How Millennials Became Spooked by Credit Cards • Hacker News Board

Re: How Millennials Became Spooked by Credit Cards

#51

Post by logfromblammo » Mon, Aug 15, 2016, 6:38 PM UTC

jasonmp85 wrote: post #23

bbctol wrote: post #8

The use of credit history and score to determine worthiness in all sorts of purchases is a horrible construction that must be destroyed. I got a credit card for no reason other than to build score; I've never spent money I didn't have in my life (which seems responsible to me!) but I still have to go through this silly rigmarole of purchasing and then paying off to prove to future agencies that I'm responsible.

> this silly rigmarole of purchasing and then paying off to prove to future agencies that I'm responsible That actually sounds like a fantastic method for a lending agency to determine who is responsible and who is not.

Not when you define "responsible" as "saving up and then buying when you can afford it".

But the lending agencies say "responsible" when they mean "profitable for us", so I can see how someone might get confused.

Re: How Millennials Became Spooked by Credit Cards

#52

Post by Bartweiss » Mon, Aug 15, 2016, 6:39 PM UTC

ljoshua wrote: post #2

Huh, that's weird. I fall into the age bracket mentioned in the article, but use a credit card for nearly every single purchase for 1) the fraud protection benefits and 2) points. With the anecdotal group of people I know most people are fine using CCs. On the other hand, I pay off the statement in full every month, and therefore never have revolving debt that extends beyond 30 days. The article wasn't clear whether…

I've known both types of people in that age bracket.

Some feel underconfident with credit cards, and avoid them either for self-control or fear of fees and hidden surprises.

Many more have them and use them liberally, but won't carry a balance. It's like a debit card with fraud protection and cash back, which seems pretty popular at all ages.

Re: How Millennials Became Spooked by Credit Cards

#53

Post by nradov » Mon, Aug 15, 2016, 6:39 PM UTC

jawns wrote: post #19

h4waii wrote: post #6

What's really scary is the fact that many of these individuals don't consider the benefits and rewards of using a credit card -- free flights, cash-back, insurance and extended protection, and best of all it's not your money. You get to hold on to your cash for a month's worth of interest and you get fraud protection. Credit cards are tool and, just like most tools, should be used with proper awareness and thought-pr…

One thing that even people who consider themselves financially savvy (e.g. those who pay off the credit cards in full each month rather than carrying a balance) often fail to realize is that credit card companies are middlemen; the fees they charge the merchant -- typically around 3% of each transaction -- ultimately get paid for by someone, and that someone is you. If we all were less beholden to our credit cards, a…

Cash isn't necessarily cheaper for merchants once you factor in thefts and handling costs. But I've found that some small merchants are willing to give a 1-2% cash discount if you ask.

Re: How Millennials Became Spooked by Credit Cards

#54

Post by cmurf » Mon, Aug 15, 2016, 6:40 PM UTC

StillBored wrote: post #34

Vexs wrote: post #21

Earlier quoted context omitted.

I honestly don't understand why they're so popular here either. A debt card is basically the same as paying with cash, because you have the money. With credit, you're still doing the same thing, but you pay later- either way you're still paying the same amount, but with credit, you can fuck yourself pretty easily. Also, it's because credit cards are so prolific here that it's harder to take out a mortgage, if everyon…

Debit cards have traditionally had less fraud protection in the US, and I don't think any of them have a rewards program. So, why should I use one over my credit cards automatic 1% (or more) in cash back? If I want cash equivalent, I use cash...

Fraud protection is required by law. The reason why the protections differ is because of different laws, Fair Credit Billing Act applies to credit cards, and the Electronic Fund Transfer Act for debit cards. The only reason fraud protections would not be identical between credit and debit cards is because Congress doesn't care enough to make them the same, and that might have something to do with being under the boot of the finance industry.

https://www.consumer.ftc.gov/articles/0213-lost-or-stolen-cr...

Re: How Millennials Became Spooked by Credit Cards

#55

Post by Bartweiss » Mon, Aug 15, 2016, 6:40 PM UTC

icebraining wrote: post #11

ljoshua wrote: post #2

Huh, that's weird. I fall into the age bracket mentioned in the article, but use a credit card for nearly every single purchase for 1) the fraud protection benefits and 2) points. With the anecdotal group of people I know most people are fine using CCs. On the other hand, I pay off the statement in full every month, and therefore never have revolving debt that extends beyond 30 days. The article wasn't clear whether…

That was my first thought - are they avoiding credit cards or credit card debt ? - but later in the article it says: "more recent data has also suggested that millennials are using credit cards less than people of a similar age did in the past"

Even that - are using credit cards less - is unclear to me. Are there fewer millennials with open cards, or are millennials spending fewer dollars via credit cards (and thereby avoiding debt)?

Re: How Millennials Became Spooked by Credit Cards

#56

Post by ghaff » Mon, Aug 15, 2016, 6:41 PM UTC

sickrumbear wrote: post #41

Blackthorn wrote: post #25

Earlier quoted context omitted.

For a free $200 flight (on the low end), you'd need to spend (on the bottom end, with an exceptionally good 3% rewards number) 200 / 0.03 = $6667, on whatever stupid categories your credit card has for the 3%. Just how much money do you think most millenials have?

I'd think of it in the sense that if you're going to spend that money over whatever length of time anyways, might as well get the $200 flight out of it as well.

That's basically my attitude.(And I also have a fair bit of reimbursed spend.) You can also get credits that are effectively cash (e.g. on Amazon) or even actually cash. They're usually theoretically worth less than the airline miles or hotel points but are a lot easier to use efficiently.

As another comment suggested, there are also a lot of games that you can play churning credit cards--as well as playing gift card games. My personal take on those though is that you really have to keep on top of introductory offers, using gift cards, etc. or you can easily end up in the hole. It's also essentially a hobby. Once it becomes work, it's probably not worth it.

Re: How Millennials Became Spooked by Credit Cards

#57

Post by blakeyrat » Mon, Aug 15, 2016, 6:41 PM UTC

ljoshua wrote: post #2

Huh, that's weird. I fall into the age bracket mentioned in the article, but use a credit card for nearly every single purchase for 1) the fraud protection benefits and 2) points. With the anecdotal group of people I know most people are fine using CCs. On the other hand, I pay off the statement in full every month, and therefore never have revolving debt that extends beyond 30 days. The article wasn't clear whether…

At my bank, the fraud protection for any card with a VISA logo is identical whether it be debit or credit. Due to that, I never bothered with a credit card. I don't want the ability to spend money I don't have.

I did end up finally getting a credit card (in my mid-30s) not because I want one, but because I wanted a back-up card for when my debit card is out of commission for whatever reason. It's a constant struggle to remember to do transactions on it so it doesn't get closed for inactivity.

Re: How Millennials Became Spooked by Credit Cards

#58

Post by op00to » Mon, Aug 15, 2016, 6:42 PM UTC

ljoshua wrote: post #2

Huh, that's weird. I fall into the age bracket mentioned in the article, but use a credit card for nearly every single purchase for 1) the fraud protection benefits and 2) points. With the anecdotal group of people I know most people are fine using CCs. On the other hand, I pay off the statement in full every month, and therefore never have revolving debt that extends beyond 30 days. The article wasn't clear whether…

My wife and I fit into that age bracket, and we also exclusively use credit cards for purchases anywhere we can. Just this morning, on a rarely used card, someone used the card and in about 10 minutes and a few purchases ran up to the limit. If this was a debit card, we would have been out the money in our checking account, and the onus would have been on us to recover that money. Instead, the fraudulent purchases were removed and a new card was issued - this took about 5 minutes, including looking for the card in question to find the number to call.

Re: How Millennials Became Spooked by Credit Cards

#59

Post by Bartweiss » Mon, Aug 15, 2016, 6:43 PM UTC

johnward wrote: post #17

sotojuan wrote: post #5

This is interesting and I am glad less people are using credit cards. It's really not a good idea for the majority of people in my experience. I got mine when I was 20 and I've never paid it late or gone over my limit. Most of the time I coordinate my payments with the day I get my direct deposit (I've tried automatic payments, but too paranoid that they might not work!). Discover gives me pretty good Amazon cash bac…

Maybe I lack self control but it was really easy to go from paying off $30k in credit card bills every month, to not having that income anymore, to being $30k+ in CC debt.

This is probably a big concern for millennials in particular. The ability to "float" expenses is a nice way to smooth funds across a month, but for people without savings a sudden loss of employment can turn into instant debt.

Re: How Millennials Became Spooked by Credit Cards

#60

Post by Blackthorn » Mon, Aug 15, 2016, 6:43 PM UTC

infinite8s wrote: post #33

jawns wrote: post #19

Earlier quoted context omitted.

One thing that even people who consider themselves financially savvy (e.g. those who pay off the credit cards in full each month rather than carrying a balance) often fail to realize is that credit card companies are middlemen; the fees they charge the merchant -- typically around 3% of each transaction -- ultimately get paid for by someone, and that someone is you. If we all were less beholden to our credit cards, a…

Most credit card merchant agreements prohibit merchants from offering a discount or lower price for paying in cash.

Here in New York State you see all sorts of merchants with lower prices on items in cash. Saw the same in California when I lived there as well.