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rcmaehl

Toto, I don't think we're in China anymore - US companies adopting social credit score system

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6 hours ago, leadeater said:

Reading them isn't really the issue, it's being able to understand them and also what is not explained like the fact interest and charges are applied before payments on loan/credit principal and that not being clearly shown on statements. So you pay the $300 balance, but you actually needed to pay $320 because transaction ordering, then you are hit with a fee and interest because you're not at a zero balance at the end of the statement period.

It's very possible that things are different based on country, but here in the US that is absolutely not true.

 

First of all, any sort of fees are based on what bank you get your card with. I can only speak for myself, but of the several cards I use none have any sort of transaction fee, and there's absolutely no fee for carrying a balance unless you don't pay the minimum, which is usually about ~$25 a month.

 

There's two separate things going on: one is that as far as credit cards are concerned, basically nothing that happens in between statements matters, only what your balance in at the statement due date (unless you go over your credit limit, but that's really hard to do if you aren't an idiot). If I spend $1000 in a month but pay back $900 of it before the next statement, then as far as everyone involved is concerned I used $100 in credit that month. That's what get's reported to the credit bureaus, and that's what I would theoretically need to pay interest on after the grace period.


Which bring me to the second point, the grace period. At least in the States, credit card companies that offer a grace period (which is pretty much any major one) are legally required to give 21 days on any transaction before interest can start to be collected, and some card companies offer more than that. It's meant to give some wiggle room after your due date in case the company takes way too long getting you your statement, but in an age of all digital everything it essentially means that you have minimum 2-3 weeks to pay off your balance before a single cent's worth of interest can be calculated. And the most important thing is that sort of stacks with the previous point - because no purchase really "counts" until the next statement, you can potentially get up to two months before anything is due.

 

EDIT: I should point out that it is possible to lose your grace period if you go several months carrying balances past the end of the 21 day window, but with proper usage that should never happen and even if it did, you are obligated to get it back after several months of carrying zero balance.

 

Example:

Spoiler

 

 

Say your statement date is on the first of the month. Say I spend $1000 on the 2nd of July. Until the 1st of August, that money is just sort of floating in the ether, no interest, no fees, nothing. If I were to pay off $900 of that on the 25th of July (give a few days for transaction time and all that), then my balance at the end of the month is $100. That means that once the statement comes out, the card company is going to report to Equifax and Transunion and all them that I used $100 out of let's say a $5000 credit limit, meaning that as far as they are concerned I used only 2% of my total credit in July, which over time can give a real nice bump to your credit score.

 

Now on August 1st (or possibly a couple days later) I get my statement saying that I owe $100 due on September 1st. Now at this point the money is properly accounted for and owed, but they can't actually even begin keeping track of interest on any of it until the grace period is over, which would be at minimum August 22nd (and possibly later depending on your bank). So, as long as you pay off the remaining balance before the 22nd, you're off completely free. You get $1000's worth of reward points (probably $10-50 or the equivalent in miles or whatever) and a boost to your credit score, but it cost you nothing other than remembering to pay it off when you pay all your other bills.

 

Spoiler

If you wanted to simplify things you could also just pay off your balance in full a few days before the statement and then you don't need to worry at all about the second transaction every month. However, then when your statement gets reported to the credit agencies all it's going to show is zero balance, which as far as they are concerned means you didn't use your card that month and will have no effect/a negative effect on your credit score. You always want to carry a balance if possible, you just want it to be as low as possible. <20% is good, <10% seems to be ideal (it's hard to really guess considering the dark sorcery that credit agencies perform in order to calculate credit score).

 

This also means that if your credit limit is high enough and you are conservative enough with your spending then you may be able to completely skip the first transaction from the above scenario. If your credit limit is $10,000 and you consistently spend less than $1000 in a month, you can just carry the balance to the statement and then pay it off in full early next month.

 

 

 

6 hours ago, leadeater said:

Daily living by means of debt/credit is fundamentally a bad idea, that's not at all the purpose of it despite how it's treated today. Doing this puts you at risk, if something happens and you are unable to cover that risk you are in big trouble and quickly. Always treat debt as risk and have cover for it and don't rely on pay to pay to cover it because that does not actually cover risk. This is precisely why when you get a home loan you also get life insurance with trauma cover to cover the risk. The best risk is the one you don't have.

I think you're fundamentally misunderstanding what I'm saying to use credit for. I'm not saying to yolo it and buy a new TV whenever you feel like because hey credit is free money. I'm saying that you save up however much cash you need to buy the TV, then you purchase it on the credit card, collect your rewards and then pay it off before you pay a dime of interest on it. Same thing with groceries or clothes, there's no downside as long as you remember to pay it off. It may have been harder to keep track of in the past but nowadays we have plenty of services that do all the work for you. You add your bank account and your credit cards, and it just keeps an updated number that is bank balance minus card balances. Don't let that number hit zero and you will never not be able to pay your cards off at the end/beginning of the month. Unless you get whisked away to a foreign country where you don't have access to a web browser for 7 weeks, there is zero risk involved.

 

6 hours ago, leadeater said:

Then you have other situations like being unable to pay an unexpectedly higher bill or other such thing and you have little choices so you go in to debt, which increases expenditure, then are unable to pay that off because you had very little budge room left in the first place. There is a reason people at or below the poverty line distrust banks so much, finance companies even more, because they are almost always the ones that take them from being just above the line to below it.

This is exactly the same as if you didn't have a credit card. Honestly, it's the opposite: say something comes up that you don't have enough in savings to cover. If you don't use credit, you pay off as much as you can and then you take out a loan. If you do use credit, you pay off as much as you can and then you take out a loan, but chances are that you're going to get a much better interest rate on that loan because you have a well established credit history.

 

And on top of that, the fact that you get this minimum 21 day grace period can be really helpful for lower income people. A handful of years ago I was living paycheck to paycheck, and even though the pay was very consistent it was barely enough to cover my bills every month. Being able to buy groceries or gas now when I don't have the money, knowing that I get paid in a couple days and will be able to cover the cost then is a massive stress reliever when money is that limited.

 

Obviously there is some risk associated with that, and it can be really easy to start rationalizing purchases because "I'll have the money later," but that is 100% the responsibility of the individual making those bad decisions. If someone lacks that self control, then they probably shouldn't get a credit card, but as long as you go in knowing what you're getting yourself into it's really not that hard to manage. And again, a lot of those financial management apps provide options to automatically calculate your average income and factor that into the number it gives you for how much you have to spend.

 

___

 

Just to be clear, I'm not saying that you're necessarily wrong or your financial advisor lied to you, but at least in the US there are some pretty rigid laws in place to make sure you don't get too bent over a barrel. The main difference between any given credit card are rewards, fees, and interest rate, but if you only aim for cards without mandatory fees and you never pay interest, that you are basically just picking based on what will get you the most free money. Yes, it requires the person to have a good head on their shoulders and know how to not frivolously waste money, but the same could be said using cash. You can dig yourself into a way deeper hole with credit, but you also get benefits for buying shit, even shit you were going to buy already, that you would never get using cash or debit.

 

https://www.nerdwallet.com/blog/credit-cards/credit-card-grace-period/

 

https://www.creditkarma.com/credit-cards/i/avoid-interest-with-credit-card-grace-period/

 

https://www.consumerfinance.gov/consumer-tools/credit-cards/answers/key-terms/#grace-period

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1 hour ago, Waffles13 said:

I'm not saying to yolo it and buy a new TV whenever you feel like because hey credit is free money. I'm saying that you save up however much cash you need to buy the TV, then you purchase it on the credit card, collect your rewards and then pay it off before you pay a dime of interest on it

Yes that is what it was for, I never said otherwise.

 

1 hour ago, Waffles13 said:

Same thing with groceries or clothes, there's no downside as long as you remember to pay it off.

This is what it is NOT for.

 

1 hour ago, Waffles13 said:

There's two separate things going on: one is that as far as credit cards are concerned, basically nothing that happens in between statements matters, only what your balance in at the statement due date (unless you go over your credit limit, but that's really hard to do if you aren't an idiot). If I spend $1000 in a month but pay back $900 of it before the next statement, then as far as everyone involved is concerned I used $100 in credit that month. That's what get's reported to the credit bureaus, and that's what I would theoretically need to pay interest on after the grace period.

What works fine unless you pay on the last day then the transaction ordering issue as I gave applies. Sure you shouldn't leave it until the last day but it's no less rubbish that banks do this when you actually did your transaction first and they processed it and changed the order to benefit themselves.

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15 hours ago, leadeater said:

What works fine unless you pay on the last day then the transaction ordering issue as I gave applies. Sure you shouldn't leave it until the last day but it's no less rubbish that banks do this when you actually did your transaction first and they processed it and changed the order to benefit themselves.

Yes, the way transactions are handled really suck, but I specifically mentioned that you should pay several days ahead of time. And, in the example I have, even that doesn't matter. If you happen to forget the first transaction, to you still don't lose anything, to you just wind up reporting a slightly higher balance to the credit bureaus. Not ideal for optimal credit score, but you still don't get charged interest. If you forget about the second transaction, you have at least two weeks, usually closer to the full 21 days to pay it before interest begins to accrue. If three weeks isn't long enough for someone to remember to pay their monthly bills, then I think they have bigger issues to worry about than their credit.

 

17 hours ago, leadeater said:

Yes that is what it was for, I never said otherwise.

 

This is what it is NOT for.

You are going to need to justify these statements, because they make no sense and they are essentially the exact same scenario. Groceries are a guaranteed purchase, same with clothes (the latter meaning necessary clothes, not a shopping spree). You are going to spend that money no matter what, and I'd assume that anyone spending their free time reading excessively long off topic LTT debates isn't struggling to feed themselves, so presumably you already have the money in your bank account/cash to be able to afford it.

 

So you are going to spend say $500 a month on food and other necessities no matter what. You can either spend it and get nothing back, or spend the exact same amount and get $10-20 back at the end of the month. There is no downside unless you are an absolute baffoon who goes out and deliberately overspends because credit lmao.

 

All you're doing is converting a number of small purchases throughout the month into a single bigger one at the end. And if cash is tight enough that overspending is a major issue, you just need to check your balance before you walk into the supermarket to see exactly how much of a budget you have to spend. Which you frankly should be doing whether you have have a credit card or a debit card - and with the credit card, you have have the worry of an accidental overdraft fee which in my experience is far more damaging and costly than the theoretical worry of a couple bucks of interest.

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45 minutes ago, Waffles13 said:

You are going to need to justify these statements, because they make no sense and they are essentially the exact same scenario. Groceries are a guaranteed purchase, same with clothes (the latter meaning necessary clothes, not a shopping spree). You are going to spend that money no matter what, and I'd assume that anyone spending their free time reading excessively long off topic LTT debates isn't struggling to feed themselves, so presumably you already have the money in your bank account/cash to be able to afford it.

Because daily living on debt is a bad idea I already explained. It works right up until it doesn't and when it doesn't it goes very bad very quickly. Has nothing to do with over spending or buying frivolous things and everything to do with not being able to pay down the debt when/if something does happen.

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good thing I clear every $ I owe to credit compagnies but means nothing just a piece of the shit puzzle...

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35 minutes ago, leadeater said:

Because daily living on debt is a bad idea I already explained. It works right up until it doesn't and when it doesn't it goes very bad very quickly. Has nothing to do with over spending or buying frivolous things and everything to do with not being able to pay down the debt when/if something does happen.

How on Earth is it living on debt? Its just that instead of the money coming out of your bank account now, it comes out of your bank account in a couple weeks. You have the money either way. At no point am I advocating spending money that you don't currently have. 

 

Spoiler

Hypothetical scenario:

 

I have $101 in my bank account, and I need to buy $100 worth of food. Unbeknownst to me, a week from now my car is going to break down and require $1000 in repairs.

 

No credit card: I buy the food today using my debit card. I have no debt. The car repair comes up and now I have negative money and am forced to sign up for some sort of loan.

 

Credit card: I buy the food on my credit card. I have $100 balance on my card and $101 in the bank account. It could be argued that I am technically in debt, but I can pay off at absolutely any time. The car repair comes up, and now I am still forced to sign up for some sort of loan. At the end of the month I pay off the grocery purchase and literally everything else is identical, except I have $2-5 worth of reward points to use for next month's food.

 

The only meaningful difference is that if I have a credit card, I also have the option of putting the car repair on the card. Depending on a number of factors that may or may not be a good idea long term. However, it does mean that what I can do is I can put it on the card today and make sure my car gets fixed ASAP, and then tomorrow I can look into loans with a better interest rate than what my card has. Use that loan to pay off the credit card balance, and then I'm back to the exact same scenario that I would have been in with no credit card at all. Except, I get to avoid the stress of sitting in at the mechanic's shop looking for financing AND I may or may not get reward points for the repair itself depending on my specific card's terms.

 

Either way, I am going to go into debt, one just gives me a lot more options for how to deal with that debt.

 

And obviously, if I have half a brain and have an emergency fund/keep my bank balance above the absolute minimum, then the whole thing is a moot point, but even then it makes sense to put the repair on a credit card just for a day or two while I transfer funds around to make sure I don't overdraft.

 

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3 minutes ago, Waffles13 said:

How on Earth is it living on debt? Its just that instead of the money coming out of your bank account now, it comes out of your bank account in a couple weeks. You have the money either way. At no point am I advocating spending money that you don't currently have. 

A lot of people don't have any savings and pay down credit, which is debt, from their salary/wages. Your way of spending has no contingency, no protection from risk, so when/if something happens that's it you're now screwed.

 

Carrying unneeded debt is just bad, it always has been.

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Just now, leadeater said:

A lot of people don't have any savings and pay down credit, which is debt, from their salary/wages. Your way of spending has no contingency, no protection from risk, so when/if something happens that's it your now screwed.

 

Carrying unneeded debt is just bad, it always has been.

Did you even read the scenario in the spoiler? I specifically address that.

 

And, because somehow it isn't clear, use still keep savings, you still don't spend outside your bounds. You do literally everything that you would do with a debit card, the only difference is which piece of plastic you swipe at the register. And if someone doesn't keep a savings account, then that means that they are an irresponsible idiot and it has no bearing on how the system of credit works.

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16 minutes ago, Waffles13 said:

Did you even read the scenario in the spoiler? I specifically address that.

Yes but again as I said, many people do not having any savings, about 50% of the US last I checked.

 

Edit:

Which to make it clear since you aren't seeming to get it all it takes is to get sick, be arrested, lose your job, economic crash etc etc, there is quite a large list of things that can effect your ability to pay down debt which is precisely why daily living/expenditure on credit cards isn't a good idea and the 'benefits'/'free stuff' does not out way the risk you are incur using it. It all works fine until it doesn't.

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On 6/16/2019 at 4:13 PM, leadeater said:

Reading them isn't really the issue, it's being able to understand them and also what is not explained like the fact interest and charges are applied before payments on loan/credit principal and that not being clearly shown on statements. So you pay the $300 balance, but you actually needed to pay $320 because transaction ordering, then you are hit with a fee and interest because you're not at a zero balance at the end of the statement period.

 

Then you have other situations like being unable to pay an unexpectedly higher bill or other such thing and you have little choices so you go in to debt, which increases expenditure, then are unable to pay that off because you had very little budge room left in the first place. There is a reason people at or below the poverty line distrust banks so much, finance companies even more, because they are almost always the ones that take them from being just above the line to below it.

 

Daily living by means of debt/credit is fundamentally a bad idea, that's not at all the purpose of it despite how it's treated today. Doing this puts you at risk, if something happens and you are unable to cover that risk you are in big trouble and quickly. Always treat debt as risk and have cover for it and don't rely on pay to pay to cover it because that does not actually cover risk. This is precisely why when you get a home loan you also get life insurance with trauma cover to cover the risk. The best risk is the one you don't have.

 

This advice was given to me by my Registered Financial Adviser, unlike regular 'Financial Advisers', these ones are legally required to give the client the best advice for their situation. Not all Financial Advisers are the same and not all of them are doing the best for you and what many do not know is they don't actually have to which is a shocking thing in itself. The name differs by country but don't be tricked by other similar words in front of their title, there's only one proper one and find out what that one is and only ever talk to them.

Fact- it’s possible for one to pay the CC companies a whole lot of money in fees and interest

 

Also fact-  you can own a CC, pay zero interest or fees AND earn rewards.  In other words, you can generate income just by using a CC without incurring increased debt

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20 minutes ago, thedude4bides said:

Also fact-  you can own a CC, pay zero interest or fees AND earn rewards.  In other words, you can generate income just by using a CC without incurring increased debt

I'm not actually saying you can't, my point is you shouldn't use a credit card for certain things like they get used for. Credit cards for have a purpose and can be used well and responsibly, used generally well with not all purchases best done this method, as well as irresponsibly with that last one not actually at all what I'm talking about. It's that second middle point of it not being wise to use your credit card for every purchase like many do.

 

If you think the rewards you get out way the risk of debt incurred  then you can think that, you might be correct, you might be not. However it's always wise to think of debt as risk and have an actual plan that covers that risk beyond "I can pay it off at the end of the month" because what if you are unable to. That's not such an uncommon situation to happen, we all know it happens but seem to be only able to place blame on people for spending beyond their means when that is not always what actually happened.

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36 minutes ago, leadeater said:

I'm not actually saying you can't, my point is you shouldn't use a credit card for certain things like they get used for. Credit cards for have a purpose and can be used well and responsibly, used generally well with not all purchases best done this method, as well as irresponsibly with that last one not actually at all what I'm talking about. It's that second middle point of it not being wise to use your credit card for every purchase like many do.

 

If you think the rewards you get out way the risk of debt incurred  then you can think that, you might be correct, you might be not. However it's always wise to think of debt as risk and have an actual plan that covers that risk beyond "I can pay it off at the end of the month" because what if you are unable to. That's not such an uncommon situation to happen, we all know it happens but seem to be only able to place blame on people for spending beyond their means when that is not always what actually happened.

I've purchased almost everything I've ever owned on credit card. I got my first one (co-signed by my parents but they never paid anything for it) when I turned 16 and I've never looked back. Some of the 'passive' benefits of using a credit card for everything include things like extended warranty (even on cheap/free cards) on electronics items.

 

I would regularly (and this was over 15 years ago, so surely the technology is even better) buy something on my credit card, then immediately log into my bank and transfer from my bank account into my credit card. I always overpaid by a few bucks just in case I forgot about a couple small purchases, and in my life I've never paid credit card interest (PERSONALLY.. We've flubbed a couple bills for the business and ended up paying some interest, but far less than the cashbacks we've received so it's still a net gain even there).

 

The extra benefit of having a credit card as a young person is that it helps build credit. I've seen some people say credit is unnecessary or even that it's inherently evil, but they're simply mistaken. Credit is a tool. When used improperly it can cause harm, but when used correctly it opens up possibilities that would be otherwise unattainable. Without credit I couldn't own the house I live in, or the business I now run. 

 

I don't NEED credit anymore, but I continue to leverage it because in the right hands it's a very powerful tool.

 

With all of that said, I personally know people for whom I would never recommend getting a credit card because they just don't have the discipline and/or the attentiveness to control their spending or pay it on time :s

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8 minutes ago, LinusTech said:

-snip-

The God-King hath spoken.

 

 

Agreed Linus, I rock a very high credit score through the same strategy.  Not that long ago you could pay off a car loan with a credit card and double dip the score with a single monthly payment to both.


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3 minutes ago, LinusTech said:

Credit is a tool. When used improperly it can cause harm, but when used correctly it opens up possibilities that would be otherwise unattainable. Without credit I couldn't own the house I live in, or the business I now run.

This seems to be largely a North American thing because it seems to be the only place that talks about or need to build up credit. Getting a home loan here for example requires a lot of proving documentation of your ability to administer that loan, things like bank statements of the last 6 months, proof of employment and wage/salary, all debt you have including store cards and personal loans. It's quite a lengthy process, there's also regulations around how much is allowed to be borrowed which is calculated from your capital value against your debt and how much deposit you have (also regulated required minimum).

 

These are all there to insure responsible financing is happening by the part of the lender and the borrower, credit score isn't really a factor at all. I don't even know what mine is but I'm also not short of credit card offers from my bank with large credit limits or other similar offers from store/finance cards. These I have always declined, they are of no value to me and I do not view the benefits they come with of any real value.

 

I'm a person that views the best risk is the one you do not have and treat all debt/credit as risk. It doesn't take much for things to go wrong, I've seen it happen to many people I know, families of children at schools I have interacted with etc. Maybe I am exposed to it more having worked for an IT company that deals with the education sector but this is why I take a dim view of banks, credit card companies, finance companies because I have seen the damage they cause far too often.

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17 minutes ago, leadeater said:

and treat all debt/credit as risk

Ne'er a truer statement.

 

I have only 1 personal CC for $3000 max limit (I don't try to max it out by any means) which I use for my monthly stuff then pay off.  I have 1 CC for my small business because of ease of tracking, limiting, etc.

 

The path forward is paved so much easier with credit in the US that's why I do it, as you note


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1 hour ago, leadeater said:

Yes but again as I said, many people do not having any savings, about 50% of the US last I checked.

 

Edit:

Which to make it clear since you aren't seeming to get it all it takes is to get sick, be arrested, lose your job, economic crash etc etc, there is quite a large list of things that can effect your ability to pay down debt which is precisely why daily living/expenditure on credit cards isn't a good idea and the 'benefits'/'free stuff' does not out way the risk you are incur using it. It all works fine until it doesn't.

I don't care about what most people do, if most people are irresponsible then that's their prerogative. I'm sure most people have driven somewhere when at least a little bit drunk at some point in their life, does that mean that no one should ever drink alcohol ever again?

 

All those things sudden things that can come up suddenly in life are exactly the same whether you use credit or only cash. I'm given you multiple examples and made it abundantly clear what exactly I mean by "use credit", which is to use it exactly as you would a debit card, never use more than you currently have in cash and always pay it back in full before the due date. Yet you keep either misunderstanding or deliberately ignoring the points I'm making to hammer home this idea that debt is bad, which is plainly obvious and is completely antithetical to main point which is that you can use a credit card with accruing any debt.

 

Yes, credit card companies are shady as hell and prey on peoples bad habits, but that doesn't mean the service they offer is inherently bad. Its like a casino, except that instead of relying solely on probability to potentially make a buck, its written right into the terms of service what you need to do to win the (admittedly very small) pot every single hand.

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2 minutes ago, Tristerin said:

I have 1 CC for my small business because of ease of tracking, limiting, etc

Company credit cards certainly make things a lot easier for me as an employee. Ignoring all the spending/usage rules etc being able to quickly and easily pay for things is great, otherwise you have to deal with long processes of quotations, invoices, ledger codes etc etc. Not something I want to have to deal with for a smaller purchase. International travel without one is near as much impossible too.

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6 minutes ago, Waffles13 said:

are exactly the same whether you use credit or only cash.

If you run our of money then you have no money, if you have money on a credit card and are unable to pay for it you don't just have no money you are also inuring interest so it's not exactly the same. No money isn't the same as owing money.

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We really need to start wrangling in banks and such. For every bankruptcy that happens, the rest of us pay for it. It's time to stop their greed and the larger employers need to pay better without touching our tax-paid safety nets. 

 

Also, I'm willing to bet that this Chinese system was originally a Western idea. Credit scores (social or otherwise) need to go away and data security and privacy need to be upheld with the companies responsible for all damages. 


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1 hour ago, leadeater said:

I'm not actually saying you can't, my point is you shouldn't use a credit card for certain things like they get used for. Credit cards for have a purpose and can be used well and responsibly, used generally well with not all purchases best done this method, as well as irresponsibly with that last one not actually at all what I'm talking about. It's that second middle point of it not being wise to use your credit card for every purchase like many do.

 

If you think the rewards you get out way the risk of debt incurred  then you can think that, you might be correct, you might be not. However it's always wise to think of debt as risk and have an actual plan that covers that risk beyond "I can pay it off at the end of the month" because what if you are unable to. That's not such an uncommon situation to happen, we all know it happens but seem to be only able to place blame on people for spending beyond their means when that is not always what actually happened.

I don’t think it.  In real life I cash checks written to me by my CC card company.  

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4 hours ago, thedude4bides said:

I don’t think it.  In real life I cash checks written to me by my CC card company.  

The general thought question wasn't if you were or not but rather do you value what you are getting over the risk. I mean I can see that for you the answer is yes you value it more than the risk, keep in mind I have no idea what and how much you are putting on your credit card and neither can I say what you are comfortable with.

 

What I am point to is how credit cards are used and whether that usage is actually a good idea or the purpose of credit cards, why they exist not how they get used today. I know full well how they get used and the reward schemes that get offered, there isn't really a reason to say that these exist or that you get them.

 

There are even businesses that will only accept credit cards as payment, hotels for example as they can charge the card for damages and other fees as required if you cause damage. Something not possible unless checkout methods change, as you'd be long gone before they find out. Or another example of benefit is using a credit card to pay for something where you think there may be a potential need to reverse/block the charge. There are a lot of very good usage scenarios for credit cards and they don't need to go away.

 

However a credit focused, credit first economy is not a good idea. At no point should credit be viewed as better or preferred over actual money/currency, the real thing if you can call it real now days. This is where economies and economic situations can go wrong, remember credit is nothing more than a promise to pay but at a later time. Things can and do change between those two points of time, the payment may also not be made. Removing the wider economy aspect of this as that is a far too broad and complex discussion, in particular when having a conversation about it across countries, the personal issues of credit cards is a simpler discussion.

 

As I've mentioned before there are a myriad of situations that exist that can impact your ability to pay the credit balance, either in full or partial. Getting in to credit card debt is easy, very easy, but getting out of it is much harder.

 

Buying electronic goods, furniture etc are all fine on credit cards, here we have better option with store finance cards which are required for their interest free deals, and I'm not saying don't do that but for more expensive items there are better payment and/or finance options.

 

The money you have is your controlling interest, this is your tool of power that others desire that you can leverage to your benefit. In the same sense this is the same for your credit score however you have less direct literal control over that. Buying things on credit gives over that control of funds to the credit card company and now they have more control over that set of funds than you do and you have also introduced a 3rd party in to the transaction that may not need to be there. Now you might say if you had paid using debit card or cash you no longer have those funds but the difference here is the transaction is complete and there is no other interested party in these funds.

 

Personally I may not use personal credit cards but I'm not saying everyone should or even could do that, wise usage of credit cards is the conversation I'm having as I very much believe using a credit card for every purchase is not wise usage of them and I do not consider a few hundred to a thousand dollars as something that out weighs unwise usage of credit cards and I'm sure there is enough opportunities through out a year to use it wisely and still gain decent enough rewards from it.

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On 6/15/2019 at 10:57 AM, kokakolia said:
  Reveal hidden contents

 

If you spend $300/month on groceries that's $6. That's 1 pint of beer during happy hour, once a month. 

How do you only spend 300$ a month on groceries but 6$ on a pint during happy hour. The relation between those prices seems off to me.


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8 hours ago, leadeater said:

The general thought question wasn't if you were or not but rather do you value what you are getting over the risk. I mean I can see that for you the answer is yes you value it more than the risk, keep in mind I have no idea what and how much you are putting on your credit card and neither can I say what you are comfortable with.

 

-attempted snipping gone awry-

 

 

 for their interest free deals, and I'm not saying don't do that but for more expensive items there are better payment and/or finance options.

 

The money you have is your controlling interest, this is your tool of power that others desire that you can leverage to your benefit. In the same sense this is the same for your credit score however you have less direct literal control over that. Buying things on credit gives over that control of funds to the credit card company and now they have more control over that set of funds than you do and you have also introduced a 3rd party in to the transaction that may not need to be there. Now you might say if you had paid using debit card or cash you no longer have those funds but the difference here is the transaction is complete and there is no other interested party in these funds.

 

Personally I may not use personal credit cards but I'm not saying everyone should or even could do that, wise usage of credit cards is the conversation I'm having as I very much believe using a credit card for every purchase is not wise usage of them and I do not consider a few hundred to a thousand dollars as something that out weighs unwise usage of credit cards and I'm sure there is enough opportunities through out a year to use it wisely and still gain decent enough rewards from it.

 

A dissertation on responsible credit use is far from the point.  If you can’t be responsible, then rewards are the last thing you ought to be thinking about, IMO.

 

However, if you can be (and are) responsible then rewards cost you nothing for cards with no fees that are paid on time.  This is what I and many other slick-dealers do.  You stack coupons, and gift cards, and rebates WITH CC Rewards to get the best price possible.  This is a strategy used by many.  If saving money while being responsible is important to you then CC rewards are part of the game.  Ignore it if you want for your own personal beliefs on credit usage but it’s sound strategy for those who pay off their card every month.

 

In fact, I’d say it’s stupid to not take advantage of it if you can.

 

Editing to add... my 1080 ti last year was basically paid for by CC rewards and an eBay coupon.  Seriously.  A 1080 Ti. 

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17 hours ago, leadeater said:

If you run our of money then you have no money, if you have money on a credit card and are unable to pay for it you don't just have no money you are also inuring interest so it's not exactly the same. No money isn't the same as owing money.

Which is why you never buy anything with money you don't have. I know that you're an intelligent person, yet you just seem completely incapable of understanding such a basic concept.

 

You use a credit card exactly the same way you use a debit card. If you don't have the money in your account, you don't buy it, end of story. No debt, no interest, no inability to pay off your balance. Just free rewards.

 

If someone is unable to handle that, then they shouldn't be in charge of their own finances in the first place.

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