Credit Cards, what are they good for?

[~Di]

Credit cards are great if you pay off your balance every month.

 

This. We've done that for years. We use one card for groceries, one for gas/auto maintenance, another for on-line purchases, that kind of thing. We pay them in full every month. At the end of the year, we have handy totals for each of our major spending items, and our credit score is through the roof.

 

In the USA, if you give up your credit card accounts your credit score, strangely, takes a hit. Weird but true, I'm told.

 

Also, our credit limits have raised repeatedly to the point that we could charge a medium-ranged new car on one of them! Every once in a while a card will tell us what good customers we are and up the limit. I think they're trying to tempt us into buying something we can't pay off all at once!

Edited October 21, 2009 by ~Di

[Zoraptor]

No offense, but since I was there with him when this was explained, I'll take their word for it.

No offence taken. I'm inclined to think that it may be a country/ credit rating specific difference since the person I got the explanation from was not actually a bank/ CC employee, but someone I knew who worked for the credit rating agency. His explanation basically being that if you paid it off in full it was not considered 'real' credit- it only became 'real' credit when you paid interest on it.

 

So, probably differences in how credit ratings work between countries by the sound of it.

[taks]

So credit rating is a measure of education and ability to hold down a job?

reliability, actually.

 

i'm guessing you won't be denied a job unless your rating is really, really bad, and then probably only certain jobs. the certain jobs that come to mine are those that may require a clearance, for which a good credit rating is an absolute must. if you are in debt, your likelihood of being compromised (bribed) by a non-friendly country looking for information is much higher.

 

i'm guessing the insurance you'd be denied would be other than health, but i don't know for sure. same reason as a credit company: they want to make sure you'll alwayts pay, and pay on time.

 

someone with a really, really bad credit rating may also be assumed to be financially crooked, e.g., they may look at that as a sign that you like to write bad checks, for example. dunno for sure, however.

 

we shall be debt free other than house and car (mine, the wife's is paid off) in a few months. paying for a degree while still living like you aren't does damage to a credit card, but kicks your rating through the roof, too (as long as you pay on time). the solution: american express. you get reamed if you go over a month!

 

taks

[Humanoid]

Probably easier in lands where you have larger markets and where distributors and retailers gouge you less for exclusivity arrangements and such. Me, I use a CC a lot for ordering bike parts from the UK (which is often a 50% saving or more compared to buying locally), and sometimes PC parts from the US. All tax-free for values under $1000AUD to boot.

 

I can import an Intel SSD for slightly over $300AUD - which includes an extortionate $50 or so delivery. Locally however, retailers are asking for $450-500AUD, so you can understand the extent of this price gouging. :|

 

Likewise, I've just bought a pair of bike tyres from the UK for $45AUD each from the UK, with free delivery. The local retailer wants $120 each.

[Monte Carlo]

Yes, a friend of mine has an Amex he pays off every month and gets airmiles on, he flies for free all the time.

 

Me? I'm like a reformed boozer who has to be manhandled past a liquor store when it comes to credit cards. I'm just better off without.

 

Stuff I've done with credit cards:

 

* Turned left when I got on an areoplane (quite a few times)

 

* Bought fifteen friends dinner in a swanky restaurant on a whim

 

* Decided that a case of champagne would be a nice treat... because it was Friday

 

* Upgraded every hire car I've ever hired to one with a convertible roof, this one got me every time

 

I know, I'm a wastrel. So now I'm reformed I'm zealous about being sensible with money and the bonfire of the credit cards was step one. I've no regrets, though

 

Cheers

MC

[Humodour]

So credit rating is a measure of education and ability to hold down a job?

reliability, actually.

 

theslug specifically mentioned credit rating being correlated with education, though.

 

if you are in debt, your likelihood of being compromised (bribed) by a non-friendly country looking for information is much higher.

 

That's a solid reason for employment purposes, though I don't really get how it would help insurance companies; they're not creditors.

[Walsingham]

Yes, a friend of mine has an Amex he pays off every month and gets airmiles on, he flies for free all the time.

 

Me? I'm like a reformed boozer who has to be manhandled past a liquor store when it comes to credit cards. I'm just better off without.

 

Stuff I've done with credit cards:

 

* Turned left when I got on an areoplane (quite a few times)

 

* Bought fifteen friends dinner in a swanky restaurant on a whim

 

* Decided that a case of champagne would be a nice treat... because it was Friday

 

* Upgraded every hire car I've ever hired to one with a convertible roof, this one got me every time

 

I know, I'm a wastrel. So now I'm reformed I'm zealous about being sensible with money and the bonfire of the credit cards was step one. I've no regrets, though

 

Cheers

MC

 

*Suspicious glare*

 

Doesn't sound very English to me. Are you sure you're English?

[Guard Dog]

I have four, three of which I keep paid off. One has a moderate balance (just south of $4k) but that all went to pay for surgery for one of my dogs earlier this year. Once I finish restoring and sell some of the stuff I just bought at an auction I hope to pay that off.

 

After the car accident earlier this year I was close to $18k in credit card debt becuase I had lost my job, then had the accident and I was using them to pay bills and such. After the settlement I paid them all off.

[Monte Carlo]

Yes, a friend of mine has an Amex he pays off every month and gets airmiles on, he flies for free all the time.

 

Me? I'm like a reformed boozer who has to be manhandled past a liquor store when it comes to credit cards. I'm just better off without.

 

Stuff I've done with credit cards:

 

* Turned left when I got on an areoplane (quite a few times)

 

* Bought fifteen friends dinner in a swanky restaurant on a whim

 

* Decided that a case of champagne would be a nice treat... because it was Friday

 

* Upgraded every hire car I've ever hired to one with a convertible roof, this one got me every time

 

I know, I'm a wastrel. So now I'm reformed I'm zealous about being sensible with money and the bonfire of the credit cards was step one. I've no regrets, though

 

Cheers

MC

 

*Suspicious glare*

 

Doesn't sound very English to me. Are you sure you're English?

 

I'm a native-bornLondoner, which is sort of English but not... quite.

[Gorgon]

I just have the one credit card which is maxed out at the moment, but I manage just fine to resist going deeper in the hole by simply getting another one.

Edited October 21, 2009 by Gorgon

[LadyCrimson]

In the USA, if you give up your credit card accounts your credit score, strangely, takes a hit. Weird but true, I'm told.

This is because of the way the credit scoring works debt ratios. If you have 4 cards with 5000 limits for a total of 20k, and your total debt on all of them is 5000, that means you're using 25% of your total credit limit. If you then drop/close 2 of those cards and consolidate, you now only have 10k of credit, meaning that 5000 debt = 50%, which looks worse and consequently your score drops. At least, that's how I understand it.

There's also many other (more silly) ways your score takes temporary, small hits...it's all kinda wonky.

 

I currently have 2 credit cards. One I use only for a few monthly-charge internet things (webservers, gaming) and it gets paid off. The other I use for occasional bigger purchases (big household bills or 'toys" like my computer) and pay them off over 4-6 months, while not using them for anything else. So instead of using the card every month and paying it in full, I use it twice a year for something bigger and then pay it off slowly. Costs me a little more in interest but eh, not much...

 

If for some reason one is talking about very big purchases, debit cards often won't work then because they have a daily purchase limit (dependent on your account/bank etc).

 

Lastly, I used to have an American Express, but once I started using debit cards for most "everyday" expenses, and since I doubt I'll ever be able to pay off, say, a brand new car in one month, I found I didn't need the AmEx and canceled it.

Edited October 21, 2009 by LadyCrimson

[alanschu]

I wonder if it's a presumption by credit bureaus that canceling credit cards (which for me any, cost nothing to keep even if they have no balance/use) is a sign that the user anticipates an inability to control his credit spending, or an inability to pay for it?

 

Grasping at straws to say the least haha.

 

 

It's possible that simply having less total credit available to you reflects poorly.

[Monte Carlo]

In the UK it doesn't seem to affect your credit rating, in fact the bank and the credit card company constantly spam me with offers of crazy amounts of money I could borrow if I were stupid.

 

Which I used to be when it came to credit cards, hey I missed out the time I hired a freaking yacht in Italy out of idle curiosity. That one still smarts.

 

Cheers

MC

[alanschu]

Haha. Most of my money wasting endeavours are get rich quick schemes!

[Kaftan Barlast]

Credit cards never really made it in Sweden, we've only got debit cards although you can apply for credit if you're really dying for bankruptcy.

[WILL THE ALMIGHTY]

This is my third years sans credit cards. I used to have three, usually maxed out.

 

And I don't miss them at all. I feel astonishingly virtuous, in fact I have about 75p credit on one of them. That's right - the credit card company owes me money. Hahahahahahaa!!!

 

OK, I have a reasonably paid job but I also have a family so it's not like I'm rich. But I'm richer for not having a bloody credit card. My secret? If I can't afford something I either save for it or don't buy it. Radical, huh... it's taken me most of my life to work that one out.

 

Discuss.

 

I'm 21 and I finally got a credit card.

 

The catch? It's attached to my savings account so it's actually just a debit card with the MasterCard brand on it that works for any credit transaction. Basically so I can do online shopping.

 

I'm like you: I can't really conceive of buying something I don't have the money for.

 

Hmmm, I should try that.

[Walsingham]

Er, guys... using the bank's money to buy things is GOOD, provided the overall result in terms of effect or interest at your end is worth the interest at theirs. The only problem with credit cards is the amount of interest at their end. However, if something is needed NOW then the benefit could be huge. For example buying a train ticket to pursue the love of your life. It's no fething use saying 'oh I'll save up for it'. By then she's already married the pope.

[WILL THE ALMIGHTY]

Think of it as doing a 100% walkthrough of life. You can't have any debts to get that.

[taks]

theslug specifically mentioned credit rating being correlated with education, though.

which is why i noted that it's really more about reliability.

 

That's a solid reason for employment purposes, though I don't really get how it would help insurance companies; they're not creditors.

agreed. it's a weak link at best, and if they do use it for that reason, i'm a bit baffled.

 

taks

[Walsingham]

Monte: Aha. A Londoner. yes i agree Londoners are not really English. They just think they are. What's worse people who live in London think the rest of the UK is just the embarassing aged relative one keeps in the woodshed.

[Monte Carlo]

^ No, the attic.

 

My version of the UK is divided, broadly, into:

 

London (home) - dirty grubby magnificent world city that has already gone all Bladerunner on my ass

The M25 Londonopolis (home-from-home)

The A303 magic carpet to the West Country (home-from-home with comedy accents and nice beer, but don't stop 'til your WELL west of Swindon!)

THE REST (Thar be Dragons!)

 

Honestly, I've heard of the North of England but I'm not sure I've ever been there, although I spent ten minutes at a WH Smiths at a railway station in Manchester.

 

Cheers

MC

[Humodour]

I like the fact that Australian demographers are predicting that the cities of Sydney, Melbourne, Brisbane, Perth, etc will become so large (and rural areas so small) by 2050 that the states will become powerless and Australia well be governed by a handful of powerful capital city councils. Already 90% of Australians live in big cities on the coast.

 

I concede this has nothing to do with how queer the Motherland is. Sorry chaps.

[Monte Carlo]

^ There's the future for Oz... Escape from New York but with sunburn and really bad haircuts.

[Walsingham]

According to today's telegraph we;re set to absorb another 9 million immigrants in the next ten years. I find that mental. I don't care hwere they're from, there's not enough room/water/power for all the wankers already here.

[Monte Carlo]

I am already hording tinned food and bottles of water, already have the Mel Max beyond Thunderdome mullet.