5 ms·

You know I discovered credit cards in my mid twenties when emigrating to HK from Europe where we had only debit. I dont pay it in full each month dude, I pay i

by xwolfi 5y ago

You know I discovered credit cards in my mid twenties when emigrating to HK from Europe where we had only debit. I dont pay it in full each month dude, I pay it ... EACH TRANSACTION :D There s no reason to defer payment even by one week and each time you do delay your brain is telling a different story than if you just extracted money out of your account immediately. Why do you think humans should permanently borrow to the next month to buy tomatoes at the super market ?

lotsofpulp 5y ago
I have been using credit cards in the US since I was a kid 15+ years ago, and my parents have been using them for 20+ years easy. I feel like they have had the ability to autopay for at least that long.
- feanaro 5y ago
  What's the purpose of an autopay-enabled credit card compared to a debit card? Is it just a convention? To me a credit card always feels "dirtier" because of the connotation that it produces debt and that I have to rely on someone else extending me credit, even if momentarily. It seems much cleaner to just spend your own money directly with as little middlemen as possible.
  - bluejay2 5y ago
    Many credits card have points/airline miles/other stuff you can earn with your purchases. So as long as (1) the bill doesn't add fees for using a credit card, and (2) you are paying your credit card balance in full each month (and thus incurring no interest charges), it can be more advantageous to pay with a credit card. Even if you are not earning extra points, using a credit card may be helpful for some who are trying to establish a credit history, which will be important if they wish to borrow larger sums (auto loans, home mortgages) in the future.
    - feanaro 5y ago
      > Even if you are not earning extra points, using a credit card may be helpful for some who are trying to establish a credit history, which will be important if they wish to borrow larger sums (auto loans, home mortgages) in the future. Ah, that explains part of it, I guess. This isn't a thing in my European country. What I don't understand is why simply using a credit card would count more towards establishing you as a good creditor than not even having to use a credit card at all. I guess that's a weird bias in the system?
      - lotsofpulp 5y ago
        It is not a weird bias. Paying off a revolving credit card balance every month is not that big of a signal about your future likelihood of repaying loans in a timely manner, but it is a signal. Not borrowing any money, and hence not having any history of repaying borrowed money is zero signal. If it was true that people who never borrowed money were more likely than repaying borrowed money on time than people who regularly borrowed money, then a lender would have already noticed this in their data and would have offered a more competitive financing product in the marketplace. Since that has not happened, it is reasonable to surmise that the tiny signal of maintaining a small revolving credit card loan with timely payments is better than the zero signal of not maintaining any loan balance. Note that having many tiny credit card revolving loan amounts is viewed negatively.
  - matwood 5y ago
    > What's the purpose of an autopay-enabled credit card compared to a debit card? Is it just a convention? As long as interest is avoided, rewards and protection. I end up with a 'free' plane ticket to Europe every year through my primary CC. The Apple Card gives 3% back on anything Apple (plus some others like TMO), and allows you buy almost any Apple item with 12 month, 0% payments. I could spend the 2k on that laptop or keep that money invested and just pay 166/month. The Amazon card is 5% back on anything Amazon (and Whole foods if that's your thing). I bought a 'free' TV with the rewards last year. I've had my CCs stolen many times, and the buffer means I've never had that money leave my bank account. I was taught early on in life that cash is king. The longer you can keep the cash in your control the better. Using CCs to provide a buffer does exactly that. And the rewards are a bonus for money I'm spending anyway.
  - lotsofpulp 5y ago
    > To me a credit card always feels "dirtier" because of the connotation that it produces debt and that I have to rely on someone else extending me credit, even if momentarily. It seems much cleaner to just spend your own money directly with as little middlemen as possible. In the US, you lose out on 2%+ cash back rewards when you do not use credit card (because the price for purchasing with a credit card is the same as not using a credit card, and the minimum cash back rewards in free credit cards is 2%).
    - feanaro 5y ago
      Why does cash back exist as a concept? How does it benefit companies to charge me less simply for the act of using a credit card, even if I'm not paying interest on it?
      - lotsofpulp 5y ago
        The entities giving cash back (banks issuing credit cards) profit more from the interest from people who do not pay their monthly balance more than the loss of giving everyone 2% cash back. Merchants (generally large merchants) do not offer a discount for paying with debit cards because people spend more money when using credit cards. There are some notable exceptions that offer cheaper prices for using debit card, such as Target that offers a 5% discount for using a debit card to pay. Hence I pay at Target with a debit card. Basically, other people’s cash flow problems and/or inability to resist temptations to spend more than what they have results in profit for merchants, banks, and people that pay their credit card balance every month.
        ChrisMarshallNY 5y ago
        > Merchants (generally large merchants) do not offer a discount for paying with debit cards because people spend more money when using credit cards. Also, I assume that most credit companies (VISA, MC, etc.), have rules, expressly forbidding charging different rates for the use of credit cards. It makes sense, because they don't want to be avoided as a payment option. I learned this, when I did my first shopping cart, and read the whole freakin' VISA Merchant's Manual. There was some kind of loophole that gas stations used.
lillecarl 5y ago
Because the US credit system requires you to do it this way, also since their card safety is dogshit you want credit in case someone skims your card, because it's not your money being stolen (it's easier not to pay the CC company than getting your money back from someone). Another reason is that a CC usually allows higher offline transaction limits, which might be valuable for some. Just because your direct debit scheme makes sense to you doesn't mean it makes sense for EVERYONE. I have a VISA debit card and a Mastercard CC. I use debit the most (commonplace in Sweden) but keep the CC around as an extra if my bank has downtime or if I'm traveling the less connected parts of the world. Widen your views, things are different all over the world. Imagine billions of people don't have access to the internet and you'll find that your way isn't the only way, in some places they pay with sex, food, cattle, cash, CC, direct debit, crypto, futures or whatever convoluted (in my opinion) system they can come up with. If you're in an AMUSEMENT PARK or A BATHHOUSE you might transact with a tag and pay when you leave.
- newswasboring 5y ago
  > Because the US credit system requires you to do it this way That is the issue though. Why? It makes no sense. You gave this condescending lecture about understanding other cultures but didn't take a sentence to even try to explain.
  - shukantpal 5y ago
    “because it's not your money being stolen (it's easier not to pay the CC company than getting your money back from someone).”
smegger001 5y ago
I pay in full rather at the end of the billing cycle because I have it set to auto-pay and then I don't have to worry about it. But then I barely ever use my credit card other than for reoccurring payments or major purchase. I'll just use debit if I am buying tomatoes why barrow for small purchases in the first place.
- marderfarker2 5y ago
  With debit card you hand the merchant your whole bank account and trust them to deduct an agreed amount. With credit card it becomes the bank’s problem. Anyway it doesn’t have to be like this. In China you scan a merchant code and enter the amount you want to pay on your phone, much like a bank transfer, but it happens instantly.
  - smsm42 5y ago
    Good point on this - if some merchant cheats you, you have a decent chance with CC company to get the money back. With debit, your money is gone, good luck getting a refund.
    - martin8412 5y ago
      Not on any of my debit cards. I just dispute the charge, and get my money back.
- ChrisMarshallNY 5y ago
  I use credit cards for tomatoes. One reason is convenience. The other one is that I have a Apple Card, so I have a fairly decent Apple Cash “slush fund,” from the rebates they do.
smsm42 5y ago
If you have discipline, it's very convenient. You can manage your cash flow and know when and how much exactly is coming in and out of your account, and if you have an unexpected $2000 expense (say, something went wrong with your car), you can pay it now and have a month to fetch the money for it from wherever you keep the money - since keeping all your money on the same checking account is both wasteful and risky. Also, can get you a cool 2% back on every transaction (over the years, it comes to a non-trivial sum). Some can even do 5%. All that requires discipline and planning of course. If you don't trust yourself with being able to keep it up for years - get a debit.
ChrisMarshallNY 5y ago
I did that, for a while, but it’s just easier to do it once a month, and be done with it. I believe that self-discipline is extremely important for a life of happiness and fulfillment. Sounds like you have that. Good show.

by xwolfi 5y ago

lotsofpulp 5y ago

I have been using credit cards in the US since I was a kid 15+ years ago, and my parents have been using them for 20+ years easy. I feel like they have had the ability to autopay for at least that long.

feanaro 5y ago
What's the purpose of an autopay-enabled credit card compared to a debit card? Is it just a convention? To me a credit card always feels "dirtier" because of the connotation that it produces debt and that I have to rely on someone else extending me credit, even if momentarily. It seems much cleaner to just spend your own money directly with as little middlemen as possible.
- bluejay2 5y ago
  Many credits card have points/airline miles/other stuff you can earn with your purchases. So as long as (1) the bill doesn't add fees for using a credit card, and (2) you are paying your credit card balance in full each month (and thus incurring no interest charges), it can be more advantageous to pay with a credit card. Even if you are not earning extra points, using a credit card may be helpful for some who are trying to establish a credit history, which will be important if they wish to borrow larger sums (auto loans, home mortgages) in the future.
  - feanaro 5y ago
    > Even if you are not earning extra points, using a credit card may be helpful for some who are trying to establish a credit history, which will be important if they wish to borrow larger sums (auto loans, home mortgages) in the future. Ah, that explains part of it, I guess. This isn't a thing in my European country. What I don't understand is why simply using a credit card would count more towards establishing you as a good creditor than not even having to use a credit card at all. I guess that's a weird bias in the system?
    - lotsofpulp 5y ago
      It is not a weird bias. Paying off a revolving credit card balance every month is not that big of a signal about your future likelihood of repaying loans in a timely manner, but it is a signal. Not borrowing any money, and hence not having any history of repaying borrowed money is zero signal. If it was true that people who never borrowed money were more likely than repaying borrowed money on time than people who regularly borrowed money, then a lender would have already noticed this in their data and would have offered a more competitive financing product in the marketplace. Since that has not happened, it is reasonable to surmise that the tiny signal of maintaining a small revolving credit card loan with timely payments is better than the zero signal of not maintaining any loan balance. Note that having many tiny credit card revolving loan amounts is viewed negatively.
- matwood 5y ago
  > What's the purpose of an autopay-enabled credit card compared to a debit card? Is it just a convention? As long as interest is avoided, rewards and protection. I end up with a 'free' plane ticket to Europe every year through my primary CC. The Apple Card gives 3% back on anything Apple (plus some others like TMO), and allows you buy almost any Apple item with 12 month, 0% payments. I could spend the 2k on that laptop or keep that money invested and just pay 166/month. The Amazon card is 5% back on anything Amazon (and Whole foods if that's your thing). I bought a 'free' TV with the rewards last year. I've had my CCs stolen many times, and the buffer means I've never had that money leave my bank account. I was taught early on in life that cash is king. The longer you can keep the cash in your control the better. Using CCs to provide a buffer does exactly that. And the rewards are a bonus for money I'm spending anyway.
- lotsofpulp 5y ago
  > To me a credit card always feels "dirtier" because of the connotation that it produces debt and that I have to rely on someone else extending me credit, even if momentarily. It seems much cleaner to just spend your own money directly with as little middlemen as possible. In the US, you lose out on 2%+ cash back rewards when you do not use credit card (because the price for purchasing with a credit card is the same as not using a credit card, and the minimum cash back rewards in free credit cards is 2%).
  - feanaro 5y ago
    Why does cash back exist as a concept? How does it benefit companies to charge me less simply for the act of using a credit card, even if I'm not paying interest on it?
    - lotsofpulp 5y ago
      The entities giving cash back (banks issuing credit cards) profit more from the interest from people who do not pay their monthly balance more than the loss of giving everyone 2% cash back. Merchants (generally large merchants) do not offer a discount for paying with debit cards because people spend more money when using credit cards. There are some notable exceptions that offer cheaper prices for using debit card, such as Target that offers a 5% discount for using a debit card to pay. Hence I pay at Target with a debit card. Basically, other people’s cash flow problems and/or inability to resist temptations to spend more than what they have results in profit for merchants, banks, and people that pay their credit card balance every month.
      - ChrisMarshallNY 5y ago
        > Merchants (generally large merchants) do not offer a discount for paying with debit cards because people spend more money when using credit cards. Also, I assume that most credit companies (VISA, MC, etc.), have rules, expressly forbidding charging different rates for the use of credit cards. It makes sense, because they don't want to be avoided as a payment option. I learned this, when I did my first shopping cart, and read the whole freakin' VISA Merchant's Manual. There was some kind of loophole that gas stations used.

lillecarl 5y ago

Because the US credit system requires you to do it this way, also since their card safety is dogshit you want credit in case someone skims your card, because it's not your money being stolen (it's easier not to pay the CC company than getting your money back from someone). Another reason is that a CC usually allows higher offline transaction limits, which might be valuable for some. Just because your direct debit scheme makes sense to you doesn't mean it makes sense for EVERYONE. I have a VISA debit card and a Mastercard CC. I use debit the most (commonplace in Sweden) but keep the CC around as an extra if my bank has downtime or if I'm traveling the less connected parts of the world. Widen your views, things are different all over the world. Imagine billions of people don't have access to the internet and you'll find that your way isn't the only way, in some places they pay with sex, food, cattle, cash, CC, direct debit, crypto, futures or whatever convoluted (in my opinion) system they can come up with. If you're in an AMUSEMENT PARK or A BATHHOUSE you might transact with a tag and pay when you leave.

newswasboring 5y ago
> Because the US credit system requires you to do it this way That is the issue though. Why? It makes no sense. You gave this condescending lecture about understanding other cultures but didn't take a sentence to even try to explain.
- shukantpal 5y ago
  “because it's not your money being stolen (it's easier not to pay the CC company than getting your money back from someone).”

smegger001 5y ago

I pay in full rather at the end of the billing cycle because I have it set to auto-pay and then I don't have to worry about it. But then I barely ever use my credit card other than for reoccurring payments or major purchase. I'll just use debit if I am buying tomatoes why barrow for small purchases in the first place.

marderfarker2 5y ago
With debit card you hand the merchant your whole bank account and trust them to deduct an agreed amount. With credit card it becomes the bank’s problem. Anyway it doesn’t have to be like this. In China you scan a merchant code and enter the amount you want to pay on your phone, much like a bank transfer, but it happens instantly.
- smsm42 5y ago
  Good point on this - if some merchant cheats you, you have a decent chance with CC company to get the money back. With debit, your money is gone, good luck getting a refund.
  - martin8412 5y ago
    Not on any of my debit cards. I just dispute the charge, and get my money back.
ChrisMarshallNY 5y ago
I use credit cards for tomatoes. One reason is convenience. The other one is that I have a Apple Card, so I have a fairly decent Apple Cash “slush fund,” from the rebates they do.

smsm42 5y ago

If you have discipline, it's very convenient. You can manage your cash flow and know when and how much exactly is coming in and out of your account, and if you have an unexpected $2000 expense (say, something went wrong with your car), you can pay it now and have a month to fetch the money for it from wherever you keep the money - since keeping all your money on the same checking account is both wasteful and risky. Also, can get you a cool 2% back on every transaction (over the years, it comes to a non-trivial sum). Some can even do 5%. All that requires discipline and planning of course. If you don't trust yourself with being able to keep it up for years - get a debit.

ChrisMarshallNY 5y ago

I did that, for a while, but it’s just easier to do it once a month, and be done with it. I believe that self-discipline is extremely important for a life of happiness and fulfillment. Sounds like you have that. Good show.