61–70 of 109 posts
The article mentions several times that student loans are putting a lot of people off more debt. Then it says they'll have no credit history when it comes time to buy a house or car. What about all the student loan payments they're making? That's certainly a credit history, esp. if you miss a few.
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…
Also, nobody in the article was blaming credit cards for lack of ability to spend.
I think this trend is just a reflection of how badly credit cards have worked out for a sizable portion the previous generation.
I am willing to to take extra precautions against fraud and lose the cashback I otherwise would earn, if it means never inviting potential credit card debt.
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…
In this article they are talking about the sum of all balances on credit card accounts. Technically all of this money is borrowed, even if, as some commenters say, you "pay in full every month." You're just only getting charged interest after typically 30 days. Using terms like "revolving debt" to describe interest charges is imprecise, as is describing payments on interest-bearing debt as "paying late." Interest is interest, and debt is debt.
How do credit scores distinguish debt from interest from defaults, the inability to pay interest (sometimes principal)? It doesn't matter. Before Lending Club hid them, the variables that were strongest correlated with borrower race and borrow age were most correlated with default on loans. But debtors who accrue interest via credit cards and pay it are the most desirable, because obviously they are the debtors who make money for the creditor. The fastest way to get the best credit card offers is not to pay off your balance in full before interest is accrued; instead, accrue some interest and pay it off. Then you become Mr. Credit Card Offer, Eater of Spam Mail.
I think a lot of aversion to credit cards (and borrowing generally) is just financial illiteracy. Universally people conflate debt and interest. They get dinged by the horrible experience of forgetting to pay once, even if the total interest paid was less than 0.1% of their expenses in a year. Put another way, if you gave me access to low interest debt, of course I'd take it... And open a bank!
The real scam is mortgages. Financial illiteracy makes people minimize monthly payments instead of "finance charges," one of the most precise (broad and well defined) but poorly understood terms on a mortgage. There are millions of wealthy suburbanites paying 30 year mortgages with finance charges equal to nearly half the value of the home—a 50% markup for the privilege of lower monthly payments.
My sense is that Millennials have a less rosy view of their future economic situation than did generations past. I don't know if it was coming of age during a banking crisis or huge student loans or expensive housing or what. But obviously if you're unsure about your future earning potential you'll be more hesitant to rack up future obligations.
With a stable job and some savings, paid-off credit cards and zero-apr loans are great tools. If you're worried about losing the job and barely making rent (like many millennials are) then even 'safe' debt becomes troubling.
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…
I'm not in the age group the article is talking about, but... not having a card in my pocket that lets me spend money I don't have is my exercise of self-control.
Your attitude is so strange. The way I control credit card debt is by not having a credit card. That is the self-control you're lamenting the lack of.
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…
E.g. If you book a holiday on your credit card, and the travel company goes bankrupt, your card provider refunds you.
For the most part, those protections simply don't exist if you use a debit-card.
It still boggles my mind how prevalent credit cards are in the U.S. and how almost non-existent they are elsewhere, in particular Europe and Japan where debit cards are used. They don't call them debit cards, but rather cashless payment or what have you. And the merchant fees for these cards are far, far lower than credit cards which makes it even more baffling to me. ADD: "Without a substantial credit history, it is…
Fun fact, in France we call debit cards "Carte de Crédit " (or carte bleue) Debit cards there come with the same amount of fraud protection as the credit cards, there's not really a reason to use Credit cards there. In reply to your ADD: Because in the US, you get a "Credit score"[1] based on your credit history. And when taking a home mortgage, instead of simply asking for your past few years of income proof and oth…
I think this type of behavioral scoring is actually a great benchmark for determining responsibility. If you can't handle paying off a few hundred bucks here and there, it seems pretty reasonable that you're more likely to default on a far more expensive mortgage.
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…
In the USA there is no chip and pin, the whole system is based on trust. Therefore, having credit cards exposes you to fraud. Some people may prefer to not have that attack vector to live within their means on a debit only account. Also some people may prefer to just look after their stuff and not bother with insurance and other financial products. With this mentality the benefits of a credit card are about as much u…
Credit cards in the U.S. are chip and sign, which is the dumbest piece of crap decision by the card issuing industry. Even though I have chip on both credit and debit cards, they become chip and sign when used in Europe. It's f'n hilarious being in a grocery store where the clerk is like "oh you have to sign, umm let me go find a pen" because it's that rare.
I think the whole chip thing is stupid. We're 20 years late to the game. We should have just skipped it in favor of a more solid contactless system rather than spend all this money changing over to something arguably obsolete already.