I can’t believe I said credit cards, plural. I mean who needs more than one credit card? New Zealand credit card users have 2.2 credits each. American users have 3.7 cards each! Actually I can think of a reason to have two credit cards, when my partner and I travel we take two cards (thats one each) from different providers in case a certain brand of card isn’t accepted or on the small chance there is a problem with transactions for one of the companies. People hacking the rewards/points often have multiple cards. I get it, the rewards are nice, its especially nice to be rewarded for your boring every day spending.
I use a credit card but I have a love/hate affair with credit cards. I love that they let me order things from oversea’s and collect airpoints. I hate that I sometimes forget purchases made on my credit card and have to pay more than I anticipated to get the balance back to zero.
- Credit cards are very dangerous. Its easy to view that line of credit as “money available to spend” and easier to forget that its not really your money. My online credit card always shows the available balance as $10,000! But that’s not right I don’t have $10,000! Its just $10,000 the bank is willing to lend me. This kind of psychological trickery really infuriates me. The balance should be ZERO.
- They get away with ridiculous interest rates. 21.95% interest WTF. Yep I’ve seen them that high. Why do we accept this kind of loan sharkery? Somehow this has become the norm. Interest rates around the 20% mark severely punish the inexperienced credit card user.
- No one tells the user that they are not supposed to carry a balance. You shouldn’t carry forward any credit card debt from month to month. If you are you should cut up the card NOW. You can’t get ahead paying 20% interest on debt each month.
- Minimum payment pfffft whatever. If you pay the minimum you may as well say ” I wanna stay in debt forever” cause paying the minimum don;t do jack towards the debt when the interest rate is 20%. But somehow seeing that minimum figure on the statement and then paying it actually makes us feel good, like we are fulfilling our obligations. More psychological trickery.
- The bastards will increase your limit without asking your permission enabling chronic spenders to get even further into debt. I once rang the company and asked them to reduce my limit and I was cooley informed that I better not ever ask for a limit raise as it may not be available to me in the future! Well thanks mate. I guess you don’t want financially responsible customers.
- I’ve yet to meet a person who was able to manage their credit card successfully from day one. Everyone I’ve been brave enough to talk to about it has at some point in their life carried a balance, had to pay interest, or let their spending get out of control. That learning curve has got a lot of young people into trouble over the years including me! Getting a credit card at 18 was probably one of the worst things to happen to me (financially that is!).
- The fee’s for accepting credit cards are high, much higher than using your regular eftpos/debit card. While the eftpos card transaction are charged at a flat rate per month (usually built into the equipment rental) retailers are paying 1.7% of the transaction in fees and its really hurting smaller retailers with slim margins. So who is really paying for your credit card rewards? Maybe the retailers are bearing that cost, maybe everything would just be a little bit cheaper if there were no credit cards.
- Transactions take a few day to show up in my online statement. I have a hard time understanding this as EFTPOS transactions show immediately and I can see where and when I spent my money. With the credit card the balance is updated instantly but the detailed transaction line showing when and where the purchase took place doesn’t show up for a couple of days. It really frustrates me as I like to track every expense and if I lost the receipt on the way home….(trust me this happens I am very disorganised) I have to try remember the exact details and then wait a few days before I can update my spending tracker.