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Comment by zaarn | Hacker News Reader

I don't really understand the american need for a credit card.

In germany, I pay almost everything either in cash or via bank transfer, usually pull. I got a prepaid card a while ago, mostly to pay for american services (seriously, I only ever pay to american corporations with it). My debit card (EC card) is almost universal and directly connected to the bank account, no credit needed.

CC is barely supported, EC is a lot better in terms of coverage. Even then I usually apologize when using the card for anything below 100€ or so at my local supermarket.

I don't see much reason to go CC or EC fully, I always keep some cash in my wallet, not too much but enough to hold me over for a week. If I need more I go to the Bank's ATM and get more. Easy.

Cash-free payment would also be fairly illegal, a business must accept cash payments (though a limit of 50 coins is there, notes are unrestricted) for any purchase in person (online businesses don't have to IIRC).

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It's a cultural and market network effect thing. A lot of Americans use debit card instead of credit card that can quickly accrue interest charges if not fully paid off every month. But plenty of people carry high interest debt. The average American who carries a balance owes 15000 USD. USA has high adoption of credit card network. In most places, debit cards are only accepted as Visa/MC not the low fee inter-bank network such as PLUS or STAR or NYCE.

Then there's consumer credit history/score. Americans like to buy houses (it's de facto subsidized by the government through implicitly government guaranteed 30 year fixed rate loans). A high credit score can mean the difference of tens of thousands of dollars over the term of the mortgage. If you have no credit history, you get the worse possible rate. Housing choice determines school district, and therefore whether your children get a good excellent so-so or bad education. House prices are highly correlated with school quality - public schools are free but you have to be able to afford residency. The worse neighborhoods have shootings at night, rampant drug abuse and gangs, burglary/robbery, lack of jobs/grocery stores/medical service/non-convenience retail.

Credit score usage has metastasized into many more facets of life than originally intended. Even if you want to only rent housing, the landlord will check your credit. Good landlords only reject for evictions or out of control debt that suggests you cannot afford rent, but some decide based off score e.g. if your score is below 20th percentile you will not get approved. You cannot get electricity/water/natural gas turned on without a credit check unless you place a large security deposit. Some companies will not hire you if you have bad credit! Those with bad credit have to pay up to double for car insurance.

Of course many people like to spend beyond their means. But even responsible people put themselves at a disadvantage by not participating in the credit system.

Yeah. Luckily I've managed to eradicate all of my "bad" debt and get my credit score to fluctuate between 830 - 850.

It makes a lot of things much smoother overall. Basically, no one questions me once they run the credit check. And if they do, it's more like "Are you sure you don't want another? Something else?"

Contrast that with some people I know who have sub-700 scores. Things are just that much more of a hassle. We were comparing car notes and stuff. And my (now) wife was talking about the company handling her auto loan and I was asking where she got her car because I usually get the loan through the manufacturer's credit house (i.e. if I buy a Honda, I'm paying Honda financial). And she got her car through a dealer, but they had to do a little more work to find her the most favorable loan. Basically people are eager to give me a recurring bill while they're a little more reticent to deal with her.

And it's mostly because she has little to no credit history. I advised her: get a credit card with as high a limit as you can and then just forget about it. I have a $15,000 limit card that I just never use. It exists mainly so my overall use is a lower percentage. I don't think she's ever had a credit card. And I think her previous vehicles were purchased through less direct channels or legally purchased by someone else that she paid for (like her mother got the loan, but she paid it). I think this may be her first vehicle that she's purchased at a dealer.

Credit cards are an excellent tool as long as you don't accrue debt with them.

I get 1.5%-2% cash back with everything purchased with it. I'd be losing money by using a debit card instead. Not to mention the $500 they gave me just for signing up for it.

I also don't to worry about when I get paid. I might only have $100 left in my checking account when I need to buy groceries if the day I get paid falls at a weird time. I don't have to worry about that sort of thing with a credit card, although it is much less of an issue now that I actually have savings than it was when I was in college.

If someone steals my debit card or my cash and uses it, my money is gone. My bank would probably refund me the stolen money if my debit card was used fraudulently, but until that happens I'm still out however much of my own money.

If they steal my credit card, who cares? I'll call the bank and cancel it and in the mean time, none of my actual money has been touched.

> If I need more I go to the Bank's ATM and get more. Easy.

Not having to go to an ATM is even easier than having to go to an ATM.

You basically count up reasons why I don't use credit cards.

Cashback almost always is connected with some form of datamining. The 500$ bonus is usually paid back in form of hidden fees somewhere. No money is free.

I don't want to spend money I don't have, ever. And regarding if my card gets stolen, European EC cards are very safe. They aren't CCs where you can just start grabbing cash, you need the pin too and the banks are very aggressive on putting temporary blocks on any transactions (as part of EC, any totally blocked transactions are billed instead and fully transparent for you).

Going to the ATM is easy and it means I have a very good feeling of my weekly and monthly spendings just by looking at how often and how much I use the ATM.

In the US, credit card transactions are reversed in case of fraud (no questions asked, super easy), but if someone lifts your pin and empties your bank account over debit, you’re on your own. This actually makes it more dangerous to use debit vs running it as credit.

Also while you don’t want to take on debt you can’t pay, there’s nothing too complex about debt and credit. Businesses all largely do their accounting like that, and if you really zoom out, all money is a system of debt and credit: the $20 note in my pocket is credit from my company, since I gave them my labor, they owed me. My company in turn was owed by one of its customers for services my company offered. The customer might have gotten money from their company, and so on.

If someone lifts my pin and does transactions, my bank will reverse it or cover the damage, no questions asked.

I'm aware how credit works, but I prefer not to rely on credits for my life, I prefer spending only money I have right now.

The reason you think debt is good/acceptable is largely cultural. This definitely isn't the norm in other parts (or even most of) the world.

Absolutely. I meant to make that point when I said “In the US...” since the parent poster said they didn’t understand why Americans favor CC over debit cards. I thus gave the reasoning. Had we in America been given the same given circumstances as in Germany I’m sure we would be using debit.

I like how you use the law as a reason despite the law already restricting how you can pay.

The U.S. used to have coinage limits as well, but tied to dollar amounts rather than total coins, but those were stricken to make all coinage legal tender.

Which is even funnier when you think about it. Because originally coinage was the tender. It was stamped and minted precious metals of a certain weight.

Bills were basically receipts or scrip that represented those metals. Essentially a token saying "Dude, it's cool, I do really have this money somewhere". And now the big hubaloo is the switch to electronic payments and people are freaking out because it's not real because it's not paper, which also isn't real. Just a representation of credit you have that's backed by the government that issued the bill.

And I wouldn't say it's a need, it's more of a convenience. Instead of mucking about with bills and coins, counting out change, etc, I just swipe or insert. No need to keep anything organized, etc. No need to pop off and find an ATM every week. And I'm not saying it's an earth-shattering difference. It's more like the convenience of going out to eat rather than cooking for the night. But in this case, I'm doing it almost every night.

And I kind of went through the same phases you're describing. When debit cards were becoming ubiquitous, you'd use them for the "big" things. Going out to a "proper" restaurant, stuff that cost more than the cash in your wallet, etc. And yeah, it was like "Ugh, I'm buying a soda with my card, awkward. Sorry". When the first fast food places installed card readers it was like "This is weird. Buying a Big Mac with a card."

But now, the situation is nearly flipped. It's more like when I go through the drive through, if we have to do the cash passing game, I feel bad. The card is simple. Hand one thing over, get it back with a slip of paper.

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