Hacker News Reader

Comment by yoodenvranx | Hacker News Reader

As a European I don't underdtand why people are actually using credit cards. Over here, most people just buy stuff in stores with their EC card (which should be similar to a debit card in the States?). This way I can't spend money I actually don't have and I don't have to take care of any monthly balance.

View on HN

In the US, it's a combination of factors. Personally, I receive unlimited 2% cash back with my credit card, which is enough of an incentive for me to use it wherever I can. In addition, it helps me build my credit score, which is a system that has a lot of issues but is not one I'm in a position to ignore. I don't know about the situation in Europe though, are there similar benefits for non-credit cards (debit cards), and is the credit score system as important?

The credit system is not important. When I came to the US I didn't even know what "building credit" means. To me being creditworthy meant not to have debt.

> To me being creditworthy meant not to have debt.

To a lender being creditworthy means having a history of managing debt correctly.

Sufficient (positive) net worth definitely makes someone creditworthy. But, most borrowers aren't leveraging major assets like companies or investors or others might. What they're leveraging is their future earnings. "I need $10,000 today to buy this car, and over the next 3 years I'll pay it off at X% interest." Having a history of using credit effectively in this manner (paying it off on time being the big issue) is the only way that someone without a significant (positive) net worth can demonstrate to a lender that they're creditworthy.

The advantage of CCs in the US is that transactions are against your bank, not your money. Debit cards are debited from your account immediately, so you can't as easily reverse charges in the event of fraud, mischarges, etc.

But then, it is not that easy to defraud the EC cards, since you need the physical card to make a payment with them (in addition to a PIN that is usually needed to authorize the payment).

This can apply to online purchases as well. A charge from buying something from ebay, for instance, can be charged back if you end up not getting the item, broken, etc. It's probably harder to get your money back in a case like that with a debit card.

Thats certainly true. Usually, these cases are done with money transfers in Europe, which is not really reversible (on the other hand, this is where many people use Paypal, which also gives you the money-back feature of a CC).

I am German and use a credit card in the US like you use an EC card. I think it's a cultural thing. When I grew up it simply was inconceivable to buy things like Christmas presents on credit. I have never bought a car on credit either. In the US getting a loan is just much more accepted. Even people who could easily save up for a car still buy it on credit. And they buy two sizes bigger than I do (we have plenty of young engineers driving cars like a BMW 328i).

Australian here, I use a credit card for purchases (even though I pay it off in full every month) because of the Frequent Flyer points I earn. I've already used them for one 3-month Round The World trip. Amex cards usually have a ton of other benefits too.

There's also better fraud protection on Credit Cards over debit cards. Debit cards the money is taken from your account immediately, credit cards it's corrected before you have to pay your card bill.

If you don't have a credit history in the U.S., you are excluded from a lot of things, including registering for Obamacare or Medicaid in some states, and get flagged as a fraud risk or actively banned from a variety of services including Amazon Payments, because so many services use Experian as an identity verification service. If you don't have a credit history, you aren't in their system, and so don't exist in their eyes.

What do you mean by "over here"?

In France, Poland, Italy credit cards are common, as are debit ones. It does not make much of a difference, they draw money from your account either immediately or after some time. For all the typical cards, there is no" minimal payment", you may all the debt.

I use a credit card for online payment only. I don't like the idea of a debit card stored online because it is a direct link to my bank account. A credit card gives me a bit more protection and I make sure I pay it off every month.

>I use a credit card for online payment only

FYI I got a "prepaid" card for that - it's a card I use for online payments only - it has no credit and it doesn't have access to my account funds - I need to manually transfer money when I want to use it to pay for something. If it ever gets stolen online there's nothing on it unless I'm right about to purchase something and I always put in the exact ammount I'm about to pay so I can't get overcharged or some other silliness.

Reply on news.ycombinator.com