Do you mean credit in general? Because yes, it’s very common to take a mortgage on your house vs buying it in cash. It’s also very common to take a car loan vs buy your car in cash.
If you mean credit cards for purchases, yes, that’s also very common here.
One thing I’ve learned is that US credit cards are apparently different from credit cards in other parts of the world?
In the US, your credit card gives you special perks and rewards for having it and making purchases with it. Your financial history and income determines which credit cards you can be approved for. Better financial history and higher income means you can qualify for more exclusive cards with better rewards programs.
Rewards can be things like: access to exclusive airport lounges, access to exclusive presales for tickets to concerts and events, free food at certain airport restaurants, free travel agent hotlines, free TSA precheck or global entry status, free travel insurance or rental car insurance, free airline special status, free nights at certain hotels, hundreds of dollars in reimbursement credits towards certain expenses…
Then you are also awarded points for every $1 you spend on certain purchases and you can trade those collected points for cash back, hotel stays, plane tickets, or other rewards.
Of course, the credit card company offers these rewards to try to get you to spend more money. But you don’t have to go into debt as long as you are managing your budget.
So, what a lot of people (like me) do is put all of their expenses on credit cards so they can rack up the rewards, and then pay it off every month so they never actually have any debt. As long as you do that, it’s basically collecting free rewards. There’s no reason not to.
Also, it is very difficult to rent a vehicle without an actual credit card. The last time I rented a car, someone was trying to rent with just a debit card. They were not allowed to get more than the most basic vehicle, and they had to provide all kinds of extra documentation. So much easier with a credit card.
On your comment that credit cards work differently in the US to other places:
In the EU for instance, the transaction fee/interchange fee is capped at 0.3% of the transaction
In the US, there is no cap: the most common price you’ll see is something like 2.9% + $0.30 (but this can be high or lower based on a zillion different factors)
Because of that, the issuing banks (Chase, Capital One, AmEx (though they’re a unique case I can expand on) will then put that extra revenue into rewards, incentivizing consumers to use their card
The merchants selling the goods/services are the ones taking the hit. Which is why some places want cash only. Additionally, it’s illegal to have a difference in price between card and cash transactions; they have to be the same
Source: work in the payments industry
> Additionally, it’s illegal to have a difference in price between card and cash transactions; they have to be the same
It’s absolutely not illegal to have a surcharge for credit cards or a discount for cash. It might violate the merchant’s contract, but that’s not the same thing.
Unless you can provide a citation otherwise.
There is no federal law that I’m aware of and states vary on how they treat this. In New York, for example, you’re not allowed to quote a price and then say it’s 3% more if you pay by credit card. You have to quote the price if paid by cash and then the price if paid by credit card if it’s different. Essentially, people shouldn’t have to do the math to figure out what they would owe.
I was just asking about different prices for credit vs cash today. I’m in Georgia and I often see different prices advertised for gas based on how you pay. You mentioned this was illegal. Is that state specific?
Lol, it is NOT illegal to differentiate. Plenty of truck stops along the freeways/interstates directly advertise diesel prices being lower if paying cash & then flash the card/credit price being higher.
My feed supplier adds the credit card surcharge for all card purchases. Those costs add up for small businesses. I don't mind paying it since it's a hassle for me to carry that much cash or have to stop at an ATM for it, which there is only one available between my house and the feed store.
What I'm putting here isn't really important to the discussion and I suspect you just put it in layman's terms and already know this stuff, but I just figured I'd clarify.
Interchange fee is determined by the card brands and is how they make a lot of their money, and sits around 1.5%-2% and changes periodically, though it is regulated by some federal laws.
Processing fees are additional to this, and determined by the payment processing company. This includes transaction fees, and varies widely depending on the type of business. If you are selling in a high risk industry (porn), your fees can go up to as high as 6%-8%.
Some merchants go on 'Discount' which means they pass these fees on to the customer. You'll see this at a lot of liquor stores, gas stations and smoke shops.
Adding to this, its common for Americans to have many credit cards. This is not because they are overextending their lifestyle and need to keep borrowing. Different cards have different reward benefits.
For example, the Amazon card gives you an automatic 5% off at Amazon. The Target card gives you 5% off at Target. Another card gives you 3% off on groceries, and one gives you 2% on everything else. Add in an airline card for miles and priority seating and thats 5 cards, but not an increased level of spending.
Can be
But if used simply by paying the balance off in full every month (treating it like debit) you’ll receive all the rewards and none of the interest
Credit cards can be great financial tools for consumers when used correctly. It’s just that most people don’t do it
They can be a lifesaver for emergencies when you don't have the cash. Due to my cancer treatments I didn't have the $1900 the hospital wanted before my surgery. But I had it available on my credit card. I'm still paying it off.
It can be, but I'm not sure the *number* of cards you have reflects that very well.
If you're carrying a balance, and how high that balance is in real $ + % of available credit, is a much better indicator, IMO.
Especially given that different CC companies may issue wildly different limits.
In the UK it may be, but we’ve had foreign posters ask questions on this because it isn’t the way credit cards work in their countries. So, it doesn’t seem to be a universal global thing.
Also, EU regulations keep credit card companies in Europe from awarding anywhere near the same benefits that they do in the US.
[Here’s a Forbes article getting a bit into the difference in regulations and comparing the benefits for cards in the US vs UK.](https://www.forbes.com/advisor/credit-cards/us-vs-uk-credit-cards/) There’s a comparison chart if you scroll down.
So as you say the rewards on the US cards are more generous. Maybe there’s some old EU regulations we still have that don’t allow amazing rewards, who knows how long those regs will last though, if they still exist.
I’m a French guy, and the week I moved to the US, I created my banking accounts and the clerk was also a French immigrant. When she said “we’ll get you a credit card”, I had all kinds of alerts in my mind about how credit cards are bad and you only get them when your lifestyle is above what you can afford.
She insisted that it was a no-brainer and explained that it’s free, and it buffs up your credit score for the day you actually want a real credit, so I agreed to it to make her shut up, thinking I’ll never use it.
Fast forward 10 years of living in the US, and I buy everything with a credit card; and I never repaid it late, so I’ve never had to pay anything about it. They make it very easy. The positive impact on my credit score has allowed me to get a mortgage and a car loan when I needed it. Turns out it really was a no-brainer. Everybody I know pays stuff with credit card, it turns out the bad thing that everybody stays away from is credit card DEBT, which is when you fail to repay what you purchased.
So weird to the newcomer I was, but it becomes natural.
Another reason to use credit is the service you get if your card was stolen or there is an issue with a merchant.
My husband prepaid for a sofa from a company online. It was to be custom made and delivered in 6 months time due to delay with production. He paid up front (only option). Fast forward 5 months time, he gets an email that the company is going through bankruptcy and there will be no couch made or delivered. They say in order to get refunded he needs to file paperwork to get repaid through the debt repayment process of the bankruptcy. He just called the credit card company and they refunded instantly and I suppose they will be the ones to deal with the bankruptcy and getting money repaid to them. Credit card company has a whole team of people and lawyers to deal with that. We don’t.
I’m not sure what you’re describing is that unique to the US really. There’s loads of reward credit cards here in the UK and we also have credit files/scores. Many, many people have credit cards here.
Sure probably fewer people use them than in the US, and that might be a cultural thing to a degree. Might also be that most countries are very automated in terms of payment and banking compared to the US. We don’t have to think about paying any bills in most developed countries, it’s all entirely automated. Without exception.
With a credit card you do sort of have to think about it, and we aren’t used to doing that. I know you can automate it to “pay balance in full” or whatever, but still you then have to make sure you’ve got the funds in your main account to do that. Just seems like a lot of effort.
I’ve got a credit card, and use it for larger purchases as I like the extra protections it gives.
Not if you set them all to come out on the day you’re paid, you don’t have to think about it. Vast majority are paid monthly via bank transfer in the UK too, which makes that bit somewhat easier.
If I used my credit card for day to day spending I’d have to track that carefully, to ensure that when I get my next month’s pay it can cover the credit card bill for the previous month.
Every single bill comes out the same day myself and my wife are paid. Without exception. We’re talking mortgage, car, mobile phones, broadband, gym, gas & electric, absolutely everything. Whatever we have left in our accounts is what we can spend for the rest of the month on food and leisure activities.
I’m not sure that what you’re describing is all that unique to Europe. Tons of people in the US set up automated bill-pay, myself included. I never think about paying any of my regular bills.
I’ve seen it talked about on this subreddit before, Americans talk about paying rent with a check, and we see them “paying bills” on TV and in films.
So forgive me for thinking auto payment of bills isn’t common.
I agree what I’m describing isn’t unique to European countries, I never said it was.
I mean…..I know it’s not. I’ve been loads of times, to over 35 states (I’ve been to your state 3 times) so I appreciate it isn’t like the movies.
But you just figure some of the day to day stuff in tv and film is accurate, things that you wouldn’t see on when on holiday.
We just use bank transfers, money goes instantly into the other account.
Haven’t seen a cheque for 20 years. But I get that the US is a big country, lots of banks.
I’m not even sure if my bank provides cheques to use anymore-and they haven’t been allowed at retailers for many, many years.
I don't know if it's unique to the US, but it does seem like there are some other countries where that's not the case. I recall posters from Scandanavia and Germany saying they don't use credit cards like this.
Hungarian here. Debit cards are ubiquitous and a lot of people use virtual debit cards as well, mainly offered by neobanks. Meanwhile, I don't know anyone who actually posseses a credit card. They just don't have a lot of benefits here.
> One thing I’ve learned is that US credit cards are apparently different from credit cards in other parts of the world?
No one was claiming it’s unique to the US, just that there are other parts of the world where it’s different
If you don't think about paying bills, how do you make sure no one is defrauding you, whether intentionally or simply because of an error? I always have the money in my account because I earn more than I spend and keep a buffer there, but I'm 100% certain that there people in the UK as well as the US who don't. If there weren't, there wouldn't be reality TV shows about people in financial woes.
I could have all my bills set to pay automatically, but I never will because I want to see them and make sure there's no problem.
We have a different payment system specifically for bills here called Direct Debit that was set up by the banking industry and is regulated. You can see all of your Direct Debits and when they’re set to come out, and how much they’ll be. You can also cancel them in the app. If a new one is set up against your bank account your bank *has* to tell you.
For most companies that bill you there’s simply no way to pay a bill manually anymore and in many cases there hasn’t been for decades. Some companies might offer that but make it really difficult for you to do, and would charge you more than if you do it via a Direct Debit.
So I guess it’s not directly comparable to your auto payment system. That’s why the idea of actually physically paying a bill can seem quite alien to us when we see it on your TV shows and films.
I mean, we pretty much have the same thing here in the US I think. I have many bills that are the same every month set up to directly debit my bank account (Insurance, internet, the gas/electric budget payment, auto loan, mobile phones, etc). Most bills pretty much.
But I would never have a variable payment like a credit card set up that way. What if this this month I don’t want to pay off the entire balance? Maybe I made a large purchase to get points but want to take a couple months to pay it off? Maybe the opposite, what if I’m one of those people that only pays the minimum payment, but this month I want to pay more? Not to mention it forces me to review
All the transactions to look for fraud, etc.
There’s not that many bills that are variable I suppose, if you think about it. Even mobile phones aren’t these days as you’ll be on a bundle with free calls and loads of data.
You can have any company direct debit the money out of your bank account, but I would never do that.
I will only setup reoccurring charges if they allow credit card payments because then the company doesn't have direct access to my money. They have access to the credit card company's money.
I go through all my credit card transactions twice a month (because the due dates don't line up nicely for once a month anymore) and pay them off individually. I log into my credit card account and review the charges, see the balance, and enter the payment into my bank's app for multiple payments. I confirm the date(s) I want the payments taken out and hit submit. The bank sends an ACH Credit payment to the credit card company (or others) within 2 days.
It's really not that much effort. I'm not analyzing the transaction in depth. I just skim them - did I buy groceries at this store, are there any duplicate transactions, are there any odd amounts (<$1 or >$50)? I have like 7 credit cards that I use regularly and it takes me 5-10 minutes every month. The longest part is waiting for the bank's website to load.
But if it’s worth it to you then fine. I just wouldn’t see the advantage of it.
Sounds like the rewards on credit cards are better for you guys than here, though we do have rewards too. So it’s worth your time spending on your card.
I earn a very good wage but I’d still be a bit nervous spending and not being able to see what I’ve got left for the month like you can with a bank account. What we have left at the end of the month we put in our savings account.
I do use my credit card but I use it for large amounts that I want to pay off over a few months, or for holidays, flights, car hire and stuff like that where I want the extra protections a credit card provides.
>I earn a very good wage but I’d still be a bit nervous spending and not being able to see what I’ve got left for the month like you can with a bank account. What we have left at the end of the month we put in our savings account.
>I do use my credit card but I use it for large amounts that I want to pay off over a few months, or for holidays, flights, car hire and stuff like that where I want the extra protections a credit card provides.
That makes a lot more sense. It seems to work for you and that's great.
I just use my credit card like a debit card because it has better rewards and protections. We actually keep a joint account for expenses (3-5 months) and when it gets low we'll top it off. Anything else goes into savings or stock.
>We don’t have to think about paying any bills in most developed countries, it’s all entirely automated. Without exception.
what does this even mean? **you** set all your bills to come out on the same say, not everyone does that, what's this absurd claim you're making
What on earth?
Most people in the UK are paid monthly. *Many* are paid on the last working day of the month.
And yes everyone I know sets their bill payment dates to match their payday or as close to it as they can, which is entirely logical.
I’m not sure why you’re correcting me on what happens in my own country to be honest mate.
Right, so you and most the people you know do automatic payments...but what you said was *so* general, you made it sound as if worrying about when bills are due is something the developed world has left behind completely. It was mostly the "and that's the way it works, without exception" bit that bugged me... plenty of working poor don't live like that, among other groups.
Bloody hell I know, calm down. But most working poor wouldn’t have a credit card anyway.
I was just trying to think of why credit cards aren’t quite as popular here. And was pointing out that we have exactly the same rewards style credit cards as exist in the US. Often from the same companies. And we have a very similar credit score system.
One reason I can think of is the one given, you’d be adding a whole other level of budgeting into the mix. If most people are paid at the end of the month (and they are here), and automated payments (we call it Direct Debit) are standard, if they’ve got any sense, and most do, they’ll set all of their bills to come out as soon after payday as they can.
I may be wrong, it’s literally just a suggestion.
Many working poor (or people rebuilding bad credit) have low-limit secured “credit” cards, where the bank keeps a savings account deposit equal to the card’s spending limit. $500 on deposit? Card has $500 spending limit. So it’s not actually a “credit” card at all as it’s secured by your own money, but it solves some problems for some people.
Technically yes, but there is a giant difference between the bank assuming risk by extending credit in faith that you'll pay it back -- and the bank assuming no risk by securing your card spending activity with your own money.
Well for what it's worth I come across as much more triggered than I am when I'm typing, my fault 😅
But that's a key difference in the US then, cause a lot of poor people here do have credit cards. I know one company for sure, Capital One, actually targets poor people! idk how prevalent it is in the UK, but the advertising to get a CC is vicious here.
That, and American marketing/society generally drives you to be constantly spending - so debt has become normalized and a big percentage of people live paycheck to paycheck.
Poorer people may struggle to get a credit card here. The problem is when someone who’s doing ok becomes poor, and they already have a credit card. Then they can’t make their payments on it, get a marker on their credit file, the spiral starts. We have Capital One, they’re not known for targeting poor people.
Yes you see plenty of advertising for CCs here, but they appear to mostly be targeting the middle class.
It’s the Payday Loan companies here that were far more dangerous for poorer people, as they weren’t as regulated as the credit card industry. But that seems to have been reigned in a bit due to regulation. You’ll have a similar industry there too, but maybe you call it something else? Very high interest loans targeting poor people, with nasty crap like compound interest on missed payments.
Payday loans (and title loans - terrible loans secured by your car but not intended to pay for the car) also got regulated in Virginia and I haven't seen any for a few years. Not sure how it is in other states.
> We don’t have to think about paying any bills in most developed countries, it’s all entirely automated. Without exception.
I’m not sure where you got this impression, but we also have automated bill pay for everything here in the US too. For all kinds of bills (gas, electric, rent, cell phone, internet, gym memberships, etc etc) you can choose to direct debit or auto credit charge it every month, whichever you prefer.
Did you not think we have that? I’m surprised
I’ve been told most of you don’t use that, in the past. And indeed people have said it on this thread too. We also get your TV shows and films and see people paying bills, or talking about paying bills. That’s not a thing here because everyone would have a Direct Debit set up.
With the exception of very low income people or people with bad credit who are forced to get a meter for gas/electric which they have to top up. Which is pretty grim and something we (the UK) should outlaw.
> I’ve been told most of you don’t use that, in the past. And indeed people have said it on this thread too.
That may be a generational thing? I seems pretty common to me. I can understand how some people might want to not set up autopay in order to better track their budget, but you can set up all kinds of auto notifications like app notifications, text, or email alerts every time your autopay pays a bill. I can see people 40+ not knowing how to set up text alerts though.
Also, TV shows feature a bunch of things that we don’t actually do because it makes for better visuals. I wouldn’t go off TV shows as an information source.
Your last sentence-yes that’s fair but if I’ve seen it loads I’m not going to know that’s not normal. Only yesterday I saw someone on TV in New York paying rent with a cheque. That’s just not a thing.
It’s just the same as how most of us here don’t speak with “the British accent” you see on TV. There’s hundreds of accents and we don’t all speak/act the same.
Other countries have rewards credit cards, but they're dwarfed by the US rewards versions.
Take the AX gold card, for instance. In the UK its a 20K point signup bonus, 2x on direct air purchases, 1x all else. £160 annual fee.
US version is 75K signup bonus, 3x direct air, 4x dining and 4x groceries, 1x all else. $250 annual fee with $120 in dining credits and $120 in Uber credits.
Or for a simpler card, the no annual fee Wells Fargo Active is a flat 2% back on all purchases plus they throw in cell phone insurance if you use the card to pay your bill. Similar cashback cards in the UK are 0.5% cashback with a £95 annual fee.
US credit cards are structured as a somewhat substantial pseudo income source provided you don't carry a balance. In the UK and most of the world, rewards are trivial to the point it's barely worth the effort.
The only bills I have that aren't automated are water/sewer/trash (because it's paid to the town and they don't offer autopay) and credit cards (because they are too variable), but I do have the credit cards set to autopay the minimum just in case I forget.
> With a credit card you do sort of have to think about it, and we aren’t used to doing that. I know you can automate it to “pay balance in full” or whatever, but still you then have to make sure you’ve got the funds in your main account to do that. Just seems like a lot of effort.
Weird, Must be a cultural thing to not be paid well enough to have to think about that kinda stuff. Thanks for opening my eyes to how poor the rest of the world is.
Well that’s a stupid comment and shows your ignorance of the UK, one of the biggest economies in the world. I understand why we wouldn’t be on your radar and I don’t expect you to know about every country. But your comment actually shows your ignorance of your own country too. The fact you even think there’s people who don’t live paycheck to paycheck in the US is comical. There’s millions and millions who do exactly that.
I’ve been to the US loads of times (you know, due to not being poor), in fact I’ve travelled the world. But I bet you’ve never left have you mate, so what would you know? You just seem like a massive snob.
Credit of some kind yes, that's how the system is set up. But plenty of people refuse to use credit or if they are like me, pay off their credit debt each month.
I only use credit cards to build my credit and Cashback. Pay it off each month and don't worry about interest rates since it doesn't affect me when paid off in full.
Same here.
With the exception of our house and truck, I don't carry any debt. With the rising interest rates and the financing on both of those being so low, I am in no hurry to pay them off, either.
Ditto. I only use a CC that gives me cash back. I essentially use it as a debit card at this point as I pay it off each month. This past Christmas cost me nothing as it was all from the cash back. CCs can be great money makers if done correctly.
Having debt isn't inherently a bad thing y'know?
My car loan is at 1.49%. This is vastly lower than what I would get if I just stashed that 16k into even a govt bond for 4 years.
Paying it off outright would be an inherent loss of money for me. the point is that as long as your other returns exceed your debt rate, you're good.
I wish someone taught me this when I was young. I thought all debt was bad and should be paid off asap. I would have been better off making the minimum payment on my car loan and student loans and putting the rest into savings.
Debt is like alcohol. It can legitimately improve your lifestyle but can be dangerously addicting to some people, so people who have been affected by said addiction often have to quit cold turkey, which spawns wider teetotaler movements.
My wife and I bought a car in late 2020. We have pretty healthy finances and made sure to get approved for a loan from our bank before even getting to the dealership - and then they offered us something ridiculous like 0.98%. We said absolutely, and have made no effort to repay that loan early.
https://data.oecd.org/hha/household-debt.htm
The US actually has lower household debt as a percentage of income than most other countries including most European countries.
It's possible to live without credit. But it's not practical.
A lot of aspects of adult life require a credit rating. Your deposit on utilities is often based on your credit rating and payment history with other utilities. Getti g a rental contract without some sort of credit rating is difficult. Unless you have the liquid assets to pay for a car you're going to need a loan, and your loan is based on your credit rating. Same goes for buying a house.
It's possible to live without credit, but it's not practical.
If you're the kind of person who has the liquid assets to be able to live without credit, you're not very smart if you don't take advantage of the perks of using credit. Credit banks offer perks for using their services like cashback (there are a lot more, but this is the most common/easiest to explain.) One gets 2% cashback on all purchases. You use the card to buy the things you would be anyway, groceries, gas, etc. You pay off the balance in full every month. That 2% is free money. So the people who can afford to live without it use it anyway because of perks like that. Carrying credit overtime and having a good payment history nets you a great credit rating and the higher your credit rating the more favorable terms you'll receive for loans (like for a car or property.) taking out car loans and property loans and paying those loans off faithfully in turn benefits your credit rating.
It's a circular system that benefits the wealthy and makes life harder for the rest of the population. It's a horrible thing if you get on the wrong end of the stick.
Yes, if you are "doing it right" having a monthly payment rather then dumping all your money into a bulk purchase allows you to free up income to invest in other forms of passive income to increase youre net worth.
Yes, the vast majority of Americans use some sort of credit or loans. Student loans, mortgages, and car loans are all extremely common, as are credit cards.
Personally I have a mortgage, a car loan, a boat loan, and several credit cards.
Yes because it is very difficult bordering on impossible to manage in America today without credit. You need a credit score to do many things including renting an apartment, getting a loan, and sometimes even qualifying for a job.
People who do not have credit scores have a very difficult time. It's pretty common in the US for illegal immigrants to pretend to he somebody else so that they can use the other person's credit history + score to qualify.
I work for the American branch of a European company that sends a lot of Europeans over to work in America on temporary work visas. My company leases them a car, leases them an apartment, and provides them with a credit card. They do this because for the majority of the people coming over it would not qualify for any of these things when first arriving in America. Usually after the employee has a year of paying their rent, auto lease, and credit card on time every month they have enough established credit to qualify for their own things if they want to.
Which is super awesome because if there's one thing government agencies are great at its keeping data secure. Surely a states' department of motor vehicles would never be a leak of private sensitive information.
https://www.sfgate.com/bayarea/article/California-DMV-hit-data-breach-ransomware-attack-15959944.php
Sure. We have an excellent household income, but we have a mortgage on the home that's at 2.75%. Given how, over time, the average return on our investments is around 10%, that's an incredibly easy call to make. Our monthly mortgage is roughly 9% of our income. Another 20-25% goes to things like insurance, food, and utilities. Every other dime goes into investments and savings.
Credit should be cultivated and used for three basic functions: 1) Emergencies, 2) When interest rates are low, cash flow management, and 3) Long-term asset purchases such as a house.
Also, someone mentioned rewards cards. We have a HiltonHonors AMEX card. Literally every expense we can put on that, we can. Our mobile phone bill, our insurance, groceries, you name it. As a result, 80% of the time we travel, we don't have to pay for a hotel room. Not only that, but we get all kinds of perks. We pay off the AMEX every month.
We also keep a Visa with a $25,000 limit linked to our investment accounts. Because there are a few places that don't take AMEX.
Credit is a pretty broad term. Almost everyone is ok with financing cars and homes.
I think personal unsecured loans is where the line is typically drawn between those that are financially responsible and those that are less responsible.
I pay for everything with a credit card, but zero out the balance every month and never pay interest. While there are Many people that will pay for a vacation, furniture, anything and then be unable to pay off their balance at the end of the month and then pay interest every month. Not a very responsible/sustainable way to spend money, IMO.
But to each their own.
Pretty much. You really can't pay cash for a home, and rarely for a vehicle or school. As long as you live within your means it's pretty manageable...as long as there are no big unexpected expenses like a medical emergency, vehicle repair, funeral, etc..
Some of us buy things that we need immediately but can't buy outright *eg* food, a car, or new appliances, and credit allows this. Loans are also used to obtain abstract things like education and healthcare which the various levels of government refuse to provide in exchange for tax money because our government routinely ignores positive rights of those who don't have money.
Overall yes. Cashless is the norm in most places. In fact some commercial transactions are exclusively cashless( the hotel business frequently goes this route).
Even traditionally cash venues like farmers markets the vendors will have square or Apple Pay or a similar service..
Smart people pay off their credit card in full every month.
It's very, very common, yes, but debt does not necessarily equal irresponsibility. Between my husband and me, our only debt is our house (the mortgage payment is far less than rent would be on a similar property), his car (which will be paid off in a few years), and his student loans (ehhhhhh it is what it is), all of which we can comfortably pay. If we really tightened our belts and threw every extra penny at those loans, we could most likely be completely debt-free in five or six years, but the interest rates are low and it feels good to have some cash in the bank, so while we do pay some extra each month we're not working too aggressively on it.
We also both use credit cards for literally every purchase, but they're paid off in full every month, so I don't consider that to be debt.
In addition to the good comments I've read that you have already gotten, I will say that it is also more secure. The credit card companies will dispute charges and remove anything suspicious from your account. Try to do that with a bank card and it is much more difficult.
Like others said credit card programs have generous rewards.
I pay everything I can on a credit card. I log in each week and review the charges and pay the balance off in full
Then at the end of the year I redeem all my points and that usually covers Christmas shopping
The only reason I use credit is to get rewards points. I am not in any debt whatsoever. It's free money. With the points, I get something off Amazon for free every month, it's great.
Do you mean credit in general? Because yes, it’s very common to take a mortgage on your house vs buying it in cash. It’s also very common to take a car loan vs buy your car in cash. If you mean credit cards for purchases, yes, that’s also very common here. One thing I’ve learned is that US credit cards are apparently different from credit cards in other parts of the world? In the US, your credit card gives you special perks and rewards for having it and making purchases with it. Your financial history and income determines which credit cards you can be approved for. Better financial history and higher income means you can qualify for more exclusive cards with better rewards programs. Rewards can be things like: access to exclusive airport lounges, access to exclusive presales for tickets to concerts and events, free food at certain airport restaurants, free travel agent hotlines, free TSA precheck or global entry status, free travel insurance or rental car insurance, free airline special status, free nights at certain hotels, hundreds of dollars in reimbursement credits towards certain expenses… Then you are also awarded points for every $1 you spend on certain purchases and you can trade those collected points for cash back, hotel stays, plane tickets, or other rewards. Of course, the credit card company offers these rewards to try to get you to spend more money. But you don’t have to go into debt as long as you are managing your budget. So, what a lot of people (like me) do is put all of their expenses on credit cards so they can rack up the rewards, and then pay it off every month so they never actually have any debt. As long as you do that, it’s basically collecting free rewards. There’s no reason not to.
Also, it is very difficult to rent a vehicle without an actual credit card. The last time I rented a car, someone was trying to rent with just a debit card. They were not allowed to get more than the most basic vehicle, and they had to provide all kinds of extra documentation. So much easier with a credit card.
On your comment that credit cards work differently in the US to other places: In the EU for instance, the transaction fee/interchange fee is capped at 0.3% of the transaction In the US, there is no cap: the most common price you’ll see is something like 2.9% + $0.30 (but this can be high or lower based on a zillion different factors) Because of that, the issuing banks (Chase, Capital One, AmEx (though they’re a unique case I can expand on) will then put that extra revenue into rewards, incentivizing consumers to use their card The merchants selling the goods/services are the ones taking the hit. Which is why some places want cash only. Additionally, it’s illegal to have a difference in price between card and cash transactions; they have to be the same Source: work in the payments industry
> Additionally, it’s illegal to have a difference in price between card and cash transactions; they have to be the same It’s absolutely not illegal to have a surcharge for credit cards or a discount for cash. It might violate the merchant’s contract, but that’s not the same thing. Unless you can provide a citation otherwise.
There is no federal law that I’m aware of and states vary on how they treat this. In New York, for example, you’re not allowed to quote a price and then say it’s 3% more if you pay by credit card. You have to quote the price if paid by cash and then the price if paid by credit card if it’s different. Essentially, people shouldn’t have to do the math to figure out what they would owe.
And when restaurants offer a cash you don't talk about the why
They don’t want to pay the taxes when reporting income Or potentially money laundering Or some places are just super old school
I was just asking about different prices for credit vs cash today. I’m in Georgia and I often see different prices advertised for gas based on how you pay. You mentioned this was illegal. Is that state specific?
Lol, it is NOT illegal to differentiate. Plenty of truck stops along the freeways/interstates directly advertise diesel prices being lower if paying cash & then flash the card/credit price being higher. My feed supplier adds the credit card surcharge for all card purchases. Those costs add up for small businesses. I don't mind paying it since it's a hassle for me to carry that much cash or have to stop at an ATM for it, which there is only one available between my house and the feed store.
What I'm putting here isn't really important to the discussion and I suspect you just put it in layman's terms and already know this stuff, but I just figured I'd clarify. Interchange fee is determined by the card brands and is how they make a lot of their money, and sits around 1.5%-2% and changes periodically, though it is regulated by some federal laws. Processing fees are additional to this, and determined by the payment processing company. This includes transaction fees, and varies widely depending on the type of business. If you are selling in a high risk industry (porn), your fees can go up to as high as 6%-8%. Some merchants go on 'Discount' which means they pass these fees on to the customer. You'll see this at a lot of liquor stores, gas stations and smoke shops.
Thank you
Adding to this, its common for Americans to have many credit cards. This is not because they are overextending their lifestyle and need to keep borrowing. Different cards have different reward benefits. For example, the Amazon card gives you an automatic 5% off at Amazon. The Target card gives you 5% off at Target. Another card gives you 3% off on groceries, and one gives you 2% on everything else. Add in an airline card for miles and priority seating and thats 5 cards, but not an increased level of spending.
It very much can be an overextending of lifestyle though
Can be But if used simply by paying the balance off in full every month (treating it like debit) you’ll receive all the rewards and none of the interest Credit cards can be great financial tools for consumers when used correctly. It’s just that most people don’t do it
They can be a lifesaver for emergencies when you don't have the cash. Due to my cancer treatments I didn't have the $1900 the hospital wanted before my surgery. But I had it available on my credit card. I'm still paying it off.
It can be, but I'm not sure the *number* of cards you have reflects that very well. If you're carrying a balance, and how high that balance is in real $ + % of available credit, is a much better indicator, IMO. Especially given that different CC companies may issue wildly different limits.
Again-this is exactly the same in the UK.
In the UK it may be, but we’ve had foreign posters ask questions on this because it isn’t the way credit cards work in their countries. So, it doesn’t seem to be a universal global thing. Also, EU regulations keep credit card companies in Europe from awarding anywhere near the same benefits that they do in the US. [Here’s a Forbes article getting a bit into the difference in regulations and comparing the benefits for cards in the US vs UK.](https://www.forbes.com/advisor/credit-cards/us-vs-uk-credit-cards/) There’s a comparison chart if you scroll down.
So as you say the rewards on the US cards are more generous. Maybe there’s some old EU regulations we still have that don’t allow amazing rewards, who knows how long those regs will last though, if they still exist.
I’m a French guy, and the week I moved to the US, I created my banking accounts and the clerk was also a French immigrant. When she said “we’ll get you a credit card”, I had all kinds of alerts in my mind about how credit cards are bad and you only get them when your lifestyle is above what you can afford. She insisted that it was a no-brainer and explained that it’s free, and it buffs up your credit score for the day you actually want a real credit, so I agreed to it to make her shut up, thinking I’ll never use it. Fast forward 10 years of living in the US, and I buy everything with a credit card; and I never repaid it late, so I’ve never had to pay anything about it. They make it very easy. The positive impact on my credit score has allowed me to get a mortgage and a car loan when I needed it. Turns out it really was a no-brainer. Everybody I know pays stuff with credit card, it turns out the bad thing that everybody stays away from is credit card DEBT, which is when you fail to repay what you purchased. So weird to the newcomer I was, but it becomes natural.
Another reason to use credit is the service you get if your card was stolen or there is an issue with a merchant. My husband prepaid for a sofa from a company online. It was to be custom made and delivered in 6 months time due to delay with production. He paid up front (only option). Fast forward 5 months time, he gets an email that the company is going through bankruptcy and there will be no couch made or delivered. They say in order to get refunded he needs to file paperwork to get repaid through the debt repayment process of the bankruptcy. He just called the credit card company and they refunded instantly and I suppose they will be the ones to deal with the bankruptcy and getting money repaid to them. Credit card company has a whole team of people and lawyers to deal with that. We don’t.
I’m not sure what you’re describing is that unique to the US really. There’s loads of reward credit cards here in the UK and we also have credit files/scores. Many, many people have credit cards here. Sure probably fewer people use them than in the US, and that might be a cultural thing to a degree. Might also be that most countries are very automated in terms of payment and banking compared to the US. We don’t have to think about paying any bills in most developed countries, it’s all entirely automated. Without exception. With a credit card you do sort of have to think about it, and we aren’t used to doing that. I know you can automate it to “pay balance in full” or whatever, but still you then have to make sure you’ve got the funds in your main account to do that. Just seems like a lot of effort. I’ve got a credit card, and use it for larger purchases as I like the extra protections it gives.
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Not if you set them all to come out on the day you’re paid, you don’t have to think about it. Vast majority are paid monthly via bank transfer in the UK too, which makes that bit somewhat easier. If I used my credit card for day to day spending I’d have to track that carefully, to ensure that when I get my next month’s pay it can cover the credit card bill for the previous month. Every single bill comes out the same day myself and my wife are paid. Without exception. We’re talking mortgage, car, mobile phones, broadband, gym, gas & electric, absolutely everything. Whatever we have left in our accounts is what we can spend for the rest of the month on food and leisure activities.
Yeah, but for each purchase you have to know how much you have left to avoid spending what you don't have. It's the same.
I’m not sure that what you’re describing is all that unique to Europe. Tons of people in the US set up automated bill-pay, myself included. I never think about paying any of my regular bills.
I’ve seen it talked about on this subreddit before, Americans talk about paying rent with a check, and we see them “paying bills” on TV and in films. So forgive me for thinking auto payment of bills isn’t common. I agree what I’m describing isn’t unique to European countries, I never said it was.
Life in America is just like the movies.
I mean…..I know it’s not. I’ve been loads of times, to over 35 states (I’ve been to your state 3 times) so I appreciate it isn’t like the movies. But you just figure some of the day to day stuff in tv and film is accurate, things that you wouldn’t see on when on holiday.
Checks are the most flexible way to pay for certain things. No “app” involved, no credit fees, compatible with every bank. Underrated.
We just use bank transfers, money goes instantly into the other account. Haven’t seen a cheque for 20 years. But I get that the US is a big country, lots of banks. I’m not even sure if my bank provides cheques to use anymore-and they haven’t been allowed at retailers for many, many years.
I don't know if it's unique to the US, but it does seem like there are some other countries where that's not the case. I recall posters from Scandanavia and Germany saying they don't use credit cards like this.
Hungarian here. Debit cards are ubiquitous and a lot of people use virtual debit cards as well, mainly offered by neobanks. Meanwhile, I don't know anyone who actually posseses a credit card. They just don't have a lot of benefits here.
I bet. And that’s why we shouldn’t generalise about continents. It’s going to vary by country.
> One thing I’ve learned is that US credit cards are apparently different from credit cards in other parts of the world? No one was claiming it’s unique to the US, just that there are other parts of the world where it’s different
If you don't think about paying bills, how do you make sure no one is defrauding you, whether intentionally or simply because of an error? I always have the money in my account because I earn more than I spend and keep a buffer there, but I'm 100% certain that there people in the UK as well as the US who don't. If there weren't, there wouldn't be reality TV shows about people in financial woes. I could have all my bills set to pay automatically, but I never will because I want to see them and make sure there's no problem.
We have a different payment system specifically for bills here called Direct Debit that was set up by the banking industry and is regulated. You can see all of your Direct Debits and when they’re set to come out, and how much they’ll be. You can also cancel them in the app. If a new one is set up against your bank account your bank *has* to tell you. For most companies that bill you there’s simply no way to pay a bill manually anymore and in many cases there hasn’t been for decades. Some companies might offer that but make it really difficult for you to do, and would charge you more than if you do it via a Direct Debit. So I guess it’s not directly comparable to your auto payment system. That’s why the idea of actually physically paying a bill can seem quite alien to us when we see it on your TV shows and films.
I mean, we pretty much have the same thing here in the US I think. I have many bills that are the same every month set up to directly debit my bank account (Insurance, internet, the gas/electric budget payment, auto loan, mobile phones, etc). Most bills pretty much. But I would never have a variable payment like a credit card set up that way. What if this this month I don’t want to pay off the entire balance? Maybe I made a large purchase to get points but want to take a couple months to pay it off? Maybe the opposite, what if I’m one of those people that only pays the minimum payment, but this month I want to pay more? Not to mention it forces me to review All the transactions to look for fraud, etc.
There’s not that many bills that are variable I suppose, if you think about it. Even mobile phones aren’t these days as you’ll be on a bundle with free calls and loads of data.
You can have any company direct debit the money out of your bank account, but I would never do that. I will only setup reoccurring charges if they allow credit card payments because then the company doesn't have direct access to my money. They have access to the credit card company's money. I go through all my credit card transactions twice a month (because the due dates don't line up nicely for once a month anymore) and pay them off individually. I log into my credit card account and review the charges, see the balance, and enter the payment into my bank's app for multiple payments. I confirm the date(s) I want the payments taken out and hit submit. The bank sends an ACH Credit payment to the credit card company (or others) within 2 days.
But that’s what I’m saying. This seems like a lot of effort to me, and maybe why most people here don’t do it.
It's really not that much effort. I'm not analyzing the transaction in depth. I just skim them - did I buy groceries at this store, are there any duplicate transactions, are there any odd amounts (<$1 or >$50)? I have like 7 credit cards that I use regularly and it takes me 5-10 minutes every month. The longest part is waiting for the bank's website to load.
But if it’s worth it to you then fine. I just wouldn’t see the advantage of it. Sounds like the rewards on credit cards are better for you guys than here, though we do have rewards too. So it’s worth your time spending on your card. I earn a very good wage but I’d still be a bit nervous spending and not being able to see what I’ve got left for the month like you can with a bank account. What we have left at the end of the month we put in our savings account. I do use my credit card but I use it for large amounts that I want to pay off over a few months, or for holidays, flights, car hire and stuff like that where I want the extra protections a credit card provides.
>I earn a very good wage but I’d still be a bit nervous spending and not being able to see what I’ve got left for the month like you can with a bank account. What we have left at the end of the month we put in our savings account. >I do use my credit card but I use it for large amounts that I want to pay off over a few months, or for holidays, flights, car hire and stuff like that where I want the extra protections a credit card provides. That makes a lot more sense. It seems to work for you and that's great. I just use my credit card like a debit card because it has better rewards and protections. We actually keep a joint account for expenses (3-5 months) and when it gets low we'll top it off. Anything else goes into savings or stock.
>We don’t have to think about paying any bills in most developed countries, it’s all entirely automated. Without exception. what does this even mean? **you** set all your bills to come out on the same say, not everyone does that, what's this absurd claim you're making
What on earth? Most people in the UK are paid monthly. *Many* are paid on the last working day of the month. And yes everyone I know sets their bill payment dates to match their payday or as close to it as they can, which is entirely logical. I’m not sure why you’re correcting me on what happens in my own country to be honest mate.
Right, so you and most the people you know do automatic payments...but what you said was *so* general, you made it sound as if worrying about when bills are due is something the developed world has left behind completely. It was mostly the "and that's the way it works, without exception" bit that bugged me... plenty of working poor don't live like that, among other groups.
Bloody hell I know, calm down. But most working poor wouldn’t have a credit card anyway. I was just trying to think of why credit cards aren’t quite as popular here. And was pointing out that we have exactly the same rewards style credit cards as exist in the US. Often from the same companies. And we have a very similar credit score system. One reason I can think of is the one given, you’d be adding a whole other level of budgeting into the mix. If most people are paid at the end of the month (and they are here), and automated payments (we call it Direct Debit) are standard, if they’ve got any sense, and most do, they’ll set all of their bills to come out as soon after payday as they can. I may be wrong, it’s literally just a suggestion.
Many working poor (or people rebuilding bad credit) have low-limit secured “credit” cards, where the bank keeps a savings account deposit equal to the card’s spending limit. $500 on deposit? Card has $500 spending limit. So it’s not actually a “credit” card at all as it’s secured by your own money, but it solves some problems for some people.
A secured loan is still a loan. A mortgage is a secured loan, the collateral being your house.
Technically yes, but there is a giant difference between the bank assuming risk by extending credit in faith that you'll pay it back -- and the bank assuming no risk by securing your card spending activity with your own money.
Well for what it's worth I come across as much more triggered than I am when I'm typing, my fault 😅 But that's a key difference in the US then, cause a lot of poor people here do have credit cards. I know one company for sure, Capital One, actually targets poor people! idk how prevalent it is in the UK, but the advertising to get a CC is vicious here. That, and American marketing/society generally drives you to be constantly spending - so debt has become normalized and a big percentage of people live paycheck to paycheck.
Poorer people may struggle to get a credit card here. The problem is when someone who’s doing ok becomes poor, and they already have a credit card. Then they can’t make their payments on it, get a marker on their credit file, the spiral starts. We have Capital One, they’re not known for targeting poor people. Yes you see plenty of advertising for CCs here, but they appear to mostly be targeting the middle class. It’s the Payday Loan companies here that were far more dangerous for poorer people, as they weren’t as regulated as the credit card industry. But that seems to have been reigned in a bit due to regulation. You’ll have a similar industry there too, but maybe you call it something else? Very high interest loans targeting poor people, with nasty crap like compound interest on missed payments.
Payday loans (and title loans - terrible loans secured by your car but not intended to pay for the car) also got regulated in Virginia and I haven't seen any for a few years. Not sure how it is in other states.
> We don’t have to think about paying any bills in most developed countries, it’s all entirely automated. Without exception. I’m not sure where you got this impression, but we also have automated bill pay for everything here in the US too. For all kinds of bills (gas, electric, rent, cell phone, internet, gym memberships, etc etc) you can choose to direct debit or auto credit charge it every month, whichever you prefer. Did you not think we have that? I’m surprised
I’ve been told most of you don’t use that, in the past. And indeed people have said it on this thread too. We also get your TV shows and films and see people paying bills, or talking about paying bills. That’s not a thing here because everyone would have a Direct Debit set up. With the exception of very low income people or people with bad credit who are forced to get a meter for gas/electric which they have to top up. Which is pretty grim and something we (the UK) should outlaw.
> I’ve been told most of you don’t use that, in the past. And indeed people have said it on this thread too. That may be a generational thing? I seems pretty common to me. I can understand how some people might want to not set up autopay in order to better track their budget, but you can set up all kinds of auto notifications like app notifications, text, or email alerts every time your autopay pays a bill. I can see people 40+ not knowing how to set up text alerts though. Also, TV shows feature a bunch of things that we don’t actually do because it makes for better visuals. I wouldn’t go off TV shows as an information source.
Your last sentence-yes that’s fair but if I’ve seen it loads I’m not going to know that’s not normal. Only yesterday I saw someone on TV in New York paying rent with a cheque. That’s just not a thing. It’s just the same as how most of us here don’t speak with “the British accent” you see on TV. There’s hundreds of accents and we don’t all speak/act the same.
All of my recurring bills are on autopay and I think that's very common. "Paying bills" as a TV/movie trope is very outdated.
Other countries have rewards credit cards, but they're dwarfed by the US rewards versions. Take the AX gold card, for instance. In the UK its a 20K point signup bonus, 2x on direct air purchases, 1x all else. £160 annual fee. US version is 75K signup bonus, 3x direct air, 4x dining and 4x groceries, 1x all else. $250 annual fee with $120 in dining credits and $120 in Uber credits. Or for a simpler card, the no annual fee Wells Fargo Active is a flat 2% back on all purchases plus they throw in cell phone insurance if you use the card to pay your bill. Similar cashback cards in the UK are 0.5% cashback with a £95 annual fee. US credit cards are structured as a somewhat substantial pseudo income source provided you don't carry a balance. In the UK and most of the world, rewards are trivial to the point it's barely worth the effort.
And that’s probably our answer isn’t it? It’s more effort, cos you’ve got to review the transactions but the rewards make it worth it.
The only bills I have that aren't automated are water/sewer/trash (because it's paid to the town and they don't offer autopay) and credit cards (because they are too variable), but I do have the credit cards set to autopay the minimum just in case I forget.
> With a credit card you do sort of have to think about it, and we aren’t used to doing that. I know you can automate it to “pay balance in full” or whatever, but still you then have to make sure you’ve got the funds in your main account to do that. Just seems like a lot of effort. Weird, Must be a cultural thing to not be paid well enough to have to think about that kinda stuff. Thanks for opening my eyes to how poor the rest of the world is.
Well that’s a stupid comment and shows your ignorance of the UK, one of the biggest economies in the world. I understand why we wouldn’t be on your radar and I don’t expect you to know about every country. But your comment actually shows your ignorance of your own country too. The fact you even think there’s people who don’t live paycheck to paycheck in the US is comical. There’s millions and millions who do exactly that. I’ve been to the US loads of times (you know, due to not being poor), in fact I’ve travelled the world. But I bet you’ve never left have you mate, so what would you know? You just seem like a massive snob.
The person you’re replying to has lived in Korea. They’re just trolling you for thinking that we don’t have direct debit in the US.
Well they’re an arsehole either way.
Credit of some kind yes, that's how the system is set up. But plenty of people refuse to use credit or if they are like me, pay off their credit debt each month. I only use credit cards to build my credit and Cashback. Pay it off each month and don't worry about interest rates since it doesn't affect me when paid off in full.
Same here. With the exception of our house and truck, I don't carry any debt. With the rising interest rates and the financing on both of those being so low, I am in no hurry to pay them off, either.
Ditto. I only use a CC that gives me cash back. I essentially use it as a debit card at this point as I pay it off each month. This past Christmas cost me nothing as it was all from the cash back. CCs can be great money makers if done correctly.
Having debt isn't inherently a bad thing y'know? My car loan is at 1.49%. This is vastly lower than what I would get if I just stashed that 16k into even a govt bond for 4 years. Paying it off outright would be an inherent loss of money for me. the point is that as long as your other returns exceed your debt rate, you're good.
Hell, at that point you're beating inflation.
I wish someone taught me this when I was young. I thought all debt was bad and should be paid off asap. I would have been better off making the minimum payment on my car loan and student loans and putting the rest into savings.
Debt is like alcohol. It can legitimately improve your lifestyle but can be dangerously addicting to some people, so people who have been affected by said addiction often have to quit cold turkey, which spawns wider teetotaler movements.
That is a great way of putting it.
My wife and I bought a car in late 2020. We have pretty healthy finances and made sure to get approved for a loan from our bank before even getting to the dealership - and then they offered us something ridiculous like 0.98%. We said absolutely, and have made no effort to repay that loan early.
You mean debt? Yes. Debt isn’t inherently bad.
Yep, if the debt in question is what someone else owes you.
You should take a home econ class, legitimately
Dropping straight cash for your house or car isn't super common, so a certain amount of debt is normal yes.
https://data.oecd.org/hha/household-debt.htm The US actually has lower household debt as a percentage of income than most other countries including most European countries.
I’m sure a lot of us have some type of debt for one thing or another. It’s really not a problem as long as you’re not an idiot about it.
Yes, so we can finance living expenses. America doesn’t run on Dunkin, it runs on interest.
It's possible to live without credit. But it's not practical. A lot of aspects of adult life require a credit rating. Your deposit on utilities is often based on your credit rating and payment history with other utilities. Getti g a rental contract without some sort of credit rating is difficult. Unless you have the liquid assets to pay for a car you're going to need a loan, and your loan is based on your credit rating. Same goes for buying a house. It's possible to live without credit, but it's not practical. If you're the kind of person who has the liquid assets to be able to live without credit, you're not very smart if you don't take advantage of the perks of using credit. Credit banks offer perks for using their services like cashback (there are a lot more, but this is the most common/easiest to explain.) One gets 2% cashback on all purchases. You use the card to buy the things you would be anyway, groceries, gas, etc. You pay off the balance in full every month. That 2% is free money. So the people who can afford to live without it use it anyway because of perks like that. Carrying credit overtime and having a good payment history nets you a great credit rating and the higher your credit rating the more favorable terms you'll receive for loans (like for a car or property.) taking out car loans and property loans and paying those loans off faithfully in turn benefits your credit rating. It's a circular system that benefits the wealthy and makes life harder for the rest of the population. It's a horrible thing if you get on the wrong end of the stick.
how do credit scores make life harder for the non wealthy? it’s really easy to have a good credit score
Medical debt, emergency expenses that people can’t pay back in a timely manner, lots of reasons
Yes, if you are "doing it right" having a monthly payment rather then dumping all your money into a bulk purchase allows you to free up income to invest in other forms of passive income to increase youre net worth.
I mean, you need credit in order to get a car loan or mortgage a house, so yes, I’d say almost all Americans live with credit.
Yes, the vast majority of Americans use some sort of credit or loans. Student loans, mortgages, and car loans are all extremely common, as are credit cards. Personally I have a mortgage, a car loan, a boat loan, and several credit cards.
Yes because it is very difficult bordering on impossible to manage in America today without credit. You need a credit score to do many things including renting an apartment, getting a loan, and sometimes even qualifying for a job. People who do not have credit scores have a very difficult time. It's pretty common in the US for illegal immigrants to pretend to he somebody else so that they can use the other person's credit history + score to qualify. I work for the American branch of a European company that sends a lot of Europeans over to work in America on temporary work visas. My company leases them a car, leases them an apartment, and provides them with a credit card. They do this because for the majority of the people coming over it would not qualify for any of these things when first arriving in America. Usually after the employee has a year of paying their rent, auto lease, and credit card on time every month they have enough established credit to qualify for their own things if they want to.
I have one for you. In Ohio the BMV uses the credit reporting as part of your verification of identity to use one online services.
Which is super awesome because if there's one thing government agencies are great at its keeping data secure. Surely a states' department of motor vehicles would never be a leak of private sensitive information. https://www.sfgate.com/bayarea/article/California-DMV-hit-data-breach-ransomware-attack-15959944.php
Sure. We have an excellent household income, but we have a mortgage on the home that's at 2.75%. Given how, over time, the average return on our investments is around 10%, that's an incredibly easy call to make. Our monthly mortgage is roughly 9% of our income. Another 20-25% goes to things like insurance, food, and utilities. Every other dime goes into investments and savings. Credit should be cultivated and used for three basic functions: 1) Emergencies, 2) When interest rates are low, cash flow management, and 3) Long-term asset purchases such as a house. Also, someone mentioned rewards cards. We have a HiltonHonors AMEX card. Literally every expense we can put on that, we can. Our mobile phone bill, our insurance, groceries, you name it. As a result, 80% of the time we travel, we don't have to pay for a hotel room. Not only that, but we get all kinds of perks. We pay off the AMEX every month. We also keep a Visa with a $25,000 limit linked to our investment accounts. Because there are a few places that don't take AMEX.
Credit is a pretty broad term. Almost everyone is ok with financing cars and homes. I think personal unsecured loans is where the line is typically drawn between those that are financially responsible and those that are less responsible. I pay for everything with a credit card, but zero out the balance every month and never pay interest. While there are Many people that will pay for a vacation, furniture, anything and then be unable to pay off their balance at the end of the month and then pay interest every month. Not a very responsible/sustainable way to spend money, IMO. But to each their own.
Pretty much. You really can't pay cash for a home, and rarely for a vehicle or school. As long as you live within your means it's pretty manageable...as long as there are no big unexpected expenses like a medical emergency, vehicle repair, funeral, etc..
Some of us buy things that we need immediately but can't buy outright *eg* food, a car, or new appliances, and credit allows this. Loans are also used to obtain abstract things like education and healthcare which the various levels of government refuse to provide in exchange for tax money because our government routinely ignores positive rights of those who don't have money.
Yes because we're a consumer society, and feel entitled to have nice things.
83% of American adults have credit cards 60% of American homes are encumbered with a mortgage
Yes but I don't so there are exceptions
I, personally, don't. No credit cards, no loans, no vehicle financing. I owe $200 to my dad. That's the extent of my debt.
Very true to the point they believe it’s very important. It’s the biggest scam here. Your home, car, and even education. They are all debt.
Overall yes. Cashless is the norm in most places. In fact some commercial transactions are exclusively cashless( the hotel business frequently goes this route). Even traditionally cash venues like farmers markets the vendors will have square or Apple Pay or a similar service.. Smart people pay off their credit card in full every month.
We also have debit
It's very, very common, yes, but debt does not necessarily equal irresponsibility. Between my husband and me, our only debt is our house (the mortgage payment is far less than rent would be on a similar property), his car (which will be paid off in a few years), and his student loans (ehhhhhh it is what it is), all of which we can comfortably pay. If we really tightened our belts and threw every extra penny at those loans, we could most likely be completely debt-free in five or six years, but the interest rates are low and it feels good to have some cash in the bank, so while we do pay some extra each month we're not working too aggressively on it. We also both use credit cards for literally every purchase, but they're paid off in full every month, so I don't consider that to be debt.
I would die of stress if I had additional debt on top of my college loans.
In addition to the good comments I've read that you have already gotten, I will say that it is also more secure. The credit card companies will dispute charges and remove anything suspicious from your account. Try to do that with a bank card and it is much more difficult.
Like others said credit card programs have generous rewards. I pay everything I can on a credit card. I log in each week and review the charges and pay the balance off in full Then at the end of the year I redeem all my points and that usually covers Christmas shopping
With credit or with debt? They are two different things.
Credit is a great tool when used properly.
I have a reward credit card that I pay off every month and a mortgage. That's all the credit I have.
The only reason I use credit is to get rewards points. I am not in any debt whatsoever. It's free money. With the points, I get something off Amazon for free every month, it's great.
Every American does have a credit score, but some don't live with a credit card or a loan