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The ultimate life hack the government doesn't want you to know
(sh.itjust.works)
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this post was submitted on 17 Oct 2023
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Americans getting credit cards so young is so foreign to me. Here you only get a credit card either for business reasons or if you travel internationally where the European standards for debit cards don't apply
I was advised by my family, and the bank when I was 16 to get a Credit Card so I could build my credit score. I didn't really have any good financial awareness and they set me at a $2000 limit. Needless to say that was maxed almost immediately and took years of developing discipline to get under control. I still struggle with CCs now and then... They're too easy to come by and too hard to break free of
Where I'm from almost no one under 25 gets a credit card, because most non-online/prepaid/crypto credit cards have an age or income limit.
Everyone over the age of 12 has a debit card here. I think it promotes healthy spending knowing you have a set limit and immediately see the amount of money change. Overdrafts are also not enabled by default and require an extra package.
Venmo/Cashapp etc are also uncommon here.
Oh yeah, you do need a credit card for some hotels here. So that's a reason I guess?
There are enough that accept upfront payments in cash when you check in.
Credit cards have much better fraud protection then debit
The fraud prevention page for my mastercard debit card is the same page as the credit card page.
However, what I really recommend is you can get travel cards that you load with minimal money and are entirely disposable. You don't need to only use them overseas. I have used them for online payments and in person payments and they're disposable. That is I can get two more unique cards with unique numbers at any time. Minimising my personal risk since they can't be used as ID and I limit the money on the card to just what's needed. If it's stolen skimmed or tried to be used fraudulently I might at most lose 50 dollars but I also probably know who within a margin of error skimmed it since I rotate them with new cards every so often.
I'm also in a place where losing 50 Australian dollars won't financially bankrupt me if it was stolen. Because I'm pretty sure there is lots less fraud protection on those travel cards.
Anyway there's alternatives for those who can't or morally object to credit cards. Like me. Mine is I'm bad with money, I morally don't trust myself since I went into 10k debt at 18.
If there's fraud on a credit card, the bank fights to get their money back. If it's fraud on a debit card, you fight for your money. Also if there's fraud on your debit, that's money out of your bank account that immediately affects you. With credit, it doesn't at all. Debit has much weaker liability then credit, and also a time limit where you just lose all money if it's not reported right away, with no limit to how much you can lose if you don't get it back in time (usually 60 days). That trust that you won't go in debt with credit cards is essentially why the credit system exists, to measure that. There's nothing that has to do with morals, it's just a payment method.
The bank is fighting for their money because as long as you report it in time they are legally required to refund all but a small amount. The refund for the fraudulent charges has nothing to do with the banks ability to get their money back.
What I was just advocating for, is taking ownership and control of the risk. If it's your own entire bank account perhaps with a few thousand dollars, that risk is thousands of dollars. By segmenting that you can reduce it to dozens of dollars in which case, no matter the coin flip of bank fraud and money return, you're never putting your eggs all in one basket.
Risk management is more than good insurance.
I don't think you understood what my comment said. Fraud is prevented with credit cards, and that risk isn't there. It's smarter to use credit over debit, any bank will tell you that.
Explain the risk of fraud with a travel card.
Feel free to keep using a travel card
Also like I said witt Debit, if there's fraud then you're out of that money until it's returned. With credit, you will still be able to keep using it instead of potentially overdrafting/denied on a debit card. Or in the case of a prepaid travel card, you'd just run out, which would especially screw you over while traveling if that's your only method of payment. On top of that, it's easier to get scammed as a foreigner.
If you're still interested in learning, search engines are your friend. I am not a financial advisor.
I'm trying to get you to validate your point.
Risk 1: identity theft. Doesn't apply, travel cards aren't a form of identity. If stolen they can not be used as identity.
Risk 2: money theft. Largely mitigated to minimal amounts trivial if not returned.
I get it, you don't like this conversation, you'd rather I do my own research than discuss alternatives any further. I won't reply after this.
That's kind of irrelevant when you have modern tech like mobile payments to safeguard you. But yeah, if you're still using magnetic stripes, you're kinda fucked.
That's not how fraud protection works lol, and it doesn't have to do with the physical card
Yeah, tell me more about it, lol.
I got a credit card as a teen and have always just treated it like cash. Zero issues doing that and it helped build up my credit score by giving me such a long credit history with good payments.
As an European credit scores sound so weird to me 😮
They're basically a black box and can do some really weird shit (I had mine drop by 80 points, which is a lot, all because I paid off my student loans), but their purpose and basic workings are pretty straightforward. You show that you can be trusted when you're given a loan and can pay it back? Score go up. Do things that make the bank question if you can pay them back? Score go down.
Now, there's a shitton of complexity to it I won't go into, but it's not always as bad as people make it out to be and really only matters when you're trying to get a loan and sometimes when you're renting somewhere.
That I understand, but adding your kids on your credit card so their score goes up and things like having debt just to pay it back is weird to me
So co-signing (the having your kids on your card you mentioned) is just sharing the responsibility. Basically everyone signed on the line of credit (loan, credit card, etc) is considered equally responsible and expected to contribute financially to pay for the line of credit. Most commonly it's a husband and wife buying a house, you both contribute financially towards the loan and you both reap the benefits of the loan, and you're both in trouble if the loan isn't paid, and it affects both of your scores depending on how well you manage that line of credit.
There's different kinds of lines of credit you can get, from really bad ones like personal loans and credit cards (both are very high interest and not recommended) to moderately decent ones like car loans (interest rate is okay, but the item you're buying loses value) to good ones like a mortgage for a house or a Home Equity Line of Credit (HELoCs are weird, but it's using the equity on your house for what spends like a credit card but is paid back like a mortgage)
Fair enough. I have a question though so apologies for my ignorance.
But how do lenders in your area determine if someone is a good borrower or an unreliable borrower without something like a credit score. I'm not saying the way the US does it is the best answer or anything. I just legitimately don't know how it works elsewhere.
Pretty sure we have some sort of database or Registry for people who don't pay back their loans. And loans do show up when for example mortgage people do a background check on you
In most European countries you're innocent unless proven guilty. That means that instead of a credit score, which is 0 by default and you have to prove to everyone that you're a good boy, we can take any loans straight away. But if a person defaults, then they get a mark in their financial profile and other lenders will be wary.
Probably the best advice I've gotten was "it may be a loan and someone else's money but you best treat it as your own money because it will eventually be your money and you have to pay for everything"
What does "treated it like cash" mean?
I treat it like a debit card. I don't put more on the credit card than I have in my bank account. And I don't keep a running balance each month. I pay off the card bill each month so I don't pay credit card fees.
Just because your credit card limit is $5000, doesn't mean you should load it to the max if you only have $1000 in your bank account. I recognize that people sometimes need to do something like this to pay bills, but as a general rule you should do everything in your power to just treat it like a debit card and you won't be in debt.
Also, I know you didn't ask this... But I also tend to use my credit card instead of my debit card because I get cash back rewards points for using it (unlike with a debit card). And I'm the US (not sure about other countries), it tends to be much easier to dispute a fraudulent charge to your credit card than your debit card. Because when something is debited from your bank account, it's almost immediately gone. But when you get a charge to your credit card, it's kind of like a mini loan, so money is not immediately deducted from your bank account.
Here in Germany you can get back money that somebody took via direct debit, but not if you transfer it yourself. And many supermarkets use direct debit at their own risk after some automated risk analysis, because it has lower fees than girocard/maestro/vpay. (They extract the bank code from the card and print a form for direct debit authorization with the receipt printer)
Not letting the balance be higher then your checking. Auto pay off your statement in full every month.
Reasons to get a credit card in 2019 -
To hire a car
Reasons to get a credit card in 2023 -
?
Totally alien concept to me
You put normal monthly expenses on the credit card, then you immediately pay it off. Do this for a while and build your credit score. Use your higher credit score to get approved for loans/mortgages/bigger credit.
All credit is is a way to buy something expensive that you can't afford right now. Figure out what you want to buy, then build the necessary credit to be approved for the big purchase.
Heh, no credit agencies in my country, no credit score.
I use mine for cash back. I've been watching this finance channel on YouTube and the amount of Americans with thousands and thousands of credit card debt at sometimes over 30% interest is fucking insane.
When you pay with credit card it's bank's money. When paying with debit it's yours.
I pay everything on the internet with credit card. It's safer.
Maertro crowd isn't so lucky. And rental companies don't advertise this.
Juicy cashbacks with AmEx.
Not having a credit card is giving up free money in cash back and rewards. Just be disciplined and it's a net positive in every way, including security
Of course you can if it is a cash back.
I literally can withdrawal it. I can convert my points to cash at a 1:1 ratio, or redeem it for a flight and get 15% off the flight. Pretty tangible to me.
You can withdraw it. It's called a cash advance. It's cash that immediately accrues interest on your credit card balance.