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@wHiTeSoL wrote:That's the line that got me in trouble years ago and mostly what gets people in trouble nowadays when credit is concerned.
It happens. It's probably better that in the past I didn't have higher credit limits because I'm sure I'd be much deeper in debt than I am now. I'm older and wiser and really trying to get my house in order these days. But I'm sure there will be times in the future when something catches my eye and I talk myself into just throwing it onto the card. The key for me is going to be making sure these are only occasional isolated incidents and that I pay it off in a reasonable time rather than maxing my cards out and just paying the minimums month after month.
longtimelurker wrote:Probably true, but ~ 40% of people do carry a balance month to month on a credit card (as of Mar 2012) so that's still a lot of non-fiscally responsible people. And that's good of course. If no-one paid interest, rewards would probably have to decrease!
I have always assumed that the rewards were a portion of the merchant fees charged every time a card is used for a transaction. But, you are right, the banks make profit off of people who pay interest too. Maybe that offsets the cost of our rewards!
EDIT: sorry lexie. I don't even have an Amex. I am leaving this discussion now.
I do have something to say about Amex though. Amex has great benefits and rewards for people in the United States. For people travelling Internationally, there is little acceptance and high exchange fees. Being someone who travels frequently and lives in foreign countries for prolonged periods of time, I don't find Amex to be a useful card.
I totally agree with your statement that it is fascinating.
PS; This is my first post ever and I DO have an AmEx
@SPX wrote:
@jenn_bar wrote:My question after reading this forum is simply why is OP lurking on this site if you don't believe in credit cards?
Oh, I never said I was against credit cards at all. I have/had four accounts:
CapOne -- still open and 12 years old
Providian -- also 12 years old, but closed after they jacked my interest rate up to 31.99 percent (for ONE late payment if I remember correctly) and refused to lower it.
Wells Fargo -- got it about 6 months ago when I was offered it for overdraft protection
Discover It -- finally applied for it after an all-out assault on my mailbox wore me down, showed up about a week ago
Hell, I love credit cards and I've broken all the rules and had them maxed out, then paid them off and maxed them out again, carried balances for years, etc. But now I am trying to get everything paid off and play the game, not only because I'm tired of giving them money every month but also because I want to a) free up the credit for emergencies and b) get my credit score boosted because I'd like to buy a house in the next 3ish years.
There's another reason I've been lurking on here as well: The whole thing is fascinating. People on here have made having and using credit cards a hobby and talk about them the same way other people talk about sports or computers or model trains. It's really all very interesting.
Totally agree! Hard to not get suckered in! Just have to still maintain your spending and income! Seems easy to want to grab the next best sign-up bonus and card, no? Too bad our credit reports limit that to a certain extent....
Like Lexie said, we have veered quite a bit away from the original topic. Rather than whether "Amex is overrated", this seems to be more about "why do we need credit cards when we can pay cash".
There are many reasons why one would prefer credit cards, or even charge cards, over cash.
1. Cash is clunky. Unlike most countries, the highest denomination in US dollar notes is 100. I would hate to carry around wads of cash just in case I ever decide to buy something, and I would hate making a trip to the bank to withdraw cash, just because I need to buy something. And you really don't want to get robbed just because you're carrying thousands or more on you.
2. I hate coins. There used to be a reason to have coins, but since most parking meters now accept credit cards, I rarely ever have any coins. If a store gives me coins as change, I usually leave it as part of the tip, or I would just somehow get rid of those coins, even if it means throwing them away.
3. Fraud protection, which is a big plus over using debit cards.
4. Return protection (doesn't apply to all credit cards, but all Amex has this feature), which is nice if you ever need to return stuff. Plus the money technically has never left your bank account, so it doesn't put a strain on your finances, especially in cases where you bought an expensive item, but changed your mind and decided to buy another model instead. So you don't have to wait for the refund before placing another order, and you technically also don't have to double pay for things.
5. Purchase protection (doesn't apply to all credit cards, but all Amex has this feature). If you break, or lose the item within a specific period of time, they will replace it for free, or refund your money. Sometimes they might ask for pictures of the item, or for you to send it to them, or a copy of a police report. With Amex generally the process is pretty straightforward and simple. Like extended warranty, there are exceptions, such as those I listed below.
6. Extended warranty (doesn't apply to all credit cards, but all Amex has this feature). Like I said in an earlier post, its an additional year warranty on top of manufacturer's warranty, as long as the original warranty is less than 5 years. The T&C explains which items are covered, and which are not. Stuff that are not covered are pretty self explanatory, such as real estate, automobiles (or any kind of vehicle essentially), yatchts, airplanes, live plants and animals, perishable goods, antiques, consumable goods, etc. I don't think they cover any renovation work you do to your house as well, other than the appliances (most appliances have >5 year warranty however, so this feature is essentially moot).
7. Rewards. It's essentially icing on the cake. I listed it as my last point because rewards are not the main reason why I use credit cards. Without it, I will still use credit cards over cash. If you're going to spend those money anyhow, and the merchant isn't giving you any discounts for using cash, then you might as well use a credit card and get whatever rewards you can get. Think of it as a discount essentially.
There are times where cash is better than credit cards, such as when merchants offer a discount over credit card payments, but it also depend. If it's a shady or not-so-trustworthy merchant that you are dealing with, you're better off with credit cards then even if it means you're gonna lose the discount.
I do agree with you. Cash is king. It really is. Put in an all-cash offer with 14 day escrow for a property, and you'll triumph over standard mortgage offers most of the time, assuming both offers are reasonably priced. Many sellers would even accept a lower offer just because it's all cash, just to avoid the long contigency period and appraisal contigency that comes along with a mortgage offer. However in cases for credit cards, it's really the best solution to most everyday purchases. Credit cards are really just an alternative form of cash. It's meant to be short-term liquidity and by no means intended for one to drag balances for extended periods of time, except in very specific circumstances, such as a 0% APR offer.
Credit cards are good, but only for those who can manage debt. Otherwise, it can turn real ugly. If you or anyone have problems with managing his/her finances, then steer clear of any debt. A credit card isnt a "free pass" to spend all you want and not worry about having to repay back, which I think is the opinion that you have about credit cards. At the end of the day it's really about self-discipline.
@DaveSignal wrote:Anybody buying something large like a home or a car will have a plan and a low interest loan. This is not the purpose for a credit card.
Yes, but we were talking about the adage "the borrower is slave to the lender." Of course this applies to any kind of credit, not just credit cards.
@09Lexie wrote:
The original post was about Amex- Somehow we have veered off topic
OP,
Have you considered or would you consider apping for an Amex based on the responses so far?
I have considered it and would consider it in the future, I'm sure.
What I will say though is that, at least from many things I've read, Amex seems to be far more trigger happy about lowering your limit/spending limit for no legitimate reason. I have read many reports of people with NPSL who were out in the world and got declined because Amex had apparently lowered the limit despite always having paid on time and having the card for years. That would have ot happen to me just about ONCE and it might be enough for me to never use their card again. Not only would it be insulting, but I would also have to regard them as unreliable.
The other thing that really concerns me is the entire concept of a financial review. It sounds way too much like an audit by the IRS and I have heard of people who had good payment history with the company having to undergo this process. Again, I can't see how I'd feel anything other than insulted and probably a little humiliated to have to drum up the details of my financial life, especially if I've not given them a legitimate reason for requiring it (such as non-payment or many late payments).
@jenn_bar wrote:Totally agree! Hard to not get suckered in! Just have to still maintain your spending and income! Seems easy to want to grab the next best sign-up bonus and card, no? Too bad our credit reports limit that to a certain extent....
Yeah, I actually went a bit nutty after I got approved for my Discover and applied for something like 5 or 6 other cards. A couple are "under review" but most just got declined on the spot, so I can't say I had much luck.