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Old 03-17-2011, 02:22 PM  
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Greenville, SC
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Someone tell me what is the deal with credit?


Let me just say first that I do not spend money I don't have ie borrow money for general spending.

So let me also state that when I applied for a mortgage years ago, I was told I had "lack of credit". So, let me get this straight....
1. The only way to really "build" credit is to spend money you don't have through car loans, credit cards etc....
2. Your credit can be damaged by a late payment on just about anything (cell phone, cable, power, water, etc...)
3. But if you pay EVERYTHING on time, never late, always live within your means.... You get "lack of credit?" therefore harder to get a home loan?

Am I mistaken in thinking that this is a system that encourages people to mage (generally) poor decisions with their spending? Rewards those that chose not to spend within their means, punishes those that do? Sounds like a bunch of BS to me. (not sure where else I'm going with this....)
I have always wanted to fuss about that. Has always ticked me off... Thanks for reading!
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Old 03-17-2011, 02:56 PM  
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San Jose, CA
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That's my impression of how the game works.

I went overlimit once on a credit card (accidentally!!!) and got hit with multiple fees, and my APR shot up to like 24% in a heartbeat. This was all within one month's billing cycle too, that purchase didn't even show up on my statement yet. It was nuts. Fortunately I was able to straighten it out and get it all reversed, but it was a good learning experience; you're trapped into playing that game if you ever want to buy a house or car, and they are just waiting to screw you the first chance they get.
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Old 03-17-2011, 02:59 PM  
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Greenville, SC
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I agree. I have never had a credit card and have gotten a car loan only long enough to sell the one I was replacing and then pay the loan off. I was able to get the mortgage and haven't looked back. My credit is good due only to having paid on my mortgage for a few years. Still don't plan on ever having an actual car payment or a single credit card. I hate the game. I think it promotes an unhealthy mentality of spending..
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Old 03-17-2011, 03:16 PM  
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San Jose, CA
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That's totally true, people get cards to buy stuff they can't afford, not to build credit to eventually buy a house or car. Not everyone, but a lot of folks I know.

For me and my siblings, we just weren't educated. My parents didn't understand credit cards, so weren't able to teach us kids how to use them wisely, and that you still have to live within your means or get into big trouble. With my kids, I'll emphasize credit cards aren't free money, you have to pay it back. And you'll pay dearly if you are careless.
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Old 03-17-2011, 03:54 PM  
mohel
 
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Keizer, OR
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I avoided credit cards till I was over 40 and became convinced that for travel, hotels and flying I really needed plastic. Like you I paid my bills on time including paying off my credit cards. This drew offers from every bank in the country wanting me using their card.
I did intentionally charge $800 for computer parts when I could have paid cash. Instead I paid off the $800 in three months. (more offers)
In 2005 a health emergency forced me into living off the card for three months but by last year I'd paid that off too.

You won't get credit for not having debt but a car loan or mortgage will suffice. If you just want the card for an emergency get started with Sears, Home Depot or Lowes. Once they have a pattern to look at you can get a Visa or Mastercharge card.
A car breakdown miles from home can be a mess unless you have cash on you and fixing a trans or head gasket mean carrying more cash than I'm comfortable with.
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Old 03-17-2011, 08:25 PM  
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Montreal, Quebec
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A card works great if you can pay it off every month. A good credit rating will get you the best financing.
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Old 03-17-2011, 08:34 PM  
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Terre Haute, Indiana
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I've never had a credit card, and i hate owing (why does this look like ow-ing?) people money.

Another important lesson:

Never sell a friend anything, nor loan them money.... It's not worth what you lose...
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Old 03-18-2011, 06:19 AM  
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Greenville, SC
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I know around the time I graduated my dad encouraged me to get a card only to pay it off before the interest acrued (to build credit). He was probably about like you BLUCHER and RIPONREDTJ. He knew how to play the game well but not end up like many schmucks out there over their head in cc debt. I didn't really listen to him as far as the credit cards. I just never wanted one.
And as far as not wanting to carry a bunch of emergency cash, I agree. I do use a debit card which CAN be charged as "credit" even though you are spending your own money....
I have always been apprehensive about anything where the agreement has microscopic print covering the back page. It took me forever to get a cellphone! I didn't like the idea of not being absolutely certain what the price was going to be before getting the bill.
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Old 03-18-2011, 12:40 PM  
mohel
 
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Keizer, OR
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Quote:
Originally Posted by Otahyoni View Post
I've never had a credit card, and i hate owing (why does this look like ow-ing?) people money.

Another important lesson:

Never sell a friend anything, nor loan them money.... It's not worth what you lose...
Good advice and as usual stuff I had to learn the hard way. Perhaps the one good thing about Islam is it's position on lending money which is forbidden as usury (charging interest on loans). There are a trainload of devils in the fine print.

The trick with plastic is to simply understand it's another form of money. Used carefully the CC can document your expenditures, bail you out of life's many emergencies and save you money in the end.

Everyone here has the skill to get online and shop. There are deals online you won't find in stores. WalMart carries many online deals not found in their stores. Just buy it online and pick it up at your local store in 24 to 48 hours. No shipping charges plus you save over shopping just their store.

Anyone reluctant to use a CC is really the best person to actually own a CC. The combined advantages of the internet and plastic is simply too good to deny (or miss). Cyber Mondays are getting to be better than Black Friday. In some cases an appliance purchased with a CC carries added return options.

If you're old enough to be confident about how you manage your money you're ready to trust yourself with plastic. I keep a card with a $600 limit I use only for online purchases.
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Old 03-21-2011, 03:42 PM  
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Bristol, Tennessee
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credit cards are great!!!! (if used properly)

primarily:
no liability if lost or stolen, unlike cash where it's just gone, no immediate removal of cash you may need like a stolen debit card will. Plus an easy method of recourse against transactions that go bad.

in the past/currently (but may be going away) - awesome rewards programs, for the past two years I accumulated a lot of points on my card just buying gas, enough to pay for oil changes and still have a chunk left to use (get cash back for auto related expenses (rewards program is dead though. - with the new credit card reform rewards programs are dying, so while overall it will be far more fair I miss getting those points.

I only spend money with the card I have to spend in the first place. no one should have a wallet full of store cards but having one or two can be useful (anti-fraud detections sometimes get set off so it's good to have a spare sometimes). PLus who wants to carry around a ton of cash, that is just too much risk.

you don't have to spend to build up credit, get a credit card and just keep it somewhere safe, just having a credit available with the full balance available will help your credit.
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