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Young Americans Are Ditching Credit Cards

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#76 +LogicalApex

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Posted 11 July 2013 - 16:21

Credit Cards are dumb. Cash and Debit for the Win.

 

And if you can't afford it. You most likely don't need it.

I disagree...

 

A random example...

 

I purchased my Nexus 4 in February and in April dropped it in its case, but cracked the screen. 1 quick call to Amex and 48 hours later I had a full refund for the phone. Cash or Debit wouldn't get me that.




#77 threetonesun

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Posted 11 July 2013 - 16:27

I'm actually living in Massachusetts now. National Grid never disqualified me from getting services even though I did have bad credit a few years back, nor did they report me to the credit bureau when I made payments late. The only time it'll show on my credit report is if I fail to pay a bill for maybe 3-4 months, then it goes to collection which would show on the credit report.

 

I know, as I said, National Grid keeps a score to themselves. I have no idea if they ever use it... my old roommate "forgot" to pay the electric bill for about 6 months, and it seemed to impact no one in any particular way.


So far, had similar experiences in Kansas, Florida, Oklahoma, Mississippi and New York. These are all for apartments mind you so it may differ for a home owner since they had a major credit check just to get the house.

 

It's possible that a credit check is just the easiest way for them to verify that the person exists at all.



#78 spenser.d

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Posted 11 July 2013 - 16:40

Credit Cards are dumb. Cash and Debit for the Win.

 

And if you can't afford it. You most likely don't need it.

 

That's interesting.  Having a credit card since college helped me build my credit to where it is today, above 750.  I've got a miniscule rate on my auto loan recently because of it.  I also can't really even tell you the total amount in free cash I get from just paying everything with my credit card instead of cash because of rewards on my first card.  My second card that I got for work expenses gets me a free night at a hotel each year + hotel points that I've already used to go on vacation for free.

 

Want to know how many times I haven't paid down my balance at the end of the month? 0.  I fail to see how credit cards are dumb.  Many people that use them may be dumb, but if you aren't, you get a ton of benefit.



#79 Dinggus

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Posted 11 July 2013 - 16:43

Credit Cards are dumb. Cash and Debit for the Win.

 

And if you can't afford it. You most likely don't need it.

 

So, in emergencies you have cash stashed away?

 

Would I rather spend $800 cash or $800 credit on a plane ticket to go to a family funeral? I'd use credit. I get points and rewards, plus I'd rather not drop $800 right there on the spot.

 

In the US you need good credit to borrow, if you have no credit or bad credit, enjoy a high APR.



#80 threetonesun

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Posted 11 July 2013 - 16:57

So, in emergencies you have cash stashed away?

 

Would I rather spend $800 cash or $800 credit on a plane ticket to go to a family funeral? I'd use credit. I get points and rewards, plus I'd rather not drop $800 right there on the spot.

 

In the US you need good credit to borrow, if you have no credit or bad credit, enjoy a high APR.

 

Yeesh. Yes, you should have cash on hand for emergencies. Using credit cards for emergencies is the worst way to use them, and that's a big reason why the average US credit debt is $3500 or whatever.



#81 Brandon

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Posted 11 July 2013 - 17:17

Yeesh. Yes, you should have cash on hand for emergencies. Using credit cards for emergencies is the worst way to use them, and that's a big reason why the average US credit debt is $3500 or whatever.

You're thinking the wrong way.

 

I have maybe $2,000 in my checking account at any one time. The rest is in mutual funds and stocks. What if I have an auto accident and need to pay $4,500 to get my car fixed? I can't get the money out of my mutual funds / stocks for over a week. With a credit card though, I have 30-55 days (depending on when the purchase is within the billing cycle) to move money out and not have to worry.

 

If you literally have thousands in cash just sitting around in non-interest baring accounts, you aren't properly managing your financial assets.

 

Debit card transactions will get denied due to lack of funds, or I'll be hit huge with fees from the bank, if they even let it through.

 

Of course, I wouldn't get the $50 in 1.1% cash back either from the purchase either, so I just lost money.

 

Credit cards, if treated like cash can make you money.



#82 AJerman

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Posted 11 July 2013 - 17:22

I disagree...

 

A random example...

 

I purchased my Nexus 4 in February and in April dropped it in its case, but cracked the screen. 1 quick call to Amex and 48 hours later I had a full refund for the phone. Cash or Debit wouldn't get me that.

How did you get a refund on a phone you broke?



#83 threetonesun

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Posted 11 July 2013 - 17:23

You're thinking the wrong way.

 

I have maybe $2,000 in my checking account at any one time. The rest is in mutual funds and stocks. What if I have an auto accident and need to pay $4,500 to get my car fixed? I can't get the money out of my mutual funds / stocks for over a week. With a credit card though, I have 30-55 days (depending on when the purchase is within the billing cycle) to move money out and not have to worry.

 

If you literally have thousands in cash just sitting around in non-interest baring accounts, you aren't properly managing your financial assets.

 

Debit card transactions will get denied due to lack of funds, or I'll be hit huge with fees from the bank, if they even let it through.

 

Of course, I wouldn't get the $50 in 1.1% cash back either from the purchase either, so I just lost money.

 

Credit cards, if treated like cash can make you money.

 

If you have access to the money in 30 days, it's not really an emergency, is it.

 

Also, you should probably get car insurance. :laugh:



#84 ILikeTobacco

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Posted 11 July 2013 - 17:26

If you have access to the money in 30 days, it's not really an emergency, is it.

 

Also, you should probably get car insurance. :laugh:

You may have misread. He has 30 to 55 days to pay it off without interest. The second the emergency happens, he can pay for it with the credit card and start the process of cashing in his mutual funds and stocks to pay for it. He has the money right then and there to make the emergency payment with the card, and before the credit card bill is up, has the ability to pay for it without interest.



#85 Brandon

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Posted 11 July 2013 - 18:06

You may have misread. He has 30 to 55 days to pay it off without interest. The second the emergency happens, he can pay for it with the credit card and start the process of cashing in his mutual funds and stocks to pay for it. He has the money right then and there to make the emergency payment with the card, and before the credit card bill is up, has the ability to pay for it without interest.

Yup. Again, it's a hypothetical situation. If my AC broke at home or there's a leak in my roof, I can't wait a week for the funds to clear out of my investment accounts to my checking account. Credit cards solve that issue, and since I'll pay it off in full when the statement is due, it's a free short-term loan that reduces my stress.



#86 AJerman

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Posted 11 July 2013 - 18:12

Yup. Again, it's a hypothetical situation. If my AC broke at home or there's a leak in my roof, I can't wait a week for the funds to clear out of my investment accounts to my checking account. Credit cards solve that issue, and since I'll pay it off in full when the statement is due, it's a free short-term loan that reduces my stress.

Or... you be smarter with your money don't tie up all of your money into investments that you can't access without having to wait and have to borrow money to pay for things. There's nothing wrong with investing your money, but most people keep a savings account as well with a decent chunk of money in it for exactly the situation that you're relying on borrowing on a credit card for.



#87 +LogicalApex

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Posted 11 July 2013 - 18:18

How did you get a refund on a phone you broke?

 

It is a feature of my Amex. If I lose, have stolen, or accidentally damage anything up to $10K within 90 days of purchasing it they will fix it or refund the purchase price.



#88 ILikeTobacco

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Posted 11 July 2013 - 18:18

Or... you be smarter with your money don't tie up all of your money into investments that you can't access without having to wait and have to borrow money to pay for things. There's nothing wrong with investing your money, but most people keep a savings account as well with a decent chunk of money in it for exactly the situation that you're relying on borrowing on a credit card for.

So you are saying you would rather choose to limit your income instead of being responsible with a credit card? Why are you choosing to limit your options instead of taking full advantage of them? Using a credit card like we are saying IS being smarter with your money. Having money sitting in a stupidly low interest account when you have the option to make significantly more money from it is the smart thing to do.



#89 Brandon

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Posted 11 July 2013 - 18:20

Or... you be smarter with your money don't tie up all of your money into investments that you can't access without having to wait and have to borrow money to pay for things. There's nothing wrong with investing your money, but most people keep a savings account as well with a decent chunk of money in it for exactly the situation that you're relying on borrowing on a credit card for.

Why though? Savings accounts earn fraction of percent interest. Even investing in market index funds return on average 9% over the past 100 years. Having $5,000 sitting in cash/savings accounts can cost $400+ a year in lost interest income. It doesn't take a financial genius to see the opportunity cost there.

 

It's legally gaming the system. I'm only borrowing what I can pay off in full. For free.



#90 +LogicalApex

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Posted 11 July 2013 - 18:23

Or... you be smarter with your money don't tie up all of your money into investments that you can't access without having to wait and have to borrow money to pay for things. There's nothing wrong with investing your money, but most people keep a savings account as well with a decent chunk of money in it for exactly the situation that you're relying on borrowing on a credit card for.

Why is this a bad thing? If he is a pay in full customer like me then he has anywhere between 20 - 40 days before he has to pay any interest on that money. Leveraging a CC is actually a very smart decision in that case.

 

Why? you ask. He is borrowing at 0% interest and take advantage of the float. Allowing him to keep his money invested longer thereby increasing his earning and lowering the cost of his purchases over time...