Why we don't use CREDIT CARDS
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- čas přidán 24. 04. 2017
- We're living credit card free, and follow Dave Ramsey's baby steps. We stopped using credit cards years ago. It isn't always easy. A credit score is still the main way businesses determine your financial fitness, which is somewhat absurd. The more you borrow, the less risk you are? Huh?? In this video I share the main reason we live credit card free. What are YOUR thoughts on credit cards and credit scores in general?
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Hey there! I'm Dana. I'm a wife and Mother to 4 kids, including twin boys and two girls. I work full time outside the home in finance as a Corporate Accountant, but enjoy sharing my personal and parenting journey online. We live in the Philadelphia area.
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My dad is in his 60's, and has never had a credit card. He owns a house and a car. I'm always envious of his ways.
I'm totally debt free including my house
I have had about 15 credit cards and counting. I only get them for sign up bonuses and points (aka free money). I have never had to pay a penny of interest because I pay them off in full every month with autopay. My credit score is at 825. You don't have to carry any balances to have get a high credit score, that's totally false. As a matter of fact, IT'S OPPOSITE. If you are smart and have self control, treat them like debit cards and only buy what you can afford, you have nothing to worry about.
Cameron M exactly!
not sure where you get your information from when it comes to credit score... I am someone who always pays off the balance in full every month and sometimes I don't even use my credit cards every month where I end up having 2 or 3 months with no activity on any of my credit cards., so I have not paid any interest or any other kinds of charges for over 8 years...yet my credit score is around 783
We just paid off our two credit cards, and are still in the "Never Again!!!" stage, and still a bit angry that we had them at all. I'm a bit worried the anger will fade and we'll get lazy again, and end up with another card. It's like weight loss, when you finally get to your goal, and then relax and forget all the hard work it took to get there, and get into the donuts and cookies again! I think we're older and wiser now though, and will avoid cards from now on! :)
+Megan Congrats on getting rid of 2!!!!! Yay!!! And YES I know what you mean. I try to remember why I hate them often so we never go back. Making videos on the topic helps. ☺💕💪🏻
Watching them helps too! :)
This was me! I got into trouble as a teen in university and once they were paid off I said never again. Then it was "just one for emergencies". Then I was dealing with infertility and adoption fees and I was like "oh just one more just in case". Well now I'm recovering from being even worse than I was last time. I'm hoping this time the fact that I'm older and hopefully wiser it really will be never again! This adoption will be fully cash :)
The credit score goes up when you pay the bill on time, not when you have the balance. But if I use my credit card all the time, when they send me the bill, by the time it gets to me and I pay it, I might charge some more, so the balance is almost never zero, but when I pay the bill in full, I pay no interest. Also, the credit cards should never be charged more than 30% of available credit. So, if your limit is $2000, you should never have a balance of more than $600 in any given time. Also, we don't live paycheck to paycheck, have an emergency fund, and super careful with our spending. We don't make a big income, it's low enough that our kids get free lunches at school. So, if we can have all that with our income, most people make more and can do even better.
We are feeding our kids as much as they want to eat. About 75%of kids on our school qualify for free lunch. Having lunch at school also benefits the school and all other kids at school.
Congrats, you’ve learned to play footsie with the bank.
"You're credit won't be as high if you don't carry a balance"
False. Please don't spread misconceptions
WITNESSx right? It's not about carrying a balance it's about low debt/utilization (0% would be best) and on time payments and not a lot of hard inquiries. Carrying a balance will only hurt your utilization
Agree
WITNESSx She is actually correct. According to Equifax failing to show the ability to pay over time is calculated into the utilization.
@@timhandjr TRUE!
It's refreshing to hear you talk I thought I was the only one that use cash and no credit all my friends thinks I'm crazy and they're the ones who are in debt
I agree with everything that you said. Why do we need a credit card unless you plan on going back into debt? I got into a huge mess years ago cause something always came up and my balances kept going up and up and up where I couldn't even pay the minimums. Using credit cards is too high risk. Why let the bank determine you life instead of you. If you don't have the cash then you shouldn't buy it. Simple as that.
+Vickie Clark It's too much like playing with the devil to me. I've had some scary conversations with the credit card "customer service" reps and I know how nasty they can be. I want nooooooo association with that. NONE. 😱
Vickie Clark The way you speak about credit cards is similar to the boogieman-talk. Credit cards are an amazing tool, a god-send if you use it correctly. But as any powerful tool, it can also be dangerous. This monster you are talking about, is yourself, and your lack of knowledge in the subject (just like the video).
This is a brief explanation of why credit cards work the way they work, and why some people are better off not getting them. Credit cards give you the possibility of spending money you don't have at the moment, what you spend is a credit line with a limit. At the end of the billing period (a month) you can pay back the entire balance you spent, and not have to pay any interest in what otherwise would become a loan if not paid fully. So far there's no tricks, that's how it works. The reason why people fall into debt though, is because they fall into the trap of spending more than they can pay for, and begin to accumulate interest and fees due to bad spending habits. The credit card issuers WANT you to do this, but it's up to you to do it or not. Humans have a much harder time understanding credit than debit, because it goes up instead of down, it's counterintuitive, nonetheless, it's also a service (Credit cards) which can only benefit you if you are responsible.
These are the perks of using the right credit card/s in the right way:
1- Convenience; easy to use, easy to keep track of spending thru mobile app.
2- Safety and purchase protection; if your card goes stolen it can be frozen and renewed, if you are not satisfied with a purchase, you can be covered by the full amount. You lose no money, this is not equally true with cash or debit.
3- Builds credit history; you will need this to get the best rate for a loan, or even to get one at all. Credit is the future, it's also asked of you if you want to rent an apartment or make any type of deposit.
4- Free money; you can get cashback by just using a credit card in purchases you would be making anyways. There are plenty of cards that have this perk, and no downsides as flat fees go.
Hope this helps.
The people who usually fall into debt with credit cards are typically not using it correctly. If you use it the same as a debit card, you will never fall into debt because you will always have the money. Never spend more than you have and you can never go into debt on a credit card
Hi, Dana.Your videos are amazing. I have never had a credit card and I could live without one. As a single parent, I had to be very mindful and it was one of the main points. Thank you for all the information you share with us.
I love your analogy to smoking. I recently subscribed and I’ve been plowing through your videos. Thank you for being so open, I’m absolutely enjoying learning from you!
Thank you, Dana! As a single mom trying so desperately to manage it all this video was EXACTLY what I needed today.
It surprises me too see you claim to have no idea how credit scores are calculated. if you go to any credit bureaus website or contact them directly, they will give you information on how credit card scores are determined. As for living without credit cards, I can appreciate your point, but to simply say that it's the best way is naive. Credit Cards or not, living within your means and paying your bills when they are due is what matters. I have about 85K in credit available to me between my cards, but have never used more than about 4-6k per month. I pay the balances off prior to the statement closing dates, which is different then the due date. The advice that Mr. Ramsey's gives is simply one person's point of view. I think that when we evaluate what should be discussed is having self control to be mature enough to handle credit. If you can't control your urges, then don't get it.
Too real Dana... you said it, The heavy credit card chain around my neck!! The balances just creeped up on me... and the bank kept increasing the limit and that's how they got me. I have 4 cards.. its rough. I totally get the smoking analogy.
My mom told me if you use a credit card you have to pay it off every month in full. She told me you must pay off the balance in full.
I got rid of my credit card about 15 years ago and started just using cash or my debit/credit card. I kept track of how much was in my account. If I had the money to buy something I bought it, if I didn’t have enough money to buy whatever it was that I wanted, then, I had to wait until I had the money. It taught me the value of waiting instead of grabbing up lots of stuff just because!
I like that you said that you are trading convenience for peace. My husband and I made the same trade off. Paying for things using a Credit card was so easy, but so was getting ourselves into a lot of debt. The pain of paying off consumer debt for our financial stupidity was tough. We choose financial peace by budgeting and paying cash for what we buy.
This video has a lotttt of misinformation. Please don't spread stuff which you do not understand completely. Credit cards are awesome tools if you know how to use them. Also, the credit cards are never the issue. The issue is your own bad habits, dumbness and lack of control and willpower. If you rule your mind, you can wisely spend money and build a great credit score. Credit scores are high for those who know how to handle credit - keep credit utilization below 10% at all times, pay off balance, have no late payments or delinquent accounts. If you have multiple credit accounts and are still handling all that wisely, shows you are a trustworthy person who is smart with their money. There is nothing wrong with taking loans or credit (there are millions people around the world who have started businesses and build houses with loans and then paid them off) as long as you are smart, wise and in control. A great credit score proves that.
I like your videos but it’s not true that carrying a balance raises your credit score. Having a low utilization rate and paying off in full every month raises your credit score :)
Thank you ! I totally agree with you. It's sad how the bank is so greedy.
Dana, you are absolutely right! It’s so sad that I went through 2 divorces, and 2 bankruptcies to finally learn this. Now, I don’t want a home or a car because if you can’t pay cash for it forget it. You can live without credit, it is possible, and living debt free has caused me to save more money and have more in the long run. You just have to manage what you have WISELY!
Thank you for this video!
We are credit card free and have been for years!!! We travel and rent cars all the time with no credit cards.... But I actually still care about my credit score because reality is we may not pay cash for a house, or never need a car loan, but I will never go in to debt again for consumer type items!!
My husband and I married very young; we just celebrated 31 years last week Yay!! And we were in debt in our first years of marriage. I had a light bulb moment and sold our luxury cars for used cars we could afford, sold lots of goodies in our home and stopped eating out. We paid off our debt, tore up our credit cards but 1. We kept 1 and have used that 1 for EVERY SINGLE THING WE PURCHASE in our month and pay it in FULL EVERY MONTH. We now have 3 credit cards: One for each business we have and 1 personal one. At the end of each month we pay them off. At the end of the year we print a year end expense report for tax purposes. Makes life easy for use. Our credit score is above 775. I have taught my kids to do the same. I pray they follow our advice. Debt is an evil, evil thing. Credit cards WILL ALWAYS EXSIST because that is how companies make MONEY. It is very sad.
Thank you for sharing!
I totally agree with everything that you said, I stopped using credit cards about a year ago. The highest balance I ever carried across multiple credit cards totaled about $27,000. Like you said, it was shocking and sickening… I will never go back there again
Dana, thank you! You rock! I know exactly what you are talking about. Sorry people are being "ugly" to you, on your channel. They should have their own channel! Be blessed!
+Keebler50 Thanks! HUGS! 😊
true. so risky! We've never been in trouble or carried a balance but its been tempting. it helps we have always had our emergency fu d so even if a situation came up we transferred money from the emergency fund to pay off the card and then paid back our emergency fund over time which is obviously interest free to pay ourselves back
I've been watching your tutorials and its given me hope i have one store card that is almost paid of... Once that card is completely paid that money will go onto the next card it'll take a good few years but we'll get there... our mortgage gives us a credit score so once all the cards have gone.. our mortgage will keep pur credit score going.. i think your wonderful giving up your spare time to make these tutorials.. thank you
This may not be the case for everyone . We just treat credit cards as debit cards . We only use them for things we planned to buy anyways . We pay them off in full every month . It all depends on how you manage your finances . We have a spread sheet which gives us what we spend . We save first be it retirement or savings or mortgage . Then we only have little to spend on other things . If you have no idea how much you make and spending or you r using credit to fill up that's when credit cards are a serious problem. For us they give us extra benefits because we manage them well and treat them as debit cards .
I love your channel!
My wife and I don't use credit cards and have no plans to. We have a simple budget and multiple emergency funds both individually and as a couple. Cash flow matters most.
My husband & I froze our credit also. had to unfreeze it for 3 days (in our state, it cost us $30 to unfreeze, Free to freeze) because our Home/ car ins Co had to look up our credit score to give us a better rate. This part of a debt free life sucks, but wouldn't trade it in. They (ins Co) didn't care we were debt free. They wanted a good credit score. If you have a Government job, they look at your credit score also. I hate being defined by that credit score.
Hi Dana I love your discipline and frugal ways and I am a fan of Dave Ramsey. At the same time I am trying to play "their game" and win i.e.: a high credit score. I only keep a balance of 5 -9% on my cards. I am building my savings and pay extra on my mortgage every month by living in less of a house than I can afford. So far so good but boy it takes effort to use cash or go without. Just not ready to have a zero credit score yet lol (and yes it is true their algorithm does not award points for a zero balance so you need a balance to have a high score) love your channel...!
I was recently going through the checkout at our grocery store. I handed the cashier cash and she said cash??? I haven't seen someone pay in cash for a long time! The nosey lady behind me said I should be using my credit card so I could collect points. I wanted to tell her to give her head a shake and to mind her own business. lol We do have a credit card but we don't use it to collect points and we always pay the full balance. We have been encouraging our kids who are 18 and 16 to never get one. So far so good.
+Kimberly Kimberly Get out of here!!! That lady behind you. Rrr! That's almost as bad as the cashier commenting on the food I'm buying. I get so mad when that happens. LOL!
As a former cashier I always commented on people's food, never negative things, just "I've tried these too, and they are really good" It gets to be a boring tedious job, with a lot of human interaction, but very few positive human interactions. Don't be upset. I use my credit card for the points, and I rarely overspend.
Hi Dana, I'm just want to tell you that I had to go to a debt help place to get out of credit debt. I manage to get rid of one. But took a good couple of months to do it.
Oh my I can't believe they checked your credit for the instrument lol! When I was a kid they just loaned them out. If they checked my parent's credit, we would never have learned music! Good advice!!
Currently in that messy credit card debt it's not huge but it's there I'm trying to dig myself out of the hole before it gets any worse which I feel like it is.
Hi Dana, I love your videos. I’ve never paid interest on my credit cards. I always pay in full and my score is 850. You don’t need to carry a balance for a high score.
Hey Dana, I really like your channel and am glad I found you, but I think we definitely have very different "frugal living" lifestyles 😊😊. My husband was wary of credit cards when we first met in college and was shocked when he learned I had 3. I still have only 3 credit cards, one of which I share with my husband. We are in the "pay it off every month" group. We never put more on our card than we know we can pay off. We just choose to view it the same way as spending cash and never spend more money on anything than we have in our bank account, with the exception of having a mortgage on our home, which is separate from credit cards. We used my credit score to get a really low interest rate on our home loan - since I'd been responsibly using my credit cards since I turned 18, my credit score was really high even with student loan debt. We like that we were able to work really hard out of college and save up a down payment to buy a home before the market exploded (we live on the west coast). Since we have a low interest rate, we are not losing as much money in interest as we pay off our home. Our credit cards also give us cash back on everything we buy, and even more on groceries and gas. We are able to put our cash back towards paying off loans. We live mostly a very frugal lifestyle, and by carefully managing our income and budgeting, we have been able to pay off all my student loans, and make a huge dent in our mortgage. Every month we pay at least a couple hundred dollars extra on our house payment, which allowed us to refinance way sooner than we otherwise would have, and we now have an even lower interest rate. We love our credit cards, and I think that with mindfulness and careful budgeting, they are no more dangerous than carrying cash! We never make large purchases without having first saved for them - for example, we purchased a very nice grill/smoker last year using our credit card after saving for it (among several other things) for 4 years. We knew we could pay it off right away because we'd waited until we were financially secure in making the decision. We'd been using a grill we got for free up until then 😊. Anyway, sorry this comment is long! I think there are definitely a lot of pros to owning a couple credit cards if tracked carefully and used wisely! All the best to you and your family!
We each have a credit card and pay it in full each month. It earns us cash rewards which we of course enjoy. I set it to automatically pay the full amount. We have a very high credit score. Our only debt is our mortgage. I have never heard this theory that carrying a balance raises your score?
+stephanie yost Well no one really knows the algorithm for sure. That's kept pretty secret. They change it often too I bet. It's all hearsay. I'm not keen on testing it, but my score was always super high and I carried high balances for years.
Debt Free Dana ツ, no one knows the exact algorithm, but it's full public knowledge what makes a credit score go up and down. And it doesn't change on a regular basis. The act of carrying a balance, despite being expensive, does not affect your credit score one way or the other. It's all about what percentage of your overall available credit you're utilizing. Lower is better. So, you can carry a high balance on one card, yet have a high credit score anyway if you have a lot of other credit available on other cards.
The credit score is why I thought I needed one (and why I resisted Dave Ramsey at first) but I'm so much happier without any. It's too easy for me to get into a trap of spending. I always saw it as "free" money... like "oh I have $X available now I can buy X or go on X vacation" etc. My only worry is buying a house. By the time I need a new car I will have no issue paying cash but I don't own a house and I'm worried it will be hard to get a mortgage even with a large down payment. I'll cross that bridge when I come to it though. I'm not willing to suffer with credit cards just for it being a bit easier.
I agree that credit cards are very dangerous. It's true that no one sets out with the intention of getting into credit card debt. But it happens. Borrowing money is a poor way to live and it's really hurt me financially.
Does carrying a balance mean that you pay less than the minimum payment or that you only pay the statement balance?
Credit cards offer no advantage to anyone. They are the bank's version of payday loans, they are the cigarette of the financial world.
Thanks for your encouragement! I'm working on becoming debt free and have 2 cards paid off and cut up so far. Still a LONG way to go, but, going to make it, with determination and God's help!
+Sheree Moon You can do it!! Great start!! 👊🏻💖😄
I appreciate your honesty. It is difficult to not have a credit score at times. Our insurance agent said our rates are higher and then your violin example is a good one too. So frustrating. I hope the credit score system improves. I truly believe the credit card companies are evil and the benefits are not worth being associated with them.
We use our credit cards but very minimally. We have 2 cards, one is used for groceries and gas, the budget id set up for that, one is used for the odd online shopping, the budget is set for that also. We use them as if it was a debit card. When the money runs out, we stop swiping it.
morning Dana, greetings from the future! so I have a few questions. does using a credit card but not carrying a balance improve a person's credit score at all? what happens if, god forbid, something happens and you need more money to spend than you have, like say unexpected medical bills, when you don't have a credit score? although now that I think of it, I don't understand. I have heard that everyone in the US has medical insurance, so then how is it that you have medical bills? Perhaps I am missing something. I was born and have always lived in the UK, so all my medical care is funded by the NHS. I also should say, I don't know much about insurance generally - no need for life insurance, or home or contents insurance, or car insurance. so....maybe I am just very naive. probably I am just very naive on this whole thing.
I agree. I am shocked how many young people who have credit cards. Like it is normal. It is so risky.
I don't pay it off every month I pay it off every week
Leonardo Marquina Popoca lol I pay it off every time I use it
May if you warned against getting a credit card?
I was warned against it but I learn best by doing and experiencing and was eager to build credit not really knowing what credit was and why it was "Important" and have been regretting getting one ever since.
I’ve hit myself out of debt 3 times and I find myself back in debt again. It’s annoying. I’m killing my debt again now. I paid 2200 off of my credit card in the last 60 days. I plan on another 500 on payday.
I am one person and struggle to get out of debt and have no savings. I planed to pay off my debt fast but didn't see how much my mom would lean on me to cover the bills for her hoyse that I live in.
When I got a credit card I didn't kniw the power of Debit cards. You are a family. How did you run a family with savings and no credit?
Yes this was confusing to me because I have two cards and I have always paid the balance off every month. I buy my hoopdies/cars, outright with cash, never financed a car. I think I missed one or two payments, within the past six or seven years due to some kind of drama going on in the family. I recently I had my credit score checked at my bank and it was high. I was surprised so for me, paying off on time, every month, gave me a high score. what you have stated here is is not correct. I was also told buy a person who does a lot of financing, in the real estate business, ... they don't care about your credit score, it is not so much about a high credit score, it is your bill-paying history that matters. for example, how you pay your mortgage or rent or your electricity or cable bill or your power bills or your car payments or your even little things like your Netflix, Hulu, things that you order, all that stuff is your real history and is what Finance Checkers, for things like a house, are concerned about. my experience is dealing with real estate, I recently bought a small home.
First off, spending on a credit card has nothing to do with your credit score. Your ability to pay off what you've spent is what determines your credit score, (regardless of what that amount is) among with other factors such as average age of accounts, etc. What is missing in the video is the difference between a statement closing date and a due date. The balance reported to credit bureaus is the statement statement balance--the money you owe that month. If you don't pay that amount by the bill's due date, that is carrying a balance. And carrying a balance is how you accrue interest. The credit bureaus, who decide your score, have no access to how much interest you owe, simply the amount of your available credit you have used (the longer you carry a balance, the more credit used, and the higher the balance to credit ratio). The statement made that if you pay off your credit cards each month, and don't carry a balance, you won't have a high credit score is false. Banks do not assign or "give" credit scores. They simply relay information to the credit bureaus, who decide your score.
Credit scores actually improve cashflow for anyone who has to wait to get paid (small business owners, or people waiting between a pay period's end and when the check is dispersed). If you pay off your balance each month, then there's no way for it to sneak up on you. Just like anything else, it's about being fiscally responsible. The same as if you spend all the cash in your bank or in your safe, it's gone. If you treat credit cards (or any kind of loan for that matter) like cash, then you will never rack up a balance. Not using credit cards does not make your credit score down. If you close accounts (or let them expire), then it will slowly fall. But your credit score is not related to how much you spend.
Your credit score, in oversimplification, is a representation of how responsible you are. That's why you need it to rent a car, or often to get hotel rooms without a deposit. It's representative of what kind of a borrower you are to banks. Either you fall in the category of a high risk, or low risk.
I have no problem with someone not using credit cards. It doesn't say anything about you to not have a credit card. But you're spreading false information, and putting a bad name on something because you ALLOWED it to take advantage of you. If you use credit cards properly, they will PAY you to use them. You can get reward points or cash back by using a credit card and paying it off.
Debit cards do not have the same protections as a credit card, also. Fraud protection, yes. But you don't get extended warranties, or guaranteed return periods.
What you're saying in this video is the equivalent of someone going to college, sleeping through class, and complaining that it was a waste of money, and that other people shouldn't go there. There are plenty of legitimate reasons not to use a credit card, but I feel as though you didn't mention any of them in this video.
+Mike Thompson Wow! You spent a lot of time on this comment. I couldn't get through all of it, but it sounds like we disagree. Appreciate you taking the time to share your perspective. 😊✌🏻God bless!
I have excellent credit , and it has made life very easy. I am a widowed Mom, and cherish my score. Without it I would not have been able to do what I have needed to do for my family. I will never not have my credit card, and have made sure my children have one of their own. I have taught them the proper way to use one. It all comes down to maturity. If someone is going to be immature to misuse it, then they don't deserve to have one. And anyone who misuses one to the amount of $30,000 certainly is a very immature individual, if this all was just consumer debt, and not as a result of medical bills, which can be negotiated . My life is wonderful, because I keep my credit pristine. Your "advice" on here is wrong. Anyone following this will only regret it, as will you, and your family one day in the future.
momof2 unless you can prove your "opinion" I wouldn't be so quick to dismiss advice that differs from yours. Fact of the matter is creditors are hush hush on how they determine scores. So you may be right or very wrong. No one knows.
momof2 yes she was immature- she said she was 16! I know I made a lot of bad financial decisions in my twenties just because I didn't know any better and didnt have anyone to help me. now I spend a lot of my time educating myself on finances.
Its pretty easy to find out how they determine scores.. Utilization %, Payment History, Credit Age, Total Accounts, Hard Inquires, Derogatory marks.
Keep them in a good spot and you will have a high score.
I don't agree with everything said in the video, but I do like some concepts. I liked the analogy of smoking and the way people view credit cards. I dream of the day of being debt free!
Always carry a balance for a higher credit score. I know because I work at Experian.
I have another question. After I pay off my $1,000 in credit debt, could I still pretend to do the debt free screem even when I owe on other things like a cell phone contract and other bills? I won't ever be 100% Debt free right? Or, Is Dave Ramsey just talking about the credit debt to do the debt screem?
Thank you! I love this channel!
Here in Germany credit score works just the other way around, the more debt you have the worse your score gets and they judge your worth on your income (way harder to loose your job here).
But I too had a couple of thousand euro in debt on my credit cards and canceling them was a really good call I think. I might get one for vacation again because it's much cheaper pay with a credit card abroad then exchanging money.
KuniCross this is how it used to be done before FICO!! Wished it would go back to that! I know to many who had to file bankruptcy due to what we are taught 👎 we are teaching our kids and cc are not good and not. Needed now because cc companies have been used family games to get the idea of they need a cc to succeed!!!
On the downside it's almost impossible to for example buy a house here's if you don't have a good job on paper I think the real deal would be to give financial education at school.
KuniCross It's the same in Canada. We do pay off the balance in full EVERY month. Our credit score is very high and we never carry a balance. We don't pay interest, but we do get enough travel points each year to fly somewhere with the whole family for free.
kunicross, here in the US, more debt also generally means a worse score.
Another thing I want to share, benefits of having a credit card one I get movie tickets with the points that I earn. two, a prepaid card helped me build up my credit. I prepaid like $300 with the bank, they gave me credit card. third, if you want to rent a motel or a rental car or moving van, you have to have a credit card... that's the way it is . Next, I like how there is an automatically built-in monthly statement online provided by bank, some even break finances down in different categories.Also, I use mine a lot for ordering things online. lastly, a credit card not debit, it is good for disputes. if something is a problem with an item you purchased or a company or store that you've been to and they won't resolve the problem and you need to get it straightened out if you paid for it with a credit card chances are you can get that problem resolved. the cut credit card company will take care of the problem for you. So there are a few benefits for keeping a credit card. Lastly, it just takes discipline, sometimes robbing Peter to pay Paul and paying attention to what you are doing.
every place on youtube shows credit scores going from a 300 to 850. I have never seen a credit score of 277 , 221 every video that talks about credit scores states that it goes from a 300 to 850.
I get it. I had numerous credit cards and charged them up 10 years ago and Learned a lesson. Now I have 2 credit cards and keep them at low amounts. Don't let them go beyond 10% that's what kills your finances. After that crosspoint is where it gets unmanageable and escalates from there.
I remember the days when i had no cash, but some odd charge card, so that would be what I "had" to use, so lunch at Nordstrom cafe, one of the kid's classmates Bday present at Macy's, etc. - whichever card wasn't maxed out. And when the bills came in, I realized I had overpaid for the thing because , even if it was carefully bought, on sale, with coupons, etc., since I had trouble paying the bills in full, I paid a huge amt. of interest, AND the flat late fee ( some are $20.! - so , when your balance is low, that ends up being an astronomically high interest amount , percentage-wise ). All that drives up the total price of that item to many times the price I thought I was paying for it.
Who's money do you think you are borrowing for your mortgage?
I like to use credit cards for the built-in security they provide. Also, it is somewhat easier to replace if it gets lost or stolen over your debit card. Credit cards have their purpose. Points, air miles, perks and security. Not all bad.
only important statement I heard was they had 8 credit cards and had more than 30k in debt. This indicates an unhealthy and undisciplined relationship with money. After getting out of debt, her family has been careful not to practice whatever habits got them into financing trouble. Don't blame credit cards for a lack of financial responsibility.
I actually don’t like using Credit Cards. As a matter of fact, when I was in Canada, I didn’t opt-in for a Credit Card ( when everybody else had one ). I instead like to deal with Debit, and, pay via Cash ( if need arises ). There are certain workarounds to “not using a Credit Card”, but You need to plan in advance for this…
When I was in Canada, because I didn’t have a Credit Card, I always used to Save a certain amount of “Contingency Fund” separately at all times ( for times when there was some kind of an emergency & I needed quick access to funds ).
However, that being said, the current system is so messed up w.r.t “the use of Credit Cards” & building a “Credit Rating” that it is very difficult to live without a Credit Card. Say if You need a “Car Rental”, You must have a Credit Card. Similarly, if You want to Check-In to a Hotel, they’ll need Your Credit Card to put that Security Test Charge ( they don’t accept cash for this ). Similarly, if You plan on living in a city like Halifax, they’ll see Your Credit Score before giving You an Apartment on Rent. If You want to Finance / Lease a Car, again You’ll need a Credit Rating…
When You don’t owe anybody any money, You’ll sleep better at night. In Canada, I saw so many Youngsters that were totally into Credit Card Debt ( which they couldn’t pay off )… Its a vicious cycle…
So Fantastic!!!!!!
The way to win against a credit card company is to get a card, put a balance on it, and just pay a little more than the interest each month to them. Then pay the actual balance amount to your savings account. Then when you use the credit score for whatever you needed it for, then you pay off the credit card balance in full and let it sit till you need to get something with the score again. But know this only works if you can plan for larger purchases, emergencies can still put you in a bad spot. So have that untouched emergency fund available.
Using credit cards is not bad, in fact if your responsible and pay off your bill every month it will actually be beneficial to have a credit card. You can get rewards depending on your credit card. Treat a credit card as a debit card.
The powers that be want us moving toward a cashless society... Such good advice here - thank you.
Dana you are wrong on how credit scores work. My credit score dropped 20 points when I had a higher balance. The second I paid it off my score jumped 20 points.
My CS I don't care about my CS. I use my credit card for %5 cash back, Discover it saved me $1.5k this year
Discover IT only gives you 5% back on $1500 per quarter. That would be $300 cash back. So you put an additional $120,000 of spend on that card?
Can you please give me some data or statistics showing that "If you have a credit card and pay it off in full every single month...your credit score will not be as high as it will be if you carry a balance"? There is nothing on www.myfico.com/credit-education/whats-in-your-credit-score/ that talks about paying interest as something that will increase your score.
Who is the "they" in the "they reward you for carrying a balance"? The banks aren't the ones who make the credit scores, Experian, TransUnion, and Equifax are.
I am not trying to attack you, I am legitimately curious. I have a 730+ credit score, have 14 credit cards, and have never paid a cent of interest.
Why do you need 14 cards?
I don't NEED 14 credit cards, I CHOSE to have 14 credit cards for the purpose of mainly gaining airline points and miles, but also discounts on things that I already buy. I get 6% back on up to $6,000 in groceries for using my Amex Blue Cash Preferred card.
Sorry if I offended you... I meant why do you chose to have 14 cards. I was just wondering why you had so many. Rewards/discounts :) Got it
Wow Eric! You know how to work it ! Good for you ! I love getting my points and rewards too.. It's all about knowing what you are doing and having maturity and being responsibility . Dana has no idea what she is talking about. I hope others on here do not follow her wrong advice
I'm mature and responsible enough to know that I don't need points or rewards. Not worth the risk. Her advice comes from Dave Ramsey who has MILLIONS of people following his advice. They are happier and better off without credit cards. Maturity and responsibility have nothing to do with it.
I like Dave Ramsey and agree with his message and understand why he recommends to not use credit cards...but in my opinion, as long as you're responsible and ONLY use a credit card to pay for things you would normally HAVE to buy any way... and then pay the balance off at the end of the month.. I see no issues using credit cards, specially if they offer cash rewards.
I use Bank of America cash rewards for groceries.. why? - because groceries is something I ALWAYS have to buy and by using the credit card I get free money! - I always make sure to pay the statement balance in full on time...every time. - - -the key is you need to be responsible.. so if you're not.. then DO NOT use credit cards....but if you are, you can benefit from the free cash money.
You do realize that many of us who have multiple credit cards still live by the rule that if you don't have the money don't buy it. And we are able to even profit from credit card sign up offers and still not pay any interest. Having credit cards is saving and even making us money.
Are Debit cards safe for buying movies on Google play, getting netflix and hulu, and Shopping on Amazon?
+Scott Dow I've never had a problem. 😊
Yes I do
While I agree that credit cards can be a dangerous thing, you can have a great credit score without paying any balance. I havent payed a cent in interest in years and have an 800+ credit card.
I think credit cards are a lot like junk food for many people. Some people can live with junk food responsibly, however many people will over eat if it is around. You have to understand your own weaknesses and stay where you are comfortable.
IMO if you cant handle a CC I also don't think you should have a mortgage either, as management of money is going to be a challenge imo.
Some things can be cheaper like any trade based work you might get done, most will gladly negotiate price if you can put cash in hand.
Have you ever tried to negotiate at the grocery store for paying cash?
+Sam Nemeth Yes, cash is pretty powerful since most people aren't used to seeing it. 😊✨
Insane they checked your credit score to rent a violin! Love your philosophy. High credit score means I love debt!
Tim Koerner can you explain your last sentence? Not sure I understand what you're saying
@@samplautz5586 I just meant that the whole culture around debt is insane. Having a good credit score doesn't mean you are healthy financially. I love your philosophy on debt and money.
Your credit score is HIGHER if you pay in full and don't carry a balance and pay interest.
They normally report to credit bureaus on your closing date and a higher utilization % is worse than lower %. so if you pay in full that's 0% utilization and is better than any % of utilization.
You just have to use your card maybe once a month for a pack of gum or something and pay it and you will get a pretty high score
I don't like the risk of credit cards either, and I get nervous about having them, because I did previously have credit card debt. But my partner has never carried a credit card balance in her life, and she hasn't had debt in years (just a small student loan that she paid back immediately after graduation), and her credit score is in the 800s. I think that information is incorrect.
glovalova this must be true. My son just graduated from college, he only has a discover card and pays it off every month. His credit score is very high
My credit score is 814 I never carry a balance on my credit card. Credit card companies dont lower your score because you dont carry a balance.
We have 2 credit cards. One my husband got before we got together, it has 1400 on it. and then I got one 2 years ago for Christmas cause we had no money. So we are paying those off now. I hate having them. Well we don't "HAVE" them. We cut them up a long time ago.
+Sharing Our Life Yes we credit carded Christmas too a few times. 😩❤
2:18 wrong. Having a high credit score does not mean you’ve paid a lot of interest
Credit score is a way to mitigate loan risk.
Carrying a balance doesn't increase your credit score. It lowers your score because you represent more risk. Yes, banks make more money on people who carry a balance and pay interest but they represent a greater risk. Your credit score represents the risk of you defaulting on a loan. It is not meant represent profatibiliy.
Treat a credit card exactly as a debit card. This way you will never have a balance on it. You will always spend just what you have. However if you can't control yourself and can't be responsible enough to do this then yes I would recommend not having one
I agree with much of what you are saying and agree on principle. However, it is simply not true that there is any real correlation between credit score and interest paid. You could pay off a card every month for years and years and never pay a dime of interest and have a high score. Further, carrying a balance or not doesn't have a "positive impact" on the score. In fact, the opposite in many cases (if reported balances are high). The bank reports your balance as a snapshot each month when your statement cuts. If you pay in full, you still have a balance reported. Therefore it's not even possible by looking at a report to determine whether or not the balance is carried. You're in the right ballpark, but let's keep the info totally accurate.
I do. I'm not in debt.
2:18 ENORMOUS misconception right here. You do not need to pay interest on a credit card to get your credit score up. You get it up by paying bills on time. You only pay interest if you miss the due date for the payment. You can use a credit card for 10 years for all of your expenses and never pay a single cent in interest and still have a score in the high 700s into the 800s. Once again, INTEREST has nothing to do with your credit score.
Renting a violin? I would buy a used one and sell it if my daughter lost interest in learning to play. Used violins for students do not cost that much and you will not be able to get back the cost of renting. As it happens my daughter had an excellent teacher, and she is now an accomplished musician and plays in several orchestras.
You can have a high score without ever paying interest. Honestly to make things easier if you are the type of person prone to credit card risk. Get a low balance card, set some sort of $5 subscription on it, set the auto pay and then cut it up. That way you never have the physical temptation to use it but you still get the benefit of the auxiliary stuff credit score is used for. Interest paid isnt even on a credit report.
For the unexpected things that happen, like a hefty hospital bill. What are you going to do if you don't have the liquidation to deal with it? Surely a personal loan with low interest via a high credit score is better than the type of loan you'd get with no credit?
I get the sentiment though. The only reason I benefit from credit cards is because other people are paying interest. Average household pays $1300 in credit card interest every year. I can't imagine throwing that money away.
Preach! I totally agree with you. It's too easy to rack up more debt with credit cards. That's the first time I've heard the smoking analogy - very clever. Last month we paid off our vehicle! One more debt down! Best wishes to you and yours.
+Jendi P. Woot woot!!! Congrats! HUGS! xo
Carry over 2-7% balance and your score will be higher than if you carry over 0% balance. Try it and you'll see..
The rules of the credit card game are rigged not for your benefit, But if you are responsible and have half a brain You can win at the game. IT will take financial discipline. If you don't have financial discipline , don't get a credit card. IF you learn how to use them to your advantage, and learn how to manipulate the card system, the benefits are amazing. More knowledge = less risk. There are many many ways to mitigate the risk of using credit cards. I love Dave Ramsey but i do disagree with him on credit cards.
Smoking example is so so perfect. Thankfully, my parents don't have cancer but they stick out like sore thumbs these days. It's a rarity if you aren't living in the country. Really, smoking is shamed nowadays. Hard to believe people could smoke on an airplane! Lol hopefully credit cards will be "out" soon
I have never paid any interest in my life. My score is 810