Chimera.... thanks for the thought.
Chase, Citibank, and Discover pay me rebates: they hate me for having full automatic monthly payment (geez, no late fees, no interest..... no overdraft charge).
But they screw a lot of other people: due dates on Sunday, people who mail in their checks, universal default (raise your rates on a card if you bungle up something remote like a utility bill, they know, they read your credit report), cycles of late fees, penalties even if a card is closed, etc.
And how credit card companies moved to (Discover, Wilimington) Delaware and (Citibank, Sioux Falls) South Dakota where the laws let them charge higher interest rates.
Frontline: Secret History of the Credit Card, March 18 on your PBS station
http://www.pbs.org/wgbh/pages/frontline/shows/credit/
Gripe away!
Or watch the TV show online if you have Flash Video Format (I think it needs Adobe Flash)
There was a time I might have gotten into trouble but I didn't.
I had testicular cancer a few months short of my 27th birthday. Left untreated, usually fatal, but treated, usually cured totally without recurrence after 5 years.
I knew that a credit card was not the same thing as money you had in the bank. An empty credit card balance is not the same thing as an asset. It is a prevented debt (in the sense that you are unable to pay it back immediately).
I basically ceased all credit card activity at once and was ready to terminate all accounts if bullied into using them. Nobody bullied me into using my plastic (at least not point blank). The surgical hospital (City Hospital, Martinsburg WV) and the radiation oncology hospital (Winchester Medical Center) wrote off the bills because I was, unfortunately, unemployed: denied what I deserved with an education, and maybe because of the student loans and the degree.
Some of the physician offices showed partial or full forebearance as well, others showed patience as I demonstrated regular payments for 2.5 years until the fire was finally extinguished.
And no, the job I needed did not come for 2.5 years. I tried the Census Bureau a year later, but it was a hostile managerial environment, and I was too nice a guy to be effective to get information out of people.
Personally I avoid all possible debt and don't own any credit cards, nor do I have any loans or other form of credit. Saving up and waiting is vastly preferable to getting into debt as debt quickly spirals down with compound interest. If you save religiously for the luxuries you want and an emergency comes up, you use your savings.
At times i've thought of getting a credit card, but the first thing that enters my mind immediately afterwards is that one missed payment is enough to start the downward cycle. This is annoying because my bank will only give me a maestro debit card and maestro is not accepted for the most part outside of europe. For this reason I have a prepaid mastercard debit card for anything that I want to order online.
If you are very displicined financially and can keep track of things very well then a credit card can be a good idea to get things sooner, personally i'll stick to the safer option.
A decent savings account can give you up to 15% interest on your savings. That's way better than 1% rebate.
That 15% I refer to is within an ISA - you can invest £3000 a year tax-free in cash and £4000 a year in stocks and shares. My current ISA gives 8% interest, upgradeable to 10% if I change to a "bank account plus" customer. The 15% I quote is from another bank who I won't change to both due to the fuss of switching and because my current bank has a bunch of extra services (including very good online banking).
Breeze - that's exactly my point:
If you don't have the money, don't spend it
I never had debt until I got married.
"compound interest out to be illegal"
Why?
Interest is paid out of investments - the bank invests your money in various forms (stocks, bonds, forex etc) and loans to other customers. This is where the banks make their profit rather than just holding money without making profit on it (which would result in simply not being able to maintain their services after a while - it costs money to run a bank).
Now, what's more unethical - a bank using your money to generate profit via investments and keeping 100% of that profit, or a bank giving you a % of the profit it generates with your money?
Unless you consider investing in itself an unethical activity I fail to see the problem here.
It's a good idea to have a credit card, use it occasionally for small purchases, and pay off the balance every month. That way you build up a better credit score and if an emergency happens, you have access to funds quickly. In the USA, it can be difficult to do things like rent an apartment or make a hotel reservation without a credit card number or record of making payments.
I agree that staying out of debt is desirable if you can do it (fortunately, I can, at least right now). Truly, I would hate the anxiety. I'd rather do without the stuff that the debt money would buy me.
Problem with credit cards is even if you pay off the balance in full every month you need only slip up one month.
At that point you call them up and argue that you've been a great customer in the past and so they shouldn't penalize you for one slip-up. (I've done this in the past--for example, one month I put my bills in my jacket pocket and forgot to mail them.) Haven't done this lately, though. They may have gotten a lot meaner and unwilling to be flexible. I've had the same credit card for over 30 years, so maybe that helps, I dunno.
If you forget to pay on time then i'm talking about the interest, not late penalties.
Oh, okay. On that score, I have no clue, since I pay the thing off every month. I don't know what my interest is or whether or not it changed.