Why are some so against credit cards?

[Bades]

I was out to lunch with a buddy of mine and we got to talking about credit cards and how my rewards really paid off in the month of December

We are 24 years old, and he told me he's never had a credit card and still doesn't. I've told him many times the importance of building up credit and the rewards alone I get back make it worth it (when someone will give you hundreds of dollars a year for free...you take it!).

I know several friends in this situation, what is it about people that don't take an interest in their financial well-being? My buddy also recently tried to apply for a credit card and got denied! duh, not sure where this sense of self-pride comes from for not having a credit card??

[Bades]

And for the record I'm talking responsible people with capacity to control their money and pay it off.

[bjl584]

Credit cards are just a financial tool. You can be irresponsible with them or you can be responsible with them.

Some people shouldn't have credit cards for that reason. I'm not sure of your friend's financial picture, but maybe he is better off not having access to credit.

[Bades]

I agree with but I added to the fact that Im speaking of responsible people. I know some shouldnt get anywhere near a card.

[Slug]

In contrast to your title it seems like you're against NOT having a card, but your buddy seems quite satisfied with his current existence. I long since stopped trying to convert people who don't have an interest in being converted.

[GREENBACK]

I long since stopped trying to convert people who don't have an interest in being converted.

I've never thought to try to convince anyone of the value of a CC. We all handle our finances in the way that best suits us and for some a CC isn't the way to go. It's a simple way to build credit when you're young but impulsive spending can quickly derail your plans. I say to each his own. I use them extensively and have for almost 30 yrs. with no problems. It takes financial discipline though when you go this route.

[dczech09]

Credit cards are a financial tool just like a debt card. Some people use CCs for daily transactions, others use debit, and others use cash. Quite frankly CCs have certainly become a valid way to facilitate transactions, but there are still some moral hazard associated with using OPM (other people's money).

Personally, I use credit cards for my business trips that my employer reimburses, but aside from that it stays in my wallet.

I did spend a good 6 months using a credit card for everything and paying it off as I went. I did not see much of a change in my spending behavior since I always stick to my budget regardless of anything.

Statistics say that people spend about 18% more when using credit cards, but I think that is regarding people who use it without a plan in place.

Credit card useage is fine, but credit card debt is bad. Also I don't think people should chase rewards on credit cards. Put it this way, the CC company did not set up that reward program to lose money.

[dczech09]

Just a quick addition:

If a credit card is too much of a temptation, then do not use it. There are many people for whom a credit card is way too much of a temptation. Those people should avoid them like the plague.

[ActYourWage]

Credit cards are a financial tool just like a debt card. Some people use CCs for daily transactions, others use debit, and others use cash. Quite frankly CCs have certainly become a valid way to facilitate transactions, but there are still some moral hazard associated with using OPM (other people's money).

Personally, I use credit cards for my business trips that my employer reimburses, but aside from that it stays in my wallet.

I did spend a good 6 months using a credit card for everything and paying it off as I went. I did not see much of a change in my spending behavior since I always stick to my budget regardless of anything.

Statistics say that people spend about 18% more when using credit cards, but I think that is regarding people who use it without a plan in place.

Credit card useage is fine, but credit card debt is bad. Also I don't think people should chase rewards on credit cards. Put it this way, the CC company did not set up that reward program to lose money.

Well said.

[maat55]

[QUOTE]

Statistics say that people spend about 18% more when using credit cards, but I think that is regarding people who use it without a plan in place.

Very good point. Some people will justify over-spending for rewards. You are neither saving nor earning with a credit card if you are not using it for specific purposes.

I never use mine for anything but business expenses, gas and listed groceries. The important thing is to spend the least possible and then consider rewards.

[bjl584]

I agree with but I added to the fact that Im speaking of responsible people. I know some shouldnt get anywhere near a card.

Well if your friend is responsible financially speaking, and he manages to make do without credit cards, then more power to him. Without owning a credit card he may have trouble with things like booking flights and hotels, and buying things online, but if he is content, then good for him.

[Slug]

.

Statistics say that people spend about 18% more when using credit cards, but I think that is regarding people who use it without a plan in place.

I'm always dubious of these statistics. Will you provide a link to the full research article that supports your claim?

[disneysteve]

Statistics say that people spend about 18% more when using credit cards

I hear this all the time and really question how they arrived at that number.

If I go to the gas station to fill my tank, I'm going to spend the same amount no matter how I pay, cash or credit. If I go out to dinner, my meal will be the same price no matter how I pay, cash or credit. If I pay my auto insurance bill, the premium is the same no matter how I pay, cash or credit. The same goes for my cell phone bill, the cable bill, a hotel stay, a magazine subscription, a continuing education course or a new pair of shoes. It costs what it costs.

Paying by credit, which I do for all of the above and more, in no way affects what I spend. I don't buy anything or spend anything I wasn't already going to buy or spend just because I'm paying with a credit card. I just don't comprehend how others do that.

[bjl584]

I don't buy anything or spend anything I wasn't already going to buy or spend just because I'm paying with a credit card. I just don't comprehend how others do that.

Not everyone thinks about money the way that you do Steve.

Seriously though, I've heard that same thing about people spending more when they have credit, and I can definitely see it happening. From my years working in retail I've witnessed countless people buy things that they could not otherwise afford. They would open store credit cards just to be able to make a purchase. I'm not sure if the 18% statistic is accurate, but I do see people buy things that they can't afford all the time.

[disneysteve]

I do see people buy things that they can't afford all the time.

I agree, but I've seen it with cash and credit.

At one of my wife's former jobs, she always used to tell me about her coworkers. They would rush to the bank on their lunch break on pay day to cash their checks so that they could "afford" to go out and buy lunch, which they did every day. They had literally spent all of their money prior to that. They would also frequent the soda and vending machines in the break room and talk about where they went out to eat the night before or which club they went to last weekend.

They didn't understand why my wife, who packed her lunch daily and brought her own soda, never had to run out to cash her check. If fact, she had direct deposit and didn't cash her check at all. Half the time, she didn't even know it was pay day.

If people are going to overspend, they're going to do it with cash, debit or credit.