> trying to maximize my credit score for the sake of keeping it high.
Just being a deadbeat will do exactly that. It takes 0 effort. Put your purchases on a credit card, and settle it in full every month.
Just being a deadbeat will do exactly that. It takes 0 effort. Put your purchases on a credit card, and settle it in full every month.
If you don't need credit then taking on credit is an extra thing to manage. I personally like all my spending being on my debit card and coming out of my account so I have a single balance that reflects how much money I have. I don't want to deal with an extra company especially when their business model ultimately relies on trying to get me to miss a payment so they can charge fees/interest.
They make money on interest also, but they would rather have someone that spends and pays off a lot than someone that carries a modest balance.
In Europe and the UK, interchange is capped to a level that wouldn't support running a financial institution.
> They make money on interest also
Interest only gets charged a month after (at least on most UK credit cards), so if you're using it "the right way" and paying it off every month you will never incur any interest. It's good for you but ultimately proves that credit card providers rely on the (generally less financially-savvy) people who don't/can't use it "the right way" and incur interest or fees. That's honestly a pretty predatory business model I have no interest in supporting.
> My credit card company sends me a notification when a statement is ready and another friendly reminder a week before the bill is due.
True but why should I even statements and bills for spending what is my money in the first place? My argument is that you should only use a credit card when you actually need credit and not to merely game a broken system.
Does your bank not have a system showing you what transactions you did in a month? The credit card statement is the same thing, for a different account.
Credit cards are literally the dumbest way to borrow money, second only to payday loans. So you definitely shouldn't use them when you _actually need credit_.
But you should use them to build up your credit score, so you can get extremely cheap credit when you actually need it.
Not sure how it is where you are, but where I am the payment is automatically done every month from your bank account. There is 0 chance of missing a payment, as long as you have a sufficiently positive floating balance in your account. If someone do not, then I would question their suitability for a credit card in the first place.
Maybe in the US - in Europe where interchange is capped, credit card rewards aren't worth it. Not to mention, I like my privacy and don't want to deal with any rewards or offers programs anyway.
> but you have added fraud protection also.
In practice, all the fraud I've been victim of always fit within the card networks' dispute resolution rules. The only time I can think of this being necessary is airlines that go bust (where a card network dispute would technically succeed but fails because there's literally no money to claim back anymore).
> where I am the payment is automatically done every month from your bank account. There is 0 chance of missing a payment, as long as you have a sufficiently positive floating balance in your account. If someone do not, then I would question their suitability for a credit card in the first place.
See my other comment here: https://news.ycombinator.com/item?id=31504046
>In practice, all the fraud I've been victim of always fit within the card networks' dispute resolution rules
I think there's an element of "fraud protection" that you're missing. If your debit card gets breached and someone racks up $2000 worth of charges on it, the $2000 is immediately gone from your bank account. If rent/bills are due soon, that might be bad. On the other hand if you have a credit card, you have at least 3-4 weeks since the bill is issued before you have to pay, which means 3-4 extra weeks to get it resolved/refunded without having it affect your finances.
Does the dispute process have all disputed money be instantly returned to the account? With a credit card, you can simply turn off the auto payment system, and simply not pay the fraudulent part, and you still have your money in the bank account. With a debit card, in the US the banks typically have 10 business days to determine if there was fraud and give your money back. (If the investigation takes longer they return the money on the tenth business day pending the results of the investigation, and if they determine it was not fraud they will take the money back again.)
And in the US many people life paycheck to paycheck with effectively zero savings. If their account is zeroed out due to fraud, Things can get expensive quick.
For example, your rent payment is probably too large to be covered by banks overdraft protection, so you will likely get hit with three bounced check fees. of at least $25. One from you bank from the first attempt. Then a later re-presentment attempt will also fail, and you will get a second fee from your bank. Finally, you will get a bounced check fee from your landlord. Of course since your payment did not go through, you will likely end up with a late fee. etc.
For other bills they could be small enough that you only get hit with overdraft fees, and not the rest. But if not, then things can snowball VERY quickly. And There could be other consequential damages like losses from being unable to get certain items while they are on sale, or even things like the stress of all of this preventing you from closing a sales deal, meaning you lose out on a substantial commission, etc.
And while you can typically get the bank imposed fees waived due to the fraud, as long as they can determine that you would not have suffered those fees if the money had been there, the bank won't always cover all the the incidental and consequential damages. (The terms of service always exclude those).
Not if you have an American Express card. Interchange is capped only if there's more than 3 parties to the transaction, which is not the case on AmEx.
My bank provides fraud protection for my debit card. A card for my account got skimmed and was used to withdraw cash from an ATM. Got my money back with a single phone call to report the fraudulent activity.
This is a genuine question; I know that other countries do things differently. Is that not an option where you are?
If you’re not using a credit card, you’re:
- Adopting significant risk (debit card protections are not as strong as credit card protections)
- Failing to establish a credit history
- Giving away a significant amount of money.
Credit card transaction fees are included in all prices.
I use a card that gives me 2% cash back on all purchases — effectively, most or all of the transaction fee.
I fail to understand how you are giving away 'significant' money by spending from your own account? Are you referring to being able to earn interest on savings for the month before you have to settle the credit line?
And as the other commenter's reply says, all my credit cards pay me cash back or a points system which is redeemable for things with high cash value. There's a real quantifiable cost to not using them.
It always shows as pending in the morning and clears that evening.
I can also make a payment and it will update my CC limit the same day if needed.
You depend on your bank for this type of stuff? Isn't that basically begging for vendor lock-in? It makes far more sense to have a vendor-agnostic solution (eg. mint or personal spreadsheet), so your analytics aren't at the whims of your bank.
A credit card would break that and introduce unnecessarily complexity including another company that I'd rather not have to deal with (also, I'm not aware of any modern credit card providers that would give me a decent experience).
If I look at my recent expenses in my banking app, I can see that I got a coffee (food&beverage), bought fuel (transport) and paid freight cost on a case of wine from my frequent flyer miles rewards program (incorrectly classed as travel).
It's not 100% accurate but gives a good enough overview in the app week by week, and I sit down quarterly to look at things properly in a spreadsheet.
Here in the US it is common for banks to both provide traditional banking services and credit cards, and when you open your banking app, both accounts are together.
I don't give out my debit card and I only use it at trusted ATMs.