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I almost never use credit cards. In the Netherlands they've got iDEAL http://ideal.nl/?s=&lang=eng-GB http://ideal.nl/?s=&lang=eng-GB (online payment through yo

I almost never use credit cards. In the Netherlands they've got iDEAL http://ideal.nl/?s=&lang=eng-GB http://ideal.nl/?s=&lang=eng-GB (online payment through your own bank). Why use Cedit Cards at all? Then again, I hate living on credit as do most of my countrymen. I am amazed people would lend to buy a new car. If you can't afford it buy a cheaper model or one that's got more miles (or years) on it.

omni 14y ago
Not sure how credit cards work in Europe, but in the US, I use credit cards exclusively for the rewards they give out. I get 2% on all of my purchases plus an interest-free 30 day loan until my payment's due. I've never missed a payment and never carried a balance, so at the age of 24 I've made something like $3,000 net off of credit card companies.
- digitalengineer 14y ago
  I think with "I've never missed a payment and never carried a balance" you're not the tipical joe. I've read some banks can charce excessive rates when people forget (or can't) to pay.
  - amalag 14y ago
    Everyone in my family does this. I also have around $1000 from my 2% back over the last 3 years.
- jmaskell 14y ago
  I'm not sure about the rest of Europe, but the UK works pretty much like this. Lots of cashback, store vouchers or airline miles. I guess the card companies win either way - in interest on people who rack up debts (enticed by the benefits) and also on transaction fees charged to merchants when the card is used.
- jpdoctor 14y ago
  > I've never missed a payment and never carried a balance Hilariously, in banker lingo you are referred to as a "deadbeat", without any apparent sense of irony.
dangrossman 14y ago
"Credit card" doesn't mean "buying on credit" even in countries where it's the normal way to pay for online purchases. When you open a checking account at virtually any bank, you're issued a Visa or MasterCard debit card that deducts from your account when used. Websites don't really know or care whether the card you present is a credit or debit card -- if it's got the Visa/MC logo, it can be charged as if it was a credit card either way.
- Swannie 14y ago
  They should know and should care. At least in the UK, a CC attracts the processing fee of ~=2.5%. The Debit card, does not, or charges a fixed processing fee. Many web retailers/vendors pass on this processing fee. The bigger you are, the lower processing fee you can get (fraud, chargeback rates and other factors all being equal).
- T-hawk 14y ago
  There are two very different types of cards and transactions (in the US) that both go by the name of "debit". 1. As you describe, a card branded with Visa/MC, where the transaction goes through Visa/MC processing. The money is deducted from a checking account, although that fact is immaterial to the merchant. 2. A transaction that goes directly to the bank without Visa/MC. This is the EFTPOS network. This type of transaction is secured by a PIN and the physical card must be swiped (not an online charge). This system was originally for ATM cash withdrawals. But then retail merchants like supermarkets and department stores entered this space for payments, because it's much cheaper for them not to give up the 3% slice to Visa/MC. Wal-Mart in particular was a leader in doing this, and that's why the terminal always prompts for a PIN (it's cheaper for them) rendering it non-obvious how to do a Visa/MC-based transaction instead (unintuitively hit Cancel at the PIN prompt.) Nowadays, virtually all cards and underlying accounts support both types of transactions. And most customers just know it as a "debit" card, oblivious to the difference between PIN and signature verification. But there are significant differences in the back end.
vasco 14y ago
In Portugal my bank has a system which works very similarly to iDEAL from what I saw in the site. It's very rarely used. The system that most people use is a different one on which you create a virtual credit card for some given amount and use those credentials when paying. It's much cleaner, it ties with your personal bank account, and you don't need to actually own a credit card or pay fees. As soon as the payment is processed the card gets invalidated and no further charges can be made. Pretty sweet.
roel_v 14y ago
Somehow every story that somehow, however remotely, mentions credit cards, seems to lure out this sort of smug comments, with people saying a permutation of '<country I live in X> doesn't use credit cards, I'm so much smarter than those Americans'. "Why use Cedit Cards at all?" Maybe because, uh, iDEAL only works for Dutch shops? "I am amazed people would lend to buy a new car." Yeah well apparently you fail at math, because (depending on circumstances) borrowing money to buy a car can be cheaper than paying in cash, because of promotional rates and opportunity cost. Might want to re-think your ideological hangups. (plot twist: I live in the Netherlands and paid cash for all cars I've owned up until now.)
- digitalengineer 14y ago
  "I'm so much smarter than those Americans'" Your words, not mine, I did not say that. I did ask "Why use Cedit Cards at all?" because it made no sense to me. Thankfully there are some of your countrymen who can tell me why without talking about "ideological hangups" or my math skills. I can only guess by your comments, but it would seem you're not very happy in the Netherlands? I'm probably one of the few Dutch people who bothered (visiting the US and) studying Amercian psychology, history and policy. On the other hand I like to fully own my stuff right away. I care not for the 'discount' I might receive if I lend it. Cash also brings it own benefits (and being Dutch I like to haggle and hate lending).
  - roel_v 14y ago
    "it might be worth familiarizing yourself with the kind of behavior that is accepted and expected here." True, you didn't explicitly say it, but your words did imply it. While we're being pedantic, I didn't say you said so either, I just said you said a permutation of it, which you did. "I can only guess by your comments, but it would seem you're not very happy in the Netherlands?" Oh I'm mostly happy right now, and the Netherlands is one of the best countries for me to live in right now. But just because I'm fairly content with something doesn't mean that I can't identify any faults with it - actually, I could name a whole list of things I dislike about the Netherlands and Dutch culture in general, yet I still choose to stay here (I guess relevant: while Belgian by nationality, I have a Dutch wife, was born from a Dutch mother and Belgian father and have lived in the Netherlands for 10+ years. I basically asymptotically approach being 'real' Dutch, so to speak, and I could list just as many things I dislike about Belgium as I could about the Netherlands - more, actually, hence me living where I do). "I care not for the 'discount' I might receive if I lend it." OK well if you prefer to be irrational wrt your finances, more power to you, but proclaiming some sort of moral superiority because of it is out of line.
mniejiki 14y ago
In addition to the money back that was mentioned, in the US credit cards provide consumer protection. If you pay $500 for something and it's never deliver you can get a charge back from the cc company. Good chance you'll get your money back with minimal hassle. If you use a debit card or equivalent there is a lot less protection and it's a lot harder to get your money back. These are asfaik legally mandated things so it's not a question of CC being nicer as much as them being legally forced to be nicer than debit cards. If you're able to actually control your spending a CC is very much superior to anything else in the US.
lotsofpulp 14y ago
Using a credit card does not mean you have to pay interest. Buying something with a credit card is a 0% loan for 30 to 45 days. You can pay off any or all of your credit card balance within that time and not be charged a cent in interest. Here's the kicker: In the US, if you don't buy with a credit card that earns you "rewards", then you are subsidizing those who do use credit cards with rewards. The reason is because many credit cards give around 1%-3% back, but the prices for everything remain the same regardless of whether or not you pay with a credit card that gets you rewards. As a result, built into the cost of nearly everything, is the cost of providing the airline miles, points, or cash back rewards. On top of this, credit cards provide you with protection because you can dispute charges, and if someone fraudulently uses it, you do not lose that money immediately. Also, some cards (like American Express) provide 1 year of extra warranty for anything you buy. TL;DR It's better to buy with a credit card, it costs nothing (individually), and you get benefits. There is a cost to society (everything costs a few % more), but I don't see that changing anytime soon.
- clarky07 14y ago
  I agree with everything you said, but you do have to be careful with this. There are many studies that suggest we tend to spend more using credit cards than we otherwise would. Up to 18%. Spending 18% to save 3% doesn't work. Just a note of caution. If you are disciplined he is definitely right. But I've never had the answer to how did you get rich be "it was the airline miles"
  - clauretano 14y ago
    Unfortunately, those same studies (you're referencing a Dun & Bradstreet study with that 18%) show that debit cards with a VISA/MasterCard logo on them increase spending just as much. It's all about the lack of transparency, i.e. it hurts less to pay with plastic. I can't find an actual link to that study, unfortunately, but here's an article based on the info in that DNB study: http://seekingalpha.com/article/20333-guide-to-credit-cards-how-credit-cards-encourage-you-to-overspend http://seekingalpha.com/article/20333-guide-to-credit-cards-...
timthorn 14y ago
In the UK, consumer credit law means that credit card companies are jointly liable for the products/service purchased on the card. If the company you're buying from goes bankrupt before delivering your goods, or if they won't honour a warranty claim, you can easily claim from your cc company - so it makes much more sense to buy higher value items on a credit card.
deleted 14y ago
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omni 14y ago

Not sure how credit cards work in Europe, but in the US, I use credit cards exclusively for the rewards they give out. I get 2% on all of my purchases plus an interest-free 30 day loan until my payment's due. I've never missed a payment and never carried a balance, so at the age of 24 I've made something like $3,000 net off of credit card companies.

digitalengineer 14y ago
I think with "I've never missed a payment and never carried a balance" you're not the tipical joe. I've read some banks can charce excessive rates when people forget (or can't) to pay.
- amalag 14y ago
  Everyone in my family does this. I also have around $1000 from my 2% back over the last 3 years.
jmaskell 14y ago
I'm not sure about the rest of Europe, but the UK works pretty much like this. Lots of cashback, store vouchers or airline miles. I guess the card companies win either way - in interest on people who rack up debts (enticed by the benefits) and also on transaction fees charged to merchants when the card is used.
jpdoctor 14y ago
> I've never missed a payment and never carried a balance Hilariously, in banker lingo you are referred to as a "deadbeat", without any apparent sense of irony.

dangrossman 14y ago

"Credit card" doesn't mean "buying on credit" even in countries where it's the normal way to pay for online purchases. When you open a checking account at virtually any bank, you're issued a Visa or MasterCard debit card that deducts from your account when used. Websites don't really know or care whether the card you present is a credit or debit card -- if it's got the Visa/MC logo, it can be charged as if it was a credit card either way.

Swannie 14y ago
They should know and should care. At least in the UK, a CC attracts the processing fee of ~=2.5%. The Debit card, does not, or charges a fixed processing fee. Many web retailers/vendors pass on this processing fee. The bigger you are, the lower processing fee you can get (fraud, chargeback rates and other factors all being equal).
T-hawk 14y ago
There are two very different types of cards and transactions (in the US) that both go by the name of "debit". 1. As you describe, a card branded with Visa/MC, where the transaction goes through Visa/MC processing. The money is deducted from a checking account, although that fact is immaterial to the merchant. 2. A transaction that goes directly to the bank without Visa/MC. This is the EFTPOS network. This type of transaction is secured by a PIN and the physical card must be swiped (not an online charge). This system was originally for ATM cash withdrawals. But then retail merchants like supermarkets and department stores entered this space for payments, because it's much cheaper for them not to give up the 3% slice to Visa/MC. Wal-Mart in particular was a leader in doing this, and that's why the terminal always prompts for a PIN (it's cheaper for them) rendering it non-obvious how to do a Visa/MC-based transaction instead (unintuitively hit Cancel at the PIN prompt.) Nowadays, virtually all cards and underlying accounts support both types of transactions. And most customers just know it as a "debit" card, oblivious to the difference between PIN and signature verification. But there are significant differences in the back end.

vasco 14y ago

In Portugal my bank has a system which works very similarly to iDEAL from what I saw in the site. It's very rarely used. The system that most people use is a different one on which you create a virtual credit card for some given amount and use those credentials when paying. It's much cleaner, it ties with your personal bank account, and you don't need to actually own a credit card or pay fees. As soon as the payment is processed the card gets invalidated and no further charges can be made. Pretty sweet.

roel_v 14y ago

Somehow every story that somehow, however remotely, mentions credit cards, seems to lure out this sort of smug comments, with people saying a permutation of '<country I live in X> doesn't use credit cards, I'm so much smarter than those Americans'. "Why use Cedit Cards at all?" Maybe because, uh, iDEAL only works for Dutch shops? "I am amazed people would lend to buy a new car." Yeah well apparently you fail at math, because (depending on circumstances) borrowing money to buy a car can be cheaper than paying in cash, because of promotional rates and opportunity cost. Might want to re-think your ideological hangups. (plot twist: I live in the Netherlands and paid cash for all cars I've owned up until now.)

digitalengineer 14y ago
"I'm so much smarter than those Americans'" Your words, not mine, I did not say that. I did ask "Why use Cedit Cards at all?" because it made no sense to me. Thankfully there are some of your countrymen who can tell me why without talking about "ideological hangups" or my math skills. I can only guess by your comments, but it would seem you're not very happy in the Netherlands? I'm probably one of the few Dutch people who bothered (visiting the US and) studying Amercian psychology, history and policy. On the other hand I like to fully own my stuff right away. I care not for the 'discount' I might receive if I lend it. Cash also brings it own benefits (and being Dutch I like to haggle and hate lending).
- roel_v 14y ago
  "it might be worth familiarizing yourself with the kind of behavior that is accepted and expected here." True, you didn't explicitly say it, but your words did imply it. While we're being pedantic, I didn't say you said so either, I just said you said a permutation of it, which you did. "I can only guess by your comments, but it would seem you're not very happy in the Netherlands?" Oh I'm mostly happy right now, and the Netherlands is one of the best countries for me to live in right now. But just because I'm fairly content with something doesn't mean that I can't identify any faults with it - actually, I could name a whole list of things I dislike about the Netherlands and Dutch culture in general, yet I still choose to stay here (I guess relevant: while Belgian by nationality, I have a Dutch wife, was born from a Dutch mother and Belgian father and have lived in the Netherlands for 10+ years. I basically asymptotically approach being 'real' Dutch, so to speak, and I could list just as many things I dislike about Belgium as I could about the Netherlands - more, actually, hence me living where I do). "I care not for the 'discount' I might receive if I lend it." OK well if you prefer to be irrational wrt your finances, more power to you, but proclaiming some sort of moral superiority because of it is out of line.

mniejiki 14y ago

In addition to the money back that was mentioned, in the US credit cards provide consumer protection. If you pay $500 for something and it's never deliver you can get a charge back from the cc company. Good chance you'll get your money back with minimal hassle. If you use a debit card or equivalent there is a lot less protection and it's a lot harder to get your money back. These are asfaik legally mandated things so it's not a question of CC being nicer as much as them being legally forced to be nicer than debit cards. If you're able to actually control your spending a CC is very much superior to anything else in the US.

lotsofpulp 14y ago

Using a credit card does not mean you have to pay interest. Buying something with a credit card is a 0% loan for 30 to 45 days. You can pay off any or all of your credit card balance within that time and not be charged a cent in interest. Here's the kicker: In the US, if you don't buy with a credit card that earns you "rewards", then you are subsidizing those who do use credit cards with rewards. The reason is because many credit cards give around 1%-3% back, but the prices for everything remain the same regardless of whether or not you pay with a credit card that gets you rewards. As a result, built into the cost of nearly everything, is the cost of providing the airline miles, points, or cash back rewards. On top of this, credit cards provide you with protection because you can dispute charges, and if someone fraudulently uses it, you do not lose that money immediately. Also, some cards (like American Express) provide 1 year of extra warranty for anything you buy. TL;DR It's better to buy with a credit card, it costs nothing (individually), and you get benefits. There is a cost to society (everything costs a few % more), but I don't see that changing anytime soon.

clarky07 14y ago
I agree with everything you said, but you do have to be careful with this. There are many studies that suggest we tend to spend more using credit cards than we otherwise would. Up to 18%. Spending 18% to save 3% doesn't work. Just a note of caution. If you are disciplined he is definitely right. But I've never had the answer to how did you get rich be "it was the airline miles"
- clauretano 14y ago
  Unfortunately, those same studies (you're referencing a Dun & Bradstreet study with that 18%) show that debit cards with a VISA/MasterCard logo on them increase spending just as much. It's all about the lack of transparency, i.e. it hurts less to pay with plastic. I can't find an actual link to that study, unfortunately, but here's an article based on the info in that DNB study: http://seekingalpha.com/article/20333-guide-to-credit-cards-how-credit-cards-encourage-you-to-overspend http://seekingalpha.com/article/20333-guide-to-credit-cards-...

timthorn 14y ago

In the UK, consumer credit law means that credit card companies are jointly liable for the products/service purchased on the card. If the company you're buying from goes bankrupt before delivering your goods, or if they won't honour a warranty claim, you can easily claim from your cc company - so it makes much more sense to buy higher value items on a credit card.

deleted 14y ago

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