4 ms·

I agree. If it were up to /r/personalfinance, everyone would have three credit cards and that's all they would ever use and it would solve every financial probl

I agree. If it were up to /r/personalfinance, everyone would have three credit cards and that's all they would ever use and it would solve every financial problem ever. They fail to realize that many people (myself included!!) are just not equipped for credit cards and it can cause huge problems.

auiya 7y ago
What does "just not equipped for credit cards" mean?
- cheese4242 7y ago
  Likely means that they have difficulty paying off the balance every month and incur interest charges. Because most credit cards offer some sort of cash back/reward for every dollar spent, they are great if you can pay off the balance 100% of the time. However, if you get hit with interest charges even once, it can wipe out any benefit you gained from the cash back/reward bonus. In such cases those people might be better off using a debit card or other means.
- Sohcahtoa82 7y ago
  Poor self control. They'll spend money on a credit card without considering whether or not they'll be able to pay it off in a reasonable amount of time. In some cases, they have negative cash flow but don't realize it because they haven't sat down and truly inspected their budgeting and spending. They're constantly deciding which bill they can choose not to pay so that they can still make rent. They think getting a credit card will give them breathing room, so they get a one and slowly the balance creeps up, or it jumps up because they suddenly think they can afford that fancy $2,000 TV.
beatgammit 7y ago
If credit cards don't work for you, check out Dave Ramsay, he has a very low tolerance for debt. That being said, if you can handle credit cards, not using them is just leaving money on the table. I get 2% back everywhere (more in certain categories), which is better than most high interest savings accounts. If you don't get that 2% back, you're still paying the interchange fees (~3%) for other people because stores don't charge a different amount for cash/debit vs credit. However, getting 2% (or more) back isn't worth it if you end up spending more money. The emphasis should be on changing spending behavior, not on payment optimization My wife isn't very good at saving, so our solution is that I review our spending periodically and we discuss anything over $50 that isn't routine spending (e.g. grocery stores), and we each get $X/month for guilt-free spending. She tends to spend it as she "earns" it, while I save up month to month until there's a good deal so I get more value, add I occasionally treat her if she's run out of cash and has a craving.

auiya 7y ago

What does "just not equipped for credit cards" mean?

cheese4242 7y ago
Likely means that they have difficulty paying off the balance every month and incur interest charges. Because most credit cards offer some sort of cash back/reward for every dollar spent, they are great if you can pay off the balance 100% of the time. However, if you get hit with interest charges even once, it can wipe out any benefit you gained from the cash back/reward bonus. In such cases those people might be better off using a debit card or other means.
Sohcahtoa82 7y ago
Poor self control. They'll spend money on a credit card without considering whether or not they'll be able to pay it off in a reasonable amount of time. In some cases, they have negative cash flow but don't realize it because they haven't sat down and truly inspected their budgeting and spending. They're constantly deciding which bill they can choose not to pay so that they can still make rent. They think getting a credit card will give them breathing room, so they get a one and slowly the balance creeps up, or it jumps up because they suddenly think they can afford that fancy $2,000 TV.

beatgammit 7y ago

If credit cards don't work for you, check out Dave Ramsay, he has a very low tolerance for debt. That being said, if you can handle credit cards, not using them is just leaving money on the table. I get 2% back everywhere (more in certain categories), which is better than most high interest savings accounts. If you don't get that 2% back, you're still paying the interchange fees (~3%) for other people because stores don't charge a different amount for cash/debit vs credit. However, getting 2% (or more) back isn't worth it if you end up spending more money. The emphasis should be on changing spending behavior, not on payment optimization My wife isn't very good at saving, so our solution is that I review our spending periodically and we discuss anything over $50 that isn't routine spending (e.g. grocery stores), and we each get $X/month for guilt-free spending. She tends to spend it as she "earns" it, while I save up month to month until there's a good deal so I get more value, add I occasionally treat her if she's run out of cash and has a craving.