@iced wrote:
@Arago wrote:It is a matter of principle. Credit card "rewards" drive up demand for credit, but at the expense of people who have poorer credit than those with excellent credit. The credit card company certainly doesn't give you "free" money. They just charge their other customers more. You may ask yourself, "why should I care?" Well, you just might experience a financial crisis someday and be on the "other side" where you are paying high interest and another person is getting "rewards" off of your interest payments. What goes around comes around. Just because you are offered something, doesn't mean it's okay ethically to take it.
Credit card rewards can give said rewards due to a combination of merchant fees and people carrying balances, and neither are any more unethical than my drinking a can of Pepsi knowing full well that some people drink 6 liters of it a day and get fat and/or diabetic for it.
Any business with a modicum of brain matter has already factored merchant fees into the cost of their good or service, either through higher rates for everyone or through different cash/credit rates (gas stations do the latter one a lot around here). I'll also go ahead and cut off the argument now that if nobody used credit cards, the rates would therefore be lower, because they wouldn't. They'll just pocket the extra, and if you don't believe me, ask the airlines sometime why ticket prices didn't really come down much despite oil being at or near the lowest prices in a decade pretty much all year.
No prime rewards cards charge a cent of interest if the statement balance is paid each month. Signing up for a rewards card is not compulsory. Carrying a balance and paying interest on a high APR is not compulsory. If you pay any interest from month to month the only person you can blame for that is you. Many prime rewards cards (such as Chase) only accept higher scored people precisely because they would rather have the PIF customer than the carry-a-high-balance-and-maybe-miss-a-payment customer.
If you are on the "other side", you should have an emergency fund saved up to weather the storm (and the good sense to tighten the budget belt during hardship). It is common knowledge (or should be anyway) that credit cards are about the worst form of loan there is, even if they don't hold a candle to payday loans in the crappy APR contest. If you are relying on credit cards to make it through the month, you already have larger finance problems. Not even a credit card with 0% APR is going to solve that problem.
You read my mind, we must be on the same wavelength.
I use reward cards to mitigate some(obviously not all) merchant fees and the cool frills like price matching. I don't carry a balance unless it's 0% APR, and even then I have a plan to pay it off, plus a plan if something happens that prevents me from paying it off. I even have BK and foreclosure as a plan, albeit it's next to my zombie apocalypse plan. It's just thinking in terms of "best strategy if ___ happens", which even includes paying interest, whatever ends up working the best.
My problem with the the Ramsey way is it puts finance in religious terms. If getting a credit card is a bad idea, explain the extra 1k I get in rewards every year? Of course I get the 1k from people who pay interest, but all I see is this plastic thingy that I buy stuff with, pay it off that week and free money! I read the terms before securing the card, I know the APR, penalty APR, promo APR and fee schedule. What am I missing? Oh that's right, the compulsion I might buy more than I can pay off or the "unforeseen big expense". Not to sound smug (I am actually a complete idiot) but I have never carried more on a interest charging CC than what I could pay off. I have used interest charging loans, but again, I understood the terms and made sure I could budget it. I have more respect for someone who pays 17% on a car loan but budgeted their car payment than someone who mindlessly buys a car without knowing if they can afford it, even at 0% APR. That is why I like this forum, it's not about do's and don'ts, it's nuts and bolts, real life. Even Dave's advise to not lease a vehicle is ridiculous, my company does it all the time because we can write it off and trade up every few years. It makes way more sense, but for some it may not.
Don't get me wrong, I know **bleep** can happen and tomorrow might be the day I have to buy something with a CC in order to survive (it would be my last choice) . Like my best friend from childhood, he just got married and tried to have a kid (literally a month after) but his wife miscarried and she required emergency surgery. He had to go into medical BK because his wife was not yet on his insurance! I totally feel for him, how would you like to be 29, hitting all the important milestones and then having it soured by a miscarriage and medical emergency? His mistake was not planning, he just did it. You can't plan for everything, but if it's something you can control, control it! If you're paying CC interest but understand how much you are paying, and have a plan to pay it off, I salute you! It's the ones that need a religion to keep their finances together that I worry about. I know I am preaching to the choir here, but I did start my finance journey listening to Dave, and it wasn't until later realized how flawed his mindset was, not just his ideas.
TL
R life is uncertain and mitigating its adverse effects sometimes requries some creativity. Do your research, understand the terms and plan! Oh, and Dave Ramsey and Joel Osteen share the same customer base.
I don't see any conflict at all between acknowledging that credit cards can have benefits to individuals that manage them well and also acknowledging that credit cards have facilitated millions of people into debt and financial hardship. Obviously, both are true. I also see the ethical problem with consumer retail prices being set up, almost universally, with the credit card swipe fee built in, whether you use plastic or cash. Given that there are millions of people who would be better served avoiding cards, it is unethical to charge them the hidden swipe fees. The ethical burden isn't on card users, but it sure as hell is on the big banks who pressure their monopoly fee structure onto retailers. If there was a credit card surcharge that offset rewards, the use of plastic would collapse.
It is akin to legalizing heroin. It wouldn't directly affect me as I'm not vulnerable to it, but it sure would affect society as we dealt with the carnage to the vulnerable.
I personally use credit cards and reap some rewards, but I have no problem seeing people like Dave Ramsey's point that credit card issuers are evil and credit is dangerous. Too many millions of examples to deny that. It is a matter of perspective, but if you consider the hidden swipe fees, credit card users aren't getting ahead, they just aren't getting as far behind as those that eschew credit.
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850 FICO8 since 2015, Thanks MyFICO - 5+ years since last HP
I pay all my utilities with cash (EFT through my bank actually) because the company charges a $5.99 convenience fee. No thank you!
It's true though, I would probably not use credit cards if the price was higher than paying in cash. I definitely prefer plastic because it's safer and easier to track my expenditures. So in that vein, I would continue using CC's even if rewards were not available.
I actually agree that merchants shouldn't charge accross the board swipe fees, even though it would totally ruin my day. I just think it's unfair to charge everyone those fees, even those who do not partake in it. I get that it's overhead just like anything else, but people who are forced to pay in cash shouldn't have to pay for it.
An interesting point about Heroin, the Kazakhstan–Russia border was tightened a few years ago and heroin/opium became harder for Russia junkies to get a hold of. So guess what, they just made their own! Most famously the krokodil variant. So even if all CC's were banished, people would still be broke due to poor money managing habits and declining wages. Shoot, most people who burn their scores usually end up at some Title Loan place or borrowing from Mom & Dad. It will always be an issue.
@Dalmus wrote:
@arizonahd wrote:I pay all my utilities with cash (EFT through my bank actually) because the company charges a $5.99 convenience fee. No thank you!
It's true though, I would probably not use credit cards if the price was higher than paying in cash. I definitely prefer plastic because it's safer and easier to track my expenditures. So in that vein, I would continue using CC's even if rewards were not available.
I actually agree that merchants shouldn't charge accross the board swipe fees, even though it would totally ruin my day. I just think it's unfair to charge everyone those fees, even those who do not partake in it. I get that it's overhead just like anything else, but people who are forced to pay in cash shouldn't have to pay for it.
An interesting point about Heroin, the Kazakhstan–Russia border was tightened a few years ago and heroin/opium became harder for Russia junkies to get a hold of. So guess what, they just made their own! Most famously the krokodil variant. So even if all CC's were banished, people would still be broke due to poor money managing habits and declining wages. Shoot, most people who burn their scores usually end up at some Title Loan place or borrowing from Mom & Dad. It will always be an issue.
There's a circle of thought out that that builds on this (what I highlighted). Basically, it says that if you evenly distriubuted all the world's cash amongst all the world's pupulation, within a few years, most people would be right back where they started out from financially within a short time. Look at how many people win millions of dollars off a lottery ticket, and then are broke a few years later.
Its something we see all the time. Couple meets, each individually making $X per year, and living slighting better than paycheck to paycheck. Things go great, and they get married, combining their incomes... Rather than keeping the same bills and living worry-free, they figure with two incomes they can upgrade their cars and buy a nicer house. Now they're back to living slighly better than paycheck to paycheck.
You just described myself! 
Dang it. To be fair, we did get good interest rates on our stuff, who knows how long that is going to last.
I agree though, it's like the guy who finally gets a good paying job and decides to buy an entry level BMW. #YOLO
