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Another good way to protect yourself is to save money, and avoid needing to rely on banks for a credit lifeline.
by brndnmtthws 9y ago
Another good way to protect yourself is to save money, and avoid needing to rely on banks for a credit lifeline.
- argonaut 9y agoBut in many cases using credit will save you money. Two examples would be credit cards with their rewards (as long as you never pay interest) and house/car loans if you manage to get a low rate and invest what you don't pay up front.
- tertius 9y agoIf "invest what you don't pay" is the only benefit to buying a very quickly depreciating asset then you're not a very good investor. Buy a used car and invest the bulk of the cash (if you actually have any). Can't get great deals on used car loans compared to new. Fees/depreciation quickly kills the allure of a good rate. If your user credit cards for rewards you don't realize that it actually makes you spend more money than you're getting in "rewards".
- brndnmtthws 9y agoThis right here. These companies are milking people and they have no idea because they only want to believe what already confirms their biases.
- brndnmtthws 9y agoThe "save money by spending money!!" argument is nonsense. People have just been brainwashed into conspicuous consumption to prop up the economic metrics.
- eli 9y agoNo, the scam is that all other shoppers are subsidizing your reward points in the form of slightly higher prices. There are some apartments around here that let you pay rent by credit card. You'd be foolish not to take advantage of that and save at least 1% on your rent.
- thanksgiving 9y agoI think what go is saying is that credit card companies have trained us to spend more money by using credit cards. It is possible that you are in a small minority of people who has common sense™ but most of us (including me) tend to spend more or simply decide to spend or not bad on the small stimulus. Again, I'm not accusing you of irresponsibility. I'm just saying what I think is common. Edit: I agree. If you're making an expense anyway, it is obviously better to get the highest reward you can get. But we're talking local optimization now.
- tertius 9y agoI'd ask for a cash/direct debit discount instead. Cut out the middleman.
- lotsofpulp 9y agoAs an operator of multiple businesses, I much prefer customers who pay with cards than cash. There is a high cost to handling cash, making sure employees don't steal, counting it, getting change from bank, depositing it, etc. Therefore, it might not behoove the owner of the business to provide a cash discount.
- tertius 9y agoDirect debit (or cash). Rental is more often done with direct debit than credit cards.
- lotsofpulp 9y agoIt would be nice to offer a discount for debit cards, but unfortunately, the card processing systems I've seen don't have the capability to determine credit vs debit and charge different price for it. It would be great if merchants could automatically charge people with rewards credit cards more.
- bga 9y agoOkay, so never buy food again and tell me how that goes.
- ceejayoz 9y agoBarring becoming a subsistence farmer, I have to buy groceries. Amex offers 6% cash back on groceries. As long as you pay it off every month, it's a significant savings.
- lettergram 9y agoHere's a brief list of where I use credit cards (which I always pay off monthly): - Car payments (they let me use credit cards with no fee, >$9 / month rewards) - utilities ($1 fee, with >$1 rewards) - Food (>$20 / month rewards) - Gas (>$5 / month) There are more, but that's what $40 / month. If you then use a churning method to get more points, like opening a new card where you spend $4000 in three months get $500 back, then it's even better. It depends how much you normally spend, but for me - I don't need to change spending habits. Just only use that single card. Last year I made $2500 from credit cards with my standard spending. I took out three new cards, paid for my wedding, then paid them off. Haven't used them much since and I didn't need to spend any more than I normally would have.
- jaclaz 9y ago>There are more, but that's what $40 / month. Help me understand, US$ 40 in rewards agains a monthly spending of?
- forbiddenlake 9y agoAssuming a good cash-back rate of 2%, $2000 spent on the credit card for $40 back. The point being he's spending the $2000 anyway, so he'd rather get $40 back from his credit card company rather than $0 back if he used cash or debit.
- jaclaz 9y agoBut cash-back is not the same as reward points. Cash-back is "money", reward points (more or less) is "discount on given good".
- glitch003 9y agoMany cards let you cash out rewards points now. With Chase, for example, you can get a check in the mail, use points to pay off your CC balance directly, or use points on amazon (at full value).
- skinnymuch 9y agoYou can spend completely normally and still make money from CCs if you pay them off. Everyone needs basics like food (supplies), transportation costs, and household/hygiene items. Maybe you're better than us, but most people also have utilities like internet and cell phone bills. You likely paid for however you typed that comment. Putting that on a credit card with rewards and paying it off asap wouldn't hurt you one bit. Only can help you if you have the discipline not to over spend, which seemed like a given in OPs post.
- tertius 9y ago> discipline not to over spend Like the discipline to never use Facebook? Extremely rare. And psychologically expensive.
- bittercynic 9y agoFor some, it only takes discipline while you're establishing the habit, then it is very easy to keep it rolling.
- skinnymuch 9y agoI'd say FB is way different than the discipline to not over spend on CCs in a community like this. Not over spending on CCs being far easier.
- tertius 9y agoIt depends on what your choose to define as overspending.
- pwg 9y agoNo facebook account here. Never had one, never will have one. Also pay off CC in full every month, so no interest payments on what are effectively short term loans. Neither is at all psychologically expensive. However paying off CC in full every month does require sufficient income (and/or restraint in spending for those without the sufficient income) to be able to do so.
- stephengillie 9y agoThis is a paradox I recently encountered - using credit cards can create another asset in the form of airline miles. A friend who is currently a college student (and just left a summer job as a postal carrier) used airline miles to pay for a weekend in a very nice hotel. At full rate, his few days would have cost more than a month of rent at my luxury apartment. He earned these miles through his ~20 airline-mile credit cards, and so now I'm researching how to game this "free to play" system.
- skinnymuch 9y agoYep. I put my brother in a bad spot. It doesn't really hurt him much right now but I messed up some business work using CCs under his name. With his permission of course. I can't pay them off right now, but I've managed to get my credit score close to 800. So I'm going to be getting a couple of credit cards and balance transfer my debts over to myself. All the decent or better CCs I've seen, offer pretty nice opening offers. I'll definitely be taking advantage of the "spend $3K in 2 months and get $500" sort of deals and pay off those balances. It'll essentially be free money. Like churning you said, Reddits churning subreddit provides a lot of info. Not sure if there are other good communities, but that seems good.
- tertius 9y agoSpend $3k and get $500 in rewards... Why not just spend $2k instead? Maybe spend the time increasing your income. (I have done this... Rarely would the hassle.)
- kinkrtyavimoodh 9y agoBecause you are probably spending 3K in 3 months anyway. If you absolutely aren't (or you can't hit the minimum spend in other ways [pay for your friends etc.]), sure, don't get the card.
- tertius 9y agoMore work: - cancel the card because yearly fee. - pay tax on churned $. - shorten cumulative account age (lowers credit score). I've done this... Not worth it. Focus on more important things.
- quuquuquu 9y agoYes, however many industries in the US are attempting to "financialize" everything. Debt-lenders no longer can sustain growth on just houses and cars- "let's go after furniture, all consumer goods, technology, payday loans"... etc. It is a good solution for many to "just have money on hand", but when asset prices are inflated due to easy credit, how can I ever have enough to buy in cash?
- tertius 9y agoWait, save, then buy if you still want to. You can buy a house with no credit history. Look it up.
- quuquuquu 9y agoAccording to credit suisse, only 33m people in this world have 1m+ USD of assets. So, out of 3.5 billion adults in this world, only 0.7% have the ability to buy a home in a large city in cash. What, then, should the other 99.3% of people do?
- brndnmtthws 9y agoImprove your skills, increase income, invest and save, live with roommates, learn that consumerism is programmed into people through TV ads and thus is completely unnecessary. Mr. Money Mustache[1] has been blogging about this for years, and it's a great place to start for people who don't understand personal finance. Also check out the personal finance[2] and financial independence[3] subreddits. [1]: https://www.mrmoneymustache.com/ https://www.mrmoneymustache.com/ [2]: https://www.reddit.com/r/personalfinance/ https://www.reddit.com/r/personalfinance/ [3]: https://www.reddit.com/r/financialindependence/ https://www.reddit.com/r/financialindependence/
- quadrangle 9y agoAlthough that's all completely good advice for everyone, the facts on the ground are that we can't all be rich. The majority of rich people are the beneficiaries (either directly or indirectly) of an inherently exploitive system. A trivially small number of them actually added true wealth to the world equal to or greater than the wealth they've captured.
- hockley 9y agoHow does this keep people from using your ssn and other stolen information to get a credit card or loan in your name?
- brndnmtthws 9y agoRequest a credit security freeze on all 4 credit bureaus (Equifax, TransUnion, Experian, Innovis).
- astral303 9y agoI have a friend w/o a bank account and he basically can't rent an apartment, ever.
- tertius 9y agoIt's also hard without a credit score. But not impossible but any stretch.
- lucaspiller 9y agoEven if you don't have a line of credit, identity theft is a very common occurrence. If you know you don't owe anything, it's still pretty scary to receive a letter saying your debt has been passed onto a debt collection agency. Last year somebody opened a number of phone contracts and ordered TV (to my house...?) in my name. Here in the UK apparently you just need a name, address and date of birth to walk out of a shop with a brand new iPhone 7. I eventually got it sorted, but it took a couple of months to get every cleared up. I made the mistake of using the phone, although the people I spoke to were helpful, I had to repeat everything from the beginning many times. If it happens again, I'll follow this advice and write letters.
- uiri 9y agoThe advice here is very American-centric and cites US law. You should look up the laws in the UK. Letter writing may not have the same punch that it does in the US.
- patio11 9y agoYou might not care about your credit rating but your credit rating, unfortunately, cares about you. Do you want to rent an apartment in the United States? You will, in many geographical markets, expect to have credit pulled as a matter of course. This is partly to determine ability to pay and partly to determine whether you are socially established; "I have mountains of money, why would I need credit?" is something which is often said by people who operate meth labs. Do you want to work in a job which requires a background investigation? Expect a credit pull. Do you want certain varieties of insurance policies? Expect this list to get longer as time goes on, because "credit" encodes a lot of things which are stupefyingly useful in predicting outcomes in advance. Like any bit of code which is stupefyingly useful, get_fico_score() is going to find its way in all sorts of places you'd never naively expect to see it. Additionally, if someone comes to the mistaken conclusion that you owe them money, the harassment which likely accompanies that is a nuisance even if the dings to your credit score are not.
- brndnmtthws 9y agoI have rented several apartments over the years (mostly in and around San Francisco) and have never once had my credit history checked by any of the rentees. I have a car which I own completely (no loan) and I pay the absolute minimum amount of insurance required in California, which amounts to about $264/year. I'm not saying credit doesn't matter, but the more you can do to limit your attack surface, the less likely you are to be harmed. The absolute best way to protect yourself is to not need to play along in the credit rat race. I keep a security freeze on my credit reports, and never lose sleep. I can safely publish my SSN without giving one single fuck.
- harryh 9y agoI can safely publish my SSN without giving one single fuck. You should do so right here.
- brndnmtthws 9y agocan and should are orthogonal.