Credit cards | A scam or a tool?

[teosanru]

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?

Trust me if you know how to use a credit card wisely and smartly, it's just free money that the Banks are lending you for 60 days or so. But if you are not financially wise and don't know how to manage your credit cards wisely they will ruin your financial status, not only will you end up paying very exorbitant interest rates but also will be spoiling your credit scores at various instances and not only this you will be tricked into spending much much more than what you have especially if you are being offered the facility of EMI where you can split the expenditure into monthly payments, this mentality of living paycheck to paycheck is really bad and credit cards are the prime reason people get stuck in them.

I know for a fact that most people aren't using them correctly, I've even seen it from my environment. It's definitely not free money, but I get what you mean, via credit cards, you're basically given an interest free loan, provided that you're careful enough when using them. I've also managed to postpone doses, by buying something the last day of the month, right when the monthly bill is issued. We don't have the credit score system here, I've mostly seen it in the USA if I'm not mistaken.

No Actually in my country there is no interest rate or charges of credit card as long as you make full settlement on the invoice due date of your credit card. The banks or the credit card companies earn primarily from the vendors which have POS machines with them they take a percentage on every payment made through them. The only way credit card users earn from their customers is when they skip or defer payments, they even offer to conver the outstanding debt in form of a personal loan and earn interest on that.

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[beerlover]

I have used a credit card but if we are not wise in using it then our debt will pile up

I stopped using credit cards when the interest on my debt seemed eternal and never paid off even though I always paid on time, since then I realized that credit cards are just a bank tool to bind users

Be wise to use a credit card, don't use it to spend on luxury items that are not important

What you say is right. We need to be wise using a credit card because the credit card is just a tool and give easiness to us to pay something without using our money but at the end of the month, we still need to that debt to the credit card company plus the fee. Because of the easiness to pay anything we want, we can forget to control the use and make us pay a lot of money at the end of the month. I still prefer to use a fiat or debit card because that gives me an allowance to control the use of my money.

I have never owned a credit card in my life because of this. A cheat that I have is that my wife does have a credit card, I do not use it at all but she likes to use it and she pays it with whatever she earns, the only times we ever had to use it was when we had hospital issues and health issues, which I had to use a few times as well, so I did used credit card twice in my life thanks to my wife, but that's it.

I do not use it on my regular life and our home doesn't get anything with credit card. She just likes to buy shoes, dresses, make up all the things women usually buys and uses her credit card but we always cover everything at the start of the month without a problem, we never go beyond and leave a debt. I handle everything about the house, all the food, all the groceries, all the needs, bills everything and pay straight out of my pocket. It is still a card, it is just debit card that pays from what I have and not create any debt.

[Ultegra134]

 I want to point to the fact of, so, either with credit or debit cards,
 In a first side merchant needs to pay fees to become accepting them
 In other side when paying with cash there's usually a tax for doing so

 So a tool to pump money from the people?
 And over onwards, a tool to take control over people money?

Both cards are mean of payment to make our lives more convenient. There's no such a thing as a shop not taking card payments nowadays. It's not convenient nor safe to hold large amounts of cash in your wallet. It's a quick and easy way to make transactions and even withdraw money.

[arallmuus]

The trick is to not get stuck in a loop of purchasing items you don't need, which is extremely common when installments take place. Especially during the pandemic, with shops closed, online purchases covered the majority of transactions. It's best if they are used to cover large bills (electricity, insurance and so on), with installments, as it eases the month's budget.

You cant really apply for higher credit if your credit score is on the lower side which is why people tend to use their credit card for most payment then pay it in full / installment after that simply to raise their credit score.

It is still a card, it is just debit card that pays from what I have and not create any debt.

I dont see why you wouldnt want to use your credit card when you have the cash to pay for it. Aside from raising your credit card, Its kinda bad to spend a lump sum amount on something so using credit card is another option to 'save' your money so you can use it for some other emergency situation or some other stuff that you might need

Well of course if its only a small amount, I kinda understand that some people would want to avoid using it but if it is lump sum of money then its better with credit card

[karanggatak]

the trick is, find online shop who give you cashback or discount when you buy with credit card. my friend use credit card to purchase thing than take the cashback as much as he can, just spend for it and never use for the other thing, because cash is better than credit

[stadus]

In my opinion, a credit card is a means of payment that makes it easier for us if used wisely and also must understand its use properly and correctly.
and credit cards are one of the conveniences offered by banks to borrow and borrow goods, and but we must remain vigilant when we have a credit card, if we are not wise in using it, it is not impossible that we can get into debt that will never be paid off if we use it haphazard.

If you don't control yourself you mind end up in big debt, and you'll not be able to use your credit card anymore and you will be blacklisted due to bad credit history.  But fortunately for those who have outstanding loans from credit card company, they don't need to be afraid because no one gets jailed on credit card loans, it will only give you a bad reputation on your credit history.

read;
https://www.moneymanagement.org/blog/can-you-ever-go-to-jail-over-credit-card-debt

[The Sceptical Chymist]

I wouldn't call them a scam--more like government and bank-sanctioned usury, which is generally illegal if you're not a big financial company charging outrageous interest rates.

But am I against them?  Yes, personally.  And they're not for everyone, and certainly not for people who don't know how to manage money well.  For people who are financially responsible, they can come in handy in case of emergencies and will help those folks build up their credit scores.  The problem (at least as I see it in the US) is that a lot of people want to live way beyond their means, and credit cards seem like free money to them since they don't have to pay off the entire balance at the end of the month.  Thus I see people complaining about credit card debt constantly--because they've maxed out their cards and likely have a few of them, too.

So ultimately I think they can be good or they can be bad; it all depends on whose hands that credit card is in.  I wouldn't want to see a time when they weren't available to people, because they do have benefits as I said...but you have to be very careful with them, because interest rates are so high, and there are probably fees associated with your card that you're not aware of unless you dug into the fine print.

[michellee]

I have used a credit card but if we are not wise in using it then our debt will pile up

I stopped using credit cards when the interest on my debt seemed eternal and never paid off even though I always paid on time, since then I realized that credit cards are just a bank tool to bind users

Be wise to use a credit card, don't use it to spend on luxury items that are not important

What you say is right. We need to be wise using a credit card because the credit card is just a tool and give easiness to us to pay something without using our money but at the end of the month, we still need to that debt to the credit card company plus the fee. Because of the easiness to pay anything we want, we can forget to control the use and make us pay a lot of money at the end of the month. I still prefer to use a fiat or debit card because that gives me an allowance to control the use of my money.

I have never owned a credit card in my life because of this. A cheat that I have is that my wife does have a credit card, I do not use it at all but she likes to use it and she pays it with whatever she earns, the only times we ever had to use it was when we had hospital issues and health issues, which I had to use a few times as well, so I did used credit card twice in my life thanks to my wife, but that's it.

I do not use it on my regular life and our home doesn't get anything with credit card. She just likes to buy shoes, dresses, make up all the things women usually buys and uses her credit card but we always cover everything at the start of the month without a problem, we never go beyond and leave a debt. I handle everything about the house, all the food, all the groceries, all the needs, bills everything and pay straight out of my pocket. It is still a card, it is just debit card that pays from what I have and not create any debt.

You should be grateful that your wife can control herself using a credit card because some wives lose control when they go to the mall and see many branded products and want to buy using their credit cards. I can say this because some of my family friends do that and fortunately, their husbands can pay the debt at the end or start of the month.

I rarely use debit cards and I do not own a credit card because I do not like debt. I still prefer using cash or transferring the money directly to the third party I often use to pay my bills. But I prepare my debit card just in case I do not carry enough money to pay with cash.

[xSkylarx]

I have used a credit card but if we are not wise in using it then our debt will pile up

I stopped using credit cards when the interest on my debt seemed eternal and never paid off even though I always paid on time, since then I realized that credit cards are just a bank tool to bind users

Be wise to use a credit card, don't use it to spend on luxury items that are not important

What you say is right. We need to be wise using a credit card because the credit card is just a tool and give easiness to us to pay something without using our money but at the end of the month, we still need to that debt to the credit card company plus the fee. Because of the easiness to pay anything we want, we can forget to control the use and make us pay a lot of money at the end of the month. I still prefer to use a fiat or debit card because that gives me an allowance to control the use of my money.

I have never owned a credit card in my life because of this. A cheat that I have is that my wife does have a credit card, I do not use it at all but she likes to use it and she pays it with whatever she earns, the only times we ever had to use it was when we had hospital issues and health issues, which I had to use a few times as well, so I did used credit card twice in my life thanks to my wife, but that's it.

I do not use it on my regular life and our home doesn't get anything with credit card. She just likes to buy shoes, dresses, make up all the things women usually buys and uses her credit card but we always cover everything at the start of the month without a problem, we never go beyond and leave a debt. I handle everything about the house, all the food, all the groceries, all the needs, bills everything and pay straight out of my pocket. It is still a card, it is just debit card that pays from what I have and not create any debt.

You should be grateful that your wife can control herself using a credit card because some wives lose control when they go to the mall and see many branded products and want to buy using their credit cards. I can say this because some of my family friends do that and fortunately, their husbands can pay the debt at the end or start of the month.

I rarely use debit cards and I do not own a credit card because I do not like debt. I still prefer using cash or transferring the money directly to the third party I often use to pay my bills. But I prepare my debit card just in case I do not carry enough money to pay with cash.

In the same way, there are some people who can't keep their credit cards from being used by themselves or their family members; I'm not sure why they enjoy being in debt just because they are purchasing their desires. As for me, I don't have a credit card, not because I don't like debt, but simply because I don't like it; if I don't have money, I shouldn't buy something because I can't afford it. When people advised me to obtain a credit card, I simply replied, "No, thanks, I don't want that." Also, there are online shopping sites that allow you to borrow money in order to make purchases on their website. A lot of people appreciate this, but I personally do not. We should exercise self-control when it comes to these items because we will be required to pay for them afterwards.

[harizen]

Should we blame the card itself? It's like saying gambling is good or not.

I owned 2 credit cards and in some cases before, it save my ass for urgent needs. In return, I need to pay on that how I save my ass. Fine by me. If it's used on unnecessary things and non-wise spendings, I would say there's a problem with the owner.

But what if those owners can afford to spend on those unnecessary things and non-wise spendings? I would say, their money, their rules and we should stay out of that.

[BlackMan8]

This is really convenient. I am also using this credit card. It is good to spend the amount within your own ability, and waiting for the next month to repay the money on time, there will be no impact. Don't spend a lot of money just because you own a credit card, the interest on it will become unaffordable for you.

[davis196]

Credit cards are just a tool.It depends of how do you use them.
Use them responsibly and you will get some benefits(cashback,higher credit score,etc.). Using them responsibly means paying off your credit card debt as fast as possible,before the interest rates strike you.
Use them irresponsibly and you will get into debt.Maybe that's what the banks want,but this is isn't a scam.
Nobody is forcing you to use a credit card.You choose whether or not to use credit cards.
Debt and borrowing money isn't bad.It can help you scale your business or pay for some necessary expenses.
What matters the most is how effectively you are using the money you borrowed.

 

[stompix]

Reading these replies have a feeling a lot of the poeple who have never used one and are against these don't even know how these work.

If you're in college and you earn 400 euros from a part-time job (EU) you won't get a credit card with a limit of over 1000E, don't even dream of getting thousands and thousands of euros in a credit line. For example, my current credit card limit is at around 4 monthly after-tax wages, and this is only because I have one credit card, no outstanding loans, have never been late with a payment and I get my wage directly in the same bank account.

Also, I don't know how this works in the US on their credit score but here there is a maximum % you can get, so the difference between poeple making  1k and 2k  a month is not just double it's way more than that, the worse you are the less money you can get, in worst case scenario you won't get a credit limit even with a monthly wage.

Yes, you can get into debt if you don't pay at the time, but, you need to have a  serious wage and at the same time don't pay back, go only for purchases that are not payable in installment, like cash withdraws and not make a sine payment back in the usual 35-55 days no interest grace period.
But seriously now, you go there and you sign a contract, how could you blame the banks for asking you to give back the money you happily spent all aware of the fact that you need to pay it back?

[philipma1957]

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?

Credit cards are a tool.  They can be used foolishly or wisely.

I have  charged well over 1 million  in cc charges.  I have paid under 500 in interest and fees and I have collected over 10,000 in cc bonus points.

Granted I am older 64 and have had the time to do this. But you are younger and can do the same thing.

[michellee]

In the same way, there are some people who can't keep their credit cards from being used by themselves or their family members; I'm not sure why they enjoy being in debt just because they are purchasing their desires. As for me, I don't have a credit card, not because I don't like debt, but simply because I don't like it; if I don't have money, I shouldn't buy something because I can't afford it. When people advised me to obtain a credit card, I simply replied, "No, thanks, I don't want that." Also, there are online shopping sites that allow you to borrow money in order to make purchases on their website. A lot of people appreciate this, but I personally do not. We should exercise self-control when it comes to these items because we will be required to pay for them afterwards.

I remember some parents telling me how their kids use their credit cards to buy something on the internet. They said that they allow their kids to buy things through the internet but suddenly, in the second month, they see the bills containing so much stuff their kids buy and made them yell and confused about how to pay that debt.

It is a story about parents who can not control the use of credit cards. A credit card is just a tool that helps us buy something when we do not carry money in our pocket so we must control the use and not easily give access to our kids. A credit card is like a knife that has two faces, depending on how you use it. And the banks are not easy to invite people to have credit cards and people needs to have some requirements before they can apply.

[josephdd1]

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

I don't have a credit card as I think that when you take loans just for your needs and wishes, it is a path to poverty. If you want to become financial free, you should pay off all your bills and create passive income sufficient for paying your month expenses. On the other hand, I am not against loans that are used for business or studying and you have take it on favorable terms.

[Vaskiy]

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

I don't have a credit card as I think that when you take loans just for your needs and wishes, it is a path to poverty. If you want to become financial free, you should pay off all your bills and create passive income sufficient for paying your month expenses. On the other hand, I am not against loans that are used for business or studying and you have take it on favorable terms.

That's one view. In another aspect credit card is beneficial. As you said loans are path to poverty. No doubt in it. Most of the people who go for a loan are due to situation. If a person is in need of $500 and if he goes for a loan. It too has the interest and something needs to be provided as collateral. With credit card the thing is different. We can use it prior and pay within a month's time. This way I find credit card to be a tool for avoiding short term loans/circulation of money.

[AicecreaME]

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?

This is a good question. For me, a credit card can either be a form of trick (not really a scam) or a tool depending on how you will use it and how you will view it.

Most people particularly those who are working have credit card/s. This is often issued when you have a good record in financial aspects such as having no records of deferred credit loans, having a stable and high-paying job, or having a good amount in your bank account. The credit limit increases as often as you use it and if you pay diligently. For other people, it is a form of scam from the banks to gain more profit because people are too blinded with what they seem a good offer. But actually, this is just like any other business there is. Of course, they still have to make a profit out of their capital, hence the justification of interest rates that they have for every loan you make.

I must say that this is a very good business idea from the central organization because they address the demands and needs of their clients in order to benefit from it. You see, people need and love money. Some are even blinded by it, that is why it is a good business strategy to offer something you know they can't resist. The time people would give in is the moment of winning for the banks (most especially if the person to who they offered credit cards is not really wise in handling the financial aspect). People who are too carried away with the benefit of having a credit card mostly end up spending it on nonsense matters, hence as a result they end up having huge debts to pay for.

But to others, like me, I view it as a tool. An important tool that could help you get by and even make you a profit. It just boils down to how you will use it. You see, there is a thing called good and bad debt. Bad debt is something that you took a loan for but won't make you a profit. In short, bad debt is a luxury. Meanwhile, good debt is something that if you take a loan for it, could benefit you and could possibly generate you an additional income. For an instance, when you pay your bills using your credit cards. The act of paying your bills is your responsibility, hence you used your credit card right because after all, paying bills is inevitable and you have to do it to avoid cutting of services. In this scenario, you have avoided the inconvenience of paying thru service centers at the mall and at the same time the inconvenience of possibly having a disconnection. In addition, you also earn a credit limit here for paying your bills. It's a win-win scenario for you - you have paid what needs to be paid and earned points that you could use to reward yourself or pay for anything important in the future.

Another example would be buying and selling using a credit card. This is so far one of the best ways on how you could utilize your credit card. You can buy anything which is in demand like gadgets or appliances and then sell it with a little additional price as your profit. This could really generate you money because most of the time, purchases made using credit cards have discounts and have 0% installment fees/ interest rate (depending on the company of your credit card). This way, you could earn and you could earn points again which is an advantage on your part. Or if the risk of buying first without a sure customer scares you, you can do a pre-order of items so that you already have a sure customer and sure sales.

The bottom line is that people are in charge of how things will work in their favor. If you aren't disciplined enough, then I guess you will paint credit cards as something so bad because it brought you "hell", not focusing that it was actually your own doing. Or you could view it as a tool that could give you additional income and convenience because you use it right and not impulsively. The answer is in your very own hands, so decide accordingly. Just a friendly reminder though, if you really want something but you can't afford it yet, and you know it won't really be a money-maker to you, then just save until you can buy it. You wouldn't want to be bothered and anxious about unpaid balances that keep on generating interest, do you? Spend responsibly, everyone.

[Lotus]

If you use a credit card with some sort of reward and never carry a balance, then it's a net positive tool. You gain interest on the delayed payment and you get the extra rewards on top.
If you can't control your spending, then a simple trick you can try is to just put equivalent money somewhere each time you purchase something, so you know you got it covered.

[NeuroticFish]

If you use a credit card with some sort of reward and never carry a balance, then it's a net positive tool. You gain interest on the delayed payment and you get the extra rewards on top.
If you can't control your spending, then a simple trick you can try is to just put equivalent money somewhere each time you purchase something, so you know you got it covered.

Very well said.

Credit cards are a tool. A great one. They are usually better insured/protected against theft too. In the past ~20 years most of my family's purchases were made through credit card, and we've never had to pay any interest because we've just transferred the missing money back in time. Lately we even get rewards that cover greatly its issuing cost too (and some extra).
Of course, our CC was ever set in a way it never covers more than the monthly income.

Of course, if one is careless with the spending, credit card makes it too easy to spend much more than afforded and get into trouble. But blaming the tool or seeing it as a scam is wrong/incorrect.