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Valued Contributor
red259
Posts: 2,170
Registered: ‎06-05-2013
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Re: Why do people fear credit cards?


Josh2942 wrote:

Why do people fear credit cards? Many people say that credit cards are meant to get you in debt but credit card companies make billions without people being in debt. Its actually worse when someone is in debt with a crediter because if it gets sent to collections they take a serious loss. Credit cards are a great tool for investments, rewards, travel, safer transactions, etc. I love my credit cards


People fear what they do not understand. There are a lot of myths out there about credit cards. One of the bigger ones is that if you buy something with a credit card you have to pay interest. As almost everyone on this forumn knows this is not true if you PIF by the balance due date. Unfortunatly, a lot of people are laboring under that presumption. Some people do not understand some of the value of the rewards that can be obtained. Other people may have had a bad experience with a credit card in the past (trust me if you have gone through credit card collections you may never want another card either). There are people who are compulsive spenders and therefore do not trust themselves with credit cards. Other people are not organized enough to track their balances vs money in their bank accounts and fear they may over extended themselves on accident. Many people do not understand how their purchases are protected by credit cards than by debit cards. Some people just don't want to go through the perceived hassle of paying for something with a credit card and then having to go back and pay the credit card invoice. They see it has one more bill to pay. Some of these reasons are legitimate for not wanting to get a credit card. Other reasons not so much.


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Valued Contributor
red259
Posts: 2,170
Registered: ‎06-05-2013
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Re: Why do people fear credit cards?


mnosal9 wrote:

I was never educated on credit. They should teach credit in high school. I messed up my credit in 07-08 because I had no idea what I was doing, and thought ooohh free money, then when it was time to pay it back I had the "oh **bleep**" expression. Now thanks to this forum, I have a better credit rating and have improved my finances. I am more responsible now more than I have ever been with money. Now I debate what card to use each month depending on the rewards I want.


+1 They really should teach about credit in high school. I remember classes on how to write checks properly, but I think more emphasis should be put on basic financial management. I screwed myself up when I was younger by not understanding how student loans worked and I have a fountain of debt as a result. When I have children I intend to teach them this skill set well before they go out on their own. 


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Valued Contributor
red259
Posts: 2,170
Registered: ‎06-05-2013
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Re: Why do people fear credit cards?


eagle2013 wrote:

I'll be honest in that the thought of me having more credit than my income is a very sobering and somewhat scary. With the exception of AMEX, I won't request any CLIs until I gradaute and make a higher salary. Although I manage money well (PIF), I do notice that I spend more with credit than I do cash. For example, I never really would drink Starbucks - only on occassion. However, since it is 5% cash back this quarter, I find myself being tempted to go more a couple of times a week. One of the things I liked about debit is that it is tangible - you can only spend what you have. Not the case with credit.


Hah! I just went and had a starbucks today (I have it once every 4-5 months), but the reason I did it was because the bonus is coming to an end. Really was brilliant marketing by starbucks & chase. 


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Chris679
Posts: 408
Registered: ‎03-09-2010
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Re: Why do people fear credit cards?

I also don't think a lot of people realize how easy it is to pay with your phone or track multiple accounts with an app like Mint. You can pay off all of your cards in 5 mins. Some people are convinced debit cards are safer and won't listen to reason.
Valued Contributor
SnackTrader
Posts: 1,567
Registered: ‎09-15-2012
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Re: Why do people fear credit cards?


enharu wrote:

lexrjSD wrote:

Jeff007245 wrote:

People fear the unknown - perhaps they are not knowledgeable on the subject, clueless on financial budgeting, do not possess the discipline to live within their means, and are unaware of the benefits that credit cards provide when used properly.


+1

Couldn't said better myself!


+2.

People who fear credit cards may be actually fearful of themselves, and that's nothing to be ashamed about. Not everyone can be self-disciplined, which may be due to a variety of issues including negligence, ignorance, or just pure recklessness. If I know I can't handle credit cards, then the next logical step is to avoid trying to chew more than what I can eat by simply not getting it.

 

For people whom are not educated and/or disciplined in terms of their own finances and budgeting, credit card debt can spiral out of control very easily. Most people want a shiny new exotic car, or that branded luxury bag that's sitting on the shelves, and charging on a credit card is usually "painless" because people don't feel the pinch of the money coming out of their wallet / bank accounts when they are making that purchase. Only when the credit card bill is due, which is usually around a month later, then they start to slowly notice the problem. Some may even just make minimum payments and let the debt continue snowballing and it eventually comes back to haunt them with one big fat bill.

 

Regardless of how important and useful credit cards may be, I honestly think its a bad idea for someone who cant practice self-discipline to have them. It's much better to just forgo on the rewards rather than to create a problem that could have been avoided entirely in the first place. Those people should avoid credit cards until they can control themselves. It's basically similar to the reason why impulsive gamblers shouldn't be hanging out in casinos.  

 

On the other hand, for those who can manage their finances responsibly, credit cards can be an extremely valuable tool for many reasons.

 


People are afraid of themselves. Lots of examples of people not using their cards right all over the forums (some right on the front page on the Credit Card forum right now...) including from people who are VERY active and give good advice On this site.  Remember, good credit and good financial health are two different things, and frequently people do only one of these two properly. 

 


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Valued Contributor
CreditScholar
Posts: 2,300
Registered: ‎01-22-2012
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Re: Why do people fear credit cards?


enharu wrote:

lexrjSD wrote:

Jeff007245 wrote:

People fear the unknown - perhaps they are not knowledgeable on the subject, clueless on financial budgeting, do not possess the discipline to live within their means, and are unaware of the benefits that credit cards provide when used properly.


+1

Couldn't said better myself!


+2.

People who fear credit cards may be actually fearful of themselves, and that's nothing to be ashamed about. Not everyone can be self-disciplined, which may be due to a variety of issues including negligence, ignorance, or just pure recklessness. If I know I can't handle credit cards, then the next logical step is to avoid trying to chew more than what I can eat by simply not getting it.

 

For people whom are not educated and/or disciplined in terms of their own finances and budgeting, credit card debt can spiral out of control very easily. Most people want a shiny new exotic car, or that branded luxury bag that's sitting on the shelves, and charging on a credit card is usually "painless" because people don't feel the pinch of the money coming out of their wallet / bank accounts when they are making that purchase. Only when the credit card bill is due, which is usually around a month later, then they start to slowly notice the problem. Some may even just make minimum payments and let the debt continue snowballing and it eventually comes back to haunt them with one big fat bill.

 

Regardless of how important and useful credit cards may be, I honestly think its a bad idea for someone who cant practice self-discipline to have them. It's much better to just forgo on the rewards rather than to create a problem that could have been avoided entirely in the first place. Those people should avoid credit cards until they can control themselves. It's basically similar to the reason why impulsive gamblers shouldn't be hanging out in casinos.  

 

On the other hand, for those who can manage their finances responsibly, credit cards can be an extremely valuable tool for many reasons.

 


+3. Credit cards simply magnify whatever situation you're already in. If you are disciplined, can plan ahead, and already have good control of your finances, then a credit card will just be another tool in your aresenal (albeit one that earns you rewards). In this respect rewards can be seen as a bonus for good behaviour with money.

 

On the other hand if your financial situation is a mess, if you can't control your spending and/or have poor impulse control, credit cards are probably going to make things worse because it's just another way to get yourself into trouble.

 

In many ways it's like having a baby. If your relationship is solid and things are going well, then a baby will likely add to the happiness of your family. However if you're constantly fighting with your spouse, have money problems, are worried about your marriage breaking down, etc. then having a baby will only amplify those issues. It adds another layer of complications when people in these situations really need less. I can't believe that some people who are in a lousy relationship think that having a baby will make everything better and will bring them closer together. It doesn't. Neither does getting credit cards when you're already having trouble managing your debt. It doesn't make things better either. It just makes everything worse.

 

The other thing to keep in mind is that for most people, money is a very emotional topic so it's hard for those people to remain objective. They've probably heard horror stories from their parents and friends, think that the big bad banks are out to rip you off with credit cards (which is at best a partial truth), etc. All of these things influence how one views money. I find that those who get wrapped up emotionally about money (it's evil, ______ should happen instead, it's not fair, etc.) are those with the least control over their finances. Money (like credit) is a tool that provides options, no more and no less.

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ccole93
Posts: 63
Registered: ‎12-06-2012
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Re: Why do people fear credit cards?

I'm 20 and as you can see in my sig, I have a fair amount of cards. My parents raised me to be careful with money and from a young age I was always taught to pay off my debts. It's just kind of a no-brainer to me, but so many people are shocked when they see what I have. It's not a big deal. I like the rewards, I like working on my credit, and I like being in good with the companies. My credit cards have saved me a few times and I have never made a late payment or had any other "baddies".

 

That being said, when I got my very first credit card I was absolutely ecstatic and put everything I could on it. :smileytongue: Then I joined this website and learned how to use them properly and it's really helped me out over the past three years. I don't understand the fear of credit cards, though. It's a hunk of plastic. If you can't control yourself, you shouldn't have one.


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takeshi74
Posts: 3,229
Registered: ‎06-05-2013
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Re: Why do people fear credit cards?


Josh2942 wrote:

Why do people fear credit cards?


Ignorance, bad experiences. take your pick from the countless reasons out there,  Why does it matter?

Regular Contributor
toothgrind3r
Posts: 210
Registered: ‎10-07-2012
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Re: Why do people fear credit cards?


ccole93 wrote:

If you can't control yourself, you shouldn't have one.


But that's the problem.  People get their first card, can't control themselves, get into trouble, and that's where a lot of the fear comes from.  So it's sort of unfair to say they shouldn't have one.  People need to learn, sometimes the hard way...and you can;t learn if you don't try.

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ccole93
Posts: 63
Registered: ‎12-06-2012
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Re: Why do people fear credit cards?

I guess, if learning involves racking up more debt than your income in a year. Pretty abysmal way to "learn".


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