4 ms·

> and they even pay me to use the damn thing I understand you are referring to Cashback "Rewards" but at the end of the day, a credit card is still a Loan.

> and they even pay me to use the damn thing I understand you are referring to Cashback "Rewards" but at the end of the day, a credit card is still a Loan. You are borrowing money from the company to pay for goods and services and for all legal purposes you are a debtor.

ktta 8y ago
How does this matter (apart from semantics) if one pays the balance therefore doesn't accrue any interest. They are still 'getting paid', right?
- justboxing 8y ago
  It's more than semantics. I once cancelled my Chase credit card and paid (or thought I paid off ) the balance in full. Turns out, it accrued some interest ( $8.56 to be precise) from the time of cancellation to the end of the billing cycle. Chase claimed that they sent me a statement (this was circa 2005) but I never got it. A month later I moved, and it kept going to the old address. A year later, a collection agent found me in San Francisco, just to collect that $8.56 amount and the whole thing ended up ruining my credit score for a few years. I asked them why they didn't call me, it's not like it was a huge debt that I ran away from. They gave me the cookie cutter answer "We sent you multiple statements." TL;DR: The "pay off balance within the month grace period" works only if you are on top of it all the time. Miss something even once, or you move or are overseas or something, then their penalties, fees and everything else kicks in. Again, it's a Loan, so all the operations and consequences of taking on a debt applies to credit cards, and to you as the borrower.
  - cf498 8y ago
    >The "pay off balance within the month grace period" works only if you are on top of it all the time. If you think about how many people using the "maxed out CC" as a loan because they cant get anything else, the financial model looks rather sound. The interest rate on those things is drastic if you are no longer in the grace period, and its an easy trap to fall into, especially if you are falling on bad times or are simply gullible. I dont think people who have their CC balanced at the end of the month are the business model. They are in the business of providing high interest loans.
    - bradknowles 8y ago
      Correct. If you pay off your card every month, the credit card companies consider you to be a bad investment, and they even have names to describe customers like you -- "deadbeat", among others.
      - willstrafach 8y ago
        I doubt that. Card companies surely make good money on interest, but there is risk baked into that. A customer paying off their full balance means little risk yet they still make the 1-3% processing fee.

ktta 8y ago

How does this matter (apart from semantics) if one pays the balance therefore doesn't accrue any interest. They are still 'getting paid', right?

justboxing 8y ago
It's more than semantics. I once cancelled my Chase credit card and paid (or thought I paid off ) the balance in full. Turns out, it accrued some interest ( $8.56 to be precise) from the time of cancellation to the end of the billing cycle. Chase claimed that they sent me a statement (this was circa 2005) but I never got it. A month later I moved, and it kept going to the old address. A year later, a collection agent found me in San Francisco, just to collect that $8.56 amount and the whole thing ended up ruining my credit score for a few years. I asked them why they didn't call me, it's not like it was a huge debt that I ran away from. They gave me the cookie cutter answer "We sent you multiple statements." TL;DR: The "pay off balance within the month grace period" works only if you are on top of it all the time. Miss something even once, or you move or are overseas or something, then their penalties, fees and everything else kicks in. Again, it's a Loan, so all the operations and consequences of taking on a debt applies to credit cards, and to you as the borrower.
- cf498 8y ago
  >The "pay off balance within the month grace period" works only if you are on top of it all the time. If you think about how many people using the "maxed out CC" as a loan because they cant get anything else, the financial model looks rather sound. The interest rate on those things is drastic if you are no longer in the grace period, and its an easy trap to fall into, especially if you are falling on bad times or are simply gullible. I dont think people who have their CC balanced at the end of the month are the business model. They are in the business of providing high interest loans.
  - bradknowles 8y ago
    Correct. If you pay off your card every month, the credit card companies consider you to be a bad investment, and they even have names to describe customers like you -- "deadbeat", among others.
    - willstrafach 8y ago
      I doubt that. Card companies surely make good money on interest, but there is risk baked into that. A customer paying off their full balance means little risk yet they still make the 1-3% processing fee.