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Are people really that bad managing their credit cards?

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Madness said:
They do teach math in school. I mean why is common sense the schools fault or that kids should be forced to take this. Where are people's parents as well? Nothing is stopping people from learning especially in the era of the internet. They have interest free student accounts, young adult banking accounts etc. I mean it's like what would the classes teach that people wouldn't know? That if you charge money you have to pay it back etc.
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I agree that there is some ignorance from parents pre-crash and school price mega inflation. Going to a university was set as "the thing you have to do" and I think a lot of questions that should have been asked during the mid 2000s weren't asked. Luckily, people are asking those questions now about the best route for getting educated for a field. Some cases, going to university isn't necessary, or at least going to a community college first and saving thousands.
 
Average credit card debt in the US is supposedly 15k, and based on what I've seen at work, it's entirely accurate. I can't even imagine carrying a balance that high. Highest balance I ever carried besides school/car/house was 4k for lasik, and that was 0 interest and was paid off within a year.
 
BoboBrazil said:
There are still so many clueless people that think carrying high or maxed out balances builds credit.
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Lol that reminds me my cousin had no idea why his score wasn't going up when he 1st starting using credit. He said he was carrying a high or maxed out card every month but paid it off in full every month. The funny thing is the rest of my family who were in the conversation were just as confused as to why his credit score didn't go up.
 
Nelo Ice said:
Lol that reminds me my cousin had no idea why his score wasn't going up when he 1st starting using credit. He said he was carrying a high or maxed out card every month but paid it off in full every month. The funny thing is the rest of my family who were in the conversation were just as confused as to why his credit score didn't go up.
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But shouldn't his credit score be going up if his balance was being paid in full every month, regardless of what that balance is?
 
Be me
Get credit card with only 6.9% interest.
Never miss payment for years and years.
Recession hits.
Boom, credit card company jacks up my interest to 29% because reasons.
Still paying it off but was able to transfer to a lower interest card which is still too high.

Refuse to ever care about my credit score again.
Refuse to ever get another credit card ever again.
I just decided to quit playing the game. It's all a scam, the whole thing.

From now on if I can't buy it outright I don't need it. Not even if I decide to buy a house, if I can't pay for it outright screw it. Even the car I drive now I paid cash for.
 
industrian said:
I've been debt free since 2011. It's a great feeling.

I wish I could go back to 2005-2008 and slap the shit out of my younger self for constantly being balls-deep in an overdraft. I was an ignorant cunt back then.



While I agree that this is a personal choice/responsibility matter, in early 2009 my bank gave me a credit card with a £2000 limit even though I just told them that I was unemployed and leaving the country. I didn't even ask for or want the card, but at that point they had essentially given me the card so I took it. I'm still amazed that it happened.
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Same stuff happened to me, basically sign this for a £2,000, £4,000, etc card. Offered, very few questions asked. I had 4, the highest of which had a 6 grand limit at one point.

I went into HSBC and asked for a loan to pay them off and 10 minutes later had £10,000 in my bank account. Went back about 2 years later and asked for another loan to pay off the loan and the new cards and 10 minutes later had nearly £20,000 in my account. I was only on about £18,000 a year at the time (2004ish).


I don't blame the banks because I knew what I was doing. I eventually paid every penny off - amazing feeling when you get rid of that last bit.

You'd have to be incredibly thick not to know what you're doing. They did give it out too easy and are fucking bastards and no doubt do take advantage of stupid people. But are that many people really, really, that thick?

It's about taking responsibility and thinking about the consequences isn't it?
 
MidgarBlowedUp said:
Be me
Get credit card with only 6.9% interest.
Never miss payment for years and years.
Recession hits.
Boom, credit card company jacks up my interest to 29% because reasons.
Still paying it off but was able to transfer to a lower interest card which is still too high.

Refuse to ever care about my credit score again.
Refuse to ever get another credit card ever again.
I just decided to quit playing the game. It's all a scam, the whole thing.

From now on if I can't buy it outright I don't need it. Not even if I decide to buy a house, if I can't pay for it outright screw it. Even the car I drive now I paid cash for.
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That is the best way to go about things if you are able to do it, especially with a car.
 
hirokazu said:
But shouldn't his credit score be going up if his balance was being paid in full every month, regardless of what that balance is?
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Well technically there's nothing wrong with having a high balance but what I'm thinking he did was he let the balance get reported on his statement date. Which leads to a high credit utilization. But If you know you can pay off a high balance make sure to pay it off most if not all of it before the statement date.

https://www.creditkarma.com/article/CreditCardUtilizationAndScore
 
How many cards does the avarage american have?
I have one. So do most people i know (Netherlands).
It's mostly for vacations or online stuff.
But we do most with a bankcard (is different).
 
Always-honest said:
How many cards does the avarage american have?
I have one. So do most people i know (Netherlands).
It's mostly for vacations or online stuff.
But we do most with a bankcard (is different).
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Personally I have one. I could see myself getting a second card one day for emergencies but that is it.

The average is probably well above that.
 
MidgarBlowedUp said:
Be me
Get credit card with only 6.9% interest.
Never miss payment for years and years.
Recession hits.
Boom, credit card company jacks up my interest to 29% because reasons.
Still paying it off but was able to transfer to a lower interest card which is still too high.

Refuse to ever care about my credit score again.
Refuse to ever get another credit card ever again.
I just decided to quit playing the game. It's all a scam, the whole thing.

From now on if I can't buy it outright I don't need it. Not even if I decide to buy a house, if I can't pay for it outright screw it. Even the car I drive now I paid cash for.
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If you had practiced this to begin with,you wouldn't have been screwed on the credit card. There's no reason you can't practice this, still own a credit card and take advantage of the benefits. You're leaving money on the table by refusing to get a credit card. Interest rates don't matter on a credit card if you use it responsibly. It's not a scam, you just didn't use it correctly.
 
Where I live, almost everything is paid in cash. It's uncommon to have a credit card, despite banks pushing them on their customers -I think most people were brought up to be cautious of it and the potential of screwing up their finances. For anything online, most use their debit cards or get a pre-paid 'internet card'.
 
Yes, because credit card companies are predatory and if they weren't, they wouldn't be a business if they only went after people that paid in full and carried no interest.
 
There's a bunch of people on GAF who are content claiming their cash or debit cards are just as handy and decry credit cards as predatory, as if they don't have the basic self control to reap the benefits and rewards.
 
What amazes me is I am old enough to remember interest rates (central bank rates) of 8% 10% and (outside USA), even 18%. During that time credit card interest rates were 15% 20% to 25%

Now, during the time when banks have get money for free in practically every developed economy, credit card interest rates are still basically the same. Ok you might back into one for a year with a lower rate, but in general, margins are obscene, and the less educated you are about financial matters the higher the rate.

Can you think of anything else where the wholesale price drops from $100 a unit to $1 a unit, and the retail price stays roughly the same? The PS4 prints money? no, credit cards print money.
 
DOWN said:
There's a bunch of people on GAF who are content claiming their cash or debit cards are just as handy and decry credit cards as predatory, as if they don't have the basic self control to reap the benefits and rewards.
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In the UK at least, bank accounts are free. I don't know what this paying for transactions thing is? Cash machines (ATMs) are also free and you can use any machine owned by any bank and it's still free.

You can get accounts where you pay maybe £10 a month - where you get extra stuff like free foreign transactions, car breakdown/recovery and phone insurance - but on the whole, it's all free.

So we don't have that incentive here - unless you've got some amazing brilliant special offer rewards programme with your credit card - which there is less and less of and they aren't that good. We also have a lot more protection with our debit cards (similar to credit card protections).
 
Honestly learned more about credit cards on GAF in a day or two than I ever learned in school or anywhere else, shout outs to the CC and finances OT.

Got a college card w/ a $500 limit 2 years ago, carefully used it and now I've seen them bump up my limit by a grand ever since.
 
It isn't taught in school, so if your parents don't drill it into you you're flying blind. Credit didn't even cross my mind until some time after I'd stopped living with my parents because it was never something I'd been taught.
 
Credit cards are cards you can use when you don't have the money to buy it.

The very definition means people don't know how to use it.
 
I don't think credit cards would be profitable enough to exist if people didn't understand how they worked. Same with shit like payday loans.
 
I consigned with my little sister to get a credit card because I felt bad for her since she had trouble getting one and she was over spending and only paying minimum payments. She also didn't know about the interest when charging a card. I had to make her pay that stuff off and I quickly canceled it.
 
Credit cards have some odd rules, like they want you to use them every month. You know I may skip a few months because I do. But it has to be a routine habit.
 
PipefishUK said:
In the UK at least, bank accounts are free. I don't know what this paying for transactions thing is? Cash machines (ATMs) are also free and you can use any machine owned by any bank and it's still free.
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The transaction thing is because businesses are charged for processing credit/debit card payments. That's why you will sometimes see stores that have a credit card minimum. Some places its a flat fee per transaction, others it is a percentage. There are a couple banks I've also seen who charge a $0.25 fee for each debit transaction.
 
Whoever knows how to use credit cards properly will win vs banks/lenders every single time. Specially cashback and reward cards.

I've received about $450 cashback from AMEX in 2 and 1/2 years with my blue everyday card. Use it for mandatory expenses and stuff that I want and can buy with money in the bank. The trick is paying off that balance before the cycle closes.

If your plans are to just keep buying shit with credit and keep piling it on to your balance and pay it off with minimum payments then don't even get near a credit card at all.

That's not how it works. You'll bleed out a shit ton of money relative to the cost of the items.
 
PipefishUK said:
In the UK at least, bank accounts are free. I don't know what this paying for transactions thing is? Cash machines (ATMs) are also free and you can use any machine owned by any bank and it's still free.

You can get accounts where you pay maybe £10 a month - where you get extra stuff like free foreign transactions, car breakdown/recovery and phone insurance - but on the whole, it's all free.

So we don't have that incentive here - unless you've got some amazing brilliant special offer rewards programme with your credit card - which there is less and less of and they aren't that good. We also have a lot more protection with our debit cards (similar to credit card protections).
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The paying per transaction thing isn't on the end user. When a business accepts a credit card transaction, the business pays a per transaction fee plus a percentage of the sale. That's what it means when people are talking about credit card companies get paid for the transactions.

As far as benefits, in the US you can get anywhere from 1% to 5% savings per transaction from usage. You also gain benefits depending on the card such as mileage points for airlines, extended warranty on products, extended price protection and other things that make it useful over using a debit. In the US a credit card has benefits with no drawbacks for using it over a debit card. Plus the protection is better since your money is never on the line. Debit cards have fraud protection, but they aren't instant when recovering funds in your account where as a credit card will never ever touch your money.
 
If I have 2 credit cards with current balances of about 1600 and 2000 bucks, with very similar interest rates, would it be wise to concentrate on paying off one first as fast as possible and then the other?
Or try to get them down equally at the same time?
 
DiscoJer said:
You have to realize that many people don't actually have much money. They can't pay off their credit cards every month because they don't have the money to. Indeed, that's sort of the point of a credit card vs a debit card...that whole idea of "credit".

And because the interest rates of credit cards are so sky high, people simply just get behind..
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"Yeah but I just get another card to pay dat first one coz I'm smart and gaming the system... " "I'm paying off all of my card this month so I can buy more next month"

I grew up with credit card parents, frightening stuff in hindsight but made me really good with my finances. I currently owe nobody anything.
 
SlackAdjuster said:
If I have 2 credit cards with current balances of about 1600 and 2000 bucks, with very similar interest rates, would it be wise to concentrate on paying off one first as fast as possible and then the other?
Or try to get them down equally at the same time?
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I'm pretty sure it makes no difference since the interest is the same.
 
There are a lot of people who unfortunately cannot afford to pay their cards off, or have financial issues in general. However, those who are dumb about it make me scratch my head.

Since I was a teen, or so, I've known the basics. I've never had a credit card, though, and probably should get one before I'm thirty, else I'll have a hard time building up credit. But I'd just buy small things, pay it off and not amass much debt because I know it'd bother me.

I'm not rich and never will be. I'd just spend within my means is all.
 
Darth Karja said:
The transaction thing is because businesses are charged for processing credit/debit card payments. That's why you will sometimes see stores that have a credit card minimum. Some places its a flat fee per transaction, others it is a percentage. There are a couple banks I've also seen who charge a $0.25 fee for each debit transaction.
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Ah, all the costs are built in here - you don't pay any more or less by paying on card.
There is no minimum limit or charge even on low value transactions. You could literally go into 95% of shops and buy something for 10p (£0.10) on your card (credit or debit).


Occasionally you'll find a small business, like a small newsagents or somewhere that'll say there's a minium £5 spend to use a card otherwise there's a 25p charge. But they're few and far between - the little shop up the road used to do it but they stopped ages ago. I haven't come across that for years.

They knew that people would just go to the nearest big chain convenience store (which there are a hell of a lot of) and buy their newspaper on their card there instead.

No banks charge you for anything if you don't want them to - as long as you don't go bouncing payments or go overdrawn without permission or whatever.


You really do get ripped off a lot over there don't you?
 
PipefishUK said:
Ah, all the costs are built in here - you don't pay any more or less by paying on card.
There is no minimum limit or charge even on low value transactions. You could literally go into 95% of shops and buy something for 10p (£0.10) on your card (credit or debit).


Occasionally you'll find a small business, like a small newsagents or somewhere that'll say there's a minium £5 spend to use a card otherwise there's a 25p charge. But they're few and far between - the little shop up the road used to do it but they stopped ages ago. I haven't come across that for years.

They knew that people would just go to the nearest big chain convenience store (which there are a hell of a lot of) and buy their newspaper on their card there instead.

No banks charge you for anything if you don't want them to - as long as you don't go bouncing payments or go overdrawn without permission or whatever.


You really do get ripped off a lot over there don't you?
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You've got the wrong impression. It's built into the cost here too. You don't see the advertised transaction fee. Businesses usually factor that in and most people aren't aware of what businesses pay to take a credit card. Just like your example of a small business say there's a minimum or there's an extra fee is the same thing that happens here with a minimum. It's usually a small business trying to minimize their cost so they'll make sure the transaction is at least a certain amount. You don't really ever see two prices where one is a credit card price and one is a cash price. So the reality is all of this is just the same as where you are and not getting ripped off. Where we have the advantage is that we get benefits from using our credit card. 1 to 5% discount for using a credit card is something you don't seem to have.
 
Credit ain't nothing to fuck with my mom harps me to pay it cause my dad likes to wait til the last minute to pay it she had to bail him out years ago shes trying to steer me the right way. She don't want me to end up like my uncle who she had to borrow over $20,000 dollars I'll tell you that was a fun story lol.
 
Marty Chinn said:
You've got the wrong impression. It's built into the cost here too. You don't see the advertised transaction fee. Businesses usually factor that in and most people aren't aware of what businesses pay to take a credit card. Just like your example of a small business say there's a minimum or there's an extra fee is the same thing that happens here with a minimum. It's usually a small business trying to minimize their cost so they'll make sure the transaction is at least a certain amount. You don't really ever see two prices where one is a credit card price and one is a cash price. So the reality is all of this is just the same as where you are and not getting ripped off. Where we have the advantage is that we get benefits from using our credit card. 1 to 5% discount for using a credit card is something you don't seem to have.
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Yeah, we did have that stuff, but this happened: http://www.telegraph.co.uk/finance/...r/11529393/Death-of-the-credit-card-perk.html


But that's also why we can now use our cards for very low value transactions without an additional fee or minimum limit it seems.

My card was 2p for every £1. They changed it to 1p for every £3.33 (random figure there).

I put everything on it for about a year (clearing it every month) and only got about £10 back. I didn't get it for the perks mind, I got it to increase my credit score and chose the bank I got it from because it was an ethical bank.

Some banks still do ones where you get air miles (or avios or whatever they're called now) or supermarket loyalty points - but it's getting so you have to spend more to get less. It's one of the changes since the banking crisis - back when they were handing them out willy-nilly you did get huge rewards and cash back and stuff. Not any more.
 
Marty Chinn said:
Credit cards don't mean spending what you can't afford. Use a credit card exactly like you would use a debit card and reap the rewards and savings that you don't get with the debit card.
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I hardly see any of this in the UK so I'm not sure if your post is more USA specific.

Once I remember my dad buying everything on credit card because of air miles.

My credit card is for holidays and emergencies, otherwise I will use my debit card and normal bank account for every day transactions.

Smaller credit card transactions also carry fees added to your purchase from the retailer so using it as an every day thing doesn't really make any sense to me.
 
PipefishUK said:
Ah, all the costs are built in here - you don't pay any more or less by paying on card.
There is no minimum limit or charge even on low value transactions. You could literally go into 95% of shops and buy something for 10p (£0.10) on your card (credit or debit).


Occasionally you'll find a small business, like a small newsagents or somewhere that'll say there's a minium £5 spend to use a card otherwise there's a 25p charge. But they're few and far between - the little shop up the road used to do it but they stopped ages ago. I haven't come across that for years.

They knew that people would just go to the nearest big chain convenience store (which there are a hell of a lot of) and buy their newspaper on their card there instead.

No banks charge you for anything if you don't want them to - as long as you don't go bouncing payments or go overdrawn without permission or whatever.


You really do get ripped off a lot over there don't you?
Click to expand...

I live in a semi rural area of Scotland and there are still a few shops that don't even accept cards, using only a credit card would result in you paying more for everything out with a supermarket and rounding all transactions up to over a fiver/
 
PipefishUK said:
Yeah, we did have that stuff, but this happened: http://www.telegraph.co.uk/finance/...r/11529393/Death-of-the-credit-card-perk.html


But that's also why we can now use our cards for very low value transactions without an additional fee or minimum limit it seems.

My card was 2p for every £1. They changed it to 1p for every £3.33 (random figure there).

I put everything on it for about a year (clearing it every month) and only got about £10 back. I didn't get it for the perks mind, I got it to increase my credit score and chose the bank I got it from because it was an ethical bank.

Some banks still do ones where you get air miles (or avios or whatever they're called now) or supermarket loyalty points - but it's getting so you have to spend more to get less. It's one of the changes since the banking crisis - back when they were handing them out willy-nilly you did get huge rewards and cash back and stuff. Not any more.
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I've used a credit card to buy a soda before, so I too can easily do small transactions with no additional fees or limitations in most places. So it sounds like you just lost the rewards without gaining anything according to that article. I get back a few hundred a year which is a nice little bit of bonus. It's the reason I do everything through CC. No reason not to use it if it's going to pay me to buy the things I was going to buy anyway.
 
I can't believe there's not some multiple-choice comprehension test people need to pass before taking out credit cards and payday loans, to be honest.
 
I cycle through mine where I rack it right up on a big purchase and them pay it down over a few months.

Last thing I bought on mine was some stuff for my Mustang that ended up being around 7k or so to the credit card.

Just started paying it back last month and have already knocked 2k off of that.

Of course I have an income that allows me to do this.

What boggles my mind is people on part time jobs making minimum who somehow manage to obtain an 8k credit card and then proceed to rack it up.
 
Marty Chinn said:
I've used a credit card to buy a soda before, so I too can easily do small transactions with no additional fees or limitations in most places. So it sounds like you just lost the rewards without gaining anything according to that article. I get back a few hundred a year which is a nice little bit of bonus. It's the reason I do everything through CC. No reason not to use it if it's going to pay me to buy the things I was going to buy anyway.
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I've never had a card for the perks. But people who did are probably pissed off.

The type of people who screw up probably don't have it for the rewards anyway and even if they do then their screw up far outweighs any rewards.
People who don't technically need credit and have money anyway are the people who'd benefit - but good on them I guess, might as well.


I think big supermarkets will actually reduce prices because of it. We have huge price wars here between the supermarket chains.



Incidentally, I've recently seen vending machines appearing with a contactless reader next to the coin slot, that accept credit/debit cards. Wonder if that's a result of the new rules?
 
I put every single purchase I make on my credit card for the protection and cashback (a tiny 0.5% but free money is still free money). I already log all transactions in my budget so I can't overspend, and I have a Direct Debit set to pay the statement balance in full every month

If everyone did that I suppose the banks wouldn't make anywhere near as much money though
 
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