Even if you are good with your finances, they are still more expensive and if you use some kind of bookkeeping or budgeting software, you will have issues connecting the export.
Yes, I know of cashback, but those don’t exist everywhere and exist so you buy more to fund the consumerism going on. Which is actively hurting society.
The insurance part is nice, but often it’s not better than what you get with a normal bank card.
Creditcards in most countries will hurt your credt score because of if you are paying money to pay off a credit card you cannot use that money to pay for your mortgage.
There is also that technical benefit of having to pay later which means you can “invest” that money, but for the average joe that is an irrelevant benefit.
The only benefit to me of having one is that I can use them on American sites that don’t support other payment platforms which is most American sites (including Amazon.com, while the European brands do support Wero etc.)
You might be able to handle the responsibility of the credit card, but a lot of people don’t.
they are still more expensive and if you use some kind of bookkeeping or budgeting software
Not in the slightest (cost me 0), and I do.
cashback
Not the main selling point.
insurance part
That is a good use case: charges easier to dispute & reverse.
A normal bank card spends your real money.
Disputing through a bank may take longer.
Until the bank returns money to your account, that money is gone.
technical benefit
That’s a use case for me: risk mitigation & flexibility to optimize returns on my savings.
Assumptions
my checking account earns diddly squat interest & risk of unauthorized debits is meaningful (eg, debit cards)
other accounts of varying liquidity (such as emergency savings, taxed investment, retirement, etc.) earn better
transferring between accounts (or selling less liquid assets) takes time
I budget correctly to always spend within my means, so I know enough money is somewhere.
Constantly transferring between accounts for every single transaction is inconvenient.
Leaving money in the checking account isn’t ideal due to low interest earnings & risk of unauthorized debits.
Solution
as much as possible, keep checking account near 0 & keep most money where it earns better returns
charge expenses to a credit card (at most 30% of its credit limit), then transfer to checking account the total to completely pay off the credit card when convenient well before payment due date.
The credit card is simply an instrument to allow me time & flexibility to move money I already have to pay expenses.
The money is usually earning kickass interest (at least enough to beat inflation) somewhere and takes a non-instant amount of time to transfer.
Always completely pay off a credit card by the payment due date.
A credit card is a shitty account to carry a debt (any non-0 balance past the due date): only dumbasses do that.
will hurt your credt score
If it works like in the US, then as long as you make mortgage & all other bill payments on time, completely pay off credit cards by payment due dates, and keep credit utilization low (at most 30% of card’s credit limit), you should be fine.
Taking out a mortgage temporarily lowers your credit score until it recovers with consistent repayments over a few months.
Then the added credit mix usually improves credit scores.
Are mortgages not paid there in regular installments with due amounts like in the US?
the average joe
You don’t have an account (maybe savings) that earns better interest?
You’re not saving for emergencies, retirement, or goals?
the responsibility of the credit card
It’s usually just slack time (until payment due date) to make a payment you would already make some other way.
I work at an accounting firm and part of my job is advising on automation software and the like, automating credit cards is a hassle and often impossible. Sometimes when it is possible, only half the transactions are posted (just the payments and not the money received from other your bank account).
If they don’t cost you any more, then those are the once which are expensive on the stores you buy from. For one, there is additional bookkeeping to be done (deduct the costs from the payment when receiving the money) and the extra costs itself.
Not the main selling point.
For a lot of people on the internet, that small cashback is their reason they use it.,
A normal bank card spends your real money. Disputing through a bank may take longer. Until the bank returns money to your account, that money is gone.
A normal bank card is way harder to even get into a situation where you need to open a dispute and most credit card companies do not care about you getting scammed either btw because you authorised the transaction.
my checking account earns diddly squat interest & risk of unauthorized debits is meaningful (eg, debit cards)
Unauthorised debits are such a rare thing, nobody is going to accidentally wire money to you. Unless you are a business and it’s a double payment.
You are also explaining the reasons as to why I said that technical benefit of earning money on borrowed money is bullshit for the average Joe. Why are we discussing this if we agree it’s bullshit?
transferring between accounts (or selling less liquid assets) takes time
Transfers between accounts are instant these days and payments on your normal bank accounts can be a lot larger than on most credit cards. Credit cards are limited to 1k, 2.5k or 5k for most private individuals since you generally need to make x amount more a month (after taxes) than the limit of the card. The maximum on basically every bank account of a private individual is 50k
Constantly transferring between accounts for every single transaction is inconvenient. Leaving money in the checking account isn’t ideal due to low interest earnings & risk of unauthorized debits.
Irrelevant issue, you still gotta do this with a credit card since you have to pay off the dang thing. Most things are also a consistent thing and a monthly thing. You also mean unauthorised credits, btw. Banks turn around debit and credit like it’s their party.
charge expenses to a credit card (at most 30% of its credit limit)
So like 300 bucks a month for most people, or 1500 if you have an advanced amount.
Always completely pay off a credit card by the payment due date. A credit card is a shitty account to carry a debt (any non-0 balance past the due date): only dumbasses do that.
This happens way more than you think, remember most people are terrible with money. You see this even more in countries like the US, where people take out loans for everything.
If it works like in the US, then as long as you make mortgage & all other bill payments on time, completely pay off credit cards by payment due dates, and keep credit utilization low (at most 30% of card’s credit limit), you should be fine.
In a lot of scenarios, they look at what you can monthly spend, because your past experiences don’t dictate your future. In NL and other countries it works something like this, but it is a lot more complicated in practise.
If you have a monthly income of 5k, you pay say 1k taxes from that, which means you have 4k left over. In NL, there is something saying that you can only spend say 75% of your net income on loans. In this example, that’s 3k. If you have a car loan for 1k a month and a credit card of 1k and a phone where you pay 50 bucks for and a student loan where you pay 50 bucks for. Which means you can only spend 900 euro on your mortgage.
In the US system you might be able to take a mortgage of 2k (just guessing/execrating) because you always paid off your phone, car and credit card loans nicely. Which means you would spend 3,1k a month on loans. Which is one way that a people get into financial trouble.
Are mortgages not paid there in regular installments with due amounts like in the US?
And this is why the US credit score is bullshit because yes we do, everywhere in the world.
You don’t have an account (maybe savings) that earns better interest? You’re not saving for emergencies, retirement, or goals?
Ofc we have savings for emergencies, most people do. Most of my emergency fund is located in a savings account, but still instantly accessible, which means it is at a low interest rate. I could lock the money for a year to get like 2.9% interest instead of the 1.2% I am getting or something (it’s on a free account).
It’s usually just slack time (until payment due date) to make a payment you would already make some other way.
Only the first month, after that it doesn’t really matter.
If credit cards users pay higher prices than non-users, checking accounts are secure from erroneous/unauthorized transactions, and transfers are instant, then the use case for credit cards is less clear.
If they don’t cost you any more, then those are the once which are expensive on the stores you buy from.
That changes the trade-offs a bit.
I missed the assumption that credit card users pay the same prices (& no extra fees) as everyone else: processing fees are typically paid by the vendor who includes it in prices everyone pays regardless of credit card.
In the US, credit card users basically get short-term, interest-free loans subsidized by the hidden costs in processing fees everyone is paying.
Since we can’t do much to change that, we must get a credit card or miss out on shit we’re paying for.
If credit card users pay the processing fees directly, then it’s no longer “free” to use credit cards.
It doesn’t help that those credit cards compensate (poorly) for deficiencies in our financial system as I’ll explain.
A normal bank card is way harder to even get into a situation where you need to open a dispute
Maybe yours.
Here, online payments only need some numbers on the debit card & your name & billing address.
Unauthorised debits are such a rare thing
All it takes here is debit card information or an (e-)check.
A check openly shows your routing number & bank account number & states to pay from there.
Low barriers to fraud.
most credit card companies do not care about you getting scammed either btw because you authorised the transaction
Different here: by law no one who disputes a charge within 60 days is obligated to pay it until the dispute is resolved (within 90 days).
It’s usually charged back immediately.
Due to insecurity, authorization isn’t assumed: the dispute is often that you didn’t authorize the charge, which they investigate.
Transfers between accounts are instant these days
Maybe in more civilized parts of the world.
In the US, transfers & payments between financial institutions usually take business days to settle.
Real-time payment is still uncommon there.
I could lock the money for a year to get like 2.9% interest instead of the 1.2%.
My regular & emergency savings go in an account like this with 4.3 APY, and that’s “instantly” (as fast as a checking account) accessible.
The slow settlement times, security risks, and “free” credit cards may offer some insights into our haphazard financial landscape & stopgap “solutions”.
The sensibility of credit cards is a byproduct of this broken system.
Vinstaal0@feddit.nl 3 weeks ago
Even if you are good with your finances, they are still more expensive and if you use some kind of bookkeeping or budgeting software, you will have issues connecting the export.
Yes, I know of cashback, but those don’t exist everywhere and exist so you buy more to fund the consumerism going on. Which is actively hurting society.
The insurance part is nice, but often it’s not better than what you get with a normal bank card.
Creditcards in most countries will hurt your credt score because of if you are paying money to pay off a credit card you cannot use that money to pay for your mortgage.
There is also that technical benefit of having to pay later which means you can “invest” that money, but for the average joe that is an irrelevant benefit.
The only benefit to me of having one is that I can use them on American sites that don’t support other payment platforms which is most American sites (including Amazon.com, while the European brands do support Wero etc.)
You might be able to handle the responsibility of the credit card, but a lot of people don’t.
lmmarsano@lemmynsfw.com 3 weeks ago
Not in the slightest (cost me 0), and I do.
Not the main selling point.
That is a good use case: charges easier to dispute & reverse.
A normal bank card spends your real money. Disputing through a bank may take longer. Until the bank returns money to your account, that money is gone.
Assumptions
Constantly transferring between accounts for every single transaction is inconvenient. Leaving money in the checking account isn’t ideal due to low interest earnings & risk of unauthorized debits.
Solution
The credit card is simply an instrument to allow me time & flexibility to move money I already have to pay expenses. The money is usually earning kickass interest (at least enough to beat inflation) somewhere and takes a non-instant amount of time to transfer.
Always completely pay off a credit card by the payment due date. A credit card is a shitty account to carry a debt (any non-0 balance past the due date): only dumbasses do that.
If it works like in the US, then as long as you make mortgage & all other bill payments on time, completely pay off credit cards by payment due dates, and keep credit utilization low (at most 30% of card’s credit limit), you should be fine.
Taking out a mortgage temporarily lowers your credit score until it recovers with consistent repayments over a few months. Then the added credit mix usually improves credit scores.
Are mortgages not paid there in regular installments with due amounts like in the US?
You don’t have an account (maybe savings) that earns better interest? You’re not saving for emergencies, retirement, or goals?
It’s usually just slack time (until payment due date) to make a payment you would already make some other way.
Vinstaal0@feddit.nl 3 weeks ago
I work at an accounting firm and part of my job is advising on automation software and the like, automating credit cards is a hassle and often impossible. Sometimes when it is possible, only half the transactions are posted (just the payments and not the money received from other your bank account).
If they don’t cost you any more, then those are the once which are expensive on the stores you buy from. For one, there is additional bookkeeping to be done (deduct the costs from the payment when receiving the money) and the extra costs itself.
For a lot of people on the internet, that small cashback is their reason they use it.,
A normal bank card is way harder to even get into a situation where you need to open a dispute and most credit card companies do not care about you getting scammed either btw because you authorised the transaction.
Unauthorised debits are such a rare thing, nobody is going to accidentally wire money to you. Unless you are a business and it’s a double payment.
You are also explaining the reasons as to why I said that technical benefit of earning money on borrowed money is bullshit for the average Joe. Why are we discussing this if we agree it’s bullshit?
Transfers between accounts are instant these days and payments on your normal bank accounts can be a lot larger than on most credit cards. Credit cards are limited to 1k, 2.5k or 5k for most private individuals since you generally need to make x amount more a month (after taxes) than the limit of the card. The maximum on basically every bank account of a private individual is 50k
Irrelevant issue, you still gotta do this with a credit card since you have to pay off the dang thing. Most things are also a consistent thing and a monthly thing. You also mean unauthorised credits, btw. Banks turn around debit and credit like it’s their party.
This happens way more than you think, remember most people are terrible with money. You see this even more in countries like the US, where people take out loans for everything.
In a lot of scenarios, they look at what you can monthly spend, because your past experiences don’t dictate your future. In NL and other countries it works something like this, but it is a lot more complicated in practise. If you have a monthly income of 5k, you pay say 1k taxes from that, which means you have 4k left over. In NL, there is something saying that you can only spend say 75% of your net income on loans. In this example, that’s 3k. If you have a car loan for 1k a month and a credit card of 1k and a phone where you pay 50 bucks for and a student loan where you pay 50 bucks for. Which means you can only spend 900 euro on your mortgage. In the US system you might be able to take a mortgage of 2k (just guessing/execrating) because you always paid off your phone, car and credit card loans nicely. Which means you would spend 3,1k a month on loans. Which is one way that a people get into financial trouble.
And this is why the US credit score is bullshit because yes we do, everywhere in the world.
Ofc we have savings for emergencies, most people do. Most of my emergency fund is located in a savings account, but still instantly accessible, which means it is at a low interest rate. I could lock the money for a year to get like 2.9% interest instead of the 1.2% I am getting or something (it’s on a free account).
Only the first month, after that it doesn’t really matter.
lmmarsano@lemmynsfw.com 3 weeks ago
If credit cards users pay higher prices than non-users, checking accounts are secure from erroneous/unauthorized transactions, and transfers are instant, then the use case for credit cards is less clear.
That changes the trade-offs a bit. I missed the assumption that credit card users pay the same prices (& no extra fees) as everyone else: processing fees are typically paid by the vendor who includes it in prices everyone pays regardless of credit card.
In the US, credit card users basically get short-term, interest-free loans subsidized by the hidden costs in processing fees everyone is paying. Since we can’t do much to change that, we must get a credit card or miss out on shit we’re paying for.
If credit card users pay the processing fees directly, then it’s no longer “free” to use credit cards.
It doesn’t help that those credit cards compensate (poorly) for deficiencies in our financial system as I’ll explain.
Maybe yours. Here, online payments only need some numbers on the debit card & your name & billing address.
All it takes here is debit card information or an (e-)check. A check openly shows your routing number & bank account number & states to pay from there. Low barriers to fraud.
Different here: by law no one who disputes a charge within 60 days is obligated to pay it until the dispute is resolved (within 90 days). It’s usually charged back immediately. Due to insecurity, authorization isn’t assumed: the dispute is often that you didn’t authorize the charge, which they investigate.
Maybe in more civilized parts of the world. In the US, transfers & payments between financial institutions usually take business days to settle. Real-time payment is still uncommon there.
I agree that makes more sense in accounting. It’s often stated as I did with bank accounts & I gave up trying to figure that out.
My regular & emergency savings go in an account like this with 4.3 APY, and that’s “instantly” (as fast as a checking account) accessible. The slow settlement times, security risks, and “free” credit cards may offer some insights into our haphazard financial landscape & stopgap “solutions”. The sensibility of credit cards is a byproduct of this broken system.