New credit rating agency

[Red Squirrel]

Credit is good for emergency, but one should not rely on credit. Idealy it's even better to have an emergency fund, but not everyone has enough extra income for that, or the discipline. The mistake lot of people do is rely on credit for stuff they don't need.

Don't buy a new car when you can buy used and pay cash, don't buy a brand new ski doo if you can't pay cash, etc. A house, well that's a bit different, you kinda need a place to live and be established and you're going to throw money away if you get an appartment, so a mortgage is about the only form of credit one should rely on. It is good to maybe have a credit line for small things that come up, it acts as a pay day advance fund. But pay it off! Don't hold a balance.

 

[s0me0nesmind1]

Can't trade fruit for alcohol or drugs. And texashiker thinks he's helping them...

Get out town! No way! Those are just good honest folks trying hard in life. They just happen to coincidentally always win the lottery on unlucky... every day...

 

[JMapleton]

Credit is good for emergency, but one should not rely on credit. Idealy it's even better to have an emergency fund, but not everyone has enough extra income for that, or the discipline. The mistake lot of people do is rely on credit for stuff they don't need.

Don't buy a new car when you can buy used and pay cash, don't buy a brand new ski doo if you can't pay cash, etc. A house, well that's a bit different, you kinda need a place to live and be established and you're going to throw money away if you get an appartment, so a mortgage is about the only form of credit one should rely on. It is good to maybe have a credit line for small things that come up, it acts as a pay day advance fund. But pay it off! Don't hold a balance.

I think you're missing the point. We use credit cards, pay them off monthly, to get rewards points. I currently have 120,000 Amex points. That's enough to fly anywhere in the world, first class, for free and stay at a top hotel, for free. I paid no interest and just an annual fee to get these points. It's worth it to run your expenses through a credit card to gain the benefit.

Texashiker ignorantly thinks someone is losing out because of my rewards points. They aren't. In fact if anyone is losing out, I am. The points come from the mechants fees and annual fees on my credit cards. Businesses pay for my points but they are glad to do it because people typically overspend when they buy with credit cards instead of cash. It's actually the credit card user that is losing. No one is being "robbed" by credit card users.

 

[OCGuy]

You guys are getting trolled so hard.

If he is that ignorant about how credit works, you aren't going to convince him.

My guess is that he was just waiting for the classic ATOT "I pay it off every month" crowd.

 

[Jeffg010]

I think you're missing the point. We use credit cards, pay them off monthly, to get rewards points. I currently have 120,000 Amex points. That's enough to fly anywhere in the world, first class, for free and star at a top hotel, for free. I paid no interest and just an annual fee to get these points. It's worth it to run your expenses through a credit card to gain the benefit.

Texashiker ignorantly thinks someone is losing out because of my rewards points. They aren't. In fact if anyone is losing out, I am. The points come from the mechants fees and annual fees on my credit cards. Businesses pay for my points but they are glad to do it because people typically overspend when they buy with credit cards instead of cash. It's actually the credit card user that is losing. No one is being "robbed" by credit card users.

How much did you spend to get that 120,000 points? Would it have not been cheaper in the over all scheme of things to buy the plane tickets and save all that money you spent to get the 120,000 points. I know you going to tell me it would have been things you would have bought any ways like food and gas and what ever else you needed but still I willing to bet that I could have save more even if I bought the plane ticket out right then trying to use the CC and build points. My debt card builds points too I don't have to worry about paying it off each month plus it insured so I'm doing pretty with out a CC.

 

[silverpig]

How much did you spend to get that 120,000 points? Would it have not been cheaper in the over all scheme of things to buy the plane tickets and save all that money you spent to get the 120,000 points. I know you going to tell me it would have been things you would have bought any ways like food and gas and what ever else you needed but still I willing to bet that I could have save more even if I bought the plane ticket out right then trying to use the CC and build points. My debt card builds points too I don't have to worry about paying it off each month plus it insured so I'm doing pretty with out a CC.

Presumably he's not buying $100k worth of crap to throw on a pile and burn just to earn points. He's bought stuff with the card he would normally have bought anyways.

I'd also wager that a bunch of that is a signup bonus.

I also have well over 100k points, some is from work expenses, some from personal, some from signup bonus. It's all stuff I would have put on my visa, but I put it on my amex to earn points.

 

[JMapleton]

How much did you spend to get that 120,000 points? Would it have not been cheaper in the over all scheme of things to buy the plane tickets and save all that money you spent to get the 120,000 points. I know you going to tell me it would have been things you would have bought any ways like food and gas and what ever else you needed but still I willing to bet that I could have save more even if I bought the plane ticket out right then trying to use the CC and build points. My debt card builds points too I don't have to worry about paying it off each month plus it insured so I'm doing pretty with out a CC.

I do not understand what you are asking. Points are earned one point per dollar spent. I received about 60,000 bonus points for signing up for Amex and rest is from spending.

Because I am required to pay off the balance every month, I do not find myself buying things I wouldn't have otherwise bought with this card, so I am not overspending. It did not cost me anything except for the annual fee.

Additionally, I plan to visit the UK next year and I priced first class tickets for two to London and they're about $6,000 each. That's $12,000 worth of tickets. I can get them for free. Plus I'll still have points left over. That's a lot of value.

Additionally, I have received a lot of benefits from my card. Extended warranties, loss protection, etc. I've come out far ahead having this card.

 

[Red Squirrel]

I think you're missing the point. We use credit cards, pay them off monthly, to get rewards points. I currently have 120,000 Amex points. That's enough to fly anywhere in the world, first class, for free and stay at a top hotel, for free. I paid no interest and just an annual fee to get these points. It's worth it to run your expenses through a credit card to gain the benefit.

Oh and yeah that is completely fine, I was refering more to people who are like "oh boy I got approved for another 10k credit line, time to go buy another ski doo!"

I too use mostly my credit card when making purchases as I figure since I'm going to buy something anyway, may as well get points for it. Credit card points are one of those things that are set and forget, then suddenly you think about them and can buy a couple hundred bucks of Gift cards or something. That's what I recently did with my Visa, I bought like 300 bucks worth of Canadian Tire and Home Depot gift cards.

When gassing up, may as well use the credit card too. I wish all utilities would also allow to use a credit card, then again using bank is probably better, that is less likely to change. Credit cards change more often. would be a pain having to keep changing all that. Lot of utilities are in the dark ages and don't even have a way to do it online.

 

[WilliamM2]

How much did you spend to get that 120,000 points? Would it have not been cheaper in the over all scheme of things to buy the plane tickets and save all that money you spent to get the 120,000 points.

I don't know how he spends his, but I use mine for things like the electric bill, cable, natural gas, phone, groceries, gas, etc. Things I would have to pay, no matter what payment method I used. It's not like I turn the heat up to 90, or drive an extra 20 miles on the way home to earn points.

 

[TridenT]

The thing about credit cards is that they pass the bill onto cash users.

That % increase in goods from having to pay that % to credit card companies ends up gouging the people who use cash.

So, people using cash get shafted and people using credit cards without rewards are getting shafted. But, to be honest, everyone is getting shafted. The companies don't give you rewards that are greater in worth than their transaction costs which are passed onto you and others.

The only example where that might not be true is where they give you a lot of flying miles for spending $2k in 3 months or whatever. (Usually a one time opportunity to entice new customers)

 

[silverpig]

The thing about credit cards is that they pass the bill onto cash users.

That % increase in goods from having to pay that % to credit card companies ends up gouging the people who use cash.

So, people using cash get shafted and people using credit cards without rewards are getting shafted. But, to be honest, everyone is getting shafted. The companies don't give you rewards that are greater in worth than their transaction costs.

Yeah everyone gets screwed, but cash users get screwed most.

Let's assume the world is cash-only and that a particular store makes a 10% margin after all expenses are paid. They sell something for $100, it costs them $90, they make $10.

Now let's introduce credit cards with a 2% transaction fee and let's say 50% of consumers switch to paying with credit card. There's an extra $2 dollars cost on 50% of transactions that the store has to cover, or an average of $1 on all transactions. In order to make the same margin, they have to charge $101.

So now everyone pays $101. The store still makes $10. Cash users are out an extra $1. Credit users are out an extra $1, but they get some rewards.

So yeah, everyone pays more, but credit card users get at least some of it back. They may even get more back than they pay in increased costs, but that likely depends on the store and the card.

 

[Andrew111]

It's actually kind of stupid to avoid credit if you are responsible enough to handle it. I've never paid a penny to any credit card company, but they pay me large amounts of money every year. I have to spend money anyway, I never carry a balance, and I automatically get 3% off of everything I buy. Maybe you guys like to pay more... I don't know.

I stick to my budget religiously, so the argument that I'd be spending less if I used cash doesn't work.

What credit card is doing 3% cash back on everything?

 

[JMapleton]

The companies don't give you rewards that are greater in worth than their transaction costs which are passed onto you and others.

You're not old enough to have had credit long enough to understand the benefits.

You are 100% incorrect on this issue.

American Express partners with airlines where you can convert Membership Rewards points into airline miles. They often have transfer bonuses to make it even more enticing.

As I gave in an example before, I have enough points for probably $15k worth of airline miles. No way has Amex profited that much from me or the charges I made. The value comes from the airline partners who want my business and are willing to give me first class seats that haven't been sold in exchange for Amex points.

Secondly, retailers want you to use credit cards, at least the smart ones do, because people with credit cards are more likely to spend more than they have.

Credit cards are here to stay. Get on or lose the benefits.

 

[bignateyk]

The thing about credit cards is that they pass the bill onto cash users.

That % increase in goods from having to pay that % to credit card companies ends up gouging the people who use cash.

So, people using cash get shafted and people using credit cards without rewards are getting shafted. But, to be honest, everyone is getting shafted. The companies don't give you rewards that are greater in worth than their transaction costs which are passed onto you and others.

The only example where that might not be true is where they give you a lot of flying miles for spending $2k in 3 months or whatever. (Usually a one time opportunity to entice new customers)

Credit card rewards are paid for in 3 ways:

1) People who pay interest on their cards
2) Merchant fees
3) Annual Fees

Merchants pass the cost along to customers, however, the one's paying cash are the real losers here. Those paying with credit get back that added cost in the form of rewards.

The winners are people who don't pay annual fees, always pay their balance, and use their cards for everyday items they were going to buy anyways.


Regarding your point about not giving rewards of greater value: That's not true, simply because not everybody takes advantage of them. If 25% of people pay with cash, that means the other 75% of people can get the cash users share of the rewards.

Oh - And if you have a debit card, it's being run by visa, and is incurring the same fees to the merchant. The only difference is that it's linked directly to your bank account, so if someone steals it, you can lose all your money.