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One of the reasons I don't trust credit cards is because I had read that they like and encourage people to not pay in full each month and get charged fees and find ways to punish the people that do pay in full.
No doubt that banks would like you to carry a balance, and I am sure there are some shady banks out there that make things hard for people (I'm thinking some of those subprime card issuers), but the big boys have always done alright by me.
Chase, BAC, US Bank, USAA, Amex and NFCU have never tried to trick me or punish me for paying off a balance in full. Mind you, they still make money on the interchange fees, so they do get something from my transactions.
I did have two issues when I was fresh out of high school, and both were due to waiting until the day the bill was due on store credit cards and getting hit with same day rush payments. But that is easily avoided by not getting store cards, and setting up auto pay.
So those two instances cost me $20, that's a small price to pay for more than a decade of secure transactions which limited my exposure to 3rd party theft and from being ripped off by merchants. And I've made well over 100 times that in rewards and checking account interest (everything gets charged if it doesn't cost extra). I also get 24 hour concierge service (less important now that I have a smart phone, but still good in a pinch), and free extended warranties. I don't pay for rental car insurance, and it's very easy to use the cc for deposits. I don't worry about a hold on my account at the gas pump (can be a doozy on debit), and I also get travelers insurance. All for no fees, of any kind.
I get how people can be wary, but if you treat it like a checkbook (keep a ledger), spend only what you can afford and get a card from a reputable company you'll be ok.
I've seen a lot of people justify cash purchases using a variety of reasons... but this is probably the most flawed one I've ever seen.
You're not saying you were tricked, not even someone you know, you're just going based on an opinion article you read somewhere.
Read a real credit card statement. They tell you how long it will take if you pay just the minimum and how much you'll pay in interest to do so. They also tell you those same numbers if you pay above the minimum.
There is nothing to substantiate your argument about encouraging people to not pay off in full.. Reality is the exact opposite, and as for your "ways to punish people that do pay in full," give a real example because you're just making things up now.
Do you know the only thing you get for paying your balance in full every month? Cash back rewards or other points. There are no "fees" for paying in full.
I admit I don't even remember where I read that it was years ago. It just made a bad impression. I have found some articles on the subject for you.
Use a credit card not debit and you are good to go
qft
In my life time, I've had merchants charge my credit card and deliver something very different from the agreed upon product. Since payment was first, if I paid with cash, they could have told me to pound sand. However, I paid with a credit card, and you might be amazed at how willing they are to work with a customer that explains they are considering rejecting the charges. This is one of the last areas where customers have any power.
I probably pay for something with cash once every 2 to 3 months. Otherwise, it all goes on the CC. No outstanding balance to cost me interest.
Great articles. Due to my research I learned a great deal about the previous models of CC companies, but I hadn't heard about BofAs new plan. Reminds me of their debit card charge. They are one of the most pathetic companies in America. Their accounting department must be awful, because they were unable to turn a profit on many customer accounts that other banks were happy to have. I will not miss BofA. I once had an account there. They charged 3$ for having a savings account, and required having a savings account. I told them to put it where the sun don't shine
If you can afford it and can manage your money so you don't carry a balance, use a CC. Piles up points, rebates, etc. where we typically get 2% back on all our purchases. Schemes like ebates, rewardsnetwork, etc. will let you double dip on most purchases (buy online, pickup in stores, restaurants).
Amex will typically offer credits for individual store purchases as well ($10 back for $50 at Lowes, $5 of $5 at iTunes $10 of $50 at Petco currently)
I use my CC for everything for the month and then pay the balance in full. I'm actually using the bank's money for that month while my money earns interest (yeah it's minuscule).
Am I not starving the beast as well by borrowing their money for FREE for a month?
No, you're starving the merchant. In today's 'low profit margin' economy, these CC fees are taking up a larger portion of Big/small business revenue.
I pay my CC in full every month as well. But routinely pawning-off the expense to businesses (for no reason since I'm immediately able to pay cash) is kind of selfish IMO. Also, this is the reason why I don't participate in reward programs; the concept reeks of dubious consumerism, & the no-free-lunch/rob Peter to 'reward' Paul attitude gives me a guilty conscience.
Don't be offended by my twisted logic HappyTexan/other posters; I've read many, many posts of people that use CC rewards to their advantage, & ultimately to the advantage of the Economy as well.
No, you're starving the merchant. In today's 'low profit margin' economy, these CC fees are taking up a larger portion of Big/small business revenue.
I pay my CC in full every month as well. But routinely pawning-off the expense to businesses (for no reason since I'm immediately able to pay cash) is kind of selfish IMO. Also, this is the reason why I don't participate in reward programs; the concept reeks of dubious consumerism, & the no-free-lunch/rob Peter to 'reward' Paul attitude gives me a guilty conscience.
Don't be offended by my twisted logic HappyTexan/other posters; I've read many, many posts of people that use CC rewards to their advantage, & ultimately to the advantage of the Economy as well.
Great post!
As a small business owner, I can verify wholeheartedly the cost shift involved with "points" and "rebates". Who do you think is paying for that exactly? Business. Big AND small business (and it really hits small business).
No, you're starving the merchant. In today's 'low profit margin' economy, these CC fees are taking up a larger portion of Big/small business revenue.
I pay my CC in full every month as well. But routinely pawning-off the expense to businesses (for no reason since I'm immediately able to pay cash) is kind of selfish IMO. Also, this is the reason why I don't participate in reward programs; the concept reeks of dubious consumerism, & the no-free-lunch/rob Peter to 'reward' Paul attitude gives me a guilty conscience.
Don't be offended by my twisted logic HappyTexan/other posters; I've read many, many posts of people that use CC rewards to their advantage, & ultimately to the advantage of the Economy as well.
Businesses should offer discounts for paying with cash
One of the reasons I don't trust credit cards is because I had read that they like and encourage people to not pay in full each month and get charged fees and find ways to punish the people that do pay in full.
That's rubbish. I've been using CC for all purchases for decades and paying it full every month without fail and never had issues with banks. I never carry a balance. I love my low fee airline CC because it allows me to rack up airline miles. Last year it was a free trip to Southeast Asia, this year I'm celebrating my birthday in Rome using my miles.
In my life time, I've had merchants charge my credit card and deliver something very different from the agreed upon product. Since payment was first, if I paid with cash, they could have told me to pound sand. However, I paid with a credit card, and you might be amazed at how willing they are to work with a customer that explains they are considering rejecting the charges. This is one of the last areas where customers have any power.
I probably pay for something with cash once every 2 to 3 months. Otherwise, it all goes on the CC. No outstanding balance to cost me interest.
I can see where that could be helpful as a bargaining tool but I also think with a trustworthy merchant it wouldn't be needed or that the threat of a bad review or of never buying there again might be enough to get them to fix it.
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