All I ever hear from them is “Stay away from credit cards entirely! Those are a trap!”
That would be an insanely stupid thing for anyone to say. Credit cards are very useful if used properly. I agree with mattnewport that the standard advice given in financial books is to charge a small amount every month to build up a credit rating. Also, charge large purchases at the best interest rate you can find when you’ll use the purchases over time and you have a budget that will allow you to pay them off.
Well, then I don’t know what to tell you. I’d listened to financial advice shows on and off and had read Clark Howard’s book before applying for the mortgage back then, and never once did I hear or read that you should get a credit card merely to establish a credit history (and this is not why they issue them). I suspect it’s because their advice begins from the assumption that you’re in credit card debt, and you need to get out of that first, “you bozo”.
And your comment about the usefulness of credit cards for borrowing is a bit ivory-tower. In actual experience, based on all the expose reports and news stories I’ve seen, it’s pretty much impossible to do that kind of planning, since credit card companies reserve the right to make arbitrary changes to the terms—and use that right.
I remember one case where a bank issued a card that had a “guaranteed” 1.9% rate for ~6 months with a ~$5000 limit—but if you actually used anything approaching that limit, they would invoke the credit risk clauses of the agreement, deem you a high risk because of all the debt you’re carrying, and jack up your rate to over 20%. So, a 1.9% loan that they can immediately change to 20% if they feel like it—in what sense was it a 1.9% loan?
For that reason, I don’t even consider using a credit card for installment purchases.
Wow, they can jack up the rate like that? I would definitely consider that fraud and abuse. That’s not common, however, and Congress recently passed legislation to prevent that sort of abuse. Currently, I don’t have the option of not using a credit card; I would starve to death without it.
Wow, they can jack up the rate like that? I would definitely consider that fraud and abuse. That’s not common …
I thought so too, but then was overwhelmed with stories like that. Most credit cards agreements are written with a clause that says, “we can do whatever we want, and the most you can do to reject the new terms is pay off the entire debt in 15 days”. This is one of the few instances where courts will honor a contract that gives one party such open-ended power over the other.
If you haven’t been burned this way, it’s just a matter of time.
And if you google the topic, I’m sure you’ll find enough to satisfy your evidence threshold.
Currently, I don’t have the option of not using a credit card; I would starve to death without it.
Would you starve to death with it? If you can service the debts, let me loan you the money; at this point, most investors would sell out their mother to get a fraction of the interest rate on their savings that most credit cards charge. (Not that I would, but I’d turn down the offer without my trademark rudeness...)
That would be an insanely stupid thing for anyone to say. Credit cards are very useful if used properly. I agree with mattnewport that the standard advice given in financial books is to charge a small amount every month to build up a credit rating. Also, charge large purchases at the best interest rate you can find when you’ll use the purchases over time and you have a budget that will allow you to pay them off.
Well, then I don’t know what to tell you. I’d listened to financial advice shows on and off and had read Clark Howard’s book before applying for the mortgage back then, and never once did I hear or read that you should get a credit card merely to establish a credit history (and this is not why they issue them). I suspect it’s because their advice begins from the assumption that you’re in credit card debt, and you need to get out of that first, “you bozo”.
And your comment about the usefulness of credit cards for borrowing is a bit ivory-tower. In actual experience, based on all the expose reports and news stories I’ve seen, it’s pretty much impossible to do that kind of planning, since credit card companies reserve the right to make arbitrary changes to the terms—and use that right.
I remember one case where a bank issued a card that had a “guaranteed” 1.9% rate for ~6 months with a ~$5000 limit—but if you actually used anything approaching that limit, they would invoke the credit risk clauses of the agreement, deem you a high risk because of all the debt you’re carrying, and jack up your rate to over 20%. So, a 1.9% loan that they can immediately change to 20% if they feel like it—in what sense was it a 1.9% loan?
For that reason, I don’t even consider using a credit card for installment purchases.
Wow, they can jack up the rate like that? I would definitely consider that fraud and abuse. That’s not common, however, and Congress recently passed legislation to prevent that sort of abuse. Currently, I don’t have the option of not using a credit card; I would starve to death without it.
I thought so too, but then was overwhelmed with stories like that. Most credit cards agreements are written with a clause that says, “we can do whatever we want, and the most you can do to reject the new terms is pay off the entire debt in 15 days”. This is one of the few instances where courts will honor a contract that gives one party such open-ended power over the other.
If you haven’t been burned this way, it’s just a matter of time.
And if you google the topic, I’m sure you’ll find enough to satisfy your evidence threshold.
Would you starve to death with it? If you can service the debts, let me loan you the money; at this point, most investors would sell out their mother to get a fraction of the interest rate on their savings that most credit cards charge. (Not that I would, but I’d turn down the offer without my trademark rudeness...)