Kind of ironic

[Alelou]

Fundamentally, it just doesn't make any sense. You nailed it. The only reason to have a credit card is convenience, and maybe for emergencies.

[TPoptarts]

So like aside from emergencies how is it more "convenient" than debit card??

[Aquarius]

Wait... so like even if you got more money in the bank than you spend with a credit card you're still in "debt" if you use the credit card?? That you have to "pay off" with the money you got in the bank?? Like isn't it supposed to pay itself off or whatever?? It doesn't make any sense

Sorry I'm new to all this

You're thinking of a debit card.

[Aquarius]

No I didn't mean like for free, I meant like doesn't the money in the bank account pay it off... or something uh but like why would I wanna use someone else's money if I got my own, and then I'm gonna have to pay them more than I'd have to pay if I used my own money?? It still doesn't make sense

Because sometimes--as in the busted furnace example--you don't HAVE enough of your own money to buy something you need.

Also, establishing a credit history and credit rating is essential for being able to get loans you DO want--like for buying a car, or a house. And paying your balance off at the end of every month doesn't necessarily improve your credit rating, because these lenders are interested in seeing how you do with a line of credit over TIME. If you're capable of carrying a balance while still paying at least the minimum on time, they consider you a good risk, as long as you're not over-extended on your income.

[TPoptarts]

Whut??

[Aquarius]

It's really not that hard.

Just think of it this way: you're going to have to ask a bank or other lending institution to loan you a LOT of money if you want to buy something like a house or a car, because face it: unless you're idle rich, NOBODY has that kind of money laying around in the old checking account, nor are they likely to.

Now, given that, it's reasonable to assume that the bank would like to know that they're probably gonna get their money back from you, right?

So, in order to determine that, they look at your credit history. Have you paid your bills on time? Have you opened up other lines of credit? And how much credit do you have extended to you, vs. your actual income? Because even if you have stellar credit, if you have too much credit extended to you, they'll be afraid that you'll run up too many bills and not be able to pay.

Now, with a DEBIT card, it's different. Though it has a Visa or Master Card logo on it, it is NOT credit. You open a checking account somewhere, and they give you the debit card. The card gets run through a credit card machine, but the money comes out of your checking account. If you don't have enough money in the account, it gets declined. This started out as mostly a convenience thing, because there are so many restrictions on writing checks in so many places.

[Pitseleh]

I learned to use a credit card just like a debit card 'cause of my dad's lecturing. For as long as I can remember, and I'm talking maybe 7 years old or so here, my dad explained to me over and over again that the credit card was just a way to not carry the money you already have, NOT to spend the money you don't. To this day, I can't bring myself to put something on my card if I'm not absolutely sure I have the money to cover it in my bank account. The horror stories he told me about credit card debt still haunt me... I guess that sort of lessons are to be expected from someone with a degree on economics.

[Alelou]

Personally I think showing you can carry a balance is not necessarily going to help your credit rating. It may make you more attractive, and you may get more offers, simply because they think they will make more money off you. (It is good for your rating to have more credit available than you use (which is an argument against cancelling cards you don't use, or at least not doing so right before you go mortgage-hunting.)

My husband and I have exactly the same credit history in terms of home loans. We both had college loans we eventually paid off. He also had new car loans, while I've never bought car from a dealer and so I've always paid cash. He racked up significant credit card debt, which he always made at least the minimum payments on, if not more, while I always paid my credit cards off. He was always convinced that his credit rating would be far superior to mine, because he was proving he could "handle his expenses" without ever missing a payment -- but when we finally got to find out what our credit ratings actually were (while getting the home equity loan ultimately required to pay off his mounting debts), my rating was significantly higher than his, even though at that point he had a good steady salary and I was a freelancer making only about a quarter as much.

So I wouldn't recommend that you ever carry a balance just to prove you can. DO get a credit card and pay it off just to prove you can. That WILL help you build credit you may need someday.

And if you're in a position where you're actually paying someone to cash your pay checks, like a lot of poorer people without bank accounts are, try to get your pay given to you in the form of a check card instead. That's a lot safer and cheaper than paying those rip-off check cashing companies and carrying around cash. Again, we need better usury laws in this country. Don't even get me started about pay-day loans. Or Rent-a-Centers. Or companies that offer to buy up your court settlements or your life insurance policies for a one-time cash offer. And many so called "debt settlement" firms, even ones that claim to be nonprofit. And read the fine print on every thing you sign. It's truly amazing how many utterly heartless, utterly charming fraudsters there are out there.

[JadziaKathryn]

It's nice to have a credit card for the security of knowing that, if my car breaks down halfway between home and the university and it's not something covered by AAA, I won't be stuck on the side of the highway. But there are college students graduating with $10,000 in CDs, video games, pizza, and beer. That's just insane. I have a reasonably low student debt and have no wish to add to it in such a manner. My Mastercard is used once in a while and a check for the whole amount promptly written, just to build a credit rating so I can get a mortgage someday, but that's it.

I really think that, while certainly banks etc. have been irresponsible with their lending, part of the problem is our culture of credit.

[Alelou]

I think it's more than a culture of credit, it's a culture of buying crap to make yourself feel better.

[CX]

I'm materialistic, and frankly I'm cool with that. Money for me is simply the exchange of time I spend doing something for someone else so I can get the things I want and/or do the things I want. I have one credit card through my bank, and I pay it off in its entirety every month. The thing that'll suck more is when I have to start paying back my student loans, which hopefully won't suck as bad because I'll have gotten a good job after I'm done with school.

[JadziaKathryn]

The thing that'll suck more is when I have to start paying back my student loans

Yes. Education just goes up every year, and what I want to know is where all this money is going. Because if you talk to the professors, you quickly realize it's not ending up in their paychecks. Since I go to a state university tuition increases have to be approved by the state legislature. The school has gotten around that by terming them "fees" instead. I have to pay $75 a semester for a gym I never once used because they built a shiny expensive new athletic center. I have to pay a communications fee for things that should be included in tuition. The semester I was in the dorm I was in a junky old dorm that probably had health hazards and had a heating system that left some rooms sweltering and others freezing, and it was some absurd price - the same price, of course, as if you were in a newly built or recently refurbished dorm. Food wasn't cheap either. (Hoping to commute next semester if I can get my classes all in 2 days.) I tell you, if these politicians can actually pull off making higher education affordable the way they talk about it, that would be quite a feat.

/rant

[CX]

My cost of going to school has doubled since I started back in 2001.

[Alelou]

Check out the cost of the politically-appointed university administration. That would be my first guess. Or even the private ones. I think Shirley Jackson at Rensselaer Polytechnic is the most highly paid university president in the country and although the school apparently is doing well practically everybody who works on that campus hates that woman. It's like CEO pay, completely out of control. (Though still not at the mindboggling levels of corporate CEO pay.)

New York has its own fine tradition of apportioning cushy university admin jobs to former political figures, letting them double dip by getting a great state salary AND receiving their state pension. And they give out state pensions like candy. You can get a state pension in this state just for being a lawyer who works on an hourly basis for a school board. Or at least you could, for years -- the AG is currently going after that.

It's socialism for the well-connected.

[CX]

It doesn't help that the state keeps cutting back on fi=unding while the school has big plans to do big things, like the recent change to Division 1 for our football team (thus proving how evil school-sponsored athletics are).