What's the point of credit cards?

[Johnny_Favorite]

Yes I know the basic idea is to show creditworthiness and build up an awesome fico. But what I don't get is that it seems like one gigantic game.

If you were to actually use your cards and carry a large balance, you would be looked at unfavorably by the card companies. So the goal is to spend a little and always pay in full - something you could do with your ATM card.

Yes I will play the game but it all seems so ridiculous to me. Here's some credit - now don't really use it or you're not credit worthy.

[sakhalin070]

---

@Johnny_Favorite wrote:
Yes I know the basic idea is to show creditworthiness and build up an awesome fico. But what I don't get is that it seems like one gigantic game.

If you were to actually use your cards and carry a large balance, you would be looked at unfavorably by the card companies. So the goal is to spend a little and always pay in full - something you could do with your ATM card.

Yes I will play the game but it all seems so ridiculous to me. Here's some credit - now don't really use it or you're not credit worthy.

---

With an ATM/Debit card I won't be able to build credit history for future purposes such as buying a house or a car, or getting approved for loans I may need (such as grad school loans). 

With an ATM/Debit card, my money is more at risk because the card is directly linked to my checking account; and in the case of someone skimming card numbers, I am screwed.  At least with my credit cards I can easily dispute the suspicious transactions through the fraud protection and benefits that credit cards have over debit cards.  It is still possible to dispute transaction with a debit card, but it's nowhere near as convenient as a credit card.

And lastly, I don't get rewards on my debit card.

And these are the reasons I use credit over debit.  The only time I use my ATM or debit card is....at an ATM. lol.  But hey, to each their own.

[_jb_]

Gotta play the game unfortunately. I chose not to for the longest time, and it didn't help when I needed a vehicle loan, etc.

[bobebob]

Proper use will be rewarded over time in the form of lower interest rates and easy loan processing.

I just started talking to a loan broker on 1/25 and should close this week on my mortgage refi (about 3 weeks).  That's pretty quick.  And I got a good rate (15 year fixed @ 2.875 for no cost refi).

Also, I PIF every month (even if I don't always pay before the statement posts) so I don't pay any interest or fees.  And because I put most of my expenses through my AMEX, this month I am getting over $600 back (the check for the year).

That's over 600 reasons! 

[jsickz32]

Did some winter shopping and used my discover. I got $157 cash back. I dont carry balances so i could of used my debit card but i would of missed out on the cashback. And i build credit while doing it. Win win for me.

[SnackTrader]

Some people do use their cards to carry balances, and they are perfectly fine. They may not be approved for every card they apply for subsequently, but they are using credit for what it is there for. They are also losing money by paying interest, but that's their choice.

Something that has been said a million times here but needs repeating is that this forum is NOT fully representative of the greater population. The stories of AA for carrying balances, and CLDs, etc. are put on these forums because people are looking for help or want to share their stories. For every one of those, there are thousands of people who have never had that problem and therefore don't feel the need to share on a credit card forum.

Here's my take: I use my cards for rewards only. I don't carry a balance and I don't intend to because it is expensive. But, if life ever got in my way and I couldn't afford my day to day life, I would carry a balance and make minimum payments in a heartbeat. That is why I am playing the game now, to be ready for when the game plays me. Lets just hope it never happens.

[lithium78]

For me, credit cards are basically discount cards that I use to get 1%-20% off the price of items (although instead of instant savings I get the savings as cashback).  I could buy whatever with my debit card, but I don't get rewards for that.  In addition, I get much better purchase protection, rental car insurance, and fraud protection using credit cards instead of debit cards.  The only people who have to worry about credit cards are people who lack self-discipline and self-control.  Treat a credit card like it's a debit card and the cards end up paying YOU for using them.

[LionLaw]

Well, utilization is a flexible thing. Yes, your scores will take a hit when balances report, but they recover fully when you pay in full. Since your scores only really matter when you're hunting for new credit, which most people don't do too frequently, you don't need to worry about "playing the game" all that often.

Of course, people on this forum make a hobby out of growing their credit, so they worry about these sorts of things much more frequently, but there's no reason you have to do so.

[Open123]

To me, they are:

1.  Earn benefits associated with the card that I would otherwise not get, i.e., elite hotel and airline memberships without prerequisite number of stays or flights.

2.  Rewards - since I'm going to spend the money anyway, mind as well get some kind of rebate.  Enough people using cash, debit, and non rewards cards to benefit those using high rewards cards.

3.  Safer than cash in case of fraud and creates a trail where it makes it easier to audit and track.  

4.  With Amex - some merchants are less prone to be dishonest realizing the company's draconian chargeback policy almost invariably in favor of the cardmember.

5.  Extended warranties and free insurance when buying products or renting cars.

If a person doesn't carry a balance, I fail to see how anyone would opt to use cash, debit, or a non rewards card.  I can only guess they either don't qualify for the rewards cards, grossly misinformed, or being disengenuous for commercial motives (i.e., Dave Ramsey, Susie Orman and their ilk).

[distantarray]

if you never borrow money from a friend will he trust you with money if you need it? probably not much. but if you have a good relationship with your friend and borrow money here and there and always pay back quickly then would he trust you with more? yes indeed he would.

Same concept, and with credit people get lost with what they feel they can spend vs what they can actually spend it shows responsibility. Kind of like relationships most are only as faithful as their own options, but if you show commitment etc then you stick together building a bond (credit)