
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Re: Credit Cards are Good
Just wanted to illustrate the legitimacy of blanket statements such as the above.
Re: Credit Cards are Good
I think for society as a whole they are bad, but this is mostly due to the financial ignorance of the population at large. That being said, we use credit cards for most of our purchases and pay them off monthly.
We use them for:
1) rewards
2) easy of use, auto transaction tracking/budgeting
3) safety (returns, charge backs, etc.)
4) from time to time the other minor benefits they offer
I feel bad using them because:
1) loss of privacy - lots of people know a lot about our buying habits, what we like, who we like, what we've been up to, etc.
2) speeds up transition to a cashless society - although there are some benefits of a cashless society, the Orwellian dangers of cashless and the loss of privacy are very real (at least in my mind)
3) keeps prices up to 3% higher due to the fees merchants are charged
We use them for:
1) rewards
2) easy of use, auto transaction tracking/budgeting
3) safety (returns, charge backs, etc.)
4) from time to time the other minor benefits they offer
I feel bad using them because:
1) loss of privacy - lots of people know a lot about our buying habits, what we like, who we like, what we've been up to, etc.
2) speeds up transition to a cashless society - although there are some benefits of a cashless society, the Orwellian dangers of cashless and the loss of privacy are very real (at least in my mind)
3) keeps prices up to 3% higher due to the fees merchants are charged
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Re: Credit Cards are Good
Funny, I have been robbed six times with my credit cards but never held up for cash.Andymoler58 wrote:It's a complete misnomer to teach people that credit cards are bad. There are so many benefits to using credit cards over using cash.
1. If you get robbed, they won't get any cash since you don't carry any
I guess more accurately the credit company was robbed...
"They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety." - Benjamin Franklin
- RustyShackleford
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Re: Credit Cards are Good
Another advantage (maybe it's already been mentioned) of credit cards is that they make it very easy to monitor your spending. I keep a big spreadsheet, one per year, and I download all my credit-card transactions to it every month or so. I add a column, so that, when I resolve against my receipts, I add a comment (in that column) showing what it's for, e.g. "gasoline", "groceries".
At year's end, by sorting on that column, it's super easy to see what expenses might have tax implications, or just seeing that I'm spending more/less on restaurants than in previous years. Or course, many CC companies send you similar printout each year, but I don't think it's usually available in electronic format, nor is it organized the way I'd like.
Another advantage of these files is answering questions like "when did I buy that piece of furniture years ago, and where, and what did I pay for it ?"
At year's end, by sorting on that column, it's super easy to see what expenses might have tax implications, or just seeing that I'm spending more/less on restaurants than in previous years. Or course, many CC companies send you similar printout each year, but I don't think it's usually available in electronic format, nor is it organized the way I'd like.
Another advantage of these files is answering questions like "when did I buy that piece of furniture years ago, and where, and what did I pay for it ?"
- RustyShackleford
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Re: Credit Cards are Good
Geez, where you been hanging out ?SimonJester wrote: Funny, I have been robbed six times with my credit cards but never held up for cash.
- RustyShackleford
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Re: Credit Cards are Good
Some merchants DO give a slight discount if you pay cash.backpacker wrote:Yes, merchants should be allowed to charge credit card users additional fees. Until they do, I use rewards cards to recoup the fees I'm forced to pay the credit card companies.Pizzasteve510 wrote: Is this good or bad, you can decide, but don't pretend credit vs cash as a payment mechanism is free. We all pay for cash via the taxes sent to the treasury, we pay for credit cards in the form of higher prices for goods.
The best way to recoup money from the CC companies is through signup bonuses of frequent-flyer points. People at flyertalk-dot-com make a science of this (they are a little obsessive, if I do say so myself). I have gotten pretty good at it too, so much so that I can say, with only a hint of irony, that people who actually pay for their airline tickets are suckers
Re: Credit Cards are Good
Was going to say. I've lived most of my life in and very near NYC, I'm in my 50's, and I've never been robbed. I often wonder about other people's (Americans' usually) apparently high fear of crime, but in this case the person is saying it's happened repeatedly. I don't disbelieve it, but it must be a pretty different kind of place, or very different luck of the draw.RustyShackleford wrote:Geez, where you been hanging out ?SimonJester wrote: Funny, I have been robbed six times with my credit cards but never held up for cash.
I don't much worry about losing the kind of cash amounts I carry around routinely (<$200). Losing credit cards is more of a hassle. However I mainly use CC's and my solution to the potential hassle of losing them is to be careful. Again, being robbed is not a likely enough outcome for me to worry about, as it relates to losing a couple of 100 bucks. My concern about robbery to the extent I ever think of it, in certain very limited situations, is about the much less likely still but much more serious case of being injured or killed by a robber.
I agree the gambit of pointing out how 'you' pay for CC cash back via CC charges to merchants lacks logic. It's always brought up eventually on CC threads though. It would only matter if you, individually, could get a discount for not using the CC. Sometimes you can and it goes without saying you should if you can, a discount which exceeds the cash back (doesn't for example at gas stations usually, with 5% from Amex). For the much more frequent cases where there's no discount for cash the merchant charges argument is just irrelevant. And it's not even necessarily true. Just because a merchant is able to achieve a reduction in costs (from CC fees, or landlord rent reduction, or anything else) doesn't mean it would all necessarily be passed on to customers. That's not an 'anti-capitalist' statement, it's just what basic micro-economics tells us: there's some shifting equilibrium price depending on elasticity of supply and demand, and the degree of competition. Anyway on an 'individually actionable' level you can't change the system of merchant charges or competitive dynamics generally, just look for the best deal yourself, which is to use highest % CBCC where there's no larger discount for cash.
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Re: Credit Cards are Good
For those interested, there was a lot of rules related to how merchants can or can't discriminate that were established by the payment brands. A suit and a settlement was eventually reached. In 2012 Visa posted this informative discussion of the impacts http://usa.visa.com/download/merchants/ ... chants.pdfRustyShackleford wrote:Some merchants DO give a slight discount if you pay cash.backpacker wrote:Yes, merchants should be allowed to charge credit card users additional fees. Until they do, I use rewards cards to recoup the fees I'm forced to pay the credit card companies.Pizzasteve510 wrote: Is this good or bad, you can decide, but don't pretend credit vs cash as a payment mechanism is free. We all pay for cash via the taxes sent to the treasury, we pay for credit cards in the form of higher prices for goods.
The best way to recoup money from the CC companies is through signup bonuses of frequent-flyer points. People at flyertalk-dot-com make a science of this (they are a little obsessive, if I do say so myself). I have gotten pretty good at it too, so much so that I can say, with only a hint of irony, that people who actually pay for their airline tickets are suckers
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Re: Credit Cards are Good
Target, Home Depot, Harbor Freight etc.... Virtual robbing...RustyShackleford wrote:Geez, where you been hanging out ?SimonJester wrote: Funny, I have been robbed six times with my credit cards but never held up for cash.
"They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety." - Benjamin Franklin
Re: Credit Cards are Good
Not what I said, they are two different categories. A multi millionaire could be undisciplined spend all their money and be broke. An upper middle class family/individual could spend above their means and constantly be paying interest on credit cards. Two separate categories, not one.hyla wrote:Please do not imply that "the poor" are undisciplined and cannot take advantage of credit and investing. Whether or not credit is a good idea is an issue of an individual's discipline and responsibility, not income level, although income obviously affects the size of credit limits individuals receive.Paul78 wrote:Just like stocks they are good for people both upper middle class (or higher) who are also disciplined.
The poor mostly likely will be stuck with "bad" credit cards with poor rewards just as the poor can not afford to put money in the market. The undisciplined spend their fortune instead of investing and over extend themselves credit wise.
- SmileyFace
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Re: Credit Cards are Good
Summary:
- Good for those of us that are disciplined.
- Bad for those of us that are not.
- Good for those of us that are disciplined.
- Bad for those of us that are not.
Re: Credit Cards are Good
Cash can be an easy way to track spending and control it. If you take out $100 (or insert another number here) a week for groceries (or gas/lunches/etc) and you find that you don't have enough money (or too much money) you can adjust your spending and track it as such. I do a monthly spreadsheet with the same amount of money weekly for groceries and fuel so I have these items tracked to the specificity that I need, and I don't have the temptation to over spend in these areas due to credit being available. In this way cash is the easy way to track spending without spreadsheets or other programs to track to the exact $0.01 which I think is unnecessary.
Credit Cards can be used for great amounts of rewards but you have to be careful to pay them off because you are playing with fire. To me the risk and hassle is not worth the reward. I think that I may be tempted to spend more when using a credit card. To each their own.
Credit Cards can be used for great amounts of rewards but you have to be careful to pay them off because you are playing with fire. To me the risk and hassle is not worth the reward. I think that I may be tempted to spend more when using a credit card. To each their own.