I know this might just reflect financial culture differences across countries, but let’s give it a try
Edit: as a clarification, I meant credit card compared to debit, not to cash
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I don’t. Used to have a prepaid credit card, but the services is gone now. I am seriously considering it for some time now, given that a lot of services, especially US based, require credit cards.
No. I’d rather not owe the bank anything.
what i have (which usually isn’t much) is in my pocket. if i can’t pay for it, it doesn’t get bought (u.s.)
at the office (it’s just two of us), it’s different. we use cards for convenience, but we still don’t spend what we don’t have in the bank.
I do the same, but with a credit card. I never allow my credit card balance to exceed my non-emergency fund cash, unless it’s an emergency, in which case it can eat into my emergency fund reserves.
Essentially, I use it the same way I would a debit card, but it gets paid monthly instead of being pulled out instantly. I use a budgeting tool that pulls down transactions, so I always know my bank and credit balances.
Japan here. I use credit or cashless payments linked through credit almost exclusively. It makes it easy to manage family finances, as although there are no joint bank accounts here, you can have family credit cards. So one card for family expenses, and another for personal expenses.
Plus by default, credit cards in Japan are basically charge cards; they are paid off every month by direct debit. There is no interest in this case. You can also split payments over two months without incurring interest. Also, many credit cards offer bonus payment (typically workers receive summer and winter bonuses, card companies allow you to delay payment until that time without incurring interest).
In the UK, as long as you are able to track your finances well enough to ensure you repay the balance in full each month (you can arrange for this to happen automatically), there’s no reason not to use a credit card.
You should especially use it for purchases over £100 as by law card issuers are jointly liable for problems with goods purchased, so if I have a warranty issue the retailer won’t help with I can go through section 75 with my bank
I have never purchased something on a credit card and had it on the balance long enough to pay interest though, the rates are insane.
Plus, some cards give you points. Which can later be used for things like upgrades on flights.
This is exactly what I use mine for, and I’m trying to convince my wife to do the same. We’ve had to buy some relatively expensive things for the house recently, so I’ve been using the credit card for the extra protection, while she’s been paying in cash / debit card.
Luckily, we haven’t had any major problems yet, but she doesn’t seem to understand that the extra protection is worth it.
Honestly I’ve found that women have a different relationship with cash. It feels safer, more secure, it’s tangible - I don’t think that translates to credit so well. Just my experience however.
I use a credit card because our laws in the USA protect credit-card purchases better than they do debit-card and other electronic purchases.
Although I use a credit card with revolving credit, I always pay the full balance each month. In this way, it acts as a debit card, but I get the benefits of a credit card. I have to remember to pay it on time, but I can set up autopay even for that.
My credit union (a kind of non-profit bank owned by its members) is the issuer of the card, and it gives a 2% cash award for credit-card usage.
I do this, too. Anyone with any sort of self control should do the same, unless they prefer cash.
Using a debit card is too risky.
I feel exactly the same way. The only case I would recommend a debit card is if it’s at a separate institution from your main savings. That way, you’d only lose up to whatever that account has.
I’ve seen too many stories of people losing their savings because of a compromised debit card.
In Europe they are basically featureless, and the only people I have seen using them were those who struggle with consumerism.
Interesting to see our experiences align
NZ here, I use it for online purchases. Credit cards have the advantage of extra fraud protection, as well as having a safety net of being able to do a chargeback in case the seller does fraud or something. I don’t need to pay any interest on it either because I make use of the interest free days. I have a direct debit set up so the bill gets cleared on its own every month, so I don’t forget and accidentally pay interest or something.
Totally! I always pay it off each month so there is no interest and I get tons of points.
They also give tons of other benefits, like accidental damage and theft protect on stuff for the first 30 days, double the manufacturers warranty, if I die over seas they will cover the cost to repatriate my body (I live in a foreign country)
There are tons of other things, too. Just don’t care to list them off. I do have to pay about $200/year to have the card, but I think it’s worth it due to the points back.
If you get a cash back/rewards card and pay in full every month, you get paid for shopping.
[united states] i use a credit card for anything that i can. the perks are nice (as others have mentioned), and i never spend more than i have. i’ve never paid a penny in interest. i always pay the statement balance on the day it’s due.
US here. I use a debit card to day to day stuff. I never had an issue with out of control debt, but still fell down the Dave Ramsey rabbit hole. Early in life I was debit card only, but after not having a credit history bit me a couple times, I got some credit cards and built up a score. The US really pushes people into credit cards and credit in general. I’m now moving back to my debit roots, as debt makes me uneasy, and I like know that whatever is in my account is what I actually have.
I do still have a single credit card (which Ramsey would not approve of) I use for all my stuff that’s on auto-pay, just to keep it active (purchases and pay off each month is all automatic, I don’t even carry it with me). It’s a card with 0 foreign transaction fees and stuff, so I also use it when traveling. Though my debit card is also good for travel and let’s me get cash at ATMs anywhere in the world without fees.
Ramsey told folks to keep making payments on student loans when the payments and interest were paused. He does not give sound financial advice.
The University of Chicago would disagree.
https://www.newsweek.com/student-loan-borrowers-debt-got-worse-during-payment-pause-1805139
I’m not saying the guy is infallible. I mentioned many things I disagree with him on. However, skipping out on paying off debt when it can be done interest free is dumb, and the data backs that up.
The report, which was published by researchers at the Becker Friedman Institute for Economics at the University of Chicago, found that borrowers who paused their debt payments “sharply increased mortgage, auto and credit card borrowing,” compared to those who continued paying their loans.
Yeah, what did you expect them to do, be responsible and invest 100% of their paused payment in investments with guaranteed upside? Have you met people? This is why stopping payments was stupid.
A debit card is not recommended for day to day. If it gets picked up by a skimmer or otherwise used in a fraudulent manner, your bank account gets debited until the investigation is done.
This can take months and can involve large sums of money.
With a credit card, no money leaves your bank account during the investigation.
That’s propaganda from the credit card companies.
I’ve my debit card stolen before I got my first credit card. I went to the bank to report it and had the money back almost immediately.
I also have a debit card with 2 different banks. My primary bank that pays off my credit card, mortgage, and all that stuff. Then a second card with a different bank, which is the one I use for day to day purchases. I figure there is a higher chance of issues with the card I use everyday and don’t like to have to re-set-up my whole life if a number changes. I move $1,000 at a time over there, use it until it starts to hit my low bar threshold, then move another $1,000. If it gets stolen and I can’t use it for a month, or were to get cleaned out with no chance of resolution (not likely), I’d be fine.
So far (knock on wood), I’ve had 0 issues with my current debit card getting fraudulent charges on it. In contrast, I was having to get a new credit card every 6 months or so. It was a heavy metal card that stood out. I’m not sure if that led to more waiters trying to skim it or what, but it happened all the fucking time. It was super annoying and disruptive.
I also find, psychologically, the debit card works better for me. When I spend money I see my balance go down, so I know I spent money. On credit cards when you spend money, it doesn’t show a negative backing, the numbers go up. I don’t like that. The whole industry is manipulative. From the rewards, that they know make people spend more, to non-stop “deals”, and predatory minimum payments and interest rates, the whole industry is dog shit.
I’m glad that your one single experience trumps the experience of hundreds of thousands of other people who’ve gotten in a jam with a debit card. Good for you.
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I didn’t miss that part. I was responding to your main point about “propaganda from the credit card companies”. If it’s not propaganda and you got your money back almost instantly… then why are you still jumping through hoops to protect your money? 🤔
After all the issues I had with my credit card getting stolen, I like to have backups in place for the gaps. The credit card I had would take several days to send a new card, which could be a problem. So I wanted a system where if anything happened to the card, even it just being destroyed, I wouldn’t have to stress about the account or the gap in access.
It just so happened it also addressed your issues, but it wasn’t my primary driver for doing it.
In Europe there is a Card Stop number you can use to block your card as soon as you noticed it’s stolen.
From the rest of the thread, it seems that US laws protect credit cards better than debit.
A lot of the stuff Ramsey says is good for Ramsey; not anyone else, and certainly not the public. I 100% agree with him that (most) debt is bad, but having no credit is worse than bad credit. If you want a strain on the system (what we have now), you deny credit to people that aren’t credit worthy (*people without credit) so that they cannot afford to purchase homes. A mortgage is debt, but it’s not “bad-debt.”
Sure, and Ramsay argues that a mortgage is fine. His contention is that ideally you wouldn’t need to have any debt. So once your retirement is on track, you would pay down the mortgage because it’s no longer needed.
I disagree with him, but that’s probably because I’m very disciplined and have never had an issue where I have more non-mortgage debt than cash on hand. In fact, I was very nervous about my mortgage debt, so I aggressively saved after getting a house to build up investments so they would exceed my mortgage (I can now theoretically pay it off if I liquidate my retirement accounts). I have never financed a car (my cars are both 15+ years old), never paid credit card interest, and never needed a personal loan. I have maintained an emergency fund since I was 16 (didn’t call it that until my late 20s). I see debt as a tool, if I can get lower interest debt than I can make with guaranteed returns, I consider it foolish to not take it. In fact, I have a few thousand in 0% credit card debt right now because I refuse to pay it back until the promo is about up.
That said, many people have a problem handling debt, so if that’s you, Ramsay’s advice is perfect. I actually like listening to his show, and I recommend him all the time, despite disagreeing with him on practically everything. He offers a very structured program that works for a lot of people, and that’s way better than trying something perhaps mathematically better but relies on discipline.
Yea I mean, I don’t want to entirely shit on everything Ramsey says, it’s just incredibly rudimentary. Great for people starting out… but if his listeners continue to listen to him forever they are doing themselves a disservice.
Yup, the goal should be financial literacy, not consistency following someone else’s program.
Having bad credit is worse than no credit. With no credit you can get some starter stuff and build credit if you want. It also means a person probably has some good money habits if they haven’t needed debt. With bad credit you have to dig yourself out of a hole, and likely have a lot of bad money habits that need to be unlearned, which can be a long and hard road.
The Ramsey way for a home is to do manual underwriting, which doesn’t require a credit score, although that’s not what I did, since I had an 800+ credit score.
As far as a mortgage being good debt, that can be argued when interest rates are 3%, but with interest rates at what, 7-8% now, it’s not so great anymore. Time will tell if they go up into the teens like we saw in the 1980s. Also, the “good debt” stuff assumes the person is extremely financially disciplined and invests every dime they would have put toward that debt into some other investment earning above the interest rate of the loan. I’m willing to bet that a vast majority of those who hold on to their mortgage in the name of “good debt” aren’t doing that, so the math no longer works out.
I will agree with you that Ramsey can be overly simplistic, which at times can leave money on the table. I disagree with him on acting like mutual funds are the only type of index fund worth looking at. I’m also keeping a credit card around to maintain some credit as a hedge, instead of getting rid of it all together like he suggests. However, I think for most people, good is better than perfect. For me, the value was mostly in having a plan. I was aimlessly investing here and there with no budget or intention, which didn’t have me feeling good (although I think I was still doing better than most). Once I had a plan, even if the plan may have not been designed for me, as I did baby step 1-5 in about 20 minutes, it has put in a place where I’m about to have a paid off house in a matter of a few weeks (if things go according to plan). From there, my living costs will drop dramatically, I can increase my savings/investing dramatically, and can actually buy some stuff for myself guilt free, which I’ve never really been able to do. I expect it will also reduce my stress around work and I may even take the risk of trying something completely new. Taking the typical advice would keep me in the hamster wheel my whole life, but with this plan I’m feeling like I’m on the verge of being able to step off it, which feels good. Could I have made more if I took everything I have into my house into the market… maybe, but there is no way in hell I would have invested as aggressively as I paid down my house. I can squeeze for 3 years for a goal, doing it for 30 years is very different. That’s where the “good debt” thing falls apart for me. Almost everyone doing those calculations is comparing apples or oranges when it comes to what people will do in the real world.
You clearly listen to too much Ramsey. No credit is a credit score of 0. Bad credit is 580. It is going to take time to repair either one but if you’re running a race, do you want to start at 0, or 2/3 of the way to the finish line?
Even if rates are 10%, ownership is better than paying a landlord rent. Equity, equity, equity… High interest rates are when you upgrade or purchase more property to build wealth. Just ride it out and refinance when the rates come down.
Having a high credit score makes everything easier. A high credit score is also something required for certain jobs. Ramsey comes up with “workarounds” for when his advice about not having credit doesn’t work out.
You should probably learn how credit scores works. You sound very misinformed.
Ownership can be better than rent, it depends on the situation, but you’re moving the goalpost from a “good debt” argument to an “own vs rent” argument. Interest rates can could go decades without dropping below 5% again. What we saw after 2008 could have truly been a once in a lifetime thing. I’m not sure what you’re talking about when you’re saying high interest rates are a good time to buy for wealth building. That makes 0 sense, unless you’re buying in cash when interest rates are pricing everyone else out of the market. Have fun waiting to refinance at some unknown future time… kind of hard to predict your ROI when you don’t have a crystal ball to see the future. Buying in at a low interest rate locks it in, so you keep it even when rates go up, which is an infinitely better idea, as you don’t need to wait and hope for a rate drop in the future and then pay to refinance.
Also, if you really liked “good debt”, you wouldn’t have any equity. You’d mortgage yourself as much as possible and do a cash-out refinance every chance you got. No equity.
High credit scores can make some things easier, but most related to borrowing money. I’ve had my credit locked at all the reporting agencies since the Equifax thing happened. I can count on 1 hand the number of times I’ve had to unfreeze it for a pull since then. It’s not like people should be doing things on a daily or even monthly basis that require their credit score. And I don’t know what kind of shitty job would require a credit check.
You sound brainwashed by the credit industry. Do you think velocity banking will supercharge your finances too?
When I checked my credit score last month, it was 847. I’m sure I’m doing better than 99% of people in that regard.
When interest rates are high, there’s less demand and as a result prices are lower.
Keep listening to Ramsey. This conversation has devolved into something I’m no longer interested in, so I’m checking out… have a good one.
Having a high credit score doesn’t mean you know how it works. For example, on time payments is part of the calculation. If you have no credit, you can get new credit and start at 100% when you start paying. If you have bad credit for missed payments, those don’t magically go away when you start paying, you have to wait for them to age out. They stick around for 7 years and drag you down.
Prices are lower, great if you have cash… which is what I said. If you’re paying a bunch of money in interest, it negates the benefit.
You “lost interest” when you realized you have no idea what you’re talking about… Most of this isn’t Ramsey stuff, it’s just finance stuff. If your ideas can’t hold up to any scrutiny, are they good ideas?
I lost interest when I realized I don’t care if you’re fucking up, and I don’t care if you think I’m wrong either. I don’t want to argue with you. Waste of my time. Like I said earlier, have a good one.
They’re not moving the goal posts from good debt to own vs rent, the reason a mortgage is good debt to have is because it is better than renting. Consider taking out a loan for something that has zero benefit, like a statue or yourself or something stupid. That’s bad debt because it provides no benefit. Being in a home builds equity. Your putting your money into a 30 year hole very slowly but it’s better than a bottomless pit.
It can be, not always.
I have one to shift large expenses to the end of the month. Just to have more room. I dont spend money I dont have or saved
Based in germany
American here. Not only do I use credit cards for all of my purchases (and pay them off every month, so no debt builds up), but I am finding it increasingly hard to use cash on a daily basis, even when I want to. I used to prefer cash, especially on trips, as a way to control spending when needing to stick to a budget. But now so many places here have stopped taking cash altogether, or shuffle cash purchases off to a separate process which takes longer. I still carry cash, but find I rarely use it,
But all the different types of electronic payments now are confusing. I recall getting stuck at an airport once, and sitting near a place that had food for a few hours. They took cash, credit, and Google Pay, but not Apple Pay. I was amazed by the number of people who end up walking away when they realized that, and who didn’t have an alternate way to pay.
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