topic Re: Why do people fear credit cards? in Credit Cards

Why do people fear credit cards?

Josh2942 — Mon, 17 Mar 2014 18:30:03 GMT

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

Re: Why do people fear credit cards?

meehan22 — Mon, 17 Mar 2014 18:34:46 GMT

mines a love/hate. If I didn't have a want to buy a home I wouldn't have them.

I'll make a purchase on them and as soon as it posts I go online and pay it. Might be $5 or $100. never cut a statement with a balance owing.

I dont like paying interest. haha.

Re: Why do people fear credit cards?

heygirlhey — Mon, 17 Mar 2014 18:37:08 GMT

I always feared them because I was not taught anything about them. It seemed they were "evil". I remember seeing a news story where a college guy killed himself because he was drowning in credit card debt. That scared me!! The adults around me didnt have credit card sense, so neither did I. After that story they said stuff like credit card companies prey on college kids. They will give you all these credit cards knowing you dont have the money to pay them back.

I think ease with credit cards starts in the home and then in school. If you don't learn about it in either place it can lead to a fear of them.

Re: Why do people fear credit cards?

Josh2942 — Mon, 17 Mar 2014 18:43:13 GMT

The thing I dont understand is if a crediter gives you 10k. It doesnt mean you have to pay 10k. You use what you want and need and pay it back. It may be 5 dollars it may be 10k. They are a great tool

Re: Why do people fear credit cards?

meehan22 — Mon, 17 Mar 2014 18:54:41 GMT

@Josh2942 wrote:
The thing I dont understand is if a crediter gives you 10k. It doesnt mean you have to pay 10k. You use what you want and need and pay it back. It may be 5 dollars it may be 10k. They are a great tool

Yep. But to bad every other person you meet doesn't share that same theory. Than again if everyone had that theory the credit card companies wouldn't make as much money.

Re: Why do people fear credit cards?

Jeff007245 — Mon, 17 Mar 2014 19:18:51 GMT

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.

Re: Why do people fear credit cards?

lg8302ch — Mon, 17 Mar 2014 19:27:08 GMT

because in the US we did not learn to spend within our means ...

Re: Why do people fear credit cards?

TrulyyBlessed — Mon, 17 Mar 2014 19:34:27 GMT

I was going over my credit card spreadsheet and a family friend viewed it. I have over 40K in available credit, but he immediately stated "You have over 40K of Debt." Some people view credit cards themselves as debt instead of the actual amount you owe being the true debt. He was not raised within a household where credit/ credit card management was discussed and nor was I. I recently learned valuable information about credit from this forum and books. I think for many individuals credit cards themselves are viewed as negative b/c they have no clue how CCs work or they may have gained an opinion of credit from some of the many people who abuse their available credit. If an individual is not able to properly manage finances or does not posess a certain amount of knowledge regarding credit than perhaps he or she SHOULD be afraid of credit cards. It will keep them out of debt.

Re: Why do people fear credit cards?

Shock — Mon, 17 Mar 2014 19:41:47 GMT

People like to pay debit or cash and have the transaction over with. Let's say for instance I spend 10 bucks on lunch 5 days a week. That's 50 bucks a week. At the end of the month, I spent 200 on lunch. Instead of paying for lunch everyday, I am on the hook for 200 bucks. Now I think "Awww man, now I have to dish out 200 bucks...." when in reality, I am going to spend 200 bucks anyways.

It's basically pay now vs pay later. People don't want to be on the hook, especially when it comes to money, The way I see it, you're going to spend the money anyways, so it really doesnt matter, Not are you only establishing your credit, but youre getting rewards too. So might as well.

Re: Why do people fear credit cards?

Involver — Mon, 17 Mar 2014 19:42:56 GMT

People fear them because they aren't properly educated on them. I was one of those people for a long time.

People are likely also fearful of them due to their impulsive consumer nature of buying a bunch of crap they don't need. Credit cards make that pretty easy.

Re: Why do people fear credit cards?

Shock — Mon, 17 Mar 2014 19:45:03 GMT

@TrulyyBlessed wrote:
I was going over my credit card spreadsheet and a family friend viewed it. I have over 40K in available credit, but he immediately stated "You have over 40K of Debt." Some people view credit cards themselves as debt instead of the actual amount you owe being the true debt. He was not raised within a household where credit/ credit card management was discussed and nor was I. I recently learned valuable information about credit from this forum and books. I think for many individuals credit cards themselves are viewed as negative b/c they have no clue how CCs work or they may have gained an opinion of credit from some of the many people who abuse their available credit. If an individual is not able to properly manage finances or does not posess a certain amount of knowledge regarding credit than perhaps he or she SHOULD be afraid of credit cards. It will keep them out of debt.

This post is solid. Many people are oblivious to the advantages of credit cards. I think people are just afraid of card management. My mom always pays in full because she thinks interest rates will kill you. I mean, she has a point, but she rarely swipes because of this. Better to play it safe I suppose.

Re: Why do people fear credit cards?

lexrjSD — Mon, 17 Mar 2014 19:47:15 GMT

@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.

Couldn't said better myself!

Re: Why do people fear credit cards?

Anonymous — Mon, 17 Mar 2014 19:56:54 GMT

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.

Re: Why do people fear credit cards?

Anonymous — Mon, 17 Mar 2014 20:17:37 GMT

@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.

Re: Why do people fear credit cards?

heyitsyeh — Mon, 17 Mar 2014 20:29:26 GMT

For me, the proposition of credit cards is simple:

1. Free 30-day loan, paying in full is not optional

2. Build (good) credit history; this takes patience along with the self-discipline!

3. Rewards

4. Tracking spending; I guess insulation from theft/fraud would fall under this category.

5. Autopay

I tend to be swayed at applying for new cards for #3, but really without #2, #4, or #5 I wouldn't want a single credit card at all.

Re: Why do people fear credit cards?

CenturyChild — Mon, 17 Mar 2014 20:25:32 GMT

IMHO, nothing at all to fear if used responsibly. I agree with the logic, If you can't afford to pay for it, don't charge it.

I love my cards. I use them for everything.

In fact I think they are easier to deal with than cash. And, they can be used to your benefit.

For example, I have all utilities, insurance etc set up as a Auto pay on my Barclay card.

So rather than go and pay each bill every month, I just sit down at the 1st of the month and pay Barclay. DONE.

I just deal directly with them and they pay all my bills throughout the month.

To me thats a huge plus in and of itself, but then theres the bonus of earning rewards for using the card.

Im trying to teach my teenage niece (whom lives with me now) about credit. Hopefully she won't make some of the mistakes I did (and many of us here) with credit early on. Thats my hope anyway, along with getting here a decent history started before she turns 18.

She already has the attitude of .. its only $5, its only $20 etc all the time. I'm trying to teach her that line of thinking and a credit card together can and will get her in trouble fast. It adds up fast.

Re: Why do people fear credit cards?

lg8302ch — Mon, 17 Mar 2014 21:03:15 GMT

@heyitsyeh wrote:
For me, the proposition of credit cards is simple:

1. Free 30-day loan, paying in full is not optional
2. Build (good) credit history; this takes patience along with the self-discipline!
3. Rewards
4. Tracking spending; I guess insulation from theft/fraud would fall under this category.
5. Autopay

I tend to be swayed at applying for new cards for #3, but really without #2, #4, or #5 I wouldn't want a single credit card at all.

+1....btw...perfect card line up for domestic spending

Re: Why do people fear credit cards?

toothgrind3r — Mon, 17 Mar 2014 21:51:39 GMT

A few years ago I had pretty bad debt. Two years ago I decided to (start to) clean up my report. One year ago, if I wanted that new Canon DSLR, I would save my pennies and buy it with debit, because I didn't want to get into debt anymore. I feared the credit card after the trouble I got into.

Of course, what I really feared was my relationship with the credit card.

THAT BEING SAID, today, if I want that new Canon DSLR, I take our my credit card, think REALLY, REALLY hard about it, and then make a smart choice. But the fact that I can get it, even though I may not be able to fully afford it right now, still scares me a bit!!!

Re: Why do people fear credit cards?

eagle2013 — Mon, 17 Mar 2014 22:14:11 GMT

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.

Re: Why do people fear credit cards?

heyitsyeh — Mon, 17 Mar 2014 22:40:11 GMT

lg8302ch:

Thanks, I have no opportunities for travel with this job so no need for FTF-free or travel rewards cards yet.

I forgot to mention that I fear the possibility of overdraft from use of debit more than treating a credit line (read: loan) as "free money"