6 ms·

But 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 loan

But 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 ago
If "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 ago
  This 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 ago
The "save money by spending money!!" argument is nonsense. People have just been brainwashed into conspicuous consumption to prop up the economic metrics.
- eli 9y ago
  No, 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 ago
    I 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 ago
    I'd ask for a cash/direct debit discount instead. Cut out the middleman.
    - lotsofpulp 9y ago
      As 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 ago
        Direct debit (or cash). Rental is more often done with direct debit than credit cards.
        lotsofpulp 9y ago
        It 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 ago
  Okay, so never buy food again and tell me how that goes.
- ceejayoz 9y ago
  Barring 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 ago
  Here'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 ago
      Assuming 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 ago
        But 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 ago
        Many 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 ago
  You 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 ago
      For some, it only takes discipline while you're establishing the habit, then it is very easy to keep it rolling.
    - skinnymuch 9y ago
      I'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 ago
        It depends on what your choose to define as overspending.
    - pwg 9y ago
      No 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 ago
This 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 ago
  Yep. 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 ago
    Spend $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 ago
      Because 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 ago
        More 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.

tertius 9y ago

If "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 ago
This 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 ago

The "save money by spending money!!" argument is nonsense. People have just been brainwashed into conspicuous consumption to prop up the economic metrics.

eli 9y ago
No, 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 ago
  I 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 ago
  I'd ask for a cash/direct debit discount instead. Cut out the middleman.
  - lotsofpulp 9y ago
    As 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 ago
      Direct debit (or cash). Rental is more often done with direct debit than credit cards.
      - lotsofpulp 9y ago
        It 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 ago
Okay, so never buy food again and tell me how that goes.
ceejayoz 9y ago
Barring 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 ago
Here'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 ago
    Assuming 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 ago
      But 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 ago
        Many 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 ago
You 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 ago
    For some, it only takes discipline while you're establishing the habit, then it is very easy to keep it rolling.
  - skinnymuch 9y ago
    I'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 ago
      It depends on what your choose to define as overspending.
  - pwg 9y ago
    No 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 ago

This 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 ago
Yep. 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 ago
  Spend $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 ago
    Because 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 ago
      More 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.