Americans paid $130 billion in credit card interest and fees in 2022, according to a new report. Here are three strategies to help limit those charges.
I managed to pay off a credit card that had points associated with it, so I set up my bills to auto-pay, and to automatically pay the whole balance early every month.
This is about the only good way to use credit cards. It feels good knowing I'm costing them money.
I'd be very surprised if you were actually costing them any money. The value of your points is almost certainly less than the merchant fees they're collecting from your payees.
Those points are all paid for by the fees they charge the people you pay. You aren’t costing them money, you’re just not making them as much as people who can’t/don’t pay off their credit cards.
So you're just fine with using your checking account which has no real fraud protection? The bank doesn't care, it isn't their money on the line. Credit card companies are putting up their money and in the case of fraud, they want their money back, protecting you. Nevermind the other benefits, which you've stated you don't care about.
Mastercard and Visa both offer the same zero liability protection on debit cards as credit cards. So both my cards are comparable to credit cards in that regard. If I was at a bank that didn't have good fraud protection I'd be shopping around.
I've never had a situation where fraud took money out of my account. Someone got my debit card information somehow (I'm surprised it doesn't happen more often). The bank called me, asked if that was me that was in London trying to buy something out of a vending machine, I said nope, they turned off the card and sent me a new one. No money ever left my account, and I wasn't terribly inconvenienced, other than having to change a few autopay thingies.
I do get cash back bonus on my PayPal debit card. I appreciate the irony of taking advantage of that in contrast with my original comment. But I presume since PayPal is not a credit card company, they're paying for it with the merchant fees they collect. I could be wrong.
¯\_(ツ)_/¯
All that said to say there's nothing a credit card can offer me that a debit card can't, except debt.
It's not difficult to use credit cards responsibly and come out ahead. Moat people just lack basic financial literacy and/or the willpower to not use them irresponsibly.
I bet most of us aren't actually making anything on cash back or rewards no matter what we do. %2 cash back isn't free. Everything I've learned about the store side of things says the fees merchants pay is higher than the cash back + rewards. You think the store just eats the cost? Most of it is being passed to the consumers.
However, I don't think removing the fees now would lower prices. Might prevent them from going up a bit longer though.
I mean if you're living paycheck to paycheck it doesn't matter if you're driving rewards or not when a hardship hits.
It could be argued the person churning credit cards would have the credit rating necessary to get a loan/advance during such a good of need. Whereas someone paying cash all their life would be SOL.
You could only spend $5 a month using a credit card and still build up a good credit score/history by paying it off each month. Whether credit cards exist or not, your financial situation is still going to be the same, so you might as well use them to your advantage.
I remember when I was 18 at college there was constantly Credit Card companies setting up tables right off campus giving out free stuff if you signed up for a card.
I signed up for them constantly under my parents address and told them to cut up any credit cards that came in the mail. Took over a decade before any were closed due to inactivity but in the meantime I had an 800 credit rating right out of college because I had a crazy balance of unused credit.
I think I had north of 20k available between all the cards, just never used them because interest was like 20%.
It would have been very easy to fuck around and waste a lot of money.
Is it just me, or do most top comments on this post read like astro-turfing?
You should always be extremely wary of any post that presents a topic and then has comments offering you a ready-made opinion of that topic to make your own.
In this case, it doesn't matter how many people furiously suck themselves off over how responsible they are with their credit cards and how their bank strokes their hair as they fall asleep, credit card companies raked in billions.
A non-trivial amount of that is going to be from who didn't have the luxury of being "smart" or "careful" with their card because they were broke and desperate.
A billion dollars would buy a lot of sock puppets and wouldn't even be 1% of their profits.
Is it just me, or do most top comments on this post read like astro-turfing?
I've been thinking this a lot about posts on lemmy and it's really disappointing.
But it's not just the corporate stuff that's disappointing. A post on the front page right now about Spotify not removing the intentionally hateful transphobic song has an entire comment section justifying hate speech.
I question staying on lemmy more and more because I'm seeing trash rhetoric like this more and more and it's fucking gross.
It really is absolutely disgusting how much they take in over bullshit charges. If I remember correctly around 2008-2009 Thieves Bank of America took in over 2 billion in overdraft fees alone...
Too poor? Pay me $35 now. I was one of them... Overdrawn by 0.25, in the same day I added $10 so I wouldn't overdraw when my automatic charge came in but somehow caught it at the worst time, overdrawn then my $10 sets me positive but the fee kicked in and made it overdrawn again and they hit me with another $35 since the first $35 set me under again... That was the day I stopped using Thieves Bank of America
I closed my account in the negative then was part of the settlement and they wanted me to open an account to get my settlement. My account would have still been negative.
As a business owner, there is also a monthly generic processing fee. Oftentimes there's a software licensing fee. There's also a compliance fee (sometimes). There are also periodic shore-up fees of the over/under was off during the month. Sometimes there are equipment rental fees or service fees, or you can buy it outright but there's typically still a monthly fee to use it.
Also AmEx is the worst offender depending on your processor, they can charge upwards of 6% to process. Discover is around 3%. Visa & MC are ~1-2%. That's why blended processors tend to be around 2-3%, but it also depends on volume.
Honestly, looking back at a former small business I had, I think it would have been better to be cash only and have an ATM. I know it'd annoy some customers, but our fees/costs just to accept cards was probably 5-10% of gross revenues each month. Then you take out labor, utilities, rent, raw cogs, etc. and your net margin gets real small, real fast.
I've got a no-fee credit card that I've had for years, and I think its probably been 3-5 years since I paid any interest at all. I get hundreds of dollars a year in cash back (because I use it as my primary method of payment) which I can use to lower my balance or effectively make free purchases since paypal will let me pull from that first.
If you're responsible with them, credit cards are a way to make money. You just need to be disciplined enough to not overspend, which is a skill in and of itself.
I always keep a negative balance on my credit cards (no annual fees)
I pay soon after making a purchase, way before my monthly bill
I will use the money anyways so I overpay/overfill my credit card just before a long spendthrift holiday or vacation
I have my own ledger (hledger) to keep tabs on all my purchases and where the money is going, therefore the monthly credit card statement is just a sanity/balance check of my own ledger
have never payed any interest ever
Credit card are great for the extended insurance, travel insurance, rewards, cashback, etc… but only if one never pays interest and keep a positive balance.
Otherwise, I pay my regular bills through my bank.
I know you don't want to pay fees on the card, but carrying a negative balance and paying you bill early are both interest free loans to the bank. You can manage your money in whatever way makes sense to you, and interest held by keeping that money in a high yield savings account probably wouldn't be much, but you can also reduce your level of effort quite a bit.
Technically, their "worst" customer would be one who pays in full on the last day their bill is due, in full, with no mistakes.