Why do you use credit cards in the first place? As a non American I never really understood that. Why doesn’t America just have the “normal” (from my perspective) bank cards that just let you use money from your bank account. Why do you need to borrow and pay back? It seems like such a weird system, not just weird also dangerous, where you can end up in debt.
American here. We have normal cards, they are called debit cards and are what most people use. Generizing a lot here, but credit cards are for people who were never financially educated, desperate poor people, or people who only use them to get plane miles or cash back.
It’s absurd to me to put myself in debt for all but the most desperate of cases.
I don’t think debit cards or their associated bank accounts affect your credit in any way since those transactions don’t go through any of the credit agencies.
When I was just starting out in life, I had a credit card but only used it maybe once a year. Just with that I somehow had a credit score in the upper 700s.
Credit cards offer more fraud protection, at least where I live, while debit cards offer nothing much. I buy on credit and pay it off fully every month.
Agreed. Weird system, and dangerous for many. That’s why I only allow myself a very limited card, which is what I used to build my shitty credit back up.
Most Americans can’t afford a $400 emergency and live pay check to paycheck. Car breaks down, emergency medical expenses, emergency house breaks down could all cost over $400. You need a Credit card for that back up that you could eventually pay back by probably sacrificing something else. Need a car need a credit score or you pay $3-10,000 more in interest same with buying a home. Want to rent need a credit check. Want to get a job at a bank, military contractor, some government positions, and other secure jobs. They want to make sure you don’t have bad credit or can’t be taken advantage of . Which no credit is often considered bad credit.
If you don’t have 400 in savings and live paycheck to paycheck how can you borrow 400? Like how can you pay that back? It still seems really weird, and if you can somehow pay it back, why didn’t you save a small amount before the car broke down?
Most good credit cards have some form cash back, as in they give you a little bit of the credit card processing fee they place on merchants. Credit card benefits vary from card to card.
We use credit cards so much because it builds our credit score, which makes it significantly easier to take out loans for large purchases (eg car, house, etc) or rent an apartment.
We do have “normal” cards, they’re called debit cards. You are right that it’s weird and bizarre and dangerous. You shouldn’t be using credit cards if you’re living paycheck to paycheck imo.
Does that mean that your credit score is determined by companies? Or is the credit score something the government calculates for people?
I think in the Netherlands if you want to get a mortgage, the bank looks at your income, other loans you have, etc and they determine on rules the government set how much you ca borrow. There is a register for people that fail to pay bills, but it’s not something you get on easily, you really need to fail a lot.
Why do you use credit cards in the first place? As a non American I never really understood that. Why doesn’t America just have the “normal” (from my perspective) bank cards that just let you use money from your bank account. Why do you need to borrow and pay back? It seems like such a weird system, not just weird also dangerous, where you can end up in debt.
American here. We have normal cards, they are called debit cards and are what most people use. Generizing a lot here, but credit cards are for people who were never financially educated, desperate poor people, or people who only use them to get plane miles or cash back.
It’s absurd to me to put myself in debt for all but the most desperate of cases.
Thanks, I didn’t know that, you always hear about credit card (debt) but never about debit cards. Can you still use the for a good credit score?
I don’t think debit cards or their associated bank accounts affect your credit in any way since those transactions don’t go through any of the credit agencies.
When I was just starting out in life, I had a credit card but only used it maybe once a year. Just with that I somehow had a credit score in the upper 700s.
Credit cards offer more fraud protection, at least where I live, while debit cards offer nothing much. I buy on credit and pay it off fully every month.
Agreed. Weird system, and dangerous for many. That’s why I only allow myself a very limited card, which is what I used to build my shitty credit back up.
Most Americans can’t afford a $400 emergency and live pay check to paycheck. Car breaks down, emergency medical expenses, emergency house breaks down could all cost over $400. You need a Credit card for that back up that you could eventually pay back by probably sacrificing something else. Need a car need a credit score or you pay $3-10,000 more in interest same with buying a home. Want to rent need a credit check. Want to get a job at a bank, military contractor, some government positions, and other secure jobs. They want to make sure you don’t have bad credit or can’t be taken advantage of . Which no credit is often considered bad credit.
If you don’t have 400 in savings and live paycheck to paycheck how can you borrow 400? Like how can you pay that back? It still seems really weird, and if you can somehow pay it back, why didn’t you save a small amount before the car broke down?
Most good credit cards have some form cash back, as in they give you a little bit of the credit card processing fee they place on merchants. Credit card benefits vary from card to card.
We use credit cards so much because it builds our credit score, which makes it significantly easier to take out loans for large purchases (eg car, house, etc) or rent an apartment.
We do have “normal” cards, they’re called debit cards. You are right that it’s weird and bizarre and dangerous. You shouldn’t be using credit cards if you’re living paycheck to paycheck imo.
Does that mean that your credit score is determined by companies? Or is the credit score something the government calculates for people?
I think in the Netherlands if you want to get a mortgage, the bank looks at your income, other loans you have, etc and they determine on rules the government set how much you ca borrow. There is a register for people that fail to pay bills, but it’s not something you get on easily, you really need to fail a lot.