R.F.F. wrote:I'm sorry that you're not responsible enough to manage credit. If you follow the good advice of many people on this forum you won't have any trouble. Your irresponsibility doesn't equal credit cards being the devil.

I can manage my credit just fine pal. Did you miss the part where I said I have credit that I pay on time every month? Wait, no, you didn't miss that because you said

R.F.F. wrote:Again, good for you. You seem like a good person and hard worker. You are the exception to the rule.

My claim that credit cards are the devil is based not on my behavior but the behavior of the lenders. People like you. People who raise 8% rates to 29.99% in one month or lower credit limits because of a late payment on an entirely different card. People like you who hold payments made past the due date so they can charge a late fee and then raise the rates. People like you who prey on sub prime borrowers knowing full well that they will slip up and trigger late charges and higher rates then those you are already bleeding out of them. People like you who call people like me that responsibly manage our debt and have long ago paid off our cards as "deadbeats".

So buzz off you devil.

El Protoolio wrote:

ebeam wrote:

El Protoolio wrote:No. I am saying to not use credit cards and to pay cash as you go and that by doing this and saving up for the big things you won't get screwed by your debt to the banks and will be living within your means. That is, spending no more then what you make in any given month.

If you are responsible enough to save up for the big things in the first place, why wouldn't you be responsible enough to pay off your credit card each month and not overspend? Your circular logic is confusing.

If I am responsible enough and save enough for the big things and can pay off my balance each month why would I want the card in the first place? Your circular logic is confusing.

Well, because you can build credit AND save money..these are not mutually exclusive concepts. Just because you're confused, doesn't make my logic circular. You present this like one is an alternative to the other. What I'm saying is that they are not the same thing and in the long-term financial picture it can be to your advantage to have good credit so you can take on good debt more easily and cheaply. I'm not saying it is impossible to get by without credit and I also don't mean to imply that having a credit card is the best or the only way to build good credit.

Take buying a home for example. What your 20-25% down payment buys you is the ability to forego a high-rate second mortgage or mortgage insurance to cover the banks ass in case you default before you've built enough equity in the home to cover transaction costs, etc. This is the same whether you have great credit or not. Maybe it's possible to get the same rate if you have bad credit, but you will likely pay points or have to work with a broker that charges higher than average fees, which are just other ways to mitigate their risk and still charge you a low rate. And maybe you're right and you will be able to negotiate once you've saved a bunch of cash, however, in the mean time you could already be building equity with your rent money, taking a tax deduction for your interest payments, taking advantage of some of the lowest interest rates in history and hopefully beating inflation with the increased value of your property.

Also, you should keep in mind that we are in a time when getting a loan is relatively easy. This is due to a lot of factors, not the least of which is the current real estate boom, which due to fast appreciation has made it much less risky for banks to issue loans to people who probably shouldn't get them. In California for a while you could get 104% financing with no money down because they were banking on property values increasing at rates far above inflation.

El Protoolio wrote:

I have 2 jobs, one of which I save every dime from. Took me 3 years to save $60,000.

We should play poker more often.

ebeam wrote:Also, you should keep in mind that we are in a time when getting a loan is relatively easy. This is due to a lot of factors, not the least of which is the current real estate boom, which due to fast appreciation has made it much less risky for banks to issue loans to people who probably shouldn't get them. In California for a while you could get 104% financing with no money down because they were banking on property values increasing at rates far above inflation.

Really? It has nothing to do with predatory lending practices? That market boom you talk about, does that include all the subprime borrowers who are defaulting on their morgtages?

El Protoolio wrote:If I am responsible enough and save enough for the big things and can pay off my balance each month why would I want the card in the first place? Your circular logic is confusing.

I'm trying to count the ways in which you're being wilfully clueless on this topic... let's see if we can summarize them here:

- Judging from what you've written above, you're unable to contemplate that anyone is able to use a credit card for the convenience -- carry less cash, visit ATMs rarely, pay it off each month, and get the ~1% rewards back. In fact, a pretty big and growing group of people do exactly that, which is one reason why total U.S. credit card outstandings have been shrinking for several years despite steady increasing consumer spending. The companies are happy to exploit those who need them, but I'm happy to exploit them for a free one-month float and a small rebate on all my spending.
- Having no credit history means having a really low credit score. Credit cards aren't the only way to build a credit history, but they are the easiest way, and for most people, the first. It's also the only way that can be free (car loans always carry interest, but credit cards cost you nothing if you use them the right way). Some sections of the FICO score model are exclusively dedicated to revolving credit (bank overdraft accounts, credit cards, etc.) meaning that all else being equal, someone without these accounts will always have a lower score than someone who has one or two but owes a small amount on them.
- Having a low score will always hurt you in a mortgage application. If you manage to find a magical mortgage lender who does not bother to look at credit scores, you're going to find that they charge higher rates to everyone. Sure you can get a mortgage with a lower score, but I don't like donating money to banks, so I'd prefer a lower rate. "Shopping around" and having a high down payment are great ideas. They don't make it a good idea to handicap yourself on the score.

Sure, credit cards can get you into a shitstorm of trouble if you're not careful, and no one should ever run up a balance he can't pay off on a week's notice, or that's close to the credit limit. They are bad for lots of people, and the people running the companies always pressure people to act against their own best interests. This doesn't change the fact that they are convenient for lots more people. The disadvantages of having a card are all avoidable, but the disadvantages of lacking one are unavoidable.

I worked in consumer lending for several years, although I don't anymore. You seem actually aware of all of the relevant facts, but your posts are full of straw men and sharp turns in logic. It seems to be something like a religious belief for you, so I don't expect I convinced you of anything.

AlBStern wrote:

El Protoolio wrote:

I have 2 jobs, one of which I save every dime from. Took me 3 years to save $60,000.

We should play poker more often.

I think the amount we play is quite satisfactory for me.

El Protoolio wrote:

ebeam wrote:Also, you should keep in mind that we are in a time when getting a loan is relatively easy. This is due to a lot of factors, not the least of which is the current real estate boom, which due to fast appreciation has made it much less risky for banks to issue loans to people who probably shouldn't get them. In California for a while you could get 104% financing with no money down because they were banking on property values increasing at rates far above inflation.

Really? It has nothing to do with predatory lending practices? That market boom you talk about, does that include all the subprime borrowers who are defaulting on their morgtages?

Hmmm, did you read that? "due to a lot of factors".... I don't claim to be an expert on finances or the real estate market. I'm just speaking as someone who is about to close on a home and has experienced a lot of this first-hand lately. Having good credit made that a lot easier for me. Goooooo credit!

And you're right things are changing because of the recent glut of defaults which will probably just make it harder to get a mortgage down the road without good credit.

Wow, a lot of posts since I was writing that and distracted by the job. Many people said the same stuff as me, so sorry for the reduancy.

Those of you who have credit cards and handle them wisely, i salute you.

I am complete shit with money, and am trying incrementally to do better, but i simply do not trust myself to get a credit card.

I have this motto--that memories are worth more than money, i.e. "Yes, i could save up this thousand dollars and have it for whatever, or i could spend it on going on tour and having stories to tell," so i end up going with the story. This is the rationale i used when i was able to go to Ireland for a week a few years ago, but needed to cough up a few hundred for the plane ticket. It was a hell of a stretch for me, but on the flip side, i was able to go to Ireland. I still wouldn't have that $500 (or whatever it was) today, knowing me, but i have my Ireland memories.

My point? That philosophy would end up fucking me over pretty hard if i suddenly was able to say, "hrm, i can fly to Iceland next month and worry about paying for it later." I know my limits.

I am perfectly content having lived for 32 years without any sort of credit card. My debit card is like a teeny little miracle of convenience in my pocket, but that's as far as i'll go.

But hey, i know my own limits. Many of you are able to handle credit cards responsibly, and i salute you. You are stronger folk than i.

El Protoolio wrote:Really? It has nothing to do with predatory lending practices?

Sure it does, but ebaum's point is valid too. California property values are crazy.

oxlongm wrote:
I'm trying to count the ways in which you're being wilfully clueless on this topic... let's see if we can summarize them here:

- Judging from what you've written above, you're unable to contemplate that anyone is able to use a credit card for the convenience -- carry less cash, visit ATMs rarely, pay it off each month, and get the ~1% rewards back. In fact, a pretty big and growing group of people do exactly that, which is one reason why total U.S. credit card outstandings have been shrinking for several years despite a steady increasing consumer spending. The companies are happy to exploit those who need them, but I'm happy to exploit them for a free one-month float and a small rebate on all my spending.

No I can contemplate it all just fine. I have done it and after I missed a payment on one card the other card that I had always been on time with raised my rates and lowered my limit below my balance which triggered late fees. It can and does happen to anyone. I cancelled the cards, paid them off and got the fuck out of it.

As I said if it works for you, go for it. The original poster wanted to know if he should get one, my advice is no.

oxlongm wrote:- Having no credit history means having a really low credit score. Credit cards aren't the only way to build a credit history, but they are the easiest way, and for most people, the first. It's also the only way that can be free (car loans always carry interest, but credit cards cost you nothing if you use them the right way). Some sections of the FICO score model are exclusively dedicated to revolving credit (bank overdraft accounts, credit cards, etc.) meaning that all else being equal, someone without these accounts will always have a lower score than someone who has one or two but owes a small amount on them.
- Having a low score will always hurt you in a mortgage application. If you manage to find a magical mortgage lender who does not bother to look at credit scores, you're going to find that they charge higher rates to everyone. Sure you can get a mortgage with a lower rate, but I don't like donating money to banks, so I'd prefer a lower one. "Shopping around" and having a high down payment are great ideas. They don't make it a good idea to handicap yourself on the score.

I never said the score doesn't matter did I? I said having a huge downpayment can give you some leverage.

oxlongm wrote:Sure, credit cards can get you into a shitstorm of trouble if you're not careful, and no one should ever run up a balance he can't pay off on a week's notice, or that's close to the credit limit. They are bad for lots of people, and the people running the companies always pressure people to act against their own best interests. This doesn't change the fact that they are convenient for lots more people. The disadvantages of having a card are all avoidable, but the disadvantages of lacking one are unavoidable.

I've been taking my chances without one for several years now. I seem to be doing just fine. Here let me just check my budget and my finances....yep doing just fine.

oxlongm wrote:I worked in consumer lending for several years, although I don't anymore. You seem actually aware of all of the relevant facts,

Great I thought so too. Except for your score regarding a home loan. I wasn't correct about that. I'll still take my chances with a large downpayment and a low score though. I'd rather not give a credit card company my business thank you.

oxlongm wrote: but your posts are full of straw men and sharp turns in logic. It seems to be something like a religious belief for you, so I don't expect I convinced you of anything.

And yet I just admitted I was wrong about something I've been saying thus far. I guess it's not exactly a question of faith for me is it?

If you'd like to point out some specific straw men and sharp logical turns I will be happy to try to address them or admit my mistakes.