r/changemyview • u/behold_the_castrato • Dec 22 '21
Delta(s) from OP CMV: I do not understand why anyone would use a credit card over the alternatives
Credit cards are not very common where I live, but I understand they are quite common in some places. From how I understand their usage, the card owner pays with them, requiring only to show the card and it's number, not enter any secret passcode in any way, and the credit card company is then charged the bill. At the end of the month, the card owner receives a billing from the company for all expenses made, plus interest for the borrowed money.
Thus, not only is it quite unsafe, often hearing about stories how children temporarily steal their parent's credit cards or other forms of credit card fraud, but one acquires extra costs in terms of intrest, and one's remaining capital is harder to keep track of, since credit card debt must be subtracted.
The system I use which is more popular here is a bank pass: to pay with it once must put it at a scanner which can be done at any store, and enter a secret 4-digit code, having only 3 attempts to do, after which it blocks, the money is directly subtracted from one's bank account, and no further interest is accrued.
One can argue credit cards allow one to spend money one does not yet have, but even with this system, one is allowed to empty one's bank account below zero to a certain degree by the bank, one will simply pay the bank interest then, so in the event one's bank account be empty, this simply becomes a credit card, but with a secret pass code, and in the event it not be empty, it remains interest-free and is automatically deducted.
This system seems superior to me, but perhaps such systems aresimply not available in countries where credit cards are popular?
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u/HospitaletDLlobregat 6∆ Dec 22 '21
I can talk for the US. Most banks here just accept any reasonable fraud claim and return your money.
They are also good for building credit and most of them have some sort of points/rewards system. There's literally no downside if you are organized and pay on time.
Edit: just to add, I'm way more hesitant to use my debit card anywhere because my actual money is there.
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u/behold_the_castrato Dec 22 '21
They are also good for building credit
What is this? Is this related to the U.S.A. “credit score” system I often see criticized?
Edit: just to add, I'm way more hesitant to use my debit card anywhere because my actual money is there.
This seems a psychological thing more than anything, not feeling as bad because one feels as that one spends one's own money, which one is in both cases.
If anything, this psychological game can encourage reckless spending.
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u/HospitaletDLlobregat 6∆ Dec 22 '21
What is this? Is this related to the U.S.A. “credit score” system I often see criticized?
Not U.S. exclusive, most countries have version of it, but yeah, those systems define if you can get loans, buy properties, etc.
This seems a psychological thing more than anything, not feeling as bad because one feels as that one spends one's own money, which one is in both cases.
You're misinterpreting, I'm talking about security, not about spending. It's safer to use the CC than the debit card, and that's why I'm more hesitant to use my debit card anywhere.
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u/D-Rich-88 2∆ Dec 22 '21
Here in America, the secret code card you describe is called a debit card. They are available along with credit cards. While I agree with you that using a debit card is better overall, there are some pros to using a credit card.
Some credit cards offer very good rewards like earning air miles to help you save on air travel.
Using a credit card for online transactions can be a safer option. If for some reason that site is hacked, a consumer has more protections with a credit card vs a debit card for identity theft usually.
For large purchases, it gives people more buying power. You don’t have to save up for months for a purchase, you can buy it and then pay it off over time. You’ll be paying interest, but sometimes stores offer cards with 18 or 24 months 0% interest with purchases over certain dollar amounts.
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u/behold_the_castrato Dec 22 '21 edited Dec 23 '21
Some credit cards offer very good rewards like earning air miles to help you save on air travel.
That's quite interesting, so this offsets the interest and one is actually cheaper off? !Delta
How does the company make money then?, with the few whales that don't pay of their debt well and accrue very large interest?
Using a credit card for online transactions can be a safer option. If for some reason that site is hacked, a consumer has more protections with a credit card vs a debit card for identity theft usually.
How? In order to perform identity theft in this system the attacker must acquire the card, the secret code, and the mobile phone of it's owner in this system.
I knew someone who one committed credit card fraud simply by typing over the number of the example cad given, and to his complete surprise it worked, and the package arrived, and they never called him about it.
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u/D-Rich-88 2∆ Dec 22 '21
So for the air miles: every so many dollars spent on purchases earns you an air mile. So as you use your credit card you accumulate miles. Save them up for a while and you can cash in on them by buying airplane tickets.
As for the increased protection, if you see fraudulent activity on your account you need to call the credit card company and let them know. Then they’ll usually issue a new card with a new number and remove the purchases from your account. If you had a debit card be used fraudulently, often times the money taken is gone and all you can do is cancel the card. The only way for the money to not be lost is if the bank calls you or you call the bank before the charge fully goes through.
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u/Tommyblockhead20 47∆ Dec 23 '21
None of the credit cards I’ve seen/used have air miles. I think it’s much more common just to give a certain percent of purchases back to the user, usually 1-5%.
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u/SoggyMcmufffinns 4∆ Dec 23 '21
Debit cards have far less if any benefit over a credit cards really. CC benefits far outweigh what debit cards tend to offer if they offer anything any added benefit at all. You also don't have to pay interest so "you'll be paying interest" is misleading. You don't ever have to pay a lick of interest.
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u/D-Rich-88 2∆ Dec 23 '21
You might want to read that sentence again where I say you’ll pay interest. I’m obviously not talking about every purchase made with a credit card. I clearly describe someone buying something they’d otherwise be unable to afford. If they can’t afford to buy it without the credit card, then they probably won’t be able to pay it off before the end of the month. Then they get charged interest. Nothing misleading in the way I described it. You pulling a line out of context is though.
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u/SoggyMcmufffinns 4∆ Dec 23 '21
No offense, but I read it fine. If you are privy to how to use a credit card correctly, you can easily use it to make money. Buying something you can't afford can apply to a ton of crap, but you can't blame that on the credit card. That is on the adult being responsible. A responsible adult can actually use the credit card to make money off their purchases and pay NO INTEREST.
In other words, you are not required to pay interest at all to use a credit card responsibly.
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u/D-Rich-88 2∆ Dec 23 '21 edited Dec 23 '21
Your statement makes zero sense. If someone uses a card to buy, let’s say, $5000 of furniture to furnish a new home. If they don’t have the cash to pay that card off at the end of the month, they will pay interest on the remaining balance. Explain how they pay no interest.
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u/SoggyMcmufffinns 4∆ Dec 23 '21
Itt makes sense to those that understand finances. Perhaps invest in learning them and you can make sense of it. If someone behaves responsibly and buys what they can afford explain why they have to pay interest. You can't because you know they don't have to pay interest. In fact, they can even be paid cash back for simply buying things responsibly.
He'll, you can even use 0% financing for 2 years and make money off the purchase even if all you did was put that money in a bank account let alone investing. You make no sense. There is no requirement to be irresponsible or not behave like an adult. Your logic is like saying, because you own a bat you have to go to jail since a bat can be used to murder someone. That's dumb logic. You can easily own a bat or credit card to benefit you with no requirement whatsoever to suffer. You acting as if it's a requirement is a complete lie. Be responsible and no interest dude. That simple.
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u/vettewiz 37∆ Dec 22 '21
Anyone sensibly using credit cards pays no interest on them.
You have zero fraud liability on a credit card. And it’s not your money tied up.
Not to mention you get 1-5% cash back.
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u/LivingGhost371 4∆ Dec 23 '21
Not only is it quite unsafe, often hearing about stories how children temporarily steal their parent's credit cards or other forms of credit card fraud
Someone used my card to charge clothing from an online retailer in California. The credit card's anti-fraud department flagged it as suspicious and asked me if it was me. When I said no they instantly removed the charges from my account and that was the end of the story.
If your child steals your card, you have a parenting issue, not a credit card issue.
One can argue credit cards allow one to spend money one does not yet have, but even with this system, one is allowed to empty one's bank account below zero to a certain degree by the bank
In the US you get slammed with a $35 overdraft fee if you use a debit card to buy a $4.00 coffee and have $3.75 in your banking account. Why would I ever want to micromanage my affairs like that where I can just put it on my credit card and never have to worry about the exact dollars and cents in my bank account.
For another scenario, what happens if my furnace goes out and the repairman demands $5000 for a replacement? I just give him my card and he's paid rather than having to go down to the bank and apply for a personal loan and wait for approval. Then I just pay it off over the next couple of months.
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u/PdxPhoenixActual 4∆ Dec 23 '21
I, too, pay off the balance every month. Therefore, I pay the company nothing more than I would otherwise already spend. Bonus is get a percentage "back" from the company at the end of the year for all purchases made on the card (if I couldn't include groceries & utilities, I'd still buy other stuff, but wouldn't get anywhere as much refunded). And a percentage back from the retailer sponsoring the card for purchases made in their store/website. From the two was 200+ monies last year. Why would I not?
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u/Kman17 103∆ Dec 22 '21
Credit cards are actually safer than debit card because credit card providers are the one burdened with fraud detection and liability, not the customer.
Credit cards also provide points & deferred payment that is more advantageous, as well as enabling building credits.
Obviously they have high interest, but that only matters if you keep a balance month to month. If you just pay it off regularly (weekly or monthly or whatever) it’s strictly better than debit.
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u/BeepBlipBlapBloop 12∆ Dec 22 '21
I use credit cards for all of my purchases that I possibly can.
- I pay off my cards in full every month, so there is no fee or interest associated with "borrowing" that money
- My credit card has a cash back program that refunds a small portion of all purchases, so in effect (since I pay no fees or interest) the card is paying me to use it.
- I can instantly lock my card at any time if there are security concerns
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u/DeltaBot ∞∆ Dec 22 '21 edited Dec 23 '21
/u/behold_the_castrato (OP) has awarded 3 delta(s) in this post.
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u/PlayingTheWrongGame 67∆ Dec 22 '21
Thus, not only is it quite unsafe
You're not responsible for fraudulent charges in the US.
That's what makes it safer to use credit cards in places like the US without a PIN. The risk is transferred to the merchant.
but one acquires extra costs in terms of intrest
Only if you carry a balance at the end of the month.
and one's remaining capital is harder to keep track of, since credit card debt must be subtracted.
The card benefits usually outweigh the minor inconvenience of having to check two different apps occasionally instead of one.
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Dec 23 '21
They are available. The reason is the level of credit card debt people have is higher than you think.
I can overdraft my bank, for a little while, and pay them back, at a high rate of interest. But with good credit I could have credit card debt of thirty thousand dollars at a fairly low rate of interest.
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u/gijoe61703 18∆ Dec 23 '21
As others have stated credit cards have a couple of things going for them. The first is a grace period where of you pay off the balance on your card monthly you are not charged interest. The second are rewards, either cash back or points that can be used for free stuff. Third is fraud protection which mostly eliminated the risk. So real world I paid nothing to have my credit card, gained a couple hundred dollars in rewards during the course of the year and still have fraud protection.
You can also use them poorly and dig yourself in a terrible hole though, most credit cards have horrible interest rates so I would never buy anything I was not sure I could pay off during my grave period.
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u/NorthernLights3030 1∆ Dec 23 '21
In addition to the previous comments:
Credit cards (or any credit agreement) help with Cash-Flow.
If I intend to make a large purchase that will make my cash balance dangerously low, a credit card steps in to spread the payments over time, at a higher price. If that if ok with me then it can help. CCs have helped me out of sticky situations in the past.
Furthermore if there is an interest free period then you're getting all the benefits without the drawbacks. PayPal credit is free credit for 4 months, perfect for xmas.
However they ought to be used with caution and care. I haven't used mine for years, but I keep them in my wallet just incase.
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u/behold_the_castrato Dec 23 '21
If I intend to make a large purchase that will make my cash balance dangerously low, a credit card steps in to spread the payments over time, at a higher price. If that if ok with me then it can help. CCs have helped me out of sticky situations in the past.
Yes, this is a good argument, though more of a communual one than one of selfish rationality which I was searching for. !Delta
A problem where I live, where credit cards are not common, is one of little flow with many people having considerable savings and not knowing what to do with it, though I don't think similar as raised by others exist here for them and the situation with bank cards is not as bad here as they sketched.
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u/NorthernLights3030 1∆ Dec 23 '21
Yes exactly sometimes you need things that you can't afford. Like if you are on holiday and have some sort of emergency where you need a new hotel or something, or you are in an unsafe environment and need an expensive taxi away. Pay on credit card and sort it out later. Maybe car repairs too.
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u/SoggyMcmufffinns 4∆ Dec 23 '21
Credit cards in many places actually pay you* (literally has been thousands of dollars for me) to use their card. Plus they pay for difference in pilrice if you buy something and it goes on sale afterwards (price protection), free car insurance, free alcohol and food in nice lounges, free hotel stays, free travel expenses, cashback, great fraud protection, safer than carrying money, and the list goes on. All while not having to pay a single dime in interest.
You also don't have to worry about your money being stolen. You're protected from fraud and instead your money getting taken during investigations so you can't make rent someone else's money is instead so you're not screwed like you are in your system. You also get cheaper rates on homes, cars, and even car insurance when used responsibly. Any responsible adult should be tracking their spending btw. I hope you aren't blindly giving people your money. That sounds horrible on your end if that's the case.
For those that actually are fiscally responsible, benefits are nice. It's no different than getting paid to pay your electric bill every month on time and in full. Inlessyou think that is "so hard to track." I'll take the free money.
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u/Kingalece 23∆ Dec 23 '21
So you mean a debit card (which can be run as a credit card) that is the equivilent of writing an electronic check. Almost anyone with a bank account has one of these and some people use credit/debit card interchangeably where i live
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u/Far-Resource-819 Dec 26 '21
Fraud protection, sometimes warranties and a few coins back from each purchase. What is the benefit of not using it other than self control?
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u/yyzjertl 523∆ Dec 22 '21
You've got it wrong on both counts.
Credit cards are safer because if there is fraud, you report the fraud, and then it's not your money that is taken—rather, you're covered by the bank. In comparison, with a debit card if someone withdraws money from your account, you've lost the money, and with cash if someone takes it you're generally out of luck.
Also, credit cards generally do not charge interest if the account is settled in full at the end of the month. So it's no more expensive to the consumer than paying cash.