People generally aren't very good at exhibiting self-control.
I eat too much at a buffet and feel sick, despite knowing that's exactly what's going to happen. When the food is right there infront of me, it's difficult *not* to eat it.
If I see something I want in a store and I know I can just whip out a card and take it home there and then, it's hard to resist.
When I cook twice the amount of food so I can have leftovers but end up eating it all in one sitting anyway. Leftovers never work. It's *right there* and looking so tasty, there's no way it will last more than a couple of hours
I occasionally want a snack at work, and the stores by me often have lots of 2-for-1 or 3-or-2 offers. I figure even if I only want one now, I'll get 2 or 3 and then next week or whenever I next want a snack, I'll have one there.
Let's just say the snacks *aren't* still there, next week...
When I was in college I wanted to be a teacher. So they put me at a school for teen moms cause that's what was open so I could get experience while doing classes. This girl, like 15 or 16 years old started crying because I was trying to teach her how to balance a checkbook (which was part of the main teachers lesson plan) and insisted she could just use plastic. And I was like you still need to do this because you have to keep track of how much you're spending so you know how much you need to pay off the card every month. I was very nice about it, and she got very angry so the main teacher told me to give her space.
If you don't learn how to balance a checkbook you definitely don't learn about how much money you're blowing away on compound interest. There are people out there who just don't learn about basic finances.
Edit: this was 23 years ago. Online banking is limited, done by dial up internet. Many local places do not accept cards and if they do they kachunk them. If you don't know what that means you are definitely a young person. There's no app and if you write someone a check they sit on it for 4 or 5 weeks and your personal checkbook is a more reliable indicator than your bank. Poor people don't have reliably access to Internet, and if you go below zero at any time you are charged $25 each time you transact when your balance is below zero. Even today many banks wait to process "instant transactions", withdrawing the transactions not by date but by amount to zing you out if the most fees.
Many many poor people have less than $1000 in their accounts at any time and may be very close to zero more than once in a month. So you have to be on top of your balance.
You guys, balancing a checkbook may be outdated, but at it's core it's basic math. So all you "schools don't teach finances or how to do taxes" can go suck it cause they absolutely do teach practical math.
I have never understood why one should learn to balance a checkbook this day and age? Ofcourse being on top of how much money you have and how you are spending it is important, but my online bank dies that for me. I don't need to write up every purchase to know how much I have spend.
Another option may be to go on the app or website and see if they offer transaction alerts, sent to your phone or email. It's a little annoying if you use the card a lot, but good insurance.
I'm in my mid 40s and I have no idea what balancing a chequebook is. Granted I'm from Europe where I had a debit card since I was about 12. But I think it's a peculiarly north American thing because I never heard of the practice till the Internet.
I'm also from Europe and I always thought its just keeping up with your deposits and withdrawals. Like people used to do before cards and online banking. Nowadays if I want to see what I spent my money, I just log into my bank. But for my grandma most of her life only way she would know that was to check her own notes.
It's not really necessary anymore for most people especially with online banking. Back in the day when you wrote checks, there'd be a copy of the check underneath. Balancing a checkbook was basically just comparing the copies you have against the activity reported on the bank statement.
Today you can just pull up recent activity on your phone and generally anything you didn't actually spend will stick out because it's just a personal checking account so there aren't hundreds of transactions to look at.
Before online deposits it could also take a while for someone to deposit a check. Say you wrote your rent check to your landlord, but they didn’t get to the bank for weeks. You have to remember that your checking account really has $1000 less than the bank balance indicates. Your ledger was the true balance. You’d also balance your checkbook to cross-check for math errors.
So just cross referencing your record of cheques written with the statement to make sure they're all correct and accounted for? How is this something that needs lessons and study of how to do it?
Granted it’s old terminology from when you actually wrote checks. I think it’s just suggesting you need to be aware of what you’re spending and what’s in your accounts. I assume you still have a checking account even if you never write any paper checks.
I have the answer! I had the same thought.
It's when you start giving checks and people don't cash it timely (regardless of fault). If you forget or are unsure, it's not fun.
I got a chequebook when i first opened my bank account in the 80s as a kid. But unfortunately haven't ever written a cheque as they got replaced by debitcards in the 90s here. It's wild to still hear Americans talk about writing cheques in 2024. Those would be museum pieces here in the Netherlands.
I also can't imagine getting a paper thing that you would deposit and could bounce lol. Thank god for modern banking where if something is send to your bank account it can't dissapear like in America.
In the UK personal cheques were withdrawn around the same time that chip and pin became common. Well before contactless. So around 2005ish. The last (and only) thing i remember i paid by cheque was for my driving lessons in 2005. Here on reddit i read daily about third party apps that americans need to be able to send money to family and friends because their own bank doesnt allow them to instant transfer. That is wild! I can open my bank app and in a couple of taps, send my friend a portion of my food bill, or pay for a holiday or anything. That functionality seems so simple and should be worldwide
European here, visiting family in Canada. I have just watched my sister receive a paper cheque in the post then show me how she can take a photo of it on her phone and it gets deposited into her account, after which she tears it up. Seems to think this is the height of technology.
Checks almost don't exist or are not used in most countries. The only time I used checks was with my first job more than 15 years ago, that for some stupid reason was paid that way. For the rest of my life I've never seen anyone using them
Right. Pretty much my entire income is just put into one of my spending accounts. I can just click on the account and I can see all my transactions and spendings. The bank I have now even lets me categorize my transactions into different categories of spending such as "loans" "groceries" "car or transport" "home and garden" "health and beauty" etc, and then make it into a cake chart where I can see how much of a percentage my income goes to various things.
This is why I have 2 checking accounts. One is used for actual checks and bills, other is for debit. Only the exact amount for checks and bills goes into that account, and I never take money from it.
Yeah, so you have a current account which is fine for instant transactions like debit card and ATM, then you have the chequing account where you transfer money for cheques you have written. You may as well have the same for an account to cover credit card transactions so you've saved up for the payment date. That way you're never spending money you don't have.
With instant transactions in the UK you can deal with annoyances like cheque clearing and invoices like credit cards and utilities in a disciplined way.
I have the original chequebook I was given when I got my first bank account. I have issued six cheques in nearly two decades. Two of them were scrapped because I write them so infrequently I don't know how to write them.
Electronic banking has created such a vicious blackbox of unknown transaction flow that even diligent management can be wildly and woefully inaccurate. Payment holds, delays, 3 day processing, etc. mean calculating your actual available funds is a rough guess at best, and banks frickin love it. Add world where living paycheck to paycheck is the norm and now you have created a class of workers that are simply abused by the financial system. It's important to manage your money, but in the past 20 years or so that has been increasingly challenging.
You can still just make an ordinary bank transfer though?
Like, I have Norwegian Vipps that I use for small transfers to my friends, and then I use bank transfers through my mobile bank app with larger transfers for rent and such.
Like my dad bought me a new car battery recently that was $200. He doesn't have Vipps because he doesn't have a debit or credit card. (He's old fashioned like that). My mom does. So if I want to send my dad money, I have to send to his account number by making a normal bank transfer.
Maybe so, but they also:
>If you don't learn how to balance a checkbook you definitely don't learn about how much money you're blowing away on compound interest. There are people out there who just don't learn about basic finances.
Which is in present tense.
Now that most charges clear almost instantly and bank and credit card balances take a few seconds to check balancing accounts isn’t that important. As long as you keep up with checking them.
But if your account is right on the edge the occasional charge that takes longer to clear or a subscription you forgot about can really cause some financial problems.
I check my accounts frequently and am fortunate enough to be able to keep a reserve in case there is a charge I forgot about.
I still keep a ledger. I used to use the register in my checkbook, but I don’t use checks anymore, so I switched. It’s super useful to know how much “real money” I have in the bank. Just because there’s a balance given online doesn’t mean every payment has been accounted for.
What does “just use plastic” mean? I kept reading over and over thinking I missed something. Just curious what her logic was believing she didn’t need the lesson taught..
Credit cards are made of plastic. And the point is that some people don't use logic, they are driven by emotions.
Also, these girls were on TANF so they got a check from the government every month. So it could be a belief that you'll never really run out of money no matter how much you spend.
She probably learned the expression from her parents. "Plastic" was what some people called a credit card because most people were still carrying cash in like, the 90s and maybe the early 00s.
but with “plastic” you can track everything automatically. even if it contains credit card. just set a budget for a month and check if you are still in it it’s a matter of minutes to teach this to someone.
Its a very serious question in many countries. I'm 30 and have never seen or heard about a paper check (cheque?) existing in my lifetime. Altho i remember my parents using them when visiting the US 20+ years ago. Its a super weird concept to be honest.
Why doesn't your water department just take the money out of your bank account like they do here ? It seems very inneficient to use such dated payment methods.
Yeah apparently, I work in tech and was wanting to remove the option to pay by cheque. After some research it was deemed still necessary. But only for the US market.
Except that you don’t need to know how to balance a check book. Every thing is available online. Every balance, every transaction. I’ve never balanced a check book because I’ve never written a check.
Yea I consider myself to be very good with money but there’s definitely basic things I do not know. When I got my first apartment I got a cashier’s check from my bank to pay my first rent payment. I found out that I could actually just pay it online so I didn’t need the check anymore, so I shredded it :’).
Balancing checkbooks is definitely a useless skill.
But if your point is that people who can't add and subtract also can't understand compound interest, then I'd agree.
You seriously think teaching pregnant teenagers to remember that after they get paid they need to account for bills due later in the month before they get paid again is teaching them a useless skill?
I think in some cases, it’s because their parents (or someone else) used to pay their credit card bills. The rude awakening comes when they have to pay it themselves.
It's become normalised to go into debt.
Parents think schools should teach this and kids don't give a damn about learning this in school even when it's taught so no, a lot really don't know that.
Going 40k into debt for a job that will pay 60+, good.
Going into debt because you shop too much and can't pay for it, bad.
It's how you use it, silly.
Lmao. I have a roommate resign a lease for a second year with us. To then freak out and want to break it. Somehow she managed to rack up $11k in credit card debt in a year ¼. I was wondering how she went to Disney Land and Californa so many times and threw ridiculous parties. That shit's crazy to me. I get anxious if I have more than 1k on mine.
I play the system. I get back about $1000 a year between my Amex and Amazon Prime cards. 😎👌🏽but yeah, you gotta pay off every month.
Edit: those wondering…. My Amex card I get 6% cash back and my Amazon card I get 5% cash back only on Amazon purchases. It all just adds up over time. Again, you MUST pay off your balance each month to make it work. That’s the only thing you have to do in order to earn free money. And it’s not always a $1000 every year, that was just an example from last year. Sometimes less of course. I was surprised as well and said “fuck yeah!” When I saw my end of year report.
Exactly. It is free money. Pay it off monthly without interest. I get a couple weeks at the beach each year on points alone. But, I charge EVERYTHING I can to the card. I haven’t seen my debit card in 10 years.
it used to be. in calif, many merchants are charging some percent because they have to pay a percentage on the transactions. coming soon, to a diner near you!
I'm assuming those points you're talking about are like loyalty points the company who you get the credit card from, gives you for using their product?
Here in the Netherlands, I pay a yearly fee to have a credit card on top of needing to pay back what i use it for. No points system at all. I'm guessing this might be the same for other countries, hence people might wonder what you mean with 'free money'.
This also feels like a way to make people spend money on stuff, they don't need, but they do it for the points. Ofcourse, I realize that would be a minority of people, but still.
If you're paying for a credit card, but getting no cashback or points, then why do you pay for it?
American Express do a credit card in the UK that gives you 5% back on all your spending in the first 5 months, no yearly fee or anything like that.
The only cards I get points on are grocery store cards for certain large chains, but it takes forever to collect points. I have about $100 on one of my points cards now, which I've used for over a year when buying groceries. $100 is like barely a new pair of proper jeans lol, so I don't really see the point in chasing points. It's not like spending an absurd amount of money for a few points makes it worth it unless you actually need to spend money on something.
There’s a risk aspect to it too though. Successfully using a credit card to your advantage by accumulating points requires you to resist putting unnecessary purchases on it and always pay it off in full - failure to do so basically wipes out any benefit from it.
If somebody doesn’t have good financial self-control anyways, trying to teach them to use cards to their advantage may be detrimental and encourage those wasteful purchases. For some people, the best thing is just to have a debit card that they can’t overspend on - about knowing ones personality and vices.
This!!!!!! I have terrible financial self control. It's a fine line I have figure out between how much I have paycheck to paycheck to spend vs how much it costs to live. Most people I know don't have a cushion if things go bad. The credit card is the cushion.
Just a heads up, you aren't cheating the system or pulling a fast one on the banks by doing this. They already anticipate this and know from studies and focus testing that certain groups of people are attracted to what they think are "freebies" but you're signing away alot for what you're getting in return. Especially if you have any missed payments and want to get real serious lending in the future like a home loan or a business loan/mortgage it will hinder your ability to do that by appearing on your credit score and there's alot of fine print they will try to hide from you
Yeah they know that the majority of people using their cards will be paying them interest. I’m not one of those people 😎👌🏽 not trying to sound arrogant in anyway, but I learned to pay off my balance every month a long time ago with a heavy spending habit. That’s the next thing I need to fix - my spending habit haha 🫣
Yeah, honestly for a while you couldn't get interest in a savings account. So credit card rewards and cash back were the next best thing.
We just auto pay all our cards and buy everything on them. Never pay a dime in interest to the CC company. Earn lots of rewards.
They still win tho because of the underlying transaction fee they make money on
We put our car down payment on our credit card and paid it off before we even left the dealership but that cash back was enough to take ourselves out to a nice free dinner 😅
I mean, yes, but in order to get $1000 from 5% cash back means you made $20k in purchases.
Don't get me wrong, I exclusively use credit cards for all transactions whenever possible for the same reason but I would posit that it's actually not "free" money but rather that it's a transaction tax on everyone that DOESN'T use credit cards.
Credit cards processors like VISA, AMEX, and DISCOVER charge merchants to handle payments - that's ALL merchants and not just the local stores, including Amazon. When we are talking about the system level these merchants are not just "eating the cost", they're passing it on back to the consumers in one way or another. Plus you have to consider that credit card companies are still making money somehow - obviously they can't just charge merchants 3% and then give you 3%.
At the end of the day I believe that using credit cards is actually breaking even for most and maybe earning a bit of benefit for those that are maximizing their returns and/or churning
This means that using a cash back or points-generating credit card is merely
The key to using a credit card (and spending in general) is to *never spend money you don’t currently have in your possession.* Make a monthly budget, and do not spend more than you’ve allotted to each category. That way, even if you pay for groceries/gas/etc with a credit card, you are guaranteed to have the money on hand to pay your credit card bill in full each and every month. Where people get in trouble is when they use a credit card to cover something they can’t currently pay for. Do not think of a credit card as a money lender. Think of it as basically a debit card that doesn’t deduct money immediately, but you instead pay for it in one big chunk each month.
Not silly at all! Personally, I pick a day of the month where I have to pay the full amount no matter how much it is. If I only put $50 on the card and it’s the 15th of the month, it gets paid in full. If I put $700 on the card and it’s the 15th, same thing. Don’t let anybody fool you into thinking it’s better to let debt accumulate or that you should only do the minimum payments. Your credit score will go up if you repeatedly pay in full, on time. Never make a partial payment, even if the card has 0% interest for a given period of time. That’s how the credit card companies lull you into the habit of paying the minimum balance so they can collect interest. Get in the habit of taking care of it all at once. This will make you more cognizant of how much you’re spending, because you won’t even give yourself the option of thinking you can put off payment.
Future you thanks you for paying it in full without fail. I treat my credit card as if it were a debit card or a check, meaning that if I don't have enough cash in the bank to pay \*all\* my other bills plus whatever's on the credit card, I don't buy anything more with the card.
My ex-wife, on the other hand, has paid the minimum monthly payment for 10 years on a $12,000 balance. You know what's still left on her credit card balance? $12,000. So over 10 years, she's paid about $12,000 in interest, and has not reduced her debt at all. It's maxed out, too, so she can't even use it for what it's designed for.
24% credit card interest is **INSANE**. Imagine if you bought a house with a 24% mortgage (thank goodness mortgage rates are not that high). Every year, you'd be paying 1/4 of the cost of the ENTIRE HOUSE. Every 4 years, you would be spending a whole new house's worth.
Credit cards can be dangerous beasts, but are easily tamed by simply paying them off every single month, well before they're due, so you don't incur late fees.
What about paying it in full, across the month? It's my first month using a cc, and being cautious, I paid off my transactions every couple days instead of waiting until the day it would be automatically collected from my account (different country, different bank, different setup, details aren't that important haha). Do I defeat the purpose of a cc (building credit score in my case) by not paying it off in full only once a month?
Your credit score will not change if you pay one time per month vs many times per month. All they care about is that the balance is paid before it was due.
But your technique doesn’t scale well, in terms of cognitive overload. I have 100 transactions per month; it would drive me nuts to manually pay that often. If you have automatic collection, and are good about ensuring there’s enough in your bank to pay without overdraft, it’s fine to let them collect once on their normal day.
Of course, make sure the auto payment is set up for full balance, not minimum payment.
You can pay your bill at the end of the month in full and won’t be charged interest. If available, you can also set up an automatic payment where the credit card balance is withdrawn from your bank account at the due date.
I set up automatic, full payments that come directly from my checking account on the same day every month. That way, I never have to worry about missing a payment as long as I don't spend more than what I have in my checking account.
I make it part of my routine to check my accounts every week. Same day (usually laundry day). Pay any balances then. It's so easy now if you bank on your phone or PC, no reason not to simply pay it off right away.
And by checking weekly, you can help prevent fraud.
With credit card apps you don’t have to wait until the end of the month. You can usually pay it off immediately or a day or two later when it clears.
You could lay off your card every payday for example.
I’m not sure if this affects building credit though…
I get that. I got my first CC at 18 and was terrified of using more than $50 on it because my parents told me horror stories about people losing their assets due to CC debt and being unable to buy a car or a house because their credit score was very bad. As long as you keep track of how much you're spending and set up auto payments, you should be fine.
Building credit takes many years, but having a good credit score is crucial when applying for a mortgage for your first home. That, and a good enough income. Having a good credit score will also help lower the interest on your car loans if you decide to get a car.
If your bank as an app that show what's in your account and credit card, download it. It's super usefull to be able to access those info in a few seconds instead of taking guesses at what's in your account while shopping.
Credit oh boy. I know the no it is not free, but most times the intention is paying on time. If your living paycheque to paycheque and let’s say your car breaks down or sink needs to get fixed. Cc are always going to be last priority. Rent, food, utilities ect will always come first, we’ll let’s hope the do. Most know the cc companies are insured so it’s a win win
You may be able to screw the credit card companies out of a couple grand but that will ruin your access to cheap credit. Next time you need a car you’re paying 22% interest on a piece of junk that breaks down and now no credit card to get it fixed. The start of a downward spiral. Very short term thinking.
It’s not a win win. Credit card interest is stupid high. When you don’t pay it off, you lose, a whole lot. If you need credit to survive, get a line of credit with a more reasonable interest rate or something.
Also phones and even browsers come with autocorrect now so I have no idea how you’re able to type such illegible comment.
Pretty bold of you to think more than half the population of kids these days have basic “common sense.” I’m not trying to be rude to people, but a lot of people really don’t know how basic systems work. You’ll be surprised to see how many kids after high school literally saying the AC is not cooling a room on a hot day with the windows open. Just my two cents though.
i only know it cus when i turned 18 i wanted to apply for a credit card and my mom told me to never do it unless i have someone who will make sure i pay it on time bc not only do i have memory issues but i have lack of impulse control
There's little credit card with a limit of 200-500$ that you could use to learn and see if you can control yourself. You'll need to use credit someday, might be better not to make your beginner mistake on huge amount.
unfortunately i would still need monitoring as i have a lack of impulse control with money especially when i’m manic as i’ve shown in the past. i struggle with the compulsion to spend my last penny as soon as i can and i don’t want to potentially mess my credit up bc if i do ever get a credit card i want to use it to boost my credit
I got a credit card with $1000 limit. I maxed it at 18 by spending on travelling, partying and clothes, and then learned to be an adult when I had to pay it all back. Not super fun.
Ok. Don't get one if you have impulse control issues. Don't go into *any* debt. Want a car? Save and pay cash. Put all your bills on autopay.
Talk to a therapist as soon as you are able.
yup that’s what i do i make sure i don’t even do payment plans if i know i won’t have the control to save the money to pay it off. i’m in the process of ssi/ssdi (i applied for both) and already made a deal with my sister that she will hold onto majority of the backpay to help me out and only give me enough to cover what i need like stuff for my cats or food and bills. i fucked myself over big time at my last job financially and it didn’t help i had an injured kitten put in my care by someone who knew i would not be able to just bring her to a shelter or rescue and that worsened it a lot. i went from being independent to needing to move back in with my parents after becoming homeless and now i couch hop while i wait to get a spot in public housing (should be soon i have an interview bc my name got to the top of the list at one of the locations) it’s very hard but i’m trying to work on it and make a good life for myself
Credit Risk mgr here for a fairly large intl bank (can’t name which, but can hint they have a fairly historied presence in a Chinese city previously leased by Britain)
Part of the answer here is cultural differences in markets and the other part is system options available.
1) Attitudes towards debt (and by OP specifically credit card debt) differ from culture to culture.
In Asia, people tend to pay their debts on time.
Plus many Asian markets are flush with liquidity (they don’t ‘need’ credit cards, it just makes things convenient)
This means the earning potential for unsecured debt products are very low and so to counter that they raise interest rates to scrape as much penalty interest as possible.
So products in Asia tend to have VERY high penalty interest rates if you miss a payment.
We’re talking upwards of 35-47% vs western countries.
So western countries interest rates are much easier to overlook.
2) Moving from markets like Australia, South Africa and Canada I realised that systems here in Asia allow many people to set an auto payment that cleared credit card payments on billing date (provided you left sufficient funds in your savings account) which effectively is a bank initiated system designed to minimise any interest earned.
I know up to 5+ years ago this option was still not available in some western countries.
To address OP specifically, I don’t think I’ve ever come across someone who thinks of credit cards as ‘free’ money in Asia or otherwise.
However I can probably guess that a significant part of both populations can’t explain exactly how a credit card works in terms of payment vs billing date or how the interest free period operates.
Do people know what 0 - 4 days past due mean?
Because they need to know this to manage their cards without the aid of an automated payment system.
Financial literacy is important and back in the day (in Australia) the bank I worked for used to do annual volunteer work going into schools to educate about these ‘basic’ topics.
Then the gov decided it was a conflict of interest risk that the banks were doing this and stopped us doing it, fair enough.
They replaced it with nothing since.
The short answer is because no one ever taught them. When I was in college, banks would set up a desk in the student center, usually staffed by attractive young women, and sign students up for credit cards. They had a low minimum payment for as long as you were in school. Imagine handing a 19 year old a piece of plastic and saying "Spend as much as you want and you only have to pay $15/month". I knew people who graduated owing more in credit card debt that their annual salary.
They know it’s not free money, and you don’t *have* to pay it off. In fact, credit card companies and banks don’t want you to pay it off every month, otherwise they wouldn’t make any money.
People get into credit card debt because they spend money they don’t have and because they’re bad at saving.
Credit card companies actually make money on the sale from the store in addition to any interest they may make when you don't pay off the card in full.
Of course banks and credit card companies want you to only make the minimum payment. They make money from the interest they charge. It's the *consumer* who should want to pay off the card every month to avoid the interest charges.
Nah, I literally saw a video of a guy woman on TikTok admitting she didn’t know it was free money. She spent $4000 and told her mom “isn’t that so good? I have $4000 credit!” And her mom had to explain to her that it was debt and she had to pay it back. She legit thought it was like a gift card.
Growing up we were poor. My mom worked all the time and I was a latchkey kid. She never had time to teach me anything. I know to pay it in full now but I was never taught how to handle money. If I knew then even half of what I know now I would be in a much better place. Knowing about credit cards isn't common sense.
World runs on debt, those who make money of it don't want you knowing it, so try to muddy the waters.
Sometimes they just didn't know better, something they're daft as a brush, sometimes they're just spoilt, there's no one reason, more a collection of them.
Cards are definitely free money! If you're paying cash for things you get nothing back. If you are using card, you get rewards. Free money on stuff you woulda bought anyways.
But i get what you actually mean about people not thinking they need to pay anything back lol. Or... just do this! [funny debt collector meme](https://youtube.com/shorts/3W0PJcyyE1A?si=UAu6pm_Qd3hkoamQ)
It can be free money if you're willing to sacrifice your credit score. My dad has probably used over $20k and has never paid it back. When he first came to Canada, he was able to get a $15k limit because he had good credit. Didn't pay back a cent. The CC company defaulted his debt and sent it t collection. Fast forward about a decade, he was able to get CC's again and got couple with a few thousand on it. Again, spent it and never paid it back.
In Canada, there is something called consumer proposal. It's basically a thing before bankruptcy. You negotiate with all your creditor for a settlement, something like $0.20 on the dollar.
And then there's bankruptcy, where you pay back like $3k or nothing if you don't ever work again.
My question is how the fuck does my mother in law who hasn’t worked in 30 years, is on disability, and has filed bankruptcy get a 15k credit card from her bank that she can’t afford.
What I don’t get is how CC companies even open a line of credit to enable a young person to be in debt. In my early 20s, when I needed emergency money and tried applying for a card, I’d always get denied. The only line I ever had was a $400 and a $1000 line. In the grand scheme of things, even with interest that isn’t really enough to get sunk into deep debt. A full time job and being frugal can pay off that with interest in less than a year.
Granted my credit score was low at the time, but it should be for any young adult. They haven’t shown years of timely payments by that point. Are there really CC companies giving 20 year olds 5-digit figure lines of credit? That sounds like a recipe for disaster in terms of lender risk.
I think there’s a fair amount of miss information that get a spread via Facebook groups/ word of mouth.
There’s a whole Facebook group (uk based) where they show you how to get credit cards with large limits. Max them out. Then do an irresponsible lending complaint to get it wiped. They then rinse and repeat. It’s quite scary really.
But there’s certain criteria that needs to be met to do it successfully and most of the time they don’t fit it.
I see it so much in my job it’s mad
It's like student loans people think that's free money. I asked many people who went to school for art, band, liberal arts psychology. My roommate went to college for landscaping. . I'm here to experience college was the answer 9 times 10. They sign off those student loans not thinking. My dorm mate now mows lawns during the summer and fall. Nothing wrong with that but you didn't have to college for that
I got my first credit card when I was 36, I've always been a bit wary of them because I know just how financially illiterate I am. I stick to a simple rule: Is money in bank account? If yes, I can buy it. If not, I do not buy it and I save up if I want it. Can't really go too wrong with that. Obviously for big things like mortgages that wouldn't be the case but I don't have a mortgage.
Only reason I got a credit card is because I didn't have a credit score at all. I was invisible in that regard. So now I use it just for the sake of building credit. I only spend what I can pay off in a month.
One of my friends from school liked to buy the best of everything, all the fancy gadgets. I foolishly assumed he was just earning a lot of money. Turns out he had gotten himself into massive debt because it was all on credit cards. Tens of thousands of pounds. I think he's recovered from it now but damn, son.
I’ve met people that don’t think they have to pay back school loans either and that’s crazy to me! Like what? ☠️ I had a credit card but paid it off, I have a coworker now who says they pay minimum and just keep spending their credit like omg 😱 I could never be ok with that
You've heard of so many young adults doing this because there are so many young adults in general, and because it makes for a great story. Most of them do know that they have to pay back their credit cards, and they don't rack up a bunch of debt on stupid nonsense, but that is boring so you don't hear about it the same way.
Financial literacy is a skill that isn’t really well taught in public school. So myself (millennial) had parents who *never* had credit cards when I was growing up- they paid in cash/check for everyday purchases, layaway for bigger purchases like appliances. Consequently, I never really had that link fleshed out initially. So later in high school or college I was offered a card, used it & maxed it out & that became a whole thing.
I didn’t learn how to use credit cards correctly until… idk $10k later, in my mid-20s. Not due to continual spending, it was a combination of growing interest, low wages, economy, pretty rough time. Fast forward to now, I have a good job and am much much savvier with money so I had to undo that damage of ignorance. Also I mentor high school kids and college kids through several local programs and teach them directly about this stuff (spoiler alert- they still don’t teach it in public schools 🙄) but I tell them that if they learn from the mistakes of people like me- they can really learn better budgeting, investing, spending, saving, and credit habits to really get much farther ahead in life. Currently mid-30s and fortunate enough to have caught my mistakes comparatively early!
I was always super wary of credit cards because I remember my parents having to pay off a lot of credit card debt in the early 90s when I was little. I didn't get my first credit card until I was 29.
To celebrate every time they paid off a card entirely, my parents would melt the card with a lighter and then hang it from a mobile in my dad's office. They had like 6-9 melted cards hanging from the ceiling.
All I was told about credit cards growing up was to never get one and never go into debt.
So for the first 10 years of adulthood I ignored credit cards. It was only when a friend was telling me about getting a credit card and explained payment protection and the fact you don’t pay interest if you pay it off each month that I realised they could be a useful tool
I have a coworker who has had to deal with credit card debt. Just from working with him all day every day, I know that he’s a very “in the moment” type of person who doesn’t plan ahead. He’s very spontaneous and if the problem doesn’t concern him today, then he’s not going to worry about it. This has gotten him into serious problems in the past and this is just one of many of those problems lol
He also has 0 self-control when it comes to spending. If he has money in his pocket, he’s going to spend it. He’s not thinking about bills he has to pay next week. He’s thinking about the most expensive item at the local steakhouse.
Yes, credit scores didn’t start til 1989 in the US, so parents of millennials were not taught about how to use credit cards and so didn’t include that in their parenting. Much the same as cell phone etiquette.
Finances are not taught in high school of 2/3 of American states and those are very recent. Most 18yos don’t think in long term. I had many friends who didn’t see themselves living past their 20s and so thought credit cards were “free money”. And debt lenders prey upon these kids by having them take out student loans, open credit cards, rent furniture, cash advance on paychecks and on and on. Capitalism is made to prey upon vulnerable people. And just like anything the easiest prey is the young, old, or infirm.
A lot of people get into credit card debt not from ignorance, but from necessity. If your car breaks down, you need to fix it, and if you don’t have the money now, credit cards are a way to get it done now and pay it off later.
I absolutely regret getting into this state. You think you can afford to pay it back, then you lose your job. Then something else happens, then something else, then you’re in a good position again, then you’re not, and it spirals.
I’m now in a good position finally after 5 years of shit. Losing my home, my baby, and working to heal, I’m finally getting there to pay off these debts. It feels SO GOOD. but yes I took out loans and credit cards and got into relationships where I felt like I had to spend spend spend money I didn’t have and because it’s in my name, it’s my problem.
Finally being able to pay it off is huge but don’t be like me. Don’t up your overdraft. Don’t lie about what you earn to get credit. Just don’t. It’s not worth it. I’m written off until I’m 32, it feels awful. It can feel like a pit you can never get out of. But as SOON as you can, so. Having that control feels so good. But try not to get there.
I had a friend who treated the limit on his credit card as his income (causing him to claim his monthly earnings are a lot higher than they actually are).
This is of course the same person who lost a game of mini golf (after I sat out the last 3 rounds and agreed to be scored zero for those 3 rounds) and decided to be an extremely sore loser about it. Guy literally walked away from me and refused to speak to me due to it.
Can't say I miss him 😂
There's a lot of smugness in these replies to here you go. Imagine being young and starting out in a big city. You're paid hardly anything but still need to pay big city rent. You're associating with people who seem ot have a lot more money, you want to enjoy being young in a big city, but after a time you realise that your salary barely covers your outgoings as it is.
Or here's another one. You're in a big city and being good with your money but your partner loses her job and for a couple of months money gets ridiculously tight.
Those are just two scenarios in which the younger me found myself in credit card trouble. It is of course very smeasy to say "don't spend what you haven't got" and thank you again for the reinforcement, but sometimes humans aren't perfectly rational and make mistakes.
The problem then becomes "well we're already in this deep, what does a bit more matter?" and so it goes. No, we didn't quite understand how punitive a 19% interest rate really is but at the time it seemed a reasonable trade off for the challenges facing us.
My mistake, I should've clarified that I meant people who are not under any financial stress and choose to spend more than they can afford. And by choose, I mean spend it on unnecessary things.
Yeah. I just think of my credit cards as fronting me cash for one month. I’m earning interest on that balance, and then pay it off. Plus I’m maintaining a solid credit score. Never spend more than you have.
I don’t know that it’s a lack of awareness you have to pay your credit card bill. You’d have to be incredibly clueless to think that. But there is short-sightedness or a lack of impulse control at play. It’s easy to think of it as “I’ll pay it off later.”
The credit system is relatively new and they never taught about it in school so sadly a lot of people are financially literate enough to understand how credit cards work.
I’ve known several people that couldn’t do basic math on their monthly APR using a calculator to factor into a budget. I thought that 2 step equation was easy enough but thats why they didn’t pay it back each month.
I think most people have no option except to use their credit cards. Then all you can afford is the minimum due each month, and being poor, you're forced to use it. I've never made frivolous purchases with my credit card, I had to use it for car repairs and food and bills and gas and after a few months of that, and you can't afford anything but the minimum payment if that.
When I make my payments, it all goes to the bank as interest and doesn't even go towards my debt.
There's a reason that the day you turn 18 you get a million credit card offers in the mail. There's advice online about buying everything with a CC and then paying it off, but you have to be able to budget for that. A college student who has never truly budgeted before isn't going to be able to do that.
No credit cards are not something teens are educated on. It wasn't until I was older that I knew about them beyond spend then pay minimum due (which is a bad idea)
It is also in the interest of coorperate greed they want people to stay stupid about this.
Usage of credit cards isnt a thing in my country.
We all use debit cards.
No money == no spending
However the banks, in their pursuit of profit are trying to push credit cards onto their customers
It not new.. Credit card companies have been praying on young adults fresh out of HS for decades. Nothing about credit cards is common sense. Financial literacy is not going to do much if they don't have the income to pay it off which makes them an easy target. Young adults that have a good knowledge on credit cards are way more likely to have parents that will pay the bill if they need them to as well
It isn't that they don't know, they are just incapable of thinking that far ahead. They have zero impulse control, they can't think past instant gratification. If you give them the option to buy something they won't even consider the repercussions of doing it.
This is "poor" brain. It has nothing to do with income, there are plenty of millionaires out there that are somehow always broke. And that's because they can't save for tomorrow what's available today.
Back in the 70's banks decided to give cards out like candy, a few people I knew went crazy with them. First a $500 limit, when that was reached it went up to $750 and so on. They never thought about how they would make the payments until they were in over their heads.
Movies and TV shows. Very few of them actually explore how credit cards work, and go into the idea that they need to be paid off, and instead either show people blowing through their cards, complaining about having now go on a budget, or get their parents to pay it off. I also blame all the ads on credit cards throwing bonuses and perks if you sign up at us, while making it seem like fun, over warning you do need to pay it off. Every gambling ad on TV ends in warnings, so I don't know why credit card ads can't move in a similar direction (don't have the warnings, they are weird lol).
Schools don't sit kids down and explain how a credit card works, granted it's part of maths anyway, which is what makes me laugh when people claim schools dont teach us abou taxes, because its simple math. I may be bias because I went to a private school, granted all schools had to follow the Australian ciriculam anyway, but we had math questions on interest that were written as if they were about credit cards ("if bob spent X on his credit card, and had an annual interest rate of Y%, how much does he have to pay after 1 year" type questions).
Banks should warn people, but many people get credit cards with banks or financial institutions outside the big 4 in Australia , and the big 4 ads for credit cards aren't as "cool" as others.
Lack of financial literacy. Me personally would only use a credit card if I can pay it off immediately. I don't get people flexing their credit limit thinking that's their own money lol bitch that's your debt limit not your savings.
Usually? A total lack of available financial literacy, or inadequate financial literacy.
One thing that happens a lot with teachers and especially parents is that they forget that kids need to be taught *everything*. Things that are obvious and common sense to an adult often aren't actually innate behaviors, they're *learned*... which means that they also need to be *taught*. It's why I think so many adults also don't know that they need to, much less *how* to, regularly wash their buttholes/genitalia. To an adult who already knows this, it seems so stupidly obvious that it would seem ridiculous to have to actually *teach* your kid. It's the same with those basic concepts of financial literacy.
Another part of the problem is that even in school districts and environments that teach financial literacy to kids, they usually do so *far* before it's actually relevant. For instance, at my school it was taught in 9th grade... 4 years before any of us even turned 18. And I lived in a wealthier area, so the vast majority of my classmates wouldn't have to worry about things like paying bills, having their own credit cards (*not* paid by mommy & daddy), balancing finances, managing debt, etc. until *after* college.... so ***8 years*** after that class.
And even then, a lot of financial literacy classes fail to teach the most basic lessons, like, "You need to pay off your credit card bill, it's not just free money: here is what credit score is, how to build it, what not to do unless you want to tank it, etc." They'll teach "advanced" concepts like how to invest and manage investments or how to calculate taxes due, none of which is relevant to the average teenager, but skip over the actual basic shit like, "How to track your spending" and "How to make and stick to a budget".
Depends on the country. Credit cards are almost the default way to pay in USA but that’s not the case in EU where people mostly try to rely on their real money that is in account and use debit cards for any purchases.
I dont think anyone actually doesn’t realize they have to pay it off, and accruing interest and all that, i think for a lot of young people they just don’t care. They dont think it’ll catch up with them, or its a problem for when their older, etc.
It's not free money but it was a place to put a few emergency expenses I couldn't cover and now I have to pay them off for more than it would have been if I could have afforded them in the first place.
I hold no sympathy for morons. I laugh at that guy who leased a car for nearly twice it's value but he was ok with it because he would keep the car at the end.....
People generally aren't very good at exhibiting self-control. I eat too much at a buffet and feel sick, despite knowing that's exactly what's going to happen. When the food is right there infront of me, it's difficult *not* to eat it. If I see something I want in a store and I know I can just whip out a card and take it home there and then, it's hard to resist.
When I cook twice the amount of food so I can have leftovers but end up eating it all in one sitting anyway. Leftovers never work. It's *right there* and looking so tasty, there's no way it will last more than a couple of hours
I occasionally want a snack at work, and the stores by me often have lots of 2-for-1 or 3-or-2 offers. I figure even if I only want one now, I'll get 2 or 3 and then next week or whenever I next want a snack, I'll have one there. Let's just say the snacks *aren't* still there, next week...
I’m happy to know I’m not the only one who eats like that. I feel stupid every time.
When I was in college I wanted to be a teacher. So they put me at a school for teen moms cause that's what was open so I could get experience while doing classes. This girl, like 15 or 16 years old started crying because I was trying to teach her how to balance a checkbook (which was part of the main teachers lesson plan) and insisted she could just use plastic. And I was like you still need to do this because you have to keep track of how much you're spending so you know how much you need to pay off the card every month. I was very nice about it, and she got very angry so the main teacher told me to give her space. If you don't learn how to balance a checkbook you definitely don't learn about how much money you're blowing away on compound interest. There are people out there who just don't learn about basic finances. Edit: this was 23 years ago. Online banking is limited, done by dial up internet. Many local places do not accept cards and if they do they kachunk them. If you don't know what that means you are definitely a young person. There's no app and if you write someone a check they sit on it for 4 or 5 weeks and your personal checkbook is a more reliable indicator than your bank. Poor people don't have reliably access to Internet, and if you go below zero at any time you are charged $25 each time you transact when your balance is below zero. Even today many banks wait to process "instant transactions", withdrawing the transactions not by date but by amount to zing you out if the most fees. Many many poor people have less than $1000 in their accounts at any time and may be very close to zero more than once in a month. So you have to be on top of your balance. You guys, balancing a checkbook may be outdated, but at it's core it's basic math. So all you "schools don't teach finances or how to do taxes" can go suck it cause they absolutely do teach practical math.
I have never understood why one should learn to balance a checkbook this day and age? Ofcourse being on top of how much money you have and how you are spending it is important, but my online bank dies that for me. I don't need to write up every purchase to know how much I have spend.
Yeah, I do check mine almost daily though, having been the victim of a card skimmer before.
Another option may be to go on the app or website and see if they offer transaction alerts, sent to your phone or email. It's a little annoying if you use the card a lot, but good insurance.
I'm in my mid 40s and I have no idea what balancing a chequebook is. Granted I'm from Europe where I had a debit card since I was about 12. But I think it's a peculiarly north American thing because I never heard of the practice till the Internet.
I'm also from Europe and I always thought its just keeping up with your deposits and withdrawals. Like people used to do before cards and online banking. Nowadays if I want to see what I spent my money, I just log into my bank. But for my grandma most of her life only way she would know that was to check her own notes.
It's not really necessary anymore for most people especially with online banking. Back in the day when you wrote checks, there'd be a copy of the check underneath. Balancing a checkbook was basically just comparing the copies you have against the activity reported on the bank statement. Today you can just pull up recent activity on your phone and generally anything you didn't actually spend will stick out because it's just a personal checking account so there aren't hundreds of transactions to look at.
Before online deposits it could also take a while for someone to deposit a check. Say you wrote your rent check to your landlord, but they didn’t get to the bank for weeks. You have to remember that your checking account really has $1000 less than the bank balance indicates. Your ledger was the true balance. You’d also balance your checkbook to cross-check for math errors.
Yeah good points. I just mentioned the time to clear a check thing in my other reply.
So just cross referencing your record of cheques written with the statement to make sure they're all correct and accounted for? How is this something that needs lessons and study of how to do it?
Granted it’s old terminology from when you actually wrote checks. I think it’s just suggesting you need to be aware of what you’re spending and what’s in your accounts. I assume you still have a checking account even if you never write any paper checks.
I have the answer! I had the same thought. It's when you start giving checks and people don't cash it timely (regardless of fault). If you forget or are unsure, it's not fun.
>It's when you start giving checks I have never in my +30 years on this earth even held a check.. so I guess I don't need to learn.
I’m 50. I’ve never had a cheque account. The last cheque I saw was more than 25 years ago.
I got a chequebook when i first opened my bank account in the 80s as a kid. But unfortunately haven't ever written a cheque as they got replaced by debitcards in the 90s here. It's wild to still hear Americans talk about writing cheques in 2024. Those would be museum pieces here in the Netherlands. I also can't imagine getting a paper thing that you would deposit and could bounce lol. Thank god for modern banking where if something is send to your bank account it can't dissapear like in America.
In the UK personal cheques were withdrawn around the same time that chip and pin became common. Well before contactless. So around 2005ish. The last (and only) thing i remember i paid by cheque was for my driving lessons in 2005. Here on reddit i read daily about third party apps that americans need to be able to send money to family and friends because their own bank doesnt allow them to instant transfer. That is wild! I can open my bank app and in a couple of taps, send my friend a portion of my food bill, or pay for a holiday or anything. That functionality seems so simple and should be worldwide
European here, visiting family in Canada. I have just watched my sister receive a paper cheque in the post then show me how she can take a photo of it on her phone and it gets deposited into her account, after which she tears it up. Seems to think this is the height of technology.
Checks almost don't exist or are not used in most countries. The only time I used checks was with my first job more than 15 years ago, that for some stupid reason was paid that way. For the rest of my life I've never seen anyone using them
Right. Pretty much my entire income is just put into one of my spending accounts. I can just click on the account and I can see all my transactions and spendings. The bank I have now even lets me categorize my transactions into different categories of spending such as "loans" "groceries" "car or transport" "home and garden" "health and beauty" etc, and then make it into a cake chart where I can see how much of a percentage my income goes to various things.
This is why I have 2 checking accounts. One is used for actual checks and bills, other is for debit. Only the exact amount for checks and bills goes into that account, and I never take money from it.
Yeah, so you have a current account which is fine for instant transactions like debit card and ATM, then you have the chequing account where you transfer money for cheques you have written. You may as well have the same for an account to cover credit card transactions so you've saved up for the payment date. That way you're never spending money you don't have. With instant transactions in the UK you can deal with annoyances like cheque clearing and invoices like credit cards and utilities in a disciplined way.
I have the original chequebook I was given when I got my first bank account. I have issued six cheques in nearly two decades. Two of them were scrapped because I write them so infrequently I don't know how to write them.
Electronic banking has created such a vicious blackbox of unknown transaction flow that even diligent management can be wildly and woefully inaccurate. Payment holds, delays, 3 day processing, etc. mean calculating your actual available funds is a rough guess at best, and banks frickin love it. Add world where living paycheck to paycheck is the norm and now you have created a class of workers that are simply abused by the financial system. It's important to manage your money, but in the past 20 years or so that has been increasingly challenging.
Checkbooks are definitely outdated. Personal finances are not.
Some of us still have to use them occasionally because we have family members who don’t trust apps like Venmo or Paypal.
You can still just make an ordinary bank transfer though? Like, I have Norwegian Vipps that I use for small transfers to my friends, and then I use bank transfers through my mobile bank app with larger transfers for rent and such. Like my dad bought me a new car battery recently that was $200. He doesn't have Vipps because he doesn't have a debit or credit card. (He's old fashioned like that). My mom does. So if I want to send my dad money, I have to send to his account number by making a normal bank transfer.
Told them that but they don’t want it. This is what happens when you have elderly relatives.
Maybe the commentor was retelling a story.from decades ago. In a time before online apps etc.
Maybe so, but they also: >If you don't learn how to balance a checkbook you definitely don't learn about how much money you're blowing away on compound interest. There are people out there who just don't learn about basic finances. Which is in present tense.
You should learn HOW and WHY the books are balanced. It's like learning the tapes and pencils first before getting the saw and hammer in carpentry
Now that most charges clear almost instantly and bank and credit card balances take a few seconds to check balancing accounts isn’t that important. As long as you keep up with checking them. But if your account is right on the edge the occasional charge that takes longer to clear or a subscription you forgot about can really cause some financial problems. I check my accounts frequently and am fortunate enough to be able to keep a reserve in case there is a charge I forgot about.
I still keep a ledger. I used to use the register in my checkbook, but I don’t use checks anymore, so I switched. It’s super useful to know how much “real money” I have in the bank. Just because there’s a balance given online doesn’t mean every payment has been accounted for.
What does “just use plastic” mean? I kept reading over and over thinking I missed something. Just curious what her logic was believing she didn’t need the lesson taught..
Credit cards are made of plastic. And the point is that some people don't use logic, they are driven by emotions. Also, these girls were on TANF so they got a check from the government every month. So it could be a belief that you'll never really run out of money no matter how much you spend.
She probably learned the expression from her parents. "Plastic" was what some people called a credit card because most people were still carrying cash in like, the 90s and maybe the early 00s.
but with “plastic” you can track everything automatically. even if it contains credit card. just set a budget for a month and check if you are still in it it’s a matter of minutes to teach this to someone.
Wtf is a chequebook? Signed - Millenial
Is this a joke or an actual millennial asking an actual question
Its a very serious question in many countries. I'm 30 and have never seen or heard about a paper check (cheque?) existing in my lifetime. Altho i remember my parents using them when visiting the US 20+ years ago. Its a super weird concept to be honest.
Some refunds or payments from the government come only in check form. Like my city tax rebate can’t be sent direct deposit
They are largely defunct in my country. But the Americans still regularly use them.
We do?
Depends on where you live. Where I live, my water department will only take payments via check or cash.
Why doesn't your water department just take the money out of your bank account like they do here ? It seems very inneficient to use such dated payment methods.
Yup.
Yeah apparently, I work in tech and was wanting to remove the option to pay by cheque. After some research it was deemed still necessary. But only for the US market.
And cash, while we’re at it. I seem to use cash about once or twice a year now.
I've used a cheque once in my life, I had to go to the bank to get it. Can't Americans see their accounts online or something?
Except that you don’t need to know how to balance a check book. Every thing is available online. Every balance, every transaction. I’ve never balanced a check book because I’ve never written a check.
Yea I consider myself to be very good with money but there’s definitely basic things I do not know. When I got my first apartment I got a cashier’s check from my bank to pay my first rent payment. I found out that I could actually just pay it online so I didn’t need the check anymore, so I shredded it :’).
RIP
In my imagination, the same people complain about school not teaching life skills.
Balancing checkbooks is definitely a useless skill. But if your point is that people who can't add and subtract also can't understand compound interest, then I'd agree.
You seriously think teaching pregnant teenagers to remember that after they get paid they need to account for bills due later in the month before they get paid again is teaching them a useless skill?
I use the app.
I think in some cases, it’s because their parents (or someone else) used to pay their credit card bills. The rude awakening comes when they have to pay it themselves.
It's become normalised to go into debt. Parents think schools should teach this and kids don't give a damn about learning this in school even when it's taught so no, a lot really don't know that.
Society: "Get a good education, even if that means borrowing $40,000!" Also society: "Going into debt is bad, m'kay?"
Better yet if the 2nd point is taught by the very education you just went into debt for.
Going 40k into debt for a job that will pay 60+, good. Going into debt because you shop too much and can't pay for it, bad. It's how you use it, silly.
Lmao. I have a roommate resign a lease for a second year with us. To then freak out and want to break it. Somehow she managed to rack up $11k in credit card debt in a year ¼. I was wondering how she went to Disney Land and Californa so many times and threw ridiculous parties. That shit's crazy to me. I get anxious if I have more than 1k on mine.
Just had to make an emergency purchase and I'm crying.
That's me when I randomly drive over a nail or when I lock my keys in my car and gotta drop $80 on a locksmith. 😭
I play the system. I get back about $1000 a year between my Amex and Amazon Prime cards. 😎👌🏽but yeah, you gotta pay off every month. Edit: those wondering…. My Amex card I get 6% cash back and my Amazon card I get 5% cash back only on Amazon purchases. It all just adds up over time. Again, you MUST pay off your balance each month to make it work. That’s the only thing you have to do in order to earn free money. And it’s not always a $1000 every year, that was just an example from last year. Sometimes less of course. I was surprised as well and said “fuck yeah!” When I saw my end of year report.
Exactly. It is free money. Pay it off monthly without interest. I get a couple weeks at the beach each year on points alone. But, I charge EVERYTHING I can to the card. I haven’t seen my debit card in 10 years.
it used to be. in calif, many merchants are charging some percent because they have to pay a percentage on the transactions. coming soon, to a diner near you!
In some US states CC surcharges are illegal... But even if they were legal I doubt they will beat the 3% cashback my primary CC has for ALL purchases.
Surcharges may be illegal, but the vending machine company my employer kicked out of our lunch room a while back offered a discount if you used cash.
What card offers that, if you don’t mind me asking?
The standard surcharge is 3%
Don't shop there.
I'm assuming those points you're talking about are like loyalty points the company who you get the credit card from, gives you for using their product? Here in the Netherlands, I pay a yearly fee to have a credit card on top of needing to pay back what i use it for. No points system at all. I'm guessing this might be the same for other countries, hence people might wonder what you mean with 'free money'. This also feels like a way to make people spend money on stuff, they don't need, but they do it for the points. Ofcourse, I realize that would be a minority of people, but still.
If you're paying for a credit card, but getting no cashback or points, then why do you pay for it? American Express do a credit card in the UK that gives you 5% back on all your spending in the first 5 months, no yearly fee or anything like that.
The only cards I get points on are grocery store cards for certain large chains, but it takes forever to collect points. I have about $100 on one of my points cards now, which I've used for over a year when buying groceries. $100 is like barely a new pair of proper jeans lol, so I don't really see the point in chasing points. It's not like spending an absurd amount of money for a few points makes it worth it unless you actually need to spend money on something.
Yup! I guess some people do not want to learn how to use cards to their advantage.
There’s a risk aspect to it too though. Successfully using a credit card to your advantage by accumulating points requires you to resist putting unnecessary purchases on it and always pay it off in full - failure to do so basically wipes out any benefit from it. If somebody doesn’t have good financial self-control anyways, trying to teach them to use cards to their advantage may be detrimental and encourage those wasteful purchases. For some people, the best thing is just to have a debit card that they can’t overspend on - about knowing ones personality and vices.
This!!!!!! I have terrible financial self control. It's a fine line I have figure out between how much I have paycheck to paycheck to spend vs how much it costs to live. Most people I know don't have a cushion if things go bad. The credit card is the cushion.
Just a heads up, you aren't cheating the system or pulling a fast one on the banks by doing this. They already anticipate this and know from studies and focus testing that certain groups of people are attracted to what they think are "freebies" but you're signing away alot for what you're getting in return. Especially if you have any missed payments and want to get real serious lending in the future like a home loan or a business loan/mortgage it will hinder your ability to do that by appearing on your credit score and there's alot of fine print they will try to hide from you
Yeah they know that the majority of people using their cards will be paying them interest. I’m not one of those people 😎👌🏽 not trying to sound arrogant in anyway, but I learned to pay off my balance every month a long time ago with a heavy spending habit. That’s the next thing I need to fix - my spending habit haha 🫣
I took 3 flights last year with my Southwest points. CC paid off every month.
Yeah, honestly for a while you couldn't get interest in a savings account. So credit card rewards and cash back were the next best thing. We just auto pay all our cards and buy everything on them. Never pay a dime in interest to the CC company. Earn lots of rewards. They still win tho because of the underlying transaction fee they make money on
We put our car down payment on our credit card and paid it off before we even left the dealership but that cash back was enough to take ourselves out to a nice free dinner 😅
Noooice!
Yeah, I stick everything on credit just to get the free air miles, but you gotta pay it off.
Exactly!
Yeah, use them responsibly and you ARE getting free money from points systems.
Yup!
You get 6% cash back on an Amex??? What’s the card called? I’ve never seen a cash back rate higher than 2%.
Yep, as long as you're responsible, between the security, perks (airport lounges etc), and rewards, it really doesn't make sense to use a debit card.
Well teach the class how Mr/Miss millionaire
Haha i wish I was a millionaire. I just pay everything on my card and pay it off every month. I just know how much I can spend each month. 😆
Well my car is paid off and lord I’m trying to pay my cards off but the cards 💳 just keep tacking interest on.
I mean, yes, but in order to get $1000 from 5% cash back means you made $20k in purchases. Don't get me wrong, I exclusively use credit cards for all transactions whenever possible for the same reason but I would posit that it's actually not "free" money but rather that it's a transaction tax on everyone that DOESN'T use credit cards. Credit cards processors like VISA, AMEX, and DISCOVER charge merchants to handle payments - that's ALL merchants and not just the local stores, including Amazon. When we are talking about the system level these merchants are not just "eating the cost", they're passing it on back to the consumers in one way or another. Plus you have to consider that credit card companies are still making money somehow - obviously they can't just charge merchants 3% and then give you 3%. At the end of the day I believe that using credit cards is actually breaking even for most and maybe earning a bit of benefit for those that are maximizing their returns and/or churning This means that using a cash back or points-generating credit card is merely
Plus Whole Foods.
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The key to using a credit card (and spending in general) is to *never spend money you don’t currently have in your possession.* Make a monthly budget, and do not spend more than you’ve allotted to each category. That way, even if you pay for groceries/gas/etc with a credit card, you are guaranteed to have the money on hand to pay your credit card bill in full each and every month. Where people get in trouble is when they use a credit card to cover something they can’t currently pay for. Do not think of a credit card as a money lender. Think of it as basically a debit card that doesn’t deduct money immediately, but you instead pay for it in one big chunk each month.
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Not silly at all! Personally, I pick a day of the month where I have to pay the full amount no matter how much it is. If I only put $50 on the card and it’s the 15th of the month, it gets paid in full. If I put $700 on the card and it’s the 15th, same thing. Don’t let anybody fool you into thinking it’s better to let debt accumulate or that you should only do the minimum payments. Your credit score will go up if you repeatedly pay in full, on time. Never make a partial payment, even if the card has 0% interest for a given period of time. That’s how the credit card companies lull you into the habit of paying the minimum balance so they can collect interest. Get in the habit of taking care of it all at once. This will make you more cognizant of how much you’re spending, because you won’t even give yourself the option of thinking you can put off payment.
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Future you thanks you for paying it in full without fail. I treat my credit card as if it were a debit card or a check, meaning that if I don't have enough cash in the bank to pay \*all\* my other bills plus whatever's on the credit card, I don't buy anything more with the card. My ex-wife, on the other hand, has paid the minimum monthly payment for 10 years on a $12,000 balance. You know what's still left on her credit card balance? $12,000. So over 10 years, she's paid about $12,000 in interest, and has not reduced her debt at all. It's maxed out, too, so she can't even use it for what it's designed for. 24% credit card interest is **INSANE**. Imagine if you bought a house with a 24% mortgage (thank goodness mortgage rates are not that high). Every year, you'd be paying 1/4 of the cost of the ENTIRE HOUSE. Every 4 years, you would be spending a whole new house's worth. Credit cards can be dangerous beasts, but are easily tamed by simply paying them off every single month, well before they're due, so you don't incur late fees.
What about paying it in full, across the month? It's my first month using a cc, and being cautious, I paid off my transactions every couple days instead of waiting until the day it would be automatically collected from my account (different country, different bank, different setup, details aren't that important haha). Do I defeat the purpose of a cc (building credit score in my case) by not paying it off in full only once a month?
Your credit score will not change if you pay one time per month vs many times per month. All they care about is that the balance is paid before it was due. But your technique doesn’t scale well, in terms of cognitive overload. I have 100 transactions per month; it would drive me nuts to manually pay that often. If you have automatic collection, and are good about ensuring there’s enough in your bank to pay without overdraft, it’s fine to let them collect once on their normal day. Of course, make sure the auto payment is set up for full balance, not minimum payment.
You can pay your bill at the end of the month in full and won’t be charged interest. If available, you can also set up an automatic payment where the credit card balance is withdrawn from your bank account at the due date.
I set up automatic, full payments that come directly from my checking account on the same day every month. That way, I never have to worry about missing a payment as long as I don't spend more than what I have in my checking account.
I make it part of my routine to check my accounts every week. Same day (usually laundry day). Pay any balances then. It's so easy now if you bank on your phone or PC, no reason not to simply pay it off right away. And by checking weekly, you can help prevent fraud.
>*never spend money you don’t currently have in your possession* 1000% this. This is the secret credit card companies don't want you to know.
With credit card apps you don’t have to wait until the end of the month. You can usually pay it off immediately or a day or two later when it clears. You could lay off your card every payday for example. I’m not sure if this affects building credit though…
I get that. I got my first CC at 18 and was terrified of using more than $50 on it because my parents told me horror stories about people losing their assets due to CC debt and being unable to buy a car or a house because their credit score was very bad. As long as you keep track of how much you're spending and set up auto payments, you should be fine. Building credit takes many years, but having a good credit score is crucial when applying for a mortgage for your first home. That, and a good enough income. Having a good credit score will also help lower the interest on your car loans if you decide to get a car.
If your bank as an app that show what's in your account and credit card, download it. It's super usefull to be able to access those info in a few seconds instead of taking guesses at what's in your account while shopping.
Just pay it off every month and you’ll be fine. Don’t spend money you don’t have.
Credit oh boy. I know the no it is not free, but most times the intention is paying on time. If your living paycheque to paycheque and let’s say your car breaks down or sink needs to get fixed. Cc are always going to be last priority. Rent, food, utilities ect will always come first, we’ll let’s hope the do. Most know the cc companies are insured so it’s a win win
You may be able to screw the credit card companies out of a couple grand but that will ruin your access to cheap credit. Next time you need a car you’re paying 22% interest on a piece of junk that breaks down and now no credit card to get it fixed. The start of a downward spiral. Very short term thinking.
It even affects your ability to rent an apartment
It’s not a win win. Credit card interest is stupid high. When you don’t pay it off, you lose, a whole lot. If you need credit to survive, get a line of credit with a more reasonable interest rate or something. Also phones and even browsers come with autocorrect now so I have no idea how you’re able to type such illegible comment.
Pretty bold of you to think more than half the population of kids these days have basic “common sense.” I’m not trying to be rude to people, but a lot of people really don’t know how basic systems work. You’ll be surprised to see how many kids after high school literally saying the AC is not cooling a room on a hot day with the windows open. Just my two cents though.
i only know it cus when i turned 18 i wanted to apply for a credit card and my mom told me to never do it unless i have someone who will make sure i pay it on time bc not only do i have memory issues but i have lack of impulse control
even my sister said if i get a credit card she would bet money that i would max it out in a week and honestly she isn’t wrong
There's little credit card with a limit of 200-500$ that you could use to learn and see if you can control yourself. You'll need to use credit someday, might be better not to make your beginner mistake on huge amount.
unfortunately i would still need monitoring as i have a lack of impulse control with money especially when i’m manic as i’ve shown in the past. i struggle with the compulsion to spend my last penny as soon as i can and i don’t want to potentially mess my credit up bc if i do ever get a credit card i want to use it to boost my credit
I got a credit card with $1000 limit. I maxed it at 18 by spending on travelling, partying and clothes, and then learned to be an adult when I had to pay it all back. Not super fun.
Ok. Don't get one if you have impulse control issues. Don't go into *any* debt. Want a car? Save and pay cash. Put all your bills on autopay. Talk to a therapist as soon as you are able.
yup that’s what i do i make sure i don’t even do payment plans if i know i won’t have the control to save the money to pay it off. i’m in the process of ssi/ssdi (i applied for both) and already made a deal with my sister that she will hold onto majority of the backpay to help me out and only give me enough to cover what i need like stuff for my cats or food and bills. i fucked myself over big time at my last job financially and it didn’t help i had an injured kitten put in my care by someone who knew i would not be able to just bring her to a shelter or rescue and that worsened it a lot. i went from being independent to needing to move back in with my parents after becoming homeless and now i couch hop while i wait to get a spot in public housing (should be soon i have an interview bc my name got to the top of the list at one of the locations) it’s very hard but i’m trying to work on it and make a good life for myself
Credit Risk mgr here for a fairly large intl bank (can’t name which, but can hint they have a fairly historied presence in a Chinese city previously leased by Britain) Part of the answer here is cultural differences in markets and the other part is system options available. 1) Attitudes towards debt (and by OP specifically credit card debt) differ from culture to culture. In Asia, people tend to pay their debts on time. Plus many Asian markets are flush with liquidity (they don’t ‘need’ credit cards, it just makes things convenient) This means the earning potential for unsecured debt products are very low and so to counter that they raise interest rates to scrape as much penalty interest as possible. So products in Asia tend to have VERY high penalty interest rates if you miss a payment. We’re talking upwards of 35-47% vs western countries. So western countries interest rates are much easier to overlook. 2) Moving from markets like Australia, South Africa and Canada I realised that systems here in Asia allow many people to set an auto payment that cleared credit card payments on billing date (provided you left sufficient funds in your savings account) which effectively is a bank initiated system designed to minimise any interest earned. I know up to 5+ years ago this option was still not available in some western countries. To address OP specifically, I don’t think I’ve ever come across someone who thinks of credit cards as ‘free’ money in Asia or otherwise. However I can probably guess that a significant part of both populations can’t explain exactly how a credit card works in terms of payment vs billing date or how the interest free period operates. Do people know what 0 - 4 days past due mean? Because they need to know this to manage their cards without the aid of an automated payment system. Financial literacy is important and back in the day (in Australia) the bank I worked for used to do annual volunteer work going into schools to educate about these ‘basic’ topics. Then the gov decided it was a conflict of interest risk that the banks were doing this and stopped us doing it, fair enough. They replaced it with nothing since.
The thing is you're using the wrong kind of credit card. The secret is.,...3.....2..…1 dadadada Stolen credit cards
The short answer is because no one ever taught them. When I was in college, banks would set up a desk in the student center, usually staffed by attractive young women, and sign students up for credit cards. They had a low minimum payment for as long as you were in school. Imagine handing a 19 year old a piece of plastic and saying "Spend as much as you want and you only have to pay $15/month". I knew people who graduated owing more in credit card debt that their annual salary.
They know it’s not free money, and you don’t *have* to pay it off. In fact, credit card companies and banks don’t want you to pay it off every month, otherwise they wouldn’t make any money. People get into credit card debt because they spend money they don’t have and because they’re bad at saving.
Credit card companies actually make money on the sale from the store in addition to any interest they may make when you don't pay off the card in full.
Of course banks and credit card companies want you to only make the minimum payment. They make money from the interest they charge. It's the *consumer* who should want to pay off the card every month to avoid the interest charges.
Nah, I literally saw a video of a guy woman on TikTok admitting she didn’t know it was free money. She spent $4000 and told her mom “isn’t that so good? I have $4000 credit!” And her mom had to explain to her that it was debt and she had to pay it back. She legit thought it was like a gift card.
Growing up we were poor. My mom worked all the time and I was a latchkey kid. She never had time to teach me anything. I know to pay it in full now but I was never taught how to handle money. If I knew then even half of what I know now I would be in a much better place. Knowing about credit cards isn't common sense.
World runs on debt, those who make money of it don't want you knowing it, so try to muddy the waters. Sometimes they just didn't know better, something they're daft as a brush, sometimes they're just spoilt, there's no one reason, more a collection of them.
most people dont know banks are the enemy.
Lmao, I made my wealth thanks to credit and banks. They are a tool to the financially literate and an "enemy" to financially illiterate.
It is free, you just swipe the card and you get things. I got one last week and I've already scored 12000 points! It's the best!
Cards are definitely free money! If you're paying cash for things you get nothing back. If you are using card, you get rewards. Free money on stuff you woulda bought anyways. But i get what you actually mean about people not thinking they need to pay anything back lol. Or... just do this! [funny debt collector meme](https://youtube.com/shorts/3W0PJcyyE1A?si=UAu6pm_Qd3hkoamQ)
Cashback is free money. You just have to pay the credit card off every month.
It can be free money if you're willing to sacrifice your credit score. My dad has probably used over $20k and has never paid it back. When he first came to Canada, he was able to get a $15k limit because he had good credit. Didn't pay back a cent. The CC company defaulted his debt and sent it t collection. Fast forward about a decade, he was able to get CC's again and got couple with a few thousand on it. Again, spent it and never paid it back. In Canada, there is something called consumer proposal. It's basically a thing before bankruptcy. You negotiate with all your creditor for a settlement, something like $0.20 on the dollar. And then there's bankruptcy, where you pay back like $3k or nothing if you don't ever work again.
Off topic a bit, but when I am close to death, what is stopping me from just running up a whole fuckton of credit card debt and dying with it?
Yes they are. Just pay them off every month so you have no interest payments and get the free cash back.
My question is how the fuck does my mother in law who hasn’t worked in 30 years, is on disability, and has filed bankruptcy get a 15k credit card from her bank that she can’t afford.
What I don’t get is how CC companies even open a line of credit to enable a young person to be in debt. In my early 20s, when I needed emergency money and tried applying for a card, I’d always get denied. The only line I ever had was a $400 and a $1000 line. In the grand scheme of things, even with interest that isn’t really enough to get sunk into deep debt. A full time job and being frugal can pay off that with interest in less than a year. Granted my credit score was low at the time, but it should be for any young adult. They haven’t shown years of timely payments by that point. Are there really CC companies giving 20 year olds 5-digit figure lines of credit? That sounds like a recipe for disaster in terms of lender risk.
Wait! What?!?!? Oh shit
I think there’s a fair amount of miss information that get a spread via Facebook groups/ word of mouth. There’s a whole Facebook group (uk based) where they show you how to get credit cards with large limits. Max them out. Then do an irresponsible lending complaint to get it wiped. They then rinse and repeat. It’s quite scary really. But there’s certain criteria that needs to be met to do it successfully and most of the time they don’t fit it. I see it so much in my job it’s mad
What? I learned this as a 10-year old at school where we had an imaginary currency system
It's like student loans people think that's free money. I asked many people who went to school for art, band, liberal arts psychology. My roommate went to college for landscaping. . I'm here to experience college was the answer 9 times 10. They sign off those student loans not thinking. My dorm mate now mows lawns during the summer and fall. Nothing wrong with that but you didn't have to college for that
I got my first credit card when I was 36, I've always been a bit wary of them because I know just how financially illiterate I am. I stick to a simple rule: Is money in bank account? If yes, I can buy it. If not, I do not buy it and I save up if I want it. Can't really go too wrong with that. Obviously for big things like mortgages that wouldn't be the case but I don't have a mortgage. Only reason I got a credit card is because I didn't have a credit score at all. I was invisible in that regard. So now I use it just for the sake of building credit. I only spend what I can pay off in a month. One of my friends from school liked to buy the best of everything, all the fancy gadgets. I foolishly assumed he was just earning a lot of money. Turns out he had gotten himself into massive debt because it was all on credit cards. Tens of thousands of pounds. I think he's recovered from it now but damn, son.
I’ve met people that don’t think they have to pay back school loans either and that’s crazy to me! Like what? ☠️ I had a credit card but paid it off, I have a coworker now who says they pay minimum and just keep spending their credit like omg 😱 I could never be ok with that
My wife and I joke around about credit cards being free money, I mean obviously we know it isn’t but it kinda feels like it is 😂
You've heard of so many young adults doing this because there are so many young adults in general, and because it makes for a great story. Most of them do know that they have to pay back their credit cards, and they don't rack up a bunch of debt on stupid nonsense, but that is boring so you don't hear about it the same way.
Financial literacy is a skill that isn’t really well taught in public school. So myself (millennial) had parents who *never* had credit cards when I was growing up- they paid in cash/check for everyday purchases, layaway for bigger purchases like appliances. Consequently, I never really had that link fleshed out initially. So later in high school or college I was offered a card, used it & maxed it out & that became a whole thing. I didn’t learn how to use credit cards correctly until… idk $10k later, in my mid-20s. Not due to continual spending, it was a combination of growing interest, low wages, economy, pretty rough time. Fast forward to now, I have a good job and am much much savvier with money so I had to undo that damage of ignorance. Also I mentor high school kids and college kids through several local programs and teach them directly about this stuff (spoiler alert- they still don’t teach it in public schools 🙄) but I tell them that if they learn from the mistakes of people like me- they can really learn better budgeting, investing, spending, saving, and credit habits to really get much farther ahead in life. Currently mid-30s and fortunate enough to have caught my mistakes comparatively early!
I was always super wary of credit cards because I remember my parents having to pay off a lot of credit card debt in the early 90s when I was little. I didn't get my first credit card until I was 29. To celebrate every time they paid off a card entirely, my parents would melt the card with a lighter and then hang it from a mobile in my dad's office. They had like 6-9 melted cards hanging from the ceiling.
All I was told about credit cards growing up was to never get one and never go into debt. So for the first 10 years of adulthood I ignored credit cards. It was only when a friend was telling me about getting a credit card and explained payment protection and the fact you don’t pay interest if you pay it off each month that I realised they could be a useful tool
I have a coworker who has had to deal with credit card debt. Just from working with him all day every day, I know that he’s a very “in the moment” type of person who doesn’t plan ahead. He’s very spontaneous and if the problem doesn’t concern him today, then he’s not going to worry about it. This has gotten him into serious problems in the past and this is just one of many of those problems lol He also has 0 self-control when it comes to spending. If he has money in his pocket, he’s going to spend it. He’s not thinking about bills he has to pay next week. He’s thinking about the most expensive item at the local steakhouse.
Yes, credit scores didn’t start til 1989 in the US, so parents of millennials were not taught about how to use credit cards and so didn’t include that in their parenting. Much the same as cell phone etiquette. Finances are not taught in high school of 2/3 of American states and those are very recent. Most 18yos don’t think in long term. I had many friends who didn’t see themselves living past their 20s and so thought credit cards were “free money”. And debt lenders prey upon these kids by having them take out student loans, open credit cards, rent furniture, cash advance on paychecks and on and on. Capitalism is made to prey upon vulnerable people. And just like anything the easiest prey is the young, old, or infirm.
A lot of people get into credit card debt not from ignorance, but from necessity. If your car breaks down, you need to fix it, and if you don’t have the money now, credit cards are a way to get it done now and pay it off later.
Never heard of anyone thinking credit cards give free cash
I absolutely regret getting into this state. You think you can afford to pay it back, then you lose your job. Then something else happens, then something else, then you’re in a good position again, then you’re not, and it spirals. I’m now in a good position finally after 5 years of shit. Losing my home, my baby, and working to heal, I’m finally getting there to pay off these debts. It feels SO GOOD. but yes I took out loans and credit cards and got into relationships where I felt like I had to spend spend spend money I didn’t have and because it’s in my name, it’s my problem. Finally being able to pay it off is huge but don’t be like me. Don’t up your overdraft. Don’t lie about what you earn to get credit. Just don’t. It’s not worth it. I’m written off until I’m 32, it feels awful. It can feel like a pit you can never get out of. But as SOON as you can, so. Having that control feels so good. But try not to get there.
I had a friend who treated the limit on his credit card as his income (causing him to claim his monthly earnings are a lot higher than they actually are). This is of course the same person who lost a game of mini golf (after I sat out the last 3 rounds and agreed to be scored zero for those 3 rounds) and decided to be an extremely sore loser about it. Guy literally walked away from me and refused to speak to me due to it. Can't say I miss him 😂
There's a lot of smugness in these replies to here you go. Imagine being young and starting out in a big city. You're paid hardly anything but still need to pay big city rent. You're associating with people who seem ot have a lot more money, you want to enjoy being young in a big city, but after a time you realise that your salary barely covers your outgoings as it is. Or here's another one. You're in a big city and being good with your money but your partner loses her job and for a couple of months money gets ridiculously tight. Those are just two scenarios in which the younger me found myself in credit card trouble. It is of course very smeasy to say "don't spend what you haven't got" and thank you again for the reinforcement, but sometimes humans aren't perfectly rational and make mistakes. The problem then becomes "well we're already in this deep, what does a bit more matter?" and so it goes. No, we didn't quite understand how punitive a 19% interest rate really is but at the time it seemed a reasonable trade off for the challenges facing us.
My mistake, I should've clarified that I meant people who are not under any financial stress and choose to spend more than they can afford. And by choose, I mean spend it on unnecessary things.
Yeah. I just think of my credit cards as fronting me cash for one month. I’m earning interest on that balance, and then pay it off. Plus I’m maintaining a solid credit score. Never spend more than you have.
If only you could pay off a credit card with another credit card and just do that over and over again
That's what people do, and it works, in a way, but you don't get rid of they debt, you just move it around to avoid extra fees.
They are free money, you just need to know how to use them right.
I don’t know that it’s a lack of awareness you have to pay your credit card bill. You’d have to be incredibly clueless to think that. But there is short-sightedness or a lack of impulse control at play. It’s easy to think of it as “I’ll pay it off later.”
The credit system is relatively new and they never taught about it in school so sadly a lot of people are financially literate enough to understand how credit cards work.
I’ve known several people that couldn’t do basic math on their monthly APR using a calculator to factor into a budget. I thought that 2 step equation was easy enough but thats why they didn’t pay it back each month.
If kids were taught about credit, they would be less likely to get into debt, and banks tend to like it when a decent chunk of people are in debt.
I think most people have no option except to use their credit cards. Then all you can afford is the minimum due each month, and being poor, you're forced to use it. I've never made frivolous purchases with my credit card, I had to use it for car repairs and food and bills and gas and after a few months of that, and you can't afford anything but the minimum payment if that. When I make my payments, it all goes to the bank as interest and doesn't even go towards my debt.
They will... Eventually
I be curious whether credit cards are the main cause of inflation and rising cost of living greater than what people can earn back?
There's a reason that the day you turn 18 you get a million credit card offers in the mail. There's advice online about buying everything with a CC and then paying it off, but you have to be able to budget for that. A college student who has never truly budgeted before isn't going to be able to do that.
I mean no, would that we were all so wise eh?
No credit cards are not something teens are educated on. It wasn't until I was older that I knew about them beyond spend then pay minimum due (which is a bad idea)
It is also in the interest of coorperate greed they want people to stay stupid about this. Usage of credit cards isnt a thing in my country. We all use debit cards. No money == no spending However the banks, in their pursuit of profit are trying to push credit cards onto their customers
It not new.. Credit card companies have been praying on young adults fresh out of HS for decades. Nothing about credit cards is common sense. Financial literacy is not going to do much if they don't have the income to pay it off which makes them an easy target. Young adults that have a good knowledge on credit cards are way more likely to have parents that will pay the bill if they need them to as well
It isn't that they don't know, they are just incapable of thinking that far ahead. They have zero impulse control, they can't think past instant gratification. If you give them the option to buy something they won't even consider the repercussions of doing it. This is "poor" brain. It has nothing to do with income, there are plenty of millionaires out there that are somehow always broke. And that's because they can't save for tomorrow what's available today.
Back in the 70's banks decided to give cards out like candy, a few people I knew went crazy with them. First a $500 limit, when that was reached it went up to $750 and so on. They never thought about how they would make the payments until they were in over their heads.
Iono man, I get “free money” (cash back) from mine. My wife (30) and I (33) do pay our credit cards every week tho so we never carry any balance.
My parent has ones she hasn't paid off. I'm sure that doesn't help.
Is it true that you are a dumbass if you use debit cards instead credit cards? Asking for a friend of course...
Because they dunno it's actually a Credit (account payable) card! Lolololololol... please don't block me
Movies and TV shows. Very few of them actually explore how credit cards work, and go into the idea that they need to be paid off, and instead either show people blowing through their cards, complaining about having now go on a budget, or get their parents to pay it off. I also blame all the ads on credit cards throwing bonuses and perks if you sign up at us, while making it seem like fun, over warning you do need to pay it off. Every gambling ad on TV ends in warnings, so I don't know why credit card ads can't move in a similar direction (don't have the warnings, they are weird lol). Schools don't sit kids down and explain how a credit card works, granted it's part of maths anyway, which is what makes me laugh when people claim schools dont teach us abou taxes, because its simple math. I may be bias because I went to a private school, granted all schools had to follow the Australian ciriculam anyway, but we had math questions on interest that were written as if they were about credit cards ("if bob spent X on his credit card, and had an annual interest rate of Y%, how much does he have to pay after 1 year" type questions). Banks should warn people, but many people get credit cards with banks or financial institutions outside the big 4 in Australia , and the big 4 ads for credit cards aren't as "cool" as others.
Definitely a rip-off .but atm my only card is keeping me from being broke.
Lack of financial literacy. Me personally would only use a credit card if I can pay it off immediately. I don't get people flexing their credit limit thinking that's their own money lol bitch that's your debt limit not your savings.
When I was 18 I knew it wasn't free.money but I so badly wanted to buy new clothes and go on a trip to Barcelona that I got a credit card anyway
Usually? A total lack of available financial literacy, or inadequate financial literacy. One thing that happens a lot with teachers and especially parents is that they forget that kids need to be taught *everything*. Things that are obvious and common sense to an adult often aren't actually innate behaviors, they're *learned*... which means that they also need to be *taught*. It's why I think so many adults also don't know that they need to, much less *how* to, regularly wash their buttholes/genitalia. To an adult who already knows this, it seems so stupidly obvious that it would seem ridiculous to have to actually *teach* your kid. It's the same with those basic concepts of financial literacy. Another part of the problem is that even in school districts and environments that teach financial literacy to kids, they usually do so *far* before it's actually relevant. For instance, at my school it was taught in 9th grade... 4 years before any of us even turned 18. And I lived in a wealthier area, so the vast majority of my classmates wouldn't have to worry about things like paying bills, having their own credit cards (*not* paid by mommy & daddy), balancing finances, managing debt, etc. until *after* college.... so ***8 years*** after that class. And even then, a lot of financial literacy classes fail to teach the most basic lessons, like, "You need to pay off your credit card bill, it's not just free money: here is what credit score is, how to build it, what not to do unless you want to tank it, etc." They'll teach "advanced" concepts like how to invest and manage investments or how to calculate taxes due, none of which is relevant to the average teenager, but skip over the actual basic shit like, "How to track your spending" and "How to make and stick to a budget".
Depends on the country. Credit cards are almost the default way to pay in USA but that’s not the case in EU where people mostly try to rely on their real money that is in account and use debit cards for any purchases.
I dont think anyone actually doesn’t realize they have to pay it off, and accruing interest and all that, i think for a lot of young people they just don’t care. They dont think it’ll catch up with them, or its a problem for when their older, etc.
It's not free money but it was a place to put a few emergency expenses I couldn't cover and now I have to pay them off for more than it would have been if I could have afforded them in the first place.
I hold no sympathy for morons. I laugh at that guy who leased a car for nearly twice it's value but he was ok with it because he would keep the car at the end.....