4 ms·

It is very strange... I have some assumptions that it would be better for the general public to not have a credit card culture. Very rarely have I "required" th

by tudelo 6y ago

It is very strange... I have some assumptions that it would be better for the general public to not have a credit card culture. Very rarely have I "required" the use of one, but when I was moving for my first real job out of school it was somewhat essential as a sort of buffer until the first paycheck kicked in. Not a comfortable place, but one I bet a lot of people could resonate with, and IMO a responsible use of credit.

acka 6y ago
I can confirm the strong deterrent towards having a credit card, any personal loans really, in the Netherlands. My bank, and I believe most banks in the Netherlands, requires proof of stable income well above minimum wage before even considering an application for a credit card. This puts credit cards out of reach of a sizable part of the population. Also, credit checks and reporting new lines of credit to the authorities by lenders are mandatory for all personal loans, be it for getting a mortgage, issuing a credit card, paying monthly installments for a smartphone bundled with a contract, or buying on credit from Dutch online stores or mail order catalogues.
aequitas 6y ago
To me (Dutch) the idea of using a personal credit card is very strange for anything other than because a website/shop doesn't accept any other form of payment. If you're a company, credit makes sense. You invest on a risk of getter a greater return in the future. But paying for your groceries or rent in advance should not be considered 'investing' in your personal life imho. You should just make due with what you have.
- m_mueller 6y ago
  From what I understand about the US, it is mainly to get better credit rating. This is apparently the most important social score in American society... Note to Americans: In European countries this tends not to be a thing afaik. Privacy is taken more seriously, so there is no central & privatized system to query for credit. However, to rent an apartment, get a loan or get a new job here in Switzerland it's often required to provide something like a credit register extract from the local government office. That register will get notified when someone isn't paying bills, usually after the third notification ~2 months after a bill was issued (notifying the register is costing fees, so businesses try to avoid it as much as possible). After a couple of years, entries get deleted. This way there is an attempt of balancing privacy, social mobility and the interest of businesses to collect their revenue.
  - edwintorok 6y ago
    Not just the US, the UK has credit scoring too, there I think 3 credit scoring agencies. When I moved here from Europe the entire notion of credit card and credit scoring was new to me. I still use my debit card whenever possible though, just spending enough on the credit card to avoid getting it cancelled due to not using it.
  - aequitas 6y ago
    Similar to what we have here. Only I don't think it common they check your credit score for a job application. Only when you want a new loan (mortgage, credit card, buy on credit, etc). You can also query the information yourself and see who requested access to it in the past months.
    - m_mueller 6y ago
      where is here, the US you mean? but the way I understand it, those credit score agencies are private, and their info is much more granular. e.g. it would never matter in CH and pretty much all of Europe, how much you already spent and payed off on credit in the past.
- chaorace 6y ago
  Lots of credit cards come with incentives. For example, I get reimbursed a flat 2% rate on all transactions ("cashback"). As long as I keep the card on auto-pay for the full balance, it's a win-win situation: credit building + free money. Where does that "free" money come from? From the payment network fees, of course. Mastercard takes a 4%-ish cut, the bank keeps 3% of that, and 2% of that goes back in my pocket. Banks have to offer such benefits because they will get cannibalized by the other players if their card can't compete. Structurally, it's actually quite stupid that there's an invisible tax which you can only recover by playing ball with the creditors... but on an individual level you would have to be foolish to not take advantage.

by tudelo 6y ago

acka 6y ago

I can confirm the strong deterrent towards having a credit card, any personal loans really, in the Netherlands. My bank, and I believe most banks in the Netherlands, requires proof of stable income well above minimum wage before even considering an application for a credit card. This puts credit cards out of reach of a sizable part of the population. Also, credit checks and reporting new lines of credit to the authorities by lenders are mandatory for all personal loans, be it for getting a mortgage, issuing a credit card, paying monthly installments for a smartphone bundled with a contract, or buying on credit from Dutch online stores or mail order catalogues.

aequitas 6y ago

To me (Dutch) the idea of using a personal credit card is very strange for anything other than because a website/shop doesn't accept any other form of payment. If you're a company, credit makes sense. You invest on a risk of getter a greater return in the future. But paying for your groceries or rent in advance should not be considered 'investing' in your personal life imho. You should just make due with what you have.

m_mueller 6y ago
From what I understand about the US, it is mainly to get better credit rating. This is apparently the most important social score in American society... Note to Americans: In European countries this tends not to be a thing afaik. Privacy is taken more seriously, so there is no central & privatized system to query for credit. However, to rent an apartment, get a loan or get a new job here in Switzerland it's often required to provide something like a credit register extract from the local government office. That register will get notified when someone isn't paying bills, usually after the third notification ~2 months after a bill was issued (notifying the register is costing fees, so businesses try to avoid it as much as possible). After a couple of years, entries get deleted. This way there is an attempt of balancing privacy, social mobility and the interest of businesses to collect their revenue.
- edwintorok 6y ago
  Not just the US, the UK has credit scoring too, there I think 3 credit scoring agencies. When I moved here from Europe the entire notion of credit card and credit scoring was new to me. I still use my debit card whenever possible though, just spending enough on the credit card to avoid getting it cancelled due to not using it.
- aequitas 6y ago
  Similar to what we have here. Only I don't think it common they check your credit score for a job application. Only when you want a new loan (mortgage, credit card, buy on credit, etc). You can also query the information yourself and see who requested access to it in the past months.
  - m_mueller 6y ago
    where is here, the US you mean? but the way I understand it, those credit score agencies are private, and their info is much more granular. e.g. it would never matter in CH and pretty much all of Europe, how much you already spent and payed off on credit in the past.
chaorace 6y ago
Lots of credit cards come with incentives. For example, I get reimbursed a flat 2% rate on all transactions ("cashback"). As long as I keep the card on auto-pay for the full balance, it's a win-win situation: credit building + free money. Where does that "free" money come from? From the payment network fees, of course. Mastercard takes a 4%-ish cut, the bank keeps 3% of that, and 2% of that goes back in my pocket. Banks have to offer such benefits because they will get cannibalized by the other players if their card can't compete. Structurally, it's actually quite stupid that there's an invisible tax which you can only recover by playing ball with the creditors... but on an individual level you would have to be foolish to not take advantage.