The psychology of rewards

[Anonymous]

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@Anonymous wrote:
Why is anyone defending getting a bunch of store cards? 🐒

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No one is defending that. If that is what a rebuilder can get to start building their credit before understanding what credit really is, what is wrong with that?

[red259]

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@kdm31091 wrote:

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@-Cal- wrote:

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@redpat wrote:

It's the sociology of rewards rather than psychology.

Everyone is looking at what everyone else has and wanting MORE and marketing by CCC is making it a social epidemic, lol.

Herd mentallty, just look at the posts of Discover CLI, people got'em even though they didn't need'em.

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There is some truth to that. Some look at it as what is out there that I am not taking advantage of. Some go for higher CLIs to pad their utilization. 

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I find padding utilization to be an overhyped thing as well. If your utilization is low, it's low. Doesn't matter if you have 50k available or 300k available. If you are paying in full or close to it every month anyway, you don't need some crazy high limits because there's nothing to "pad". If something does come up and you have to carry a balance, oh well...util fixes itself very quickly, so not worth having a bunch of cards just for that reason.

I know not everyone does it but some people seem to apply for cards they otherwise don't want just to "pad util". I find that misguided but that's just me.

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I don't apply for cards to pad util, but I have PC cards instead of closing them to keep the credit lines. The reason is that I want to keep my util low and don't want to have to worry about paying before statement cut etc. I PIF except on 0%apr cards, so I can see why some people factor it in when managing their credit.  

[Anonymous]

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@redpat wrote:

It's the sociology of rewards rather than psychology.

Everyone is looking at what everyone else has and wanting MORE and marketing by CCC is making it a social epidemic, lol.

Herd mentallty, just look at the posts of Discover CLI, people got'em even though they didn't need'em.

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That's a good point. I think that's a lot of the inital "Oooohhhh" that I got here. But then it turned to psychology and what worked for me. 

[Broke_Triathlete]

I think people get an emotional "high" by seeing their rewards balance increasing. To me, that just tells me I'm spending way too much money. Haha

I've said a million times, everyone is different. Everyone can do what they want to do, it doesn't affect me one bit. I honestly think if people would pull out a calculator before they make any financial decision, rewards chasing included, we would not be so quick to swipe the card just to get some "cash back." 

I thought the whole point of this site is to share in our ups, downs, victories and losses for people to learn from? I wish I came across this thread like this when I was a newbie a few years back. I may have had a little extra in the pocket that I don't have now because I was reward chasing. Nowadays, I've learned not to do this, mainly from myFICO, and I'm glad I was taught that. This is my own opionion and take it with a grain of salt... people who baulk at this thread and can't understand what the OP is really trying to say is in outright denial about how this CC game we play, works. An extreme case here, but if someone spent $100K to get X amount in rewards, was it worth being $100K in debt. Before everyone comes back at me with, "Well if they have the income to support it why does it matter?" Because they are going to pay tons of interest on that $100K until they can pay it off, so was it worth losing all that money in interest to gain peanuts in rewards? 

[Callandra]

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@Anonymous wrote:
Why is anyone defending getting a bunch of store cards? 🐒

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You know, I think store cards kind of get a bad rap (especially around here). If there's a store you like to shop at a lot (if you're going to shop there anyway) and having the card gives you a discount (5% off like Target) or tons of coupons (Kohl's, Macy's, etc.), I think it's fine to have a store card or two. The problem is when people go nuts on the SCT and wind up with 10+ store cards they will never use (and they will most likely have really low limits). Or people overshop because they have the card and wind up carrying balances and paying tons in interest (which is what the store wants). Store cards are also good for building since they usually have no AF and are easier to get than bank cards. 

[Anonymous]

A rebuilder can do better with secured cards. At least they can use those in more than a couple of places. Understand my message. Credit shortcuts lead to shortcut results.

[myjourney]

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@Open123 wrote:

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@kdm31091 wrote:

If I created the thread, I have every right to "inject my opinion" into it...if someone doesn't want to read it, that's fine too. We all ignore threads we aren't interested in. As far as giving my opinion as to why a card wouldn't work for me, I'm providing an alternative to the usual "app now app now app now!", which IMO, means I may help someone!

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Of course you do.  

No one is suggestion you shouldn't.  This is America, and this is a public forum, subject to TOS, of course.  On some posts, a person simply wants to know if Card X makes sense for them, which is a pretty natural thing ask on a CC forum.

In my view, I think the person asking would be best served by:

1.  Pros and Cons of the Card in question.

2.  Suggestions, followed by pros and cons and why an alternative *may* be better.

3.  Reasons (opinion) we made the recommendation for potential alternatives.

For instance, if a person posts, "Is the BofA Cash+ a good cash back card?"  Should I (since I'm partial to rewards) begin by, "Oh, cash sucks.  You're getting ripped off.  BofA are losers!  You should start looking at Amex 50K promos and Chase 40K promos."  Though it may or may not be better, ideally, we should naturally progress with pros and cons, and allow for the natural progression of what is most suitable for the OP to evolve with their full participation.  It may be rewards, even if they wanted cash.  Conversely, it may cash, even if they had wanted rewards initially.  Every case is unique, and takes on it's own journey.

Rewards are not a zero-sum game.  We may all collectively benefit.

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+1 exactly my point Open 

Give the person asking all the facts not oh I have that card and hate it and BofA

[Anonymous]

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@Anonymous wrote:
A rebuilder can do better with secured cards. At least they can use those in more than a couple of places. Understand my message. Credit shortcuts lead to shortcut results.

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@Of course they can.  But you also know they can get denied for the secured card also. As @Callandra stated, store cards get a bad rap here.

[redpat]

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@Anonymous wrote:

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@redpat wrote:

It's the sociology of rewards rather than psychology.

Everyone is looking at what everyone else has and wanting MORE and marketing by CCC is making it a social epidemic, lol.

Herd mentallty, just look at the posts of Discover CLI, people got'em even though they didn't need'em.

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@redpat,

I think I'd have to disagree with it is "sociology than psychology". Psychology is #1.  Human beings are hard wired for instant gratification and cash back does just that hence the craze for it.  In this excerpt from the business insider a while back by writer Jim Wang (can't fine the link)...

"Psychology

The fundamental goal of credit card companies when issuing cash back cards is to encourage people to spend more. Indeed, the incentive to “earn” money back does seem to result in people being more willing to use credit cards to make purchases. The problem with this, apart from the obvious fact that you could wind up spending more money than you otherwise would in order to earn money you otherwise could have saved, is that it could mean you won't be able to pay off your balance at the end of the month. The obvious result of this is that any cash back is converted into interest, in which case you earn nothing back.

When considering getting a cash back charge card, it's vital that you possess the cognitive maturity to understand the way in which the issuer expects you to think, in order to preemptively prevent being taken advantage of."

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I guess you missed my play on words with "social media", "herd mentality" regarding credit cards forums. 

[Anonymous]

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@redpat wrote:

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@Anonymous wrote:

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@redpat wrote:

It's the sociology of rewards rather than psychology.

Everyone is looking at what everyone else has and wanting MORE and marketing by CCC is making it a social epidemic, lol.

Herd mentallty, just look at the posts of Discover CLI, people got'em even though they didn't need'em.

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@redpat,

I think I'd have to disagree with it is "sociology than psychology". Psychology is #1.  Human beings are hard wired for instant gratification and cash back does just that hence the craze for it.  In this excerpt from the business insider a while back by writer Jim Wang (can't fine the link)...

"Psychology

The fundamental goal of credit card companies when issuing cash back cards is to encourage people to spend more. Indeed, the incentive to “earn” money back does seem to result in people being more willing to use credit cards to make purchases. The problem with this, apart from the obvious fact that you could wind up spending more money than you otherwise would in order to earn money you otherwise could have saved, is that it could mean you won't be able to pay off your balance at the end of the month. The obvious result of this is that any cash back is converted into interest, in which case you earn nothing back.

When considering getting a cash back charge card, it's vital that you possess the cognitive maturity to understand the way in which the issuer expects you to think, in order to preemptively prevent being taken advantage of."

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I guess you missed my play on words with "social media", "herd mentality" regarding credit cards forums. 

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Nope, I didn't miss it..  That is what some people seem to imply but it is not all true. Just like how people imply the place eggs people on to get store cards...