Credit cards | A scam or a tool?

[Ultegra134]

What's your thought about credit cards? Do you consider them a banking fraud, just to trick you to spend money you don't have, or a useful tool if used correctly? Do you have one yourself? In my case, as a student, I was issued a university card, which features a low yearly fee but also a considerably low credit limit. However, I often use it to pay bills in interest free installments (Car insurance for instance) and my gas expenses, which provide a decent cashback (I'll fill up my car once or twice a year for free).

On the other hand, there are quite a few shops here that also offer interest free installments, that way, I was able to purchase a bicycle for my girlfriend, when the budget was quite limited.

The trick on credit cards is to use them wisely, not spending more than you can afford, always pay in time, otherwise you'll get a huge interest on your balance, while at the same time, you're building a credit score.

What's your take on this? Are you against credit card usage?

[1715471407]

1715471407

[1715471407]

1715471407

[1715471407]

1715471407

[1715471407]

1715471407

[1715471407]

1715471407

[Poker Player]

I am not against it per se. Some authors, like Dave Ramsey, are totally against them.

Credit cards are a very profitable product for financial institutions. I have sometimes wondered how much profit they make from people who end up deferring payments, and therefore paying interest, but it is not information that can be easily found by doing a google search.

Regarding the stores that offer free installments, it is because they know that you end up spending more than if you had to pay cash.

I have a credit card but very rarely use it, to pay for air travel if I go on trips and things like that.

[kryptqnick]

I come from a culture where credits aren't considered a normal thing. You're expected to spend what you have or borrow from friends if you really need the money. If you want something you can't afford, you save money till you can buy it, rather than take a loan. I mean, there are people here who use credit cards, but it isn't very common, and having a debt is considered terrible rather than a part of normal life as I assume it is in the US. So while banks offered me some credit limit, I never use it. I don't want to be in debt, and I do the best I can with the money I own. In my country, we also have these microcredits which are very easy to get, but then the interest rate is absolutely crazy there (easily reaching 10x the amount you borrowed if you're late with payments), and so are collectors that come after you if you fail to pay them everything they say you're supposed to pay.

[Ultegra134]

I am not against it per se. Some authors, like Dave Ramsey, are totally against them.

Credit cards are a very profitable product for financial institutions. I have sometimes wondered how much profit they make from people who end up deferring payments, and therefore paying interest, but it is not information that can be easily found by doing a google search.

Regarding the stores that offer free installments, it is because they know that you end up spending more than if you had to pay cash.

I have a credit card but very rarely use it, to pay for air travel if I go on trips and things like that.

They are definitely a very profitable tool for financial institutions, since most people do not know how to use them properly and end up paying thousands in interest. I haven't missed a single payment in particular. On the other hand, installments are a way of trucking you into buying something more expensive, since you won't immediately notice the difference in price. You need to be persistent on what you're looking for and stick to that.

[dothebeats]

I do not have a credit card, nor have I ever accepted any offers my bank is sending my way in order to get one. But I am not fully against it, as long as people understand the risks and that they have the capability to pay for whatever they used. It's a better system than what loan sharks offer, and you are entitled to rewards whenever you hit a certain spending threshold which is okay-ish but not totally removing the fact that they impose exorbitant fees and high interest per month.

If you can, stay away from credit cards. But if you are the type of person that have lots of money and doesn't bring cash, use it. Otherwise, just live by your means and save for whatever you need or want.

[Dewi Aries]

I think who get bad impact of a credit card is someone who actually can't control what they want. Because if that people really can manage their money, with or without credit card they will know which one is important or not. Nowadays not only credit cards, but some merchant allow us to borrow money from them and pay it monthly, it is same with credit card, so with a lot of types of loan offer, it is all depends on us want to use it or not. Once again, we're not forced to created it and choices is all on ourself.

[LogitechMouse]

What's your thought about credit cards? Do you consider them a banking fraud, just to trick you to spend money you don't have, or a useful tool if used correctly? Do you have one yourself?

Credit cards are either a good thing or a bad thing depending on how you will use it.
I'm from a country where people mostly using credit cards to buy some stuffs either online or in malls. I myself don't have one and I'm not planning to have one too. I don't know the exact reason but I don't want to have credit card ever since.

The trick on credit cards is to use them wisely, not spending more than you can afford, always pay in time, otherwise you'll get a huge interest on your balance, while at the same time, you're building a credit score.

One word. Discipline.
Your trick will work only with the people who have discipline on themselves. I know somebody who are using credit card whenever he goes to a mall. Now come this pandemic and he lost his job and can't pay his credit card debt. Luckily there is somebody who let him pay his debt and then he will pay that person monthly with a lower interest. Like I said, having discipline is the key if you want your credit card to be a tool that will help you.

What's your take on this? Are you against credit card usage?

Well like I said, credit cards are either a good thing or a bad thing depending on the user using it. If the user doesn't have discipline and he just uses his credit cards and don't know how to pay in time then it will be a burden for him and vice versa.

[Taskford]

What's your thought about credit cards? Do you consider them a banking fraud, just to trick you to spend money you don't have, or a useful tool if used correctly? Do you have one yourself? In my case, as a student, I was issued a university card, which features a low yearly fee but also a considerably low credit limit. However, I often use it to pay bills in interest free installments (Car insurance for instance) and my gas expenses, which provide a decent cashback (I'll fill up my car once or twice a year for free).

On the other hand, there are quite a few shops here that also offer interest free installments, that way, I was able to purchase a bicycle for my girlfriend, when the budget was quite limited.

The trick on credit cards is to use them wisely, not spending more than you can afford, always pay in time, otherwise you'll get a huge interest on your balance, while at the same time, you're building a credit score.

What's your take on this? Are you against credit card usage?

It will never be a banking fraud if the person who gets it knows on how to handle his financial needs, but if they are heavy spender then this is totally a huge problem for a person. I also think that this credit card thing is created to make of each people easy and they can pay everywhere without carrying bills but this one was been  abused by some people that's why they suffer the consequences on what they do and this is actually not a bank fault since in the first place they are just doing a business and the one who came to them to get that is their client/costumer.

[stompix]

I come from a culture where credits aren't considered a normal thing. You're expected to spend what you have or borrow from friends if you really need the money. If you want something you can't afford, you save money till you can buy it, rather than take a loan. I mean, there are people here who use credit cards, but it isn't very common, and having a debt is considered terrible rather than a part of normal life as I assume it is in the US. So while banks offered me some credit limit, I never use it. I don't want to be in debt, and I do the best I can with the money I own.

Sorry but this is just .....
- you get a new job offer but you don't have a car to get there so and your old job isn't paying you enough to put that much aside to buy one, what do you do?
- you need a new laptop to ease your work and get more freelancing done but with your old machine you can't get enough projects to afford a new one, what do you do?
- your house heating is down but you don't have enough money, you need to save it for 5 months to pay upfront, you spend all winter in cold?
- you want to move out but you don't have the money to buy an apartment, you pay rent instead of paying back the loan for 30years?

What's your thought about credit cards? Do you consider them a banking fraud,

How could this be a fraud?
What is the fraud in offering you a credit card?

[jrrsparkles]

Credit card is to bring more consumerism in this world, and its not a fraud which is just a trap so its your choice whether you want to fall into it. But I will say having credit card has its own benefits for the people who has the capability to pay the due on time so their credit score will get better so they will get loans at less interest rate which can save a lot of money for them.

Another thing is cashback and redeem points which can be used on selected outlets depends on which kind of card you owns and have you ever heard a story of a man who travelled the whole world with zero spending by utilizing credit cards wisely.

[RickDeckard]

Credit cards, when used correctly, can reveal themselves to be quite handy tools when we are talking about saving money. I'm not talking about USA conditions / rest of the world, but I do know that in some countries in Europe having credit cards means that it's your only way to enjoy the benefit of "cashback". The way this works is simple:

• Most credit cards providers (that I know of) have an annual limit of cashback amount - lets say 200 € (for example)
• You get a % back of your money - usually between 1 - 2 % - whenever you make a purchase. Some credit cards providers lock the cashback effect on some purchases - they only apply to food, restaurants, gas, etc - while others don't apply any special condition
• Most people that know what they are doing, pay all of the credit used at the end of the month - thus not paying high taxes on the "lent" money
• When the annual limit is reached, they stop using the credit card.
  

If we assume that, in a family of 4, both the mother and father use this card, per year we're talking about 400 € in savings! In 5 years we're talking about 2.000 €! The main problem of credit cards is that people have to be fully aware of what they are doing and where they are spending their money - and it's in this scenario that most people fail sadly. I think that financial knowledge concepts should be taught early in our lives because it would create a society that would be fully aware of many concepts ( & dangers ) that exist in this world. If you're not literate enough regarding credit cards, instead of seeing them as a way to save money, you'll see it as a way to satisfy your current needs while sacrificing your future financial situation. But since we live in an era where consumerism is incentivized, if you aren't fully aware of what you're doing regarding your financial status, you'll get lost in it. Badly.

That's the danger of credit cards and it's the reason why credit card providers do what they do - They know that if used correctly they wouldn't be getting any money (again, maxing out the 200 € per year and stop using it until the next year) but the percentage of people doing it is so small that they assume the loss because most of their users default on the payments and get slapped on their face with high interest rates to pay back their debt.

[Wexnident]

Uhm, it's not a scam, fraud, or anything like that? It's simply a service that they offer you so that you're able to invest in something that could idk, depends really on what it is for. I mean I'd reckon the only justifiable reason to use a credit card is to invest something you don't have to make your work easier, e.g. a laptop, monthly fees for applications, etc. Credit cards ain't rocket science, you just need to manage it with the proper mindset. Credit cards are a thing for a reason, it's completely legal and very user friendly if, IF, used properly imo.

[Fatunad]

Uhm, it's not a scam, fraud, or anything like that? It's simply a service that they offer you so that you're able to invest in something that could idk, depends really on what it is for. I mean I'd reckon the only justifiable reason to use a credit card is to invest something you don't have to make your work easier, e.g. a laptop, monthly fees for applications, etc. Credit cards ain't rocket science, you just need to manage it with the proper mindset. Credit cards are a thing for a reason, it's completely legal and very user friendly if, IF, used properly imo.

Scam or fraud in the sense that you would be charge up those horrendous fees but if you are a credit card user and able to manage it well then i dont see for it to be a scam.

All you do need to do is to control on yourself on how to make use of it on the sense that you arent really risking something which you cant able to repay on.

Its a tool and if you dont like on being charge of those high interest just because you havent able to pay up on due then dont get credit card on the first place.

[The Cryptovator]

I am not actually against using a credit card but I do not use that. The most important reason is personally I like to spend what I have. So I use a debit card instead of a credit card. Second, it's not very easy to get a credit card from a bank in my country. They have so many conditions which are quite annoying to me. I am wondering to get one after a few days if possible. The reason is sometimes we can get some discount on credit cards especially from online services or platforms. I won't consider it a scam, but it depends on how are you going to use that.

[stadus]

It depends on how you'll use it, credit cards are issued by banks, they are regulated and therefore they are not scammed.

If you own a credit card and you are not a wise spender, then most likely you'll suffer from the interest, and worst is from the penalty if you get delayed with your payment. Let's put it this way, it's a burden for those who don't know how to manage their credit, but it will benefit people who use a credit cards for convenience.

[abhiseshakana]

Uhm, it's not a scam, fraud, or anything like that? It's simply a service that they offer you so that you're able to invest in something that could idk, depends really on what it is for. I mean I'd reckon the only justifiable reason to use a credit card is to invest something you don't have to make your work easier, e.g. a laptop, monthly fees for applications, etc. Credit cards ain't rocket science, you just need to manage it with the proper mindset. Credit cards are a thing for a reason, it's completely legal and very user friendly if, IF, used properly imo.

credit cards are not fraud because the issuing bank explained clear standard trading conditions when we make the application. Convenience is always sought and sought, both in meeting needs or avoiding losses. Since ancient times, humans have always struggled with the dynamics of life to seek the conveniences that lead them to happiness. The existence of a credit card not only makes transactions easier but also makes it easier for people to get what they want even though they don't necessarily need it. Something that is repeated will become a habit and credit cards are examples of tools that facilitate bad habits (debt) become normal, even many people are proud to have a fantastic credit card limit. We can plan for the future but no one can guarantee that we can always make money in the future. So be wise in using a credit card

[Cling18]

As for me, banks will benefit more from it than the users. It's another way for them to attract more users to borrow and loan more from them which is also deceiving at the same  time. However, we're still responsible for how we're going to handle and use it. We shouldn't use it if isn't necessary so we'll never fall into deep debt. Banks are too wise yet we should be wiser than them.

[mitchr4]

I have never and will never use a credit card. But I do not consider that credit/debit card is bad, instead it makes easier for people to spend money at the store with get promos and discounts. The uses of credit card that i don't like is they provide a high fee for each transaction, more over if we are late in paying monthly the interest will also be high.
The use of credit/debit cards is also very vulnerable to banking crimes. By taking the card number and code on the back of card, it is usually issued when we shop online or offline. I think we should also periodically check for suspicious transactions.

[amishmanish]

Its amazing that my own thought about credit card changed while reading through the thread. A few things that can be said for sure are :

1. They are a cultural thing and usage vary accordingly.
2. They are a boost for consumerism.
3. What you do with it says a lot about your own financial discipline than the credit card corporations.
4. If used correctly, they can be a handy tool for savings.

Personally, I like that they offer perks like discounts and most importantly, airport/ Railway lounge access. LOL. On the other hand, while I won't consider them an absolute banking scam, i don't think they are wholly innocent either. This is because of the horrendously complex method of calculating the interest and the high rate of personal interest loan that they charge on your purchases. This is when they become a tool to lock people into debt.

Overall, I don't prefer credit cards and would love to avoid them except that there are certain instances when it is only possible to make payments through them. I like to keep them exclusively for those purposes, and of course, the lounge access.

[jrrsparkles]

I am not actually against using a credit card but I do not use that. The most important reason is personally I like to spend what I have. So I use a debit card instead of a credit card. Second, it's not very easy to get a credit card from a bank in my country. They have so many conditions which are quite annoying to me. I am wondering to get one after a few days if possible. The reason is sometimes we can get some discount on credit cards especially from online services or platforms. I won't consider it a scam, but it depends on how are you going to use that.

If you simply follow the same thing even after having your credit card then its going to be beneficial for you, maybe the credit score calculations are different in each country but still it plays a huge role in that and also as I said previously you will get cashbacks and literally at zero interest rate you are getting a loan with lot of perks but only one thing is never default the credit card loans which is what the banks wanted so they will collect huge interest rate for the pending amount which may varies from 30 to 60% per annum.