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[scurker]

Wow. Didn't realize there was so much hate for credit cards.

I've been using credit for years as my primary source for spending. I haven't paid a dime in interest and earn anywhere from 1-3% in rewards depending on where I spend. Of course, I'm responsible and treat my card like cash (I don't spend unless I have). If you have this mindset and can remain responsible, there's no reason to use debit over credit. Additionally I keep my credit limit fairly low ($1750) so it helps to keep my budget in check.

I can understand having the need to use debit if you feel that you aren't responsible enough, but you do need to realize you are sacrificing some of the slight advantages that credit offers.

 

[entremet]

Sure you can get a loan, but not the best rates. 1% of interest rate over the course of a $100,000 home loan can be as much as $20k more in interest.

Oh, I agree. But I'm very conservative and would never go for a 30 mortgage. 15 year at the max.

I'm just talking about the obsession with building credit, as if it the most important financial move. Avoid debt, especially consumer debt, having a habit saving and investing, and growing one's career are much more important, but are rarely propped up, unlike building your credit.

 

[tfur]

The impact is negligible. You're not going to have a sub 700 credit score for paying off debt on time.

Well that depends on what other forms of credit you have, as well as how much.

The point is, that paying off your credit card in full DOES negatively effect your credit score because of utilization ratio. Further its the lack of paying off the card, and holding a balance that is what extends your credit scores and limits.

 

[Ceres]

Gift cards for what exactly?

Stores. Picked up one for Marshalls/TJ Maxx and another for Home Depot. Stores we spend plenty of money at. There were two that were 20% off but I don't ever buy anything from.

 

[Qaz Kwaz]

imo people should be mandated to have credit cards at this point anyway -- just like a social security card or whatever. nothing more annoying than being at a starbucks and having some twat holding up the line fumbling around with his bills/coins or even PIN or whatever

Great idea, let's stop accepting cash. I wish you were president.

 

[titiklabingapat]

I'm going to close my Chase checking account next week. Ever since they purchased Wamu, it's been downhill.

 

[Ceres]

Great idea, let's stop accepting cash. I wish you were president.

Welcome to Gaf.

 

[Future]

I also don't get the obsession with the FICO score. Net worth is much better barometer of fiscal health. Your FICO is just a measure on how well you pay off debt. Debt should be avoided in most matters--outside of student loans and home loans, which are usually an investment.

One of the reason we got in this economic mess was because idiot bankers were only looking at FICO scores as barometer of fiscal stability, when income and savings are much more important. When a meter maid gets qualified for 400k loan because she has a pristine FICO score, there's a problem.

If you have 20 percent down and no deliquencies, no bank will turn you down for a mortgage. Especially given home many unqualified home loan applicants got loans with bad credit and no money down during the real estate bubble.

Sure having lots of cash is always better. When wouldn't it be? I bought a car a couple of months ago, and it would have been great to just pay it in cash and be done.

Buy I didn't have the cash. I got a loan. And a good interest rate due to good credit. These are the benefits from having the high score, not to mention the discount in insurance premiums and the like. There is absolutely no reason to not try and have the best score you can get

 

[thefro]

I always use my "debit card" as "credit".

 

[EvilMario]

I find waiting for a credit card to process at most places takes longer than anyone looking for change.

We pay nearly everything in cash, and an occasional large purchase on the one credit card we have between my wife and myself. And a cheque for rent.. that's it.

Both of us have outstanding credit built up incrementally over the years without making every purchase on credit. In Canada, I already have limits imposed on how much I can withdraw (cash wise) from my debit account every day, but $50 would be quite low.

 

[Fernando Rocker]

Sure having lots of cash is always better. When wouldn't it be? I bought a car a couple of months ago, and it would have been great to just pay it in cash and be done.

Buy I didn't have the cash. I got a loan. And a good interest rate due to good credit. These are the benefits from having the high score, not to mention the discount in insurance premiums and the like. There is absolutely no reason to not try and have the best score you can get

And why don't you plan ahead and save money?

 

[CrankyJay]

Sure having lots of cash is always better. When wouldn't it be? I bought a car a couple of months ago, and it would have been great to just pay it in cash and be done.

Buy I didn't have the cash. I got a loan. And a good interest rate due to good credit. These are the benefits from having the high score, not to mention the discount in insurance premiums and the like. There is absolutely no reason to not try and have the best score you can get

I wouldn't pay for an entire car in cash if I got a good interest rate on finance. If you buy a $20,000 car and drive it off the lot and get in an accident, you're not going to get $20,000 back from your insurance company.

 

[JetBlackPanda]

Wow. Didn't realize there was so much hate for credit cards.

I've been using credit for years as my primary source for spending. I haven't paid a dime in interest and earn anywhere from 1-3% in rewards depending on where I spend. Of course, I'm responsible and treat my card like cash (I don't spend unless I have). If you have this mindset and can remain responsible, there's no reason to use debit over credit. Additionally I keep my credit limit fairly low ($1750) so it helps to keep my budget in check.

I can understand having the need to use debit if you feel that you aren't responsible enough, but you do need to realize you are sacrificing some of the slight advantages that credit offers.

I get this 100% but why is it universally accepted that I should be borrowing money form a company to buy something only to pay it right back and then I get points for that??

 

[Zoe]

Well that depends on what other forms of credit you have, as well as how much.

The point is, that paying off your credit card in full DOES negatively effect your credit score because of utilization ratio. Further its the lack of paying off the card, and holding a balance that is what extends your credit scores and limits.

False. If you use a credit card on a constant basis, it will always appear as if you're carrying a balance regardless of whether you pay it off in full every month.

Paying off only a portion is you just feeding the banks.

 

[CrankyJay]

I get this 100% but why is it universally accepted that I should be borrowing money form a company to buy something only to pay it right back and then I get points for that??

Because people like "free" stuff?

 

[Valkyr Junkie]

Serious question: Are the people saying that they only use debit cards because that way they only spend what they have constantly getting denied purchases? Cuz all I can assume is that if you have that mantra, and you're worried that you will immediately go into debt if you have a credit card, you must constantly find yourself in electronics stores, cars dealerships, etc and swiping your debit card only to be relieved that "Well, I guess I can't afford that after all."

 

[Future]

And why don't you plan ahead and save money?

Because I am responsible enough to pay it off over time

Even if you have the 30 grand or so, Wiping out liquid assets to get it may actually be worse depending on your situation. Sometimes it is better to actually keep the liquidity, and get the loan. This revolving payment raises your credit further, and depending on the interest rate may be worth the payment. Maybe not the case with a car (I just wanted that shit ), but with a house this can make sense due to the tax benefits you get (writing off interest)

But of course if you are rolling with say 100 gs in the bank, sure just pay the 10-30 gs off. I doubt most people are in that situation.

 

[JetBlackPanda]

Serious question: Are the people saying that they only use debit cards because that way they only spend what they have constantly getting denied purchases? Cuz all I can assume is that if you have that mantra, and you're worried that you will immediately go into debt if you have a credit card, you must constantly find yourself in electronics stores, cars dealerships, etc and swiping your debit card only to be relieved that "Well, I guess I can't afford that after all."

I don't use a Credit Card because I can afford shit on my own, I don't understand why American Express should get involved in my purchase of a TV if I can afford it, Just so I can get points? I understand I am giving that up.. ok that's fine with me.

 

[Alucrid]

I get this 100% but why is it universally accepted that I should be borrowing money form a company to buy something only to pay it right back and then I get points for that??

It's universally accepted because that's what actually occurs? What do you mean?

I don't use a Credit Card because I can afford shit on my own, I don't understand why American Express should get involved in my purchase of a TV if I can afford it, Just so I can get points? I understand I am giving that up.. ok that's fine with me.

Why does it matter?

 

[dankir]

Why? Are debit cards different in the US?

I use mine for everything because I can't be arsed to carry cash and because I don't want to use credit cards unless absolutely necessary. What's wrong with debit cards?

'

Yeah pretty much the same here. It costs me 11 dollars a month and definitely prefer it to carrying lots of cash around.

 

[FlashFlooder]

By holding zero balance, your ratio lowers your score.

This makes zero sense. When you pay off your balance, your debt-to-available-credit ratio goes DOWN. Have a low debt-to-credit ratio is a GOOD thing and will BOOST your score.

 

[tfur]

False. If you use a credit card on a constant basis, it will always appear as if you're carrying a balance regardless of whether you pay it off in full every month.

Paying off only a portion is you just feeding the banks.

I don't really know what you are talking about when you mention appearance. FICO scores are calculated from your ratio of outstanding balance divided by your credit limit. Nothing i have said is false.

 

[Fernando Rocker]

I don't use a Credit Card because I can afford shit on my own, I don't understand why American Express should get involved in my purchase of a TV if I can afford it, Just so I can get points? I understand I am giving that up.. ok that's fine with me.

Amen, brother!

 

[CrankyJay]

I don't use a Credit Card because I can afford shit on my own, I don't understand why American Express should get involved in my purchase of a TV if I can afford it, Just so I can get points? I understand I am giving that up.. ok that's fine with me.

You wouldn't want a free year of extended manufacturer's warranty? You wouldn't want to stop payment on the transaction if the TV salesperson failed to deliver it or sent you the wrong one and refused a refund?

You're passing up on consumer protection.

 

[David Incorporated Esq.]

And why don't you plan ahead and save money?

Buy car for $30,000, out $30,000

Have $30,000, take out loan on car, invest $30,000 at higher rate than loan. Profit.

Edit: Seriously, the people in this thread need to stick to keeping their money in their mattress.

 

[Fernando Rocker]

Buy car for $30,000, out $30,000

Have $30,000, take out loan on car, invest $30,000 at higher rate than loan. Profit.

Edit: Seriously, the people in this thread need to stick to keeping their money in their mattress.

Being debt free = Priceless.

 

[ToxicAdam]

Buy car for $30,000, out $30,000

Have $30,000, take out loan on car, invest $30,000 at higher rate than loan. Profit.

Lose job, eat through investment money, default on loan, lose car.

 

[Zoe]

I don't really know what you are talking about when you mention appearance. FICO scores are calculated from your ratio of outstanding balance divided by your credit limit. Nothing i have said is false.

Have you looked at a credit report? There is a field for current balance. If you're always using your card (every few days), that field will never be zero.

People get hurt by zero balances because that indicates the account is inactive.

 

[Alucrid]

Q: Anyone else required to keep a minimum balance in their checking? I have to keep 100+ dollars in mine or else I get hit with a fee for some reason...

 

[Qaz Kwaz]

Welcome to Gaf.

I've been around here since it was called Gaming Enthusiasts Online, PAL.

 

[JetBlackPanda]

You wouldn't want a free year of extended manufacturer's warranty? You wouldn't want to stop payment on the transaction if the TV salesperson failed to deliver it or sent you the wrong one and refused a refund?

You're passing up on consumer protection.

my bank has never once given me problems with a dispute on my bank account, look if you want to use your CC and pay it off with every purchase be my guest, its not like the Credit Card companies are shining beacons of hope that are here to give you free shit and protect every purchase you make, they entice people to use there service hoping you will over spend etc. If you are smart enough to pay it off on time and never have that issue then more power to you but I don't get why I am crazy for not wanting to participate.

 

[CrankyJay]

Buy car for $30,000, out $30,000

Have $30,000, take out loan on car, invest $30,000 at higher rate than loan. Profit.

Edit: Seriously, the people in this thread need to stick to keeping their money in their mattress.

GAF is too risk averse for this. But I agree with you.

 

[Zoe]

Q: Anyone else required to keep a minimum balance in their checking? I have to keep 100+ dollars in mine or else I get hit with a fee for some reason...

I have a Chase checking account, and I have to keep some ridiculous minimum or have 5 credit transactions a month.

Lose job, eat through investment money, default on loan, lose car.

You're supposed to keep the amount liquid enough that if an emergency arises, you can pay off the loan in full.

 

[krzy123]

Buy car for $30,000, out $30,000

Have $30,000, take out loan on car, invest $30,000 at higher rate than loan. Profit.

Edit: Seriously, the people in this thread need to stick to keeping their money in their mattress.

I did this when I bought my car at lesser amounts and back when CD interest rates were good.

 

[CrankyJay]

my bank has never once given me problems with a dispute on my bank account, look if you want to use your CC and pay it off with every purchase be my guest, its not like the Credit Card companies are shining beacons of hope that are here to give you free shit and protect every purchase you make, they entice people to use there service hoping you will over spend etc. If you are smart enough to pay it off on time and never have that issue then more power to you but I don't get why I am crazy for not wanting to participate.

Oh no they entice you! So it's their fault! Just like it's McDonald's fault that people are fat because they entice people with their delicious food! Oh no!

 

[Fernando Rocker]

Oh no they entice you! So it's their fault! Just like it's McDonald's fault that people are fat because they entice people with their delicious food! Oh no!

Oh, Jay... you sure are cranky!

 

[-PXG-]

Fine. Fuck you, I'll use cash then. Assholes.

 

[scurker]

I get this 100% but why is it universally accepted that I should be borrowing money form a company to buy something only to pay it right back and then I get points for that??

Unfortunately, I don't know the answer that question. All I know is that I'm taking advantage of rewards being offered for money that I'm already spending (bills, groceries, gas...) Why not take advantage of it? My assumption is they're encouraging consumers to use credit because they earn money regardless (merchant/interest fees) of what happens.

 

[Alucrid]

I have a Chase checking account, and I have to keep some ridiculous minimum or have 5 credit transactions a month.




You're supposed to keep the amount liquid enough that if an emergency arises, you can pay off the loan in full.

Hmm ok. At least I'm not alone. I'm also apparently limited to the amount of withdraws I have too or something like that, as well as the amount of times I can transfer from checking to savings.

 

[sonicfan]

Been using credit cards for about 7 years and have never paid a cent of interest. Received over a grand in rewards and made a few bucks on the interest the money in my savings/checking generated before it had to be used to pay my monthly balance.

Banks are evil. Using my credit card responsibly instead of a debit card is my way of sticking it to them . Sure, they get their fees from retailers but it's worked out great for me too.

Me too..... I've been using them for a lot longer than that, started with Discover because of the cash back, switched to AmEx blue about 8 years ago. I put EVERYTHING I can on these cards, and pay them off, IN FULL, every month. I think maybe once we forgot somehow and paid late, but that was years and years ago.....

It is AMAZING how much you get back if you work it right. Right now I get 5% back on gas and groceries and drug stores from AmEx, and 1.25% from everywhere else. Over the last 8 years I have gotten thousands of dollars back from AmEx just for using their card. My average balance outstanding probably is 3-4,000 a month, but again, I pay it in full each month. And when short term interest rates were higher (I was getting 5% on my Money Market accounts 5-6 years ago, doens't mean as much now) I would be earning basically $100+/year in interest on the carry. I love it when I have had to travel for work and can use my own credit card. I may run up a big bill, but the company pays me back, and I get the cash back rewards, just an extra bonus IMO.....

Using a Debit card WOULD COST ME A LOT OF MONEY, WHY WOULD I DO IT??

 

[JetBlackPanda]

Oh no they entice you! So it's their fault! Just like it's McDonald's fault that people are fat because they entice people with their delicious food! Oh no!

if Mcdonald's was giving away free I-pods for every 30 bigmacs purchased this argument could be made.

 

[CrankyJay]

Hmm ok. At least I'm not alone. I'm also apparently limited to the amount of withdraws I have too or something like that, as well as the amount of times I can transfer from checking to savings.

Not alone. I have to keep an average daily balance of $1500 in my checking account OR perform 5 transactions a month. For savings, it's $300 daily balance unless I have direct deposit.

$5 charge a month on both accounts if I don't follow their rules. If I did get hit with that I would just up and leave to another bank with more acceptable terms.

 

[tfur]

Have you looked at a credit report? There is a field for current balance. If you're always using your card (every few days), that field will never be zero.

People get hurt by zero balances because that indicates the account is inactive.

I am not saying the system is right, but the calculation is:

(How much do you owe) / (credit limit)

That ratio goes into your calculation for your credit score as a percentage. As the numerator approaches zero, your credit score goes down.

 

[Alucrid]

MUsing a Debit card WOULD COST ME A LOT OF MONEY, WHY WOULD I DO IT??

Cue debt free, fight the man, don't want to pay more, buy with what I have, self control, yadda, yadda.

Not alone. I have to keep an average daily balance of $1500 in my checking account OR perform 5 transactions a month. For savings, it's $300 daily balance unless I have direct deposit.

$5 charge a month on both accounts if I don't follow their rules. If I did get hit with that I would just up and leave to another bank with more acceptable terms.

I would not be cool with having to keep that much in my checking. I thought 100 was a lot... :lol

 

[CrankyJay]

I am not saying the system is right, but the calculation is:

(How much do you owe) / (credit limit)

That ratio goes into your calculation for your credit score as a percentage. As the numerator approaches zero, your credit score goes down.

Yes, but there are so many other things that factor into your credit score that might mitigate this to the point where it's negligible.

 

[CrankyJay]

Cue debt free, fight the man, don't want to pay more, buy with what I have, self control, yadda, yadda.



I would not be cool with having to keep that much in my checking. I thought 100 was a lot... :lol

It's bullshit...it should be $300 on the checking on the $1500 on the savings. Sounds like the bank just doesn't want to pay out interest...but then again, interest rates right now suck.

 

[Fernando Rocker]

My company pays my salary to a bank account at HSBC, and I have this Payroll Account or something like that. They gave me a debit card and that's the card I'm currently using.

I don't have to have a minimum, I can do every transaction I want with no limits, I have internet bank, etc..

Well... the only limit is that I can only take $400 in cash from the ATM per day.

 

[jmdajr]

It's a very small house, but still, better than paying rent (or a mortgage). And it wasn't easy. I had to save for years.

But now I'm getting married (in November), and we are not going to pay rent o a mortgage, and we can start saving together and buy a bigger house in the future.

And we will have two houses by then.

yeah that's great. taking the time to save pays off.

 

[David Incorporated Esq.]

Being debt free = Priceless.

Oh god I'm making money on an investment but I have debt!!! DEBT!!! DEEEEEEEEEEEEEEEEEEEEEBT

There's a difference between "I bought too many TVs and thought my CC was free money!" and "I've taken on debt to make money." This is the hurdle that nervous people can't get over. Example: I finally caved in and my wife and I paid off all of our student loans at once because carrying the debt made her nervous--that's $10,000 at <4% interest that we could have put somewhere making >4% return.

Lose job, eat through investment money, default on loan, lose car.

If you bought the car straight up and lost the job you'd be in the same position (except worse off because your money wasn't working for you).

People need to remember that almost no business gets off the ground without significant debt. Debt is not some evil thing come to rape your wallet, it is a tool, albeit one that can be misused.

 

[jmdajr]

I wouldn't pay for an entire car in cash if I got a good interest rate on finance. If you buy a $20,000 car and drive it off the lot and get in an accident, you're not going to get $20,000 back from your insurance company.

thats why you pay cash on a used car! new car is total waste of money. And it's not like you have to get a total piece of shit either.