Credit Card Question

[midnight]

I hope this is not a stupid question, but is there anything good about credit cards? I don't understand why everyone has them if everyone seems to think they are so bad.

[2moretrees]

Re: Credit Card Question

I don't understand why everyone has them if everyone seems to think they are so bad.

Why do people smoke when they know it is bad for them? They become addicted. it is the same thing with credit cards.

[DivaJen]

Re: Credit Card Question

I don't think credit cards are inherently bad. How one uses them is the key. Using my credit card wisely won't harm me. Using it foolishly can.

Personally, I like the statements each month that help me track expenses and provide additional proof of purchase should I need it. I like not needing to worry about carrying a lot of cash, or even my checkbook. (I can carry a smaller bag if I leave my checkbook at home.)

[jeffrey]

Re: Credit Card Question

I don't think credit cards are inherently bad. How one uses them is the key. Using my credit card wisely won't harm me. Using it foolishly can.

That is absolutely correct...unfortunately, many people use them freely without realising the true financial cost.

If you do use your credit card and pay off the ballance each month so you don't incure any interest charges, there can be quite a few advantages.

[midnight]

Re: Credit Card Question

Thank you for the information. I think I understand a little bit better now.

[byusteeler]

Re: Credit Card Question

I love my credit card. I have had a discover card for about 13 years. I have never paid them dime of interest or any fees. They me cash back. I pay it off every month. You can't use the credit card to break the budget though. You have to budget just as you normally do. For expample If you have $100 for gas and you have spent a $100 for gas you can't buy more just because you have a credit card. I use my card for gas, groceries, gift purchases dining out etc. I also have a visa for emergencies in case I did have to put something on the card and leave it for a few months but I don't use it often.

[pennywise]

Re: Credit Card Question

I love my GM credit card. I have the original. Last year I paid 7000 dollars for a 12000 dollar automobile. I get 5% back, never paid interest either. The company charges the merchant a fee who then jacks up the price of what you are buying. I pay my bill every month. I like one bill, to see the charges, and one stamp for payment. It takes discipline. Oh, and thanks to you all - Upromise is now added to my GM card and I got the $3 bonus to start. Today I went grocery shop and Mueller's noodles were buy 2 get 2 free, plus Upromise.

[Tree0164]

Re: Credit Card Question

It is the way people use credit cards. A lot of people think that they are "free money" and get up to their eye balls in debt. I was one of them in my younger years. I learned my lesson.

I don't personally use credit cards now but don't fault anyone that uses and them pays them off monthly. However the majority of people do not do that.

[jmjj215]

Re: Credit Card Question

I enjoy the cashback of a credit card that has never incurred a penny of interest. It is auto-payed each month also. That cashback amount ends up being about one month's worth of groceries each year. Nothing to sneeze at.

[jhd815]

Re: Credit Card Question

Credit, or credit cards, are not necessarily a bad thing. They can be used wisely or foolishly. Credit cards help you establish a credit score or rating - an overall view used by creditors and merchants to see how you handle your finances and pay your bills.

A good credit rating helps you get the best interest rates on cars, homes, and loans.

A poor credit rating hurts you because you wind up paying higher interest rates than those with good credit, and may keep you from being able to afford a house, rent an apartment, buy a car, or even get a job.

The biggest problem I see with credit in general is that I was never taught about it when I was in school and thus learned the hard way, probably similar to many others who have posted on this forum.

After college I was inundated with credit card offers which I was all too happy to apply for and use - foolishly. I didn't care or even think about the amount I was charging. I only focused on paying the minimum payment each month. It wasn't until much later, in my late 20's early 30's, that I realized all the money (my money) that I had wasted over the years in interest charges and fees, money that I could have invested or saved, etc.

I've come across a site that I'd like to share with everyone, especially those with teenagers. The site is called The FIRM Program - (Financial Independence, Responsibility and Management) is a comprehensive educational program designed specifically to help provide financial literacy and responsibility to teenagers.

Developed with input from parents, teens, educators and financial experts, the FIRM Program offers two comprehensive, interactive modules.

Although I have no children, I wish I had had something like this to help me learn about credit and more importantly, the responsibility of handling credit.

https://www.firmprogram.com/firm/content/style1.do?nav=n2&id=frc_overview_program

[jmjj215]

Re: Credit Card Question

I do NOT like how a credit score determines things like your auto insurance premium. I understand they have statistically proven that bad credit = higher payout per insured, but they haven't yet considered the fact that if you don't have a credit score at all (you've never borrowed money) you're probably a pretty good bet on insuring - and the insurance companies disregard this class of people in their analysis.

I think credit scores are stupid pretty much - but we're being forced to comply because of the above and other issues (background checks for employment). Bankers used to actually look at your finances, not some stupid three-digit number.

[meaghanchan]

Re: Credit Card Question

jmjj: I completely agree. I went out to college determined not to get a credit card, not to ever get into debt. Two years later, when I decided to move off campus to save money, landlords didn't even want to consider me because I had no credit. I learned my lesson-- I got a credit card and pay it off every month, just so that I have a credit score. But I would rather so much didn't depend on it. It's silly that it's looked at for employment, and for auto insurance.

[jmjj215]

Re: Credit Card Question

Meaghanchan, sorry about that. We're in the exact same boat pretty much. Mine wasn't with landlords, but I was applying for auto insurance and they said my nonexistent credit score was just as bad as a bad credit score. So I went out and got a credit card with some cashback. The payment on the balance in full is paid automatically by my bank. Nothing's changed with our finances except that we have a float for 1-2 months with OPM (which I couldn't really care less about) and we get about a month's worth of groceries in cashback for the year.

[pennywise]

Re: Credit Card Question

the firm internet site is interesting. However, what are the risks to putting your finances on the computer with internet access. Nothing like old fashioned schooling. Pen and paper are best to start. Chalk and talk has worked for many many years. There is no interest charge, therfore, no penalty for lack of discipline. I vote for a regular card to the teen who must pay it themselves, along with parental guidance of course. I take my dtr to the library 2X week and teach chalk and talk style. Why not you?