I love Credix Cards

[e30sd]

that's funny, i find myself spending more when i have cash. so i never carry it. direct deposit is my saving grace. mr. platinum amex doesn't seem to mind.

[Jand3rson]

direct deposit is my saving grace.

Good god, do I love direct deposit...

[e30sd]

i'm surprised. anyone in any sort of legit profession needs a credit card. small business owner, professional skill, business type, whatever. it's kind of needed. so much for the r3v pop. it's not evil. just fucking take a common sense class.

[James Crivellone]

I pay for EVERYTHING using my Credit Card, and just pay it off at the end of the month (most of the time lol)

[mtechnik]

Maxed out another 9 grand for school on one of my cc. I hate those little pieces of shit.

More of you guys should come over to Europe for college, tons cheaper with same level education (if not higher at times) and you have ur name brand schools in between.


-Yeah. credit cards are deff. not the best choice for every Tom, Dick & Harry.

- AMEX is getting accepted less & less worldwide i've noticed.

[erik325i]

He's got a point. Your average person with a credit card (not saying you, Erik), is more likely to buy a few more things and spend more when paying with a credit card. Think about it, if John or Susie is going out shopping, and they only brought $100 in cash with them, they can only spend $100. But say they went with their credit card and told themselves they were only going to spend $100, it's very easy to happen upon that one more item that would only be another $30. Your average person is going to say, "what the hell, it's on the credit card", and go ahead and spend that extra $30. That same trend continues in other areas of commerce like Ritalin listed, such as grocery stores

Alright, good example Josh. I understand your point about how cash is more likely to keep you from overspending if you have limited funds.

But Ritalin Kid, you need to explain how using a debit card is better than using a credit card... You can't use the situation that Josh used because we'll assume you have more than a hundred dollars in your checking account.

Cash is always king.. (or in my case debit.)

[Ray Smoodiver]

That's fine if you have no self control and abuse your card...

I have three or four credit cards, and use them to pay for everything. I rarely have any cash on me. Every month they get paid off, and I pay no interest rate. My credit score is rediculously high too.

If you are responsible, credit cards are very useful.

-Erik

+1, if controlled, they're a great way to increase your credit rating.

[RobertK]

that's funny, i find myself spending more when i have cash. so i never carry it. direct deposit is my saving grace. mr. platinum amex doesn't seem to mind.

I spend too much when I carry cash as well... that's why I only carry my debit card with me.

i'm surprised. anyone in any sort of legit profession needs a credit card. small business owner, professional skill, business type, whatever. it's kind of needed. so much for the r3v pop. it's not evil. just fucking take a common sense class.

I've had a professional computer business for 4 years and have never needed one. My Visa business check card does everything a visa credit card does.

[dmoffitt]

Charge Card > Credit Card (aka AMEX). Responsibility is the key.

[RobertK]

Alright, good example Josh. I understand your point about how cash is more likely to keep you from overspending if you have limited funds.

But Ritalin Kid, you need to explain how using a debit card is better than using a credit card... You can't use the situation that Josh used because we'll assume you have more than a hundred dollars in your checking account.

You actually answered your own question.

The amount of money you make is finite. This means that you if you overspend with cash or credit you will be in the same CC hole with most people. Since you are paying your CC with the same earning you would use to buy the item in cash it's all the same.

Here's a better example.

John makes $1000 a month and only makes purchases with cash (or debit). After he pays all his monthly bills John has $100 left for extra spending money each month. John decided he wants to buy a video game. MSRP for the game is $99.95. Not wanting to spend his entire months spending money on one thing John shops around for a good deal and finds a used copy for $60 (lets say it's missing the original case and booklet). In the end all of John's bills are paid and he has an extra $40 to either spend on something else or put in savings.

Billy makes $1000 a month and buys everything on his credit card each month then pays it off when he gets paid. He too only has $100 of extra spending money each month and wants to buy the same video game. Billy goes to the store and buys it off the shelf for $99.95 and while he's there decides that he better buy the $20 strategy guide too. Swipes his card. And when the bill comes he finds that his paycheck isn't enough to pay the entire bill.

Now $20 is not a big deal but this is how it starts. What happens to most people is they will use it CC to get them past the store register and get the item into their possesion and in the process are more likely to ignore their actual budgets.

Thus overspending on credit or with cash correlates the same consequence. With cash or debit you can't make a mad dash for the cash register unless you KNOW you have the money to buy it.

Charge Card > Credit Card (aka AMEX). Responsibility is the key.

Yeah... That's like saying for Americans the key to not getting fat is to not eat too much and exercise.

Has more to do with self control than it does responsiblity. I guess the bottom line is that cash / debit requires self control because the limit is your paycheck.

Credit Card Debt = What You Spend > What You Make

Ironically the people I run into that don't like using cash or debit are those who don't like living by budgets or restrictions. In the end if you are responsible and budget your money to only spend what you make then a Credit Card has no real purpose other than to present added risk.

+1, if controlled, they're a great way to increase your credit rating.

To be completely honest. That is a very bad way to rationalize using a credit card. A credit score is only needed to continually borrow money and be in debt. Which is only a good plan for the bank.

The only thing you should ever really borrow money for is real estate and you can have NO credit score and still get prime rate lending through an underwriter. Ironically Credit Cards (paid off or not) can work against you when trying to get prime rate lending through a FICO only lender.

[FredK]

Ironically the people I run into that don't like using cash or debit are those who don't like living by budgets or restrictions. In the end if you are responsible and budget your money to only spend what you make then a Credit Card has no real purpose other than to present added risk.

I don't understand why I am presented with added risk if I carry a credit card. If you mean there is a risk I will overspend, that is not really even on my radar. I am thrifty by nature, and I have a credit card to establish a credit history, and to avoid carrying around cash. That is probably not the norm, but in terms of American consumer behavior and obesity / eating habits, just because it is, doesn't mean it has to be. And that is a huge difference.

Your example assumes that the determining factor of consumer behavior is owning a credit card. Billy will automatically not shop around, and on top of that spend $1.20 for every dollar he has of discretionary income.

The fact is, a credit card improves your cash flow, and allows a lag time of around 30 days to pay off your debt. In that time your money could be working for you in a high yield money market account or other liquid investment. Say you bought a $1000 item. You would have earned $4 in interest (assuming 5% in a high yield MM) in the 30 days you get from the credit card company. Yeah, sure it's not a BFD, but I like to collect what is coming to me.

[erik325i]

Credit Card Debt = What You Spend > What You Make

Ironically the people I run into that don't like using cash or debit are those who don't like living by budgets or restrictions. In the end if you are responsible and budget your money to only spend what you make then a Credit Card has no real purpose other than to present added risk.

All of your scenarios are true for the average American, but you fail to see my point Ritalin Kid.

I was saying that IF you are responsible and have self control, credit cards are no worse than cash or debit.

Obviously if you are spending more than you make, you are NOT being responsible and are lacking in self control.

I use credit cards for almost everything. Not because I don't have the money to pay for things now, but because if a bank wants to lend me their money for free, I will use it. Just like Fredk stated, you can be earning interest on your money every month.

And saying a credit card proposes an added risk is incorrect. Let's say I lose my wallet with a couple hundred dollars in cash, and 4 credit cards. All I need to do is call the bank to tell them that I lost my cards, and they will freeze the account and send me new cards right away. Even if someone were to find your card and use it before you called the bank, they will not charge you for those fraudulent purchases.
What about those hundreds of dollars you had that you were going to buy groceries with? They are lost forever.

-Erik

[RobertK]

Your example assumes that the determining factor of consumer behavior is owning a credit card. Billy will automatically not shop around, and on top of that spend $1.20 for every dollar he has of discretionary income.

Actually my example is based on what studies have shown in consumer behavior when using credit instead of cash. This is why most all store now have their own branded card.

Tell me when is the last time you went to a store and they didn't try to get you to sign up for a new store branded card with the "15%-20% Off" taunt? Because marketing studies show that over 90% of the people who fall for this spend on average 20% more even with the discount.

The fact is, a credit card improves your cash flow, and allows a lag time of around 30 days to pay off your debt. In that time your money could be working for you in a high yield money market account or other liquid investment. Say you bought a $1000 item. You would have earned $4 in interest (assuming 5% in a high yield MM) in the 30 days you get from the credit card company. Yeah, sure it's not a BFD, but I like to collect what is coming to me.

False.

Credit Cards do not improve your cash flow. Cash flow planning maximizes cash flow. Credit Cards allow you to spend money before you really have it based on income speculation. Anytime you speculate you've added risk.

Also.. your MM analysis was wrong. Ask any financial adviser if this is a good idea and they will laugh at you. Why? You are only considering exact interest based on speculation. Most professional financial advisers know that when calculating investment you have to also subtract the rate of inflation (4%) and then offset risk. So really your gain is not worth the rationlization.

Believe me. You're not the first person to try to use that rationalization.
Not trying to give you hard time but I've worked for a big bank before and you seem to forget the part about credit card companies exactly100% honest.

I knew a guy who thought it would be a good idea to max out 10 credit card and put all that money into a high yield savings account. He took on about $175,000 in CC debt and made about $800 month on the interest. The way he saw it was that it was free money for writing a check each month. Until 2 companies claimed his credit risk was too high and by contractual agreement jack his interest to 23% after that the other CC companies eventually noticed the risk flags and followed suit. Bankruptcy soon followed.

[RobertK]

I use credit cards for almost everything. Not because I don't have the money to pay for things now, but because if a bank wants to lend me their money for free, I will use it. Just like Fredk stated, you can be earning interest on your money every month.

Please don't tell me you really believe you are getting FREE use of their money.. You missed my point. If you are already being responsible then you have no reason to need to borrow the banks "free" money and the person who chooses not to carries less risk. Even responsible CC users get hit by these companies. (ie. Reporting a late payment when you really sent it in on time.) It happens all the time. Spending my own cash = TRUE NO HASSLE.

BTW FredK was wrong. You are not earning any interest on your money each month. That is a ridiculous CC holder myth.

And saying a credit card proposes an added risk is incorrect. Let's say I lose my wallet with a couple hundred dollars in cash, and 4 credit cards. All I need to do is call the bank to tell them that I lost my cards, and they will freeze the account and send me new cards right away. Even if someone were to find your card and use it before you called the bank, they will not charge you for those fraudulent purchases.
What about those hundreds of dollars you had that you were going to buy groceries with? They are lost forever.

-Erik

That's why I said carry a debit card. It has the exact same protect your credit card has. I usually recommend that everyone carry a debit card instead of actuall bills. Cash is term I use loosely for spending actual money in your posession.

Let me put it this way.

There is not one reason a credit card can beat my debit card. It has no added value over my debit card. I've heard a lot of myths and I can debunk everyone of them. Everything I buy is with cash (debit) and I save for every purchase I make. I don't care about building a credit score because I would only need that if my plan was to continually borrow money and be in debt the rest of my life.

You can use a CC for all your purchases as well. If you are able to have self control and are responsible enough to budget and cash flow your money then you should be ok. But I'm not one to base my finances on a best case scenerio. I budget and save based on Murphy's Law.

[kylebes1]

This is major debate.

I am not blaming the card company at all. I just forget to pay it, period. I always spend very little, and make plenty. I just flat out never know what day of the week it is, or even what day of the month it is. :)