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Comment by h4waii | Hacker News Reader

What's really scary is the fact that many of these individuals don't consider the benefits and rewards of using a credit card -- free flights, cash-back, insurance and extended protection, and best of all it's not your money. You get to hold on to your cash for a month's worth of interest and you get fraud protection.

Credit cards are tool and, just like most tools, should be used with proper awareness and thought-process. None of the examples in the given article are fallouts of "using credit cards", but having runaway debt in the first place.

This article really just emphasizes the fact that we are living in an age of complete lack of personal responsibility and self-control, where you can blame an institution for your inability to spend.

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> This article really just emphasizes the fact that we are living in an age of complete lack of personal responsibility and self-control, where you can blame an institution for your inability to spend.

Not having credit cards is one way to control yourself.

The whole "it's a lack of self control" claim is really weird to me.

I don't stock my house with junk food, because I'd rather use willpower once at the store than constantly in my living room. Am I supposed to feel weak-willed for making the simpler choice?

I guess you can argue that people are giving up a lot and ought to find the willpower to get those benefits, but for that you need to argue that they're actually giving up a lot.

Otherwise, it's just as you say: these are people who are controlling their spending and not blaming institutions.

I used to do that. Then I married someone who absolutely will not stop stocking the house with junk food, no matter how often I ask, beg, or demand that they stop. We have at least managed to compromise on always hiding it from me and never explicitly telling me that it's there.

(But even so, I'd prefer not to be forced to buy garbage out of the household funds against my will.)

So from that metaphorical perspective, using credit cards for "the benefits" is a lot like buying a dozen glazed doughnuts, just for their smell. So you occasionally open up the box, take a whiff, and close it again, throwing them out and replacing them as necessary to replenish the odor. But sooner or later, you're going to take a bite.

Credit is best used for durable goods that produce value, or at least depreciate more slowly than the interest rate of the loan--an American household's primary car, for example. Instant consumer gratification is just not a wise use of credit, no matter how many sugary sprinkles it has on top. And that's exactly what credit cards are mainly used for--as financial junk food. Most people buy the credit doughnuts, actually eat them, and get fat.

So good job to those that can go their entire lives whiffing free doughnut smells, but some people have to arrange their lives such that they don't even drive past the doughnut shop in the morning. It's just a different kind of self-control to avoid temptations in the first place.

> It's just a different kind of self-control to avoid temptations in the first place.

This is exactly it. We all use both kinds of self-restraint, but it's still worth arranging external forces to support the kind of self-control you find easier.

I've used credit cards, and taken on debt, but always with a clear plan in mind (metaphorically, I drove to the donut shop intending to eat one?) It's been for large purchases (primary car) and some time-convenience things that came without interest (washing machine).

If I were seriously worried about spending into debt without a plan, I probably wouldn't keep credit cards, or would keep 1-2 low limit cards. As it happens, I don't struggle much with that issue, but we all use mitigation in places where we do struggle, and I see nothing with it.

For a free $200 flight (on the low end), you'd need to spend (on the bottom end, with an exceptionally good 3% rewards number) 200 / 0.03 = $6667, on whatever stupid categories your credit card has for the 3%. Just how much money do you think most millenials have?

Look up ''churning'' which is the pursuit of mega signup bonuses in order to magnify the rewards. I've earned >1 million points and miles through this method in the last few years, easily $10k+ worth of travel, although I keep it up now more so because it has become a fun hobby and I enjoy it.

There are also articles describing the risk of churning, and that hardcore churners may be damaging their credit reputation by being seen as unprofitable.

I'd think of it in the sense that if you're going to spend that money over whatever length of time anyways, might as well get the $200 flight out of it as well.

That's basically my attitude.(And I also have a fair bit of reimbursed spend.) You can also get credits that are effectively cash (e.g. on Amazon) or even actually cash. They're usually theoretically worth less than the airline miles or hotel points but are a lot easier to use efficiently.

As another comment suggested, there are also a lot of games that you can play churning credit cards--as well as playing gift card games. My personal take on those though is that you really have to keep on top of introductory offers, using gift cards, etc. or you can easily end up in the hole. It's also essentially a hobby. Once it becomes work, it's probably not worth it.

Just on groceries that is a free flight every couple years. Of course I also buy clothing, phone bill, car repairs, birthday presents... In short, I charge almost everything. I'm going for the 1% cash back not the points, but to me it seems normal to be getting back more than $100 every year. Note that I do not carry a balance. Everything in that list is something I do anyway, and I have the cash sitting in my back account (so I should probably add another buck to the $100 above for interest in my bank accounts)

Note that you have to be able to control yourself. If you ever carry a balance the math fails.

> This article really just emphasizes the fact that we are living in an age of complete lack of personal responsibility and self-control,

I'm not in the age group the article is talking about, but... not having a card in my pocket that lets me spend money I don't have is my exercise of self-control.

Your attitude is so strange. The way I control credit card debt is by not having a credit card. That is the self-control you're lamenting the lack of.

One thing that even people who consider themselves financially savvy (e.g. those who pay off the credit cards in full each month rather than carrying a balance) often fail to realize is that credit card companies are middlemen; the fees they charge the merchant -- typically around 3% of each transaction -- ultimately get paid for by someone, and that someone is you.

If we all were less beholden to our credit cards, and/or the public and retailers were more comfortable with higher prices for credit card purchases, we might see cash prices go down. The savviest among us would probably lean more on cash for smaller purchases and reserve credit cards for only big-ticket purchases (because of the transaction/purchase protection benefits).

Most credit card merchant agreements prohibit merchants from offering a discount or lower price for paying in cash.

Those clauses were struck down in a settlement in 2012 following a lawsuit by merchants against Visa and Mastercard: http://www.nytimes.com/2012/07/14/business/mastercard-and-vi...

Here in New York State you see all sorts of merchants with lower prices on items in cash. Saw the same in California when I lived there as well.

In an ideal world, sure, but as it stands today, purchasing an item for $5, $50, or $5000 is the same cost regardless if you pay cash, debit, or credit.

Does it suck that a small business can't accept cash at a discount if they accept credit, due to merchant rules? Yes, I'm sure it does, but as a purchaser, I can get rewards for using a piece of plastic vs paper money?

I acknowledge and agree with the principle though -- no single snowflake.

Cash isn't necessarily cheaper for merchants once you factor in thefts and handling costs. But I've found that some small merchants are willing to give a 1-2% cash discount if you ask.

Yes, with 1 major downside.

You have to handle cash and all the negatives that come with that. Using ATMs (finding one, avoiding fees, navigating the myrian of poorly designed UIs) and carrying large amounts of cash is a major inconvenience compared to carrying 1 piece of plastic. No incentive to rob people either if they don't have anything but easily replaceable credit cards. Having a digital trail for yourself also simplifies budgeting and record-keeping tremendously.

That is probably the only reason why I use credit cards. Make no mistake your paying for those perks, they are just hidden in your everyday purchases. About 15 years ago I got tired of trying to negotiate cash discounts (usually only for larger purchases), and became a loyal discover card user. So, now i'm part of the problem, and the banks are very happy to keep it that way, because they are also making a percent or so on every purchase I make...

The good news is that gas stations offering a few cents off a gallon, small restaurants, etc that have built in cash discounts seem to be more common now than they were just a few years ago.

Im willing to bet people don't value fraud protection because they haven't been a victim yet. I keep the number of places that see my debit and checking numbers as few as possible. Plus, the credit card companies themselves don't view fraud the same way or with alarm.

There is no such thing as free. I think your comment emphasizes the fact most credit card users think these kickbacks really are free, when they cost everyone a lot more money in the form of 2-5x higher fees for every transaction.

A month's worth of interest? At 0.1% per year these days? Please.

The monetary benefits of credit cards aren't very convincing unless you spend a fair bit. For most millennials, cash back is a few hundred dollars a year and monthly interest is approximately zero.

I'll grant, though, that the ability to contest transactions is huge. Most people I know have used it, many to the tune of hundreds or thousands of dollars. Just knowing that in the case of fraud or bad business practices you aren't trying to reclaim already-transferred cash is value enough for me.

I always thought the free flights, etc. was like the casino comp'ing you free drinks.

Can't put a price on a free drink!

The way it works is that credit cards charge merchants ~3% per transaction. They don't allow merchants to charge proportionately more for CC transactions over cash transactions. Since it's business suicide not to take cards, everyone just charges a few percent more across the board. So basically everyone without a good card is getting fucked over, but if your card has a rewards program you can at least get some of that 3% back.

Exactly. Basically everybody without a cash back card is subsidizing cash back for those who do (ultimately in terms of higher prices).

The way it REALLY works is that the merchant charge % varies per card. The higher paying cards have higher merchant fees. What this does is incentivize the card holder to get a card with even better payouts, which results in even higher merchant fees. Card holders with high perks are freeloading off those who use cards with fewer perks, or none like cash or debit card users.

It's a huge externality. If it were the law that merchants had to make the card holder pay their own fees, this whole perverted system would go away. The only way it works the way it does is because EMV contractually requires merchants to obfuscate the true cost from the consumer.

In the USA there is no chip and pin, the whole system is based on trust. Therefore, having credit cards exposes you to fraud. Some people may prefer to not have that attack vector to live within their means on a debit only account. Also some people may prefer to just look after their stuff and not bother with insurance and other financial products. With this mentality the benefits of a credit card are about as much use as 70's style Green Shield Stamps. For the generation not able to get on the property ladder much of the consumerism that goes with it is irrelevant.

That doesn't protect you from fraud, given how little personal information you need to open a credit card account. In fact without checking your credit reports you might not even realize you have an account fraudulently opened in your name.

Umm? There is chip and pin, it's every debit card. They used to be swipe and pin, but since pretty much all cards have been replaced with chip, it's now chip and pin.

Credit cards in the U.S. are chip and sign, which is the dumbest piece of crap decision by the card issuing industry. Even though I have chip on both credit and debit cards, they become chip and sign when used in Europe. It's f'n hilarious being in a grocery store where the clerk is like "oh you have to sign, umm let me go find a pen" because it's that rare.

I think the whole chip thing is stupid. We're 20 years late to the game. We should have just skipped it in favor of a more solid contactless system rather than spend all this money changing over to something arguably obsolete already.

In the UK, there's all sorts of consumer protection when you use a credit-card - essentially, the credit-card company takes on liability for suppliers' failings.

E.g. If you book a holiday on your credit card, and the travel company goes bankrupt, your card provider refunds you.

For the most part, those protections simply don't exist if you use a debit-card.

Sometimes self-control means putting yourself in a situation where you're less likely to make a mistake, saving your resolve for other situations.

Also, nobody in the article was blaming credit cards for lack of ability to spend.

I think this trend is just a reflection of how badly credit cards have worked out for a sizable portion the previous generation.

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