Do you only pay for things like a car or a house using cash? Or what about if you are applying for a loan to start a business? Is it all just a 100% cash based society?
Business credits exist too of course, but I'd guess that the proportion of the population doing that is even less (and Germans are already much less likely to buy houses or apartments than people in the US).
Of course if you did have a credit somewhere, and you defaulted/didn't pay, it's bad, and there is a credit bureau tracking that and more ("SchuFa").
Nearly every “basic” transaction (like buying coffee) is done with what might appear as a “credit card”, but it is actually a debit card. Some people use “credit” for these daily sorts of purchase, but at least among the people I know, this is extremely rare.
The closer you are to 'living pay check to pay check' the easier it is to get you into this. And I suppose for some people it takes multiple larger purchases to get you into it. Popular culture, TV shows, Twitter nowadays etc. don't help and 'legitimatize' it (everyone's talking about it that way, so everyone must be doing it that way, so it's OK to do it that way).
You might be good at "paying it off at the end of the month". A lot of people easily slip into credit card hell that way, because they _can't_ pay it off at the end of the month, because they didn't realize how much of their credit they should really be using. Credit card says you have $2000? Let's spend $2000. At the end of the month I only have $1500 left in my account? Oh crap!
Personally I pay it off in sort of regular intervals, since it's all right there in my online banking. I've never waited for a "credit card bill", even when they still sent them to me in actual dead tree form.
I use my credit card for the purchase buffer the other mentioned, and I've set it to the exact amount is taken from my bank account on the due date.
I also track my expenses and categorize it, so I have a clear idea what's happening in the budget.
The points for regular spend, the sign up bonuses, and the interest savings (the average balance on my card ends up saving me interest on my mortgage) put me well ahead.
Credit cards are a solid because many (most?) people use them poorly, but it's certainly possible to use them wisely.
This sentence is the epitome of marketing brainwashing in the US. Not trying to single you out, as we all suffer it to different degrees here, but this sentence kind of puts it in such a nice little box.
What's a reward? What actions warrant such gifts? Why don't they just give you money instead of "points"? At any point, does the gameification of debt strike any of us as one of the most abhorrent MBA ideas in history? It's right up there on the list, sitting below indentured servitude and for-profit prisons.
This gets repeated, but it's not true everywhere. Some banks may not care or maybe it's harder in some countries. But for example in the UK I could easily revert a few £k the same day without issues. I'd love to read more about where the differences come from, but the blanket statement is not 100% correct.
It always depends, so do your own research, but as far as I understand, it is still considered decent general advice to tell people to prefer credit cards over debit cards. They will build credit, earn rewards, have excellent consumer protection from fraud, increase the distance between their purchases and the cash in their bank account, and so on.
"Credit card bills" also seem to be a regular part of everyday conversation here, in sitcoms, on Twitter...
You've been somewhat misinformed. You build credit by obtaining the credit line and just having it available for a long time, not by using it "as much as possible." Actually purchasing items with your credit card is not required.[1]
In fact, "maxing out" your credit cards (when your bill closes using 85%+ of your limit) actually can reduce your score (but only for the month(s) your cards are "maxed out.")
FICO scores aren't a black box, they publish exactly what they take into account - https://www.myfico.com/credit-education/whats-in-your-credit...
[1] with the caveat that some credit card issuers will close dormant accounts after a couple years.
Lenders get a raw copy of your report when you apply for credit, which contains things like credit account history (max limit, % of limit used, late payments if any, etc) and then run their own scoring algorithm on it. Those are black boxes.
In the UK, getting a credit card and using it regularly seems to be the common advice for building credit, which makes sense considering the scoring algorithms themselves aren't public (and differ by lender).
Pretty sure you need to make at least a $0.01 purchase for the purpose of having a payment, otherwise you won't have a payment history.
https://youtu.be/vsMydMDi3rI?t=2595
Now, if I shop online, I used to put it on a credit card. Now I generate a virtual debit card using an online service and pay with that. The logic is the same.
We later got some fraudulent charges on it, which got resolved for either of us, but for me the money was never gone (I had not paid the bill yet), while for my friend it took a while to get the money back on their account.
Another fun difference: When during our trip, waiters and cashiers would not just take the credit card, but walk away with it, we were horrified. In Germany, you never give your card away to anyone. You stick it in a terminal and type in your PIN.
I mean, it’s basically their only purpose in life (if you use it for the other purpose to purchase things ahead of your paycheck, that you don’t have the cash for already, you’re going to get yourself in trouble — 20% interest _hurts_)
Cash back/miles is another one.
For the cases that amex isn't accepted, all the major airline groups have a rewards card too (although BA's is an Amex), and most of the supermarkets have cashback cards in the 0.75-1% range.
Family restaurant means a chain like Applebees for those unfamiliar with the term.
The tablets are also a revenue-generating device as you can play games on them for a fee. They also have surveys so you can give feedback on the service, this has become somewhat controversial (see https://www.eater.com/2018/6/22/17492528/tablets-restaurants...).
Really depends.
If you know mostly college students, and younger, lower income people, yeah, most are paying with debit.
If your circle is high income and older, then it's mostly credit. Especially people who do frequent business travel.
In most nations the debt to income ratio for these things is also much stricter than in the USA, since they don't expect everyone to have 10k in credit card debt and 50k in student loans.
Financing can absolutely exist without a centralized credit rating system / data privacy nightmare.
Seems like a good system to me. You give people the "buffer" between your account and merchants but make it very hard for people to go into debt.