Thoughts on credit cards?

[Malcharion]

I'm taking Personal Finance this semester, and we watched an intro video where they talked about how bad credit cards were. I personally think that there's nothing wrong with using them, and I thought it would be interesting to see how some other people felt.

[Ennui.]

It depends how you use them. It's easy to get yourself into debt using them if you don't watch your spending because you may end up overspending and not have the money to pay it off when the bill comes. If used responsibly they're a good way to build credit. The one I have can only be used at a medical provider that accepts it. I've used it for my wisdom tooth removal and general dental checkups because I don't have dental insurance and needed the work done. I've also used them to buy glasses for my parents and I. So I use my card for the important things.

They aren't bad if you use them wisely.

First, you want to pay more than the minimum payment each month. Secondly you don't want to charge it too high.

When I first got my card I was able to pay off the balance once or twice. Then I had to charge some larger things and have had other money issues and haven't been able to pay it off.

That being said, when I get a job I will probably start paying 100-200 on the card and I'll get it paid off.

If using a card you should only use it for certain things. Another thing is, say you want to charge a bigger item like $200. Once you do that you shouldnt use the card again until you are able to pay it off etc.

Emergencies do happen though. I owe so much mainly because I've had to use my cars to get my car fixed. If it weren't for that I wouldn't owe so much. I mean, I originally got my card to buy textbooks and also buy books that I'd read for fun.

I know some people who only use it for gas or they only use it for medical stuff.

[Ennui.]

I know some people who only use it for gas or they only use it for medical stuff.

Definitely a good point. There are credit cards that are specific for certain stores/places/etc too! While mine isn't specific to one store it is a card that people get for medical purposes only. But, some stores and gas stations also offer their own credit card that you can use, which may help limit you a little bit if you're afraid that you'll go on a huge shopping spree as soon as you get a card. Of course, you are still at risk of overspending, but now at least you've limited where you can spend.

I have gone ahead and moved this to the finance forum as I feel it fits here better. If you disagree please feel free to message me or another PA to discuss it.

[Eternal]

I think credit cards are very important, actually. If you want to rent or buy a house (or some other large purchases, such as a car), you have to have good credit. I recently got a year 2016 car, and wouldn't have been approved had I not had the extremely high credit score that I do. Additionally, when applying to rent, they usually check credit scores and may even have a minimum, which my potential future landlord currently requires. I think too many people see credit cards as "free money." I use mine like a debit card, I use it to buy gas and groceries and I pay it off every single week. In my most recent statement, I believe it said my credit score is above 85% of Americans or something like that, and I have no problem applying for loans or making big purchases now because of it. In addition though, it's great to have in case of an emergency where you may not have the cash.

[Kintsukuroi.]

I have 4 credit cards in my wallet. Three are linked to my parents (one is for only for gas and another is for anything other than gas) and we have on the we use only if we are in the United States/travelling (and for concerts presales lol) and then I have my own that is used a few times a month in order to build up my credit score, usually from stuff my parents have me buy for them.
I've always been taught that don't buy anything unless you have the money to pay it off in your account and I've had my card for a few years in my own name (not linked to my parents) in order to build up my credit score which is important. My mum pays them off as soon we receive the bill (that's what we were told by our various cards is best).
When my parents buy new cars, they charges them in full on the credit card and then pays the card off after so they gets the points. My dad doesn't believe in leasing vehicles so he uses the card and then pays it in cash (and gets less of a look if he was to pay in actual cash/transfer). That way our cards don't have a ballence owning after the month is over and we get points/cash back as well which is an added benefit.

I've been raised to pretty much treat it like a debit card and that's what we do and avoid interest. I think they're important providing you are smart with it and don't get into debt.

[NeuroBeautiful]

I agree with what's been said above. There was a time when I didn't believe in credit cards. I had decided I simply don't want one ever because I don't want to be a slave to debt. Well since then I've realized I can be strategic about if and then it can be beneficial for me and even help me gain financial independence which is what my aim is.
It is a tool to get you to your goal, whether that goal is to build credit or pay for things that you really need like in the medical card situation. If you're dtrategic and intentional about it, as the users above had done for themselves, you're less likely to go wrong with it. There may be emergencies or certain circumstances that push you off course with paying if back but that's with anything. And while I don't believe in capitalism and the way money works, there really aren't any sustainable alternatives right now.

Historically, in the 70s and 80s when corporate service jobs were becoming the main kind of work, the corporations thought it would be cheaper and more convenient or something, to instead of giving the employees a raise in salary, they gave the employees credit cards as a "benefit package" which honestly really hurt a lot of families. The prices of every thing where going up, butthe salary wasnt following in correspindance. I remember I learned this from a documentary, i forget which one but that really stuck with me.

But the fact is that we need the system we have now till we can do better and make a transition where people are in charge of their own economy. Until then credit cards don't necessarily need to be boycotted or seen as the devil.

[FallonRose]

I myself will probably never get a credit card in my life just because I'm very irresponsible with my money and to have virtually unlimited access to money could get me in a world of trouble. It just depends on how you are as a person with the responsibility of money. It can be a lot easier than you think to spend $5 here and $10 there and all of a sudden you've spent $150 (trust me, it's happened to me). Therefore, I will probably always stick to debit cards because it limits how much money I can spend (and won't let me spend any more after I've overdrawn the account $5).
Another thing that I don't like about credit cards is that those companies flood your mailbox with offers to open up accounts when they find records that you're in college because they frequently target college students due to their vulnerability and broke-ness. In my opinion it's just an opportunity to find yourself in a whole lot of debt and I don't think its worth the risk.
I think credit cards should only be an option when you are financially stable and can easily pay off the bill at the end of the month but that's just my opinion.
If in the future you find yourself looking at opening a credit card account, please please please make sure that you are at a point in your life where you know for a fact you won't have any issues in paying off the bill. You don't want a simple swipe of a card to ruin your credit history and keep you from getting a payment plan on a car or keep you from getting a new TV or apartment or house. It will follow you through your adulthood.

[DeletedAccount53]

We only use our debit cards. Our birth parents ran up a massive debt with BarclayCard and American express and had to pay off their debt in monthly installments. Adding interest to each month on the balance meant it took them three years to pay it off. Julie and I vowed never, ever, to have one.

We only buy what we need. Using plastic these days is far safer than cash and banknotes because of covid cross-infection. Therefore all we need do is swipe our card, then use our copper contact-free 'dibber' to press in the numbers. All don and dusted, the payment is auto-debited out of our bank account. It's the safest way.

Julie and I keep a tight spend, payments out (accepting our Direct Debit monthly payments for utility bills, and everything we buy gets entered into our ledger, always by Julie. This way we know what comes in and goes out., Admittedly there is gain from living in Monaco that is 100% free of any taxes, long since abolished by Prince Albert II. VAT is all anyone pays, the Principality's only income (other than the Casino where we are forbidden), so our income and outgoings have always been closely watched by us.

No debts for us with credit cards. Even if we get sent one in junk mail, it'll get cut in half and binned.

[Kate*]

I don't have my own, but my mom made me an authorized user of hers when I was 16 or 17 to help build my credit.. Since it's hers, I only use it with permission and very rarely. I think I used it for medical copays before I got my job and could pay them myself, and when I was in college, she gave me one for emergencies and said, just tell her when I used it so she would know to pay the bill. She always told me "Don't charge anything you can't afford to pay for by the end of the month." So, you don't wrack up debt unless there's an emergency or something that you'd never have enough to cover; like she had to replace the roof recently, major plumbing heating/AC issues car stuff etc.

I'll probably get one for myself eventually for big stuff like that, just so I have a safety net. There's nothing wrong with them as long as you're responsible.

[Dawn.]

Hi there,

As other users have mentioned, it depends on how you use them and they can be good to accrue points. I personally don't have a need for them so I don't have one.

[MWF]

I'm pretty anti-credit card. I dont think they're inherently useless or bad- its a good way to build credit, and they're not problematic for people who have a lot of financial discipline. But its psychologically less painful to use a credit card than cash, which can encourage you to spend more money while shopping. With cash, there's more transparency with what you lose: you see what you're spending when you spend it, and you're encouraged to spend less as a result. With credit, it's not your money, there's a delay with the billing, and you dont lose the plastic after swiping it. I'll drop a link for this study, but there was a study in 2008 that showed that people spent an average of $30 more on Thanksgiving with a credit card than with cash.

During covid it makes sense to have a debit card because there are less germs than with cash. Debit is also better than credit from a psychological standpoint because at least the money is coming from your own account. You won't build a credit score though.
Im aiming to check out of the whole credit/debt system. If I ever buy a house, I'm going to try to buy the whole thing up front after the inevitable next market crash.

https://www.psychologytoday.com/intl...or-credit-card

[Tennant]

I like to use a credit card during purchases, since you do not need to look for cash without giving up, and the seller does not need to look for the delivery itself.

[Proud90sKid]

Get one. Don't be like me: late twenties and zero credit history whatsoever because you used debit for everything. I did this because I kept hearing "credit was bad" all through my teenage years, so when I was in college, I just learned to use debit for everything/never needed credit- and that just kind of stuck with me because I never needed to go out of my way to sign up for a credit card. That was a bad decision.

It seems ridiculous to me that car insurance companies can charge me more , and landlords refuse to rent to me- all because I have enough money saved up to not need to borrow money in my daily transactions. Friends who were constantly broke and used credit cards, but paid them on time (often with parental money) are considered to be better with their money than me on paper. But it is what it is. Having no credit history is very bad and can be nearly as much of an inconvenience as having bad credit. With no credit history, I was paying a high rate of car insurance AFTER 25 despite a perfect driving record. Basically punished for having never had debt.

I think the best thing would be to get a credit card and just treat it like your debit : never pay what you don't have.

In the US, they are also required BY LAW to reimburse you for credit card fraud. They aren't required to do this for debit card (though my bank does).

basically: unless you are an idiot with your card, then it is actually much better to get one than not.