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I was similarly confused. But now it makes sense that every American seems to have a dozen of different credit cards in his wallet.

kasey_junk 12y ago
That's not what you should take from the article. What you should take from the article were: - Costco was an oddity in that they only took 1 credit card network. American Express - This was extremely lucrative for American Express - This odd position made Costco very attractive to the credit card networks and thus allowed them to bargain for a much better deal than normal. - Visa has signed a deal with costco which is wrecking American Expresses share price, but might be overly aggressive from a risk perspective for Visa. If you encounter someone with a wallet full of credit cards (American or otherwise) they are either A) rotating debt or B) gaming the credit cards. Nothing about using credit cards in the US is significantly different than anywhere else in the world (with the large exception of the lack of PIN infrastructure)
- jrochkind1 12y ago
  My understanding was that in much of the rest of the world, it's actually much less common to use credit cards for standard daily purchases you don't really need any 'credit' on. And much harder to get as much of a credit line in the form of credit cards as the companies offer Americans. No?
  - kasey_junk 12y ago
    That is very locality dependent but can be true. I was really talking about the "have a bunch of credit cards" instead of "one credit card" difference. The actual usage/spending on the cards does vary greatly from place to place.
  - wongarsu 12y ago
    In Germany you would have a hard time using a credit card for daily purchases. Most physical stores that don't sell things worth hundreds of dollars don't accept credit cards. We almost exclusively use cash and debit cards (backed by the bank account, not prepaid). I observe the same in the rest of Europe.
    - deleted 12y ago
      [deleted]
- revelation 12y ago
  Some time ago, no week went without seeing another of these "consolidate your credit cards in a single card" startups pop up on HN, which is a bizarre product to start with and would be completely out of place in any part of Europe. Yet, HNers seemed to think this was a perfectly sensible product they had a use-case for. Are there really that many people here that are rotating debt or gaming credit cards (a futile game in any case)?
  - gergles 12y ago
    Gaming credit cards isn't a futile game in the US; there are signup bonuses for most of them ranging from $300-multiple thousands of dollars worth of value, depending on how you spend them and what you're interested in doing. American credit cards nearly universally offer lengthy interest-free grace periods, as well, so there's little risk as long as you have enough base spending to qualify for the signup bonus. As an example, you can sign up for an American Airlines credit card and earn 50,000 miles after spending $3000 on the card. Buy $3,000 worth of things you were going to buy anyway, and then you have a one-way business-class ticket from the US to Japan (worth at least $2K, probably significantly more). There are hundreds of these offers, so gaming credit cards can be a significantly net positive hobby for people who know how to manage their spending and who don't actually use the credit facility of the cards beyond the grace period.
    - pktgen 12y ago
      Yep. I just applied for a few, and here's what I got: - 70,000 Marriott points which I estimate to be worth about $700, based on the equivalent cash price I'd have paid for the hotel rooms (which I do have plans for) - $890 in cash bonuses - 50,000 ThankYou points which are worth $500 cash (the trick is to request mortgage or student loan redemptions, which can be made out to the bank in which you have a checking account, and then just deposit it in your account. The redemption value is higher this way than with the normal cash option.) or more for travel (probably will just take the cash as I have enough airline + hotel points right now). The tilt towards cash or cash-redeemable bonuses is intentional, as I have enough points of various types to support my travel plans. One other 'danger' I've seen some fall into is valuing their points based on the cash value of whatever they redeemed them for. For example, it's common to see people redeem airline miles for a ridiculous $10,000 ticket, and then claim they got 10c/mile or whatever based on that price. In my opinion, unless you would have paid $10k cash for that ticket had the points not existed, you haven't gotten 10c/point; you've gotten $(price you would have paid for a ticket) / $(pointsRequired). I have to spend a little over $10k to get these bonuses, which will be almost entirely in manufactured spend. I'm most certainly not spending a single penny more than I would have spent if credit cards didn't exist at all. It's also worth adding a few statistics: - Total credit card debt I've ever held in my life beyond the grace period: $0 - Total interest I've ever paid in my life: $0
- melvinmt 12y ago
  The major reason why I'm walking around with 5 credit cards in my wallet is that, as being relatively new to the country (4 years), I needed a way to boost my credit score. Note that the recommended number of credit lines (by CreditKarma) is supposed to be 20. I'm working on it :)
  - kasey_junk 12y ago
    For the record, I view that as gaming the credit cards. That is an oddity of the way that credit reporting agencies work that using 5 credit cards is perceived as better than spending the same amount on 1 card.
  - greggyb 12y ago
    Note that the "recommended" lines of credit is lifetime credit and includes things beyond credit cards. I mention this due to the context of this thread being "US residents have lots of credit cards", not because I think you misunderstand.
  - pktgen 12y ago
    Credit Karma's scores and "recommendations" like that are jokes. Of course Credit Karma wants you to have 20 credit cards - they hope you get them through their affiliate links!
- mortehu 12y ago
  > Nothing about using credit cards in the US is significantly different than anywhere else in the world There is one big difference: the widespread use of credit scores. If you never use a form of credit that reports to a credit score agency, you may find yourself unable to rent some apartments, and it can also affect your mortgage rate.
- bane 12y ago
  I'm not sure about outside the U.S., but inside you get almost constantly harassed to get store-only credit cards. My wife likes Anne Taylor, and every time she shops there they ask her if she has an "Anne Taylor" card. This is not a discount card, it's a real credit card, only usable at Anne Taylor stores. Almost every retail clothing store and most department stores seem to want to be in on this kind of thing. Originally, when we were a little dumber and before we bought our first home and started really caring about credit scores, we found our wallets slowly filling up with these cards, not really realizing they were actual credit score altering credit cards. I think it finally dawned on us when our credit score started to be hurt by having too many revolving credit accounts open, and we finally realized what these cards were. So we closed them all, just have 1 each of the three major cards (and we'll be getting rid of our AMEX card once Costco switches over) and our credit scores are amazing and credit management is simple.

kasey_junk 12y ago

That's not what you should take from the article. What you should take from the article were: - Costco was an oddity in that they only took 1 credit card network. American Express - This was extremely lucrative for American Express - This odd position made Costco very attractive to the credit card networks and thus allowed them to bargain for a much better deal than normal. - Visa has signed a deal with costco which is wrecking American Expresses share price, but might be overly aggressive from a risk perspective for Visa. If you encounter someone with a wallet full of credit cards (American or otherwise) they are either A) rotating debt or B) gaming the credit cards. Nothing about using credit cards in the US is significantly different than anywhere else in the world (with the large exception of the lack of PIN infrastructure)

jrochkind1 12y ago
My understanding was that in much of the rest of the world, it's actually much less common to use credit cards for standard daily purchases you don't really need any 'credit' on. And much harder to get as much of a credit line in the form of credit cards as the companies offer Americans. No?
- kasey_junk 12y ago
  That is very locality dependent but can be true. I was really talking about the "have a bunch of credit cards" instead of "one credit card" difference. The actual usage/spending on the cards does vary greatly from place to place.
- wongarsu 12y ago
  In Germany you would have a hard time using a credit card for daily purchases. Most physical stores that don't sell things worth hundreds of dollars don't accept credit cards. We almost exclusively use cash and debit cards (backed by the bank account, not prepaid). I observe the same in the rest of Europe.
  - deleted 12y ago
    [deleted]
revelation 12y ago
Some time ago, no week went without seeing another of these "consolidate your credit cards in a single card" startups pop up on HN, which is a bizarre product to start with and would be completely out of place in any part of Europe. Yet, HNers seemed to think this was a perfectly sensible product they had a use-case for. Are there really that many people here that are rotating debt or gaming credit cards (a futile game in any case)?
- gergles 12y ago
  Gaming credit cards isn't a futile game in the US; there are signup bonuses for most of them ranging from $300-multiple thousands of dollars worth of value, depending on how you spend them and what you're interested in doing. American credit cards nearly universally offer lengthy interest-free grace periods, as well, so there's little risk as long as you have enough base spending to qualify for the signup bonus. As an example, you can sign up for an American Airlines credit card and earn 50,000 miles after spending $3000 on the card. Buy $3,000 worth of things you were going to buy anyway, and then you have a one-way business-class ticket from the US to Japan (worth at least $2K, probably significantly more). There are hundreds of these offers, so gaming credit cards can be a significantly net positive hobby for people who know how to manage their spending and who don't actually use the credit facility of the cards beyond the grace period.
  - pktgen 12y ago
    Yep. I just applied for a few, and here's what I got: - 70,000 Marriott points which I estimate to be worth about $700, based on the equivalent cash price I'd have paid for the hotel rooms (which I do have plans for) - $890 in cash bonuses - 50,000 ThankYou points which are worth $500 cash (the trick is to request mortgage or student loan redemptions, which can be made out to the bank in which you have a checking account, and then just deposit it in your account. The redemption value is higher this way than with the normal cash option.) or more for travel (probably will just take the cash as I have enough airline + hotel points right now). The tilt towards cash or cash-redeemable bonuses is intentional, as I have enough points of various types to support my travel plans. One other 'danger' I've seen some fall into is valuing their points based on the cash value of whatever they redeemed them for. For example, it's common to see people redeem airline miles for a ridiculous $10,000 ticket, and then claim they got 10c/mile or whatever based on that price. In my opinion, unless you would have paid $10k cash for that ticket had the points not existed, you haven't gotten 10c/point; you've gotten $(price you would have paid for a ticket) / $(pointsRequired). I have to spend a little over $10k to get these bonuses, which will be almost entirely in manufactured spend. I'm most certainly not spending a single penny more than I would have spent if credit cards didn't exist at all. It's also worth adding a few statistics: - Total credit card debt I've ever held in my life beyond the grace period: $0 - Total interest I've ever paid in my life: $0
melvinmt 12y ago
The major reason why I'm walking around with 5 credit cards in my wallet is that, as being relatively new to the country (4 years), I needed a way to boost my credit score. Note that the recommended number of credit lines (by CreditKarma) is supposed to be 20. I'm working on it :)
- kasey_junk 12y ago
  For the record, I view that as gaming the credit cards. That is an oddity of the way that credit reporting agencies work that using 5 credit cards is perceived as better than spending the same amount on 1 card.
- greggyb 12y ago
  Note that the "recommended" lines of credit is lifetime credit and includes things beyond credit cards. I mention this due to the context of this thread being "US residents have lots of credit cards", not because I think you misunderstand.
- pktgen 12y ago
  Credit Karma's scores and "recommendations" like that are jokes. Of course Credit Karma wants you to have 20 credit cards - they hope you get them through their affiliate links!
mortehu 12y ago
> Nothing about using credit cards in the US is significantly different than anywhere else in the world There is one big difference: the widespread use of credit scores. If you never use a form of credit that reports to a credit score agency, you may find yourself unable to rent some apartments, and it can also affect your mortgage rate.
bane 12y ago
I'm not sure about outside the U.S., but inside you get almost constantly harassed to get store-only credit cards. My wife likes Anne Taylor, and every time she shops there they ask her if she has an "Anne Taylor" card. This is not a discount card, it's a real credit card, only usable at Anne Taylor stores. Almost every retail clothing store and most department stores seem to want to be in on this kind of thing. Originally, when we were a little dumber and before we bought our first home and started really caring about credit scores, we found our wallets slowly filling up with these cards, not really realizing they were actual credit score altering credit cards. I think it finally dawned on us when our credit score started to be hurt by having too many revolving credit accounts open, and we finally realized what these cards were. So we closed them all, just have 1 each of the three major cards (and we'll be getting rid of our AMEX card once Costco switches over) and our credit scores are amazing and credit management is simple.