creditcards? cheques? wtf?

[mugen]

I have a burning question: who do Americans use creditcards and cheques so often?
To me as a Dutchie it doesn't make much sense. Why would you "borrow" money if you have to pay it back in a month with intrest anyway? Why not just wait a month and use cash or what-ya-call-it-in-english, it's called a pincard(pinpas) in Dutch. Is there some tax benefit i don't know about? Is it the American culture of buy now pay later? I don't understand so please enlighten me.

[PopCulturePooka]

I use EFTPOS the most :D

[Jiant Flying Panda]

Well.... people use checks or a debit card when they're not carrying cash on them. The money is then taken out of your checking account so in a way your kind of using cash.... Just in a different form, lol.

[Kou123]

its called livin outside your means, you swipe the plastic now and worry about that whole paying for it later. I think 70% of america is in credit card debt by the way

[Random]

Well.... people use checks or a debit card when they're not carrying cash on them. The money is then taken out of your checking account so in a way your kind of using cash.... Just in a different form, lol.

When it's taken out of your account, isn't that a debit card?
Credit cards are the ones where you get a bill at the end of the month.

[mugen]

I think a pinpas is what you would call a debitcard. my point is that creditcards make debts and and debitcards or cash don't.

[Jiant Flying Panda]

When it's taken out of your account, isn't that a debit card?
Credit cards are the ones where you get a bill at the end of the month.

Yeah. I said debit card didn't I? :P

he asked about checks... And they work the same way... Or atleast I think they do.

[MNJetter]

I'm an American, and I don't really understand the credit card thing either, but I've got to point out that credit cards and checks (or cheques, if you learned English in the UK:P) are two completely different things.

A credit card uses money that you don't have. If the card is worth its salt, though, it won't charge you interest in the first month, so if you pay it off relatively quickly, you can use it for small purchases with no consequences. Some cards have benefits - use the card for X number of dollars, and you get points/credit/cool prizes from whoever you got the card from. So if you don't run yourself into debt, you can get free stuff just for buying other stuff. The real way people get into trouble is if they use the credit card all the time to buy something that they haven't got the money for. Once in a while it's okay, but they can have some pretty outrageous APRs if you don't pay it off soon. Bottom line for people using it, though, it's usually easier to carry around a piece of plastic the size of your palm than it is to carry an arrangement of cash and coins.

A check is a piece of paper that you write an amount on, and then the store brings that check to the bank and the bank takes it directly out of your bank account. No interest, no money that you don't have. It's just like cash, only you don't have to carry the cash with you. Delayed cash, more or less. Nowadays, credit-card-esque debit cards and check cards have been coming out, which run through a computer like a credit card, but take money directly from you like a check, instead of running up a tally for you to pay later, like a credit card. I think check cards are almost the most popular option right now.

But whatever the method, I think the biggest reason people use alternates to cash is safety, especially in bigger cities. If you're walking down the street and you get your wallet stolen, you can cancel your checks and your cards, and at most you're only liable for the first $50 that was spent between when you claim it was stolen and when you actually report it in. If it's cash, too bad, bye-bye money. I think it's the safety factor that a lot of people think of, at least in the urban areas.

[mugen]

Yeah. I said debit card didn't I? :P

he asked about checks... And they work the same way... Or atleast I think they do.
I don't know about America, but here we have to pay interest after using cheques or creditcards.

[MNJetter]

Wow, a lot of people managed to post while I was writing. That's what I get for being long-winded...heh.

[Jiant Flying Panda]

I don't know about America, but here we have to pay interest after using cheques or creditcards.

Ahhh, I see confusion.

Well here we don't. Well at least at my bank I don't have to pay interest after using a check/debit card.

But then again... The banker that made the account for me asked if I was a student. I told her yes and she said she was going to make things "easier" for me..... So yeah...

[JustTooCrazy]

I don't know about America, but here we have to pay interest after using cheques or creditcards.
You probably misunderstand how creditcards work. Lets say you pay for something with your credit card(ex. grocercies) if you pay back all the money which you charged when you get your bill you dont get charged any interest. Now if you aren't very bright and you spend more money then you know you can repay then you start getting charged interest.


http://www.themint.org/owing/advantages.php

Also since credit cards are here, stores which accept them are charged something like 3% to accept the cards. Because of this the store raises their prices to make up for this. Credit cards have things such as rewards and cash back which comes from that 3%. If you dont use a credit card you arent getting as much for your money.

[mugen]

ah i guess i was misinformed. But I still don't think using a creditcard is very wise because you can easilly build up a debt. Debitcards here can also build up debts, but debitcards here (The Netherlands) can be limited if you want them to be limited.

[Trump]

Yeah, most credit cards in the US don't charge interest until the end of the month. I charge almost everything to my credit card and pay it all off every month. It actually costs me less because the credit card gives me money back for using it (like 0.5% or something, but whatever). It is far more convenient than carrying cash, and I never... EVER get pennies for change using my credit card! :)

[General_Admission]

I don't know about America, but here we have to pay interest after using cheques or creditcards.

The stores pay the interest for you...in a way. For the security of a big company paying their bill, rather than the individual people, they pay a small percentage of the purchase to the credit card company. For example, Walmart might pay %0.5 while a mom and pop store might pay %3.0. Usually credit card companies will also give benefits and such to the stores so that they will accept their cards. That's why some places only accept certain cards.

Another thing, always just have 1 credit card. Having more than 1 can hurt your credit score.

I use my debit card though which is actually called a check card. Nothing like a long pin number for security. :o

I also have a buffer on my bank account where if I run out of money, money will be automatically transfered from my parent's account to mine w/o a fee.

[JustTooCrazy]

Credit cards also give you protection. Lets say you buy something online and you never get what you ordered, you can call up the credit card company and tell them to cancel whatever payment and file a dispute. The credit card company will handle it with the store. If you paid with money(money order) you would be screwed cause you they would have your money and you can't do anything about it.

[paul]

I dunno, in Canadian history, its the introduction of deficit financing that leads to this.
Me, I just use it because its easy, online, offline, I pay for it even before the bill arrives online anyway, so its nothing.

[Angelyne]

There are a lot of people who abuse credit cards, but there are some good reasons to have them:

I got my first credit card while I was still a teen so that I could establish a line of (good) credit history. My good credit history has helped me get approved for certain loans and leases. If you use your credit card responsibly, it can really help you out in the long run.

Also, some credit cards here have deals attached to them. My father gets free internet access based on how much he spends on his credit card (which goes towards bills/necessities). He pays off the bill in full each month, doesn't have to pay interest, and still gets free internet. Again, really nice as long as you use the card responsibly.

Personally, I prefer using cash. I only use my credit card for textbooks, and anything I order online.

[Citizen]

Americans use checks and debit cards to draw on the money they have in the bank. It's damn near the same as cash. Credit cards are for when you really want or need something right away. Credit cards are also the preferred (and sometimes only) form of payment in many situations. Credit cards are quick, easy to use, and can get you out of a jam. When not abused, a credit card is better than cash.

[Ozero]

I'm still kinda stunned how long it took the US to catch onto demit cards.. When i was of an age to be whippin around my own debit card, (as did pretty much everyone I knew), i was FLOORED to go shopping in the US, and have people look at me like I was from mars when i handed em my debit card.

"Oops, sorry sir, this is your bank card, not a credit card."

"Yeah, I know, i was gonna interact it."

".... um...?"

"huh....? You know, debit...?"

"debit?"

"Did... um... huh?"

seems like realtively recent that I've been hearing anything out of the US implying they're into the debit thing now...

I've heard it has to do with that fact that the us has so many different kinds of banks, and they were a pain to network together and get to co-operate...

meh...

[Firefly]

What Citizen said. Debit Cards and Checks are the same as cash. (Personally, I think checks are a waste of time, unless you're sending money through the mail or paying bills). Credit cards are awesome when used *smartly*. It helps you build credit so you can get a phone/place to live/a car/etc. and also is good for emergen. in case you run out of gas, are starving, etc. But of course, many people end up running wild and get into debt because they spent 500 dollars at the mall.

[Rogue_7]

Yeah, I used my credit card for almost everything. It was great! Just pay it all off at the end of the month and no problems. It provided a few nice benfits.

1) Cash Back, not much, like 1 or 2%, but thats still money I wouldn't have had otherwise.

2) Convinence- No worrying about ATMs or if I have the cash, just swipe the card.

3) A record- The statements actually pretty useful, because there you have all your expenses for the month. How many times did I buy gas? How much did I spend on DVD's? How much on Chipotle? It was very illuminating some months.

but for sure, the key is pay it off. Pay it off at the end of every month, don't let the debt build. Don't pay interest.

[harper]

Rogue_7 just said pretty much what I was going to say. I've had two credit cards for over 15 years. I use my Discover card a lot so that I don't have to carry a lot of cash and replenish it by visiting an atm or bank. I also get cash back. I have a Mastercard from my credit union in case some place doesn't take Discover.

I've never had a late fee so it's sort of like a no interest loan. I know a few people that have lived beyond their means and just made minimum payments while building a lot of debt, but I pay off my bill every month without any problems. I just send them a check. I've thought about switching to e-payments, but stil send in checks for about 5 bills each month.

[akitaka]

many people end up running wild and get into debt because they spent 500 dollars at the mall.
^the reason as to why I wouldn't mind burning a few on-campus advertisers. They even KNOW how spend-stupid undergrads can get. One of my co-workers came in last week because she had accumelated $2000 in credit debt; not much compared to some, but enough to have her work here.

[FOBulous]

Aside for the convenience of never having to carry that much cash my credit cards earn miles which I'm using to go on a trip to Tokyo and Kyoto next month. So it's kind of like a free trip.

[otro34]

The principal thing is that a credit card represents money you probably don't have (yet) and you can use it before you get it. Of course, as many said before me, the most important thing is control... you gotta know where your limit is, not because a bank gives you a 5000 dollars line of credit it means that you can spend it all! O_o...

There was i time, i remember, a long ago where my mom had some troubles paying the loan on the house and she used her credit cards to play with the bills. It was amazing how she could just move the debt around XD... until everthing was fine again and then she paid it all at once. Credit cards are a big help too, specially here in Peru, if i want to buy something on amazon the only thing i can use is a credit card... and, if i travel it's like carrying cash XD...

[Kaji]

I don't have an ATM for my bank readily available when I'm away at school, so I have all checks and such sent to my parents so they can deposit them in my account, and then pay my credit card off as I make payments on it (sometimes quite literally after the transaction hits). That allows me to conserve the cash on hand (for those rare cases where people don't accept credit), and prevents the need to take it to the grocery store to get it cashed and losing a percentage of it to them for the privledge. Also, as mentioned above, it means you don't lose all your money when you lose your wallet.

That aside, using cash a lot results in acquiring a lot of change. Here in America it's no big deal, just throw the coins in the jar for a rainy day. In Japan I was constantly throwing my 1 and 5 yen coins into the Ronald McDonald House jar because I needed to clear some space in my pocket since the smallest denomination they have is equal to about $10...

[Roxie]

who do Americans use cheques so often?

We use checks. Which are a direct debit from your bank account. It's not borrowing, it's a cash subsittute.

I have two credit cards, but they're for clothing stores. (Meaning, i can't use them anywhere else) Cause I might not have the money to get what I need/want at the time. However, I pay it back before they put any interest on it (or very little.) I usually pay the whole thing off with my next check. I never spend more than $100-$120 at a time on my credit card.

[codenamewizard]

Many debit cards also have a Visa insignia and can be used for debit or credit. Using credit cards for "buy now pay much much later" is an American thing....but one you grow out of quickly enough (at least most people i know).

As you get older the idea of carrying debt from month to month is enough to make you sick. I've 86ed all my credit cards...(except one for emergencies)...and my wife and i use the bank card for all purchases.

[tekkan]

You get your credit card stolen. You lose nothing.

You get cash stolen, you probably arn't getting it back.

I much prefer creditcards. Its just so much easier to use and even if you through away your recipts you still have a record of your pruchases online or at the end of the month through your bill.

[hidethedrone]

Credit is the way to go. However, you do need to actually pay interest to build credit. If you charge $30 and pay $30 on your next bill, the transaction is "invisible" to a creditors eyes. You need to pay $15, the next $15+ interest to build credit.

After doing so, they'll raise your limit and all that jazz. Paying so little will drive your creditors crazy, even prepaying (sending a payment in with your balance at $0) will make them raise your limit.

The higher the limit with the lower balances raises your credit score.

With a high credit score, you can make major purchases (cars, houses) with much better interest rates.


Of course cold hard cash (by way of check or debit card) is optimal, but few people have 500,000-1,000,000 in their bank account, and if you do have access to that kind of hard money (soft money being credit) more freaking power to you. I'm on my long slow quest for that kind of assest.

[Trump]

Credit is the way to go. However, you do need to actually pay interest to build credit. If you charge $30 and pay $30 on your next bill, the transaction is "invisible" to a creditors eyes. You need to pay $15, the next $15+ interest to build credit.

After doing so, they'll raise your limit and all that jazz. Paying so little will drive your creditors crazy, even prepaying (sending a payment in with your balance at $0) will make them raise your limit.

The higher the limit with the lower balances raises your credit score.

...



Misinformation, plain and simple. None of that is true.

[conners]

I have a burning question: who do Americans use creditcards and cheques so often?
To me as a Dutchie it doesn't make much sense. Why would you "borrow" money if you have to pay it back in a month with intrest anyway? Why not just wait a month and use cash or what-ya-call-it-in-english, it's called a pincard(pinpas) in Dutch. Is there some tax benefit i don't know about? Is it the American culture of buy now pay later? I don't understand so please enlighten me.


That is only one of the many uses of credit cards. For every one thousand dollars I put on my credit card I get a gift card for $20 dollars at LL Bean. I never put anything I can't afford on my card. Just gas, food and stuff like that. Then at the end of the month I send the nice people at Visa a check and every so often they send me free money. The card costs me nothing and I never get interest on it, so aside from the 37 cent stamp to send them a check it is all free.

[Trump]

I pay my bills online, I save the 37 cents :)

[Jon885]

Well I just use a debit card if I have to, but I usually use cash.

[Kang]

Looks like there are a lot of young people on this forum. Care more about spending on material goods and cash in hand than anything else.

Anyway, I want to buy my own house eventually. But I'm not wealthy, so I obviously won't be paying $200k+ in cash. Using a credit card lets me build up my credit score so I can eventually apply for a home loan.

No credit --> just as useless as bad credit.

So honestly, why not use a credit card? You don't get charged interest as long as you pay your balance in full each month anyway. Only reason the credit cards company make money anyway is because of the Americans that can't control themselves and spend themselves into debt. If you're smart, then an ounce of self control is all you need though.

I have to pay my phone bill anyway right? I do everything online so it only takes five seconds anyway. Charge the bill to my credit card, transfer funds over from my bank account/debit card --> free credit score improvement + whatever perks my card offers too (like airline miles, free gas, etc...).

[mawande]

I have three credit cards right now. One is my Chase Visa, a relic of when I worked at Time-Life, where I signed up for it. I keep it in a secret location in my house.

The other two are from Japan, so to speak.

One I signed up for with Toys R Us, that is my Visa card and nets me discounts when at TRU. One I had to sign up for when I joined a fitness club, this card is promoted by the shopping center next to the club, it's Mastercard. Gives you points and all for shopping there.

I only ever carry one at a time. If I'm expecting to go to TRU, I carry that card. If I'm expecting to go to that shopping center, I carry that card.

Each of these cards deducts money automatically from my bank accounts, so I do keep an eye on how much I'm spending. When buying from Amazon.com I use the US card. When buying from Amazon.co.jp I use the TRU Visa (because that's what I arranged before I got the Mastercard).

[Kash]

Mostly, the reason that credit cards are used widely is based on the principle of "revolving credit line". Try and rent a car or a hotel room on your debit card. Many businesses require an open line of credit because they want a avenue of recourse if you, for example, trash the hotel room or don't return the car. Likewise, purchasing a airline ticket isn't impossible to do with cash, but airlines and TSA like to see the added security of a card as it adds an additional layer of proof of identity.

I use my debit card if I'm buying groceries or fuel and whatnot, but most all my bills are paid on plastic. Why? AirMiles. I'm an AirMile whore. My morgage is automatically charged to my credit card. I use online bill paying for as many of my bills as I can. At the end of the month, I write one check, maybe two, three tops. On the other hand, I fly at least once a month. I usually purchase a coach fair and then at the airport ticket counter upgrade to first class using my airmiles. This is very economical for the added benifit of riding up front. The painless, and intrest free, benifit of charging my morgage to my credit card probably allows me to fly first class three or four times a year. The rest of the bills I charge more than make up for the upgrades to my flights. I actually run a surplus of AirMiles. Every now and again (as in every few years) I wind up with a couple free tickets to some nice vacation spot.

Managing a credit card can have awesome benifits. Likewise it can be devestating if used improperly. Not unlike alcohol, or a high performace car. Simply stated there are plenty of people that shouldn't drive, have kids or be allowed a credit card. For those of us with above room temperature IQ's, using plastic is an excellent resource.

[Trump]

There are other ways to build credit too. Rent an apartment and pay your bills on time. Or buy a car, there is always someone willing to loan you money for those. Contrary to popular belief, having too high a limit on your credit cards can be bad for your credit score. Lenders get jumpy if it looks like you could just bury yourself in debt if you wanted to.

[Overkongen]

Once, I went into an american Subway, to get a sub, and then I handed the lady my debit card, and she was like "Dude, like, I can't like, use this card, I need cash." I told her I didn't have any, and she gave me my food for free.

[Kash]

Once, I went into an american Subway, to get a sub, and then I handed the lady my debit card, and she was like "Dude, like, I can't like, use this card, I need cash." I told her I didn't have any, and she gave me my food for free.

In that strange spot inbetween the Atlantic and Pacific, if your debit card doesn't say "visa" or "mastercard", it ain't going to do you any good unless you have your bank's ATM in front of you. Or, if your bank has an agreement with another bank to accept their debit card.

In the U.S., A bank debit card will work in an extended or local group of ATM's. However, if your debit card has that little hologram that says Visa or MC, then it's just like a credit card as far as stores go. Most banks in the US dont even bother issuing ATM cards anymore. Granted in small countries, with a limited number of banks it would be easy to arrange cooperative agreements to honor eachothers propriarity bank cards. I swear, there's probably a quarter million different banks in this country and the most logical way of arranging cooperative credit is to use an omnibus company like Visa or MC.

[Overkongen]

Nono, it was a visa. It's just that the US is such a backwards country, and it isn't possible to use you card everywhere you go, or at least, it wasn't five years ago, when I visited. (No I don't really consider the US backwards)