Topic: Does Using a Credit Card Demonstrate Financial Literacy? - page 5. (Read 816 times)

Op I must say the truth, you topic is not found in the content though I understand what you are saying but I was expecting the main concept as a question in the thread but it is the opposite side that I seen in the thread and that is why when creating thread make sure we should stay on the topic so that the discussion will be very interesting.

From the topic and not the content I will say yes. It shows financial literacy and I am saying it from personal experienced and a neighbour experience. A woman who is not educated prefer going to the bank and withdraw cash and use it and I can't remember when last I visited the bank since after the redesign of the currency. Those who are not educated can not use credit card without helping hands. And that is dangerous to the security of the account. My neighbor who is a illiterate, was using credit card and POS attendance used the card to withdraw big amount of money whenever she is not around. If she was an literate she wouldn't show her pin to anyone. And because of this scenario I am saying that it shows financial literacy.

Unfortunately, the use of credit cards can negatively affect a person financially if he or she does so without self-control and control over his or her spendings. When I first had a credit card, I started to make many of my expenses using my credit card and unfortunately it caused me to have some financial difficulties because it had a higher limit than my salary. Afterwards, I started to control myself and my expenses and turned the situation into an advantage since it had the Turkish Lira currency.

Nowadays, since I live in a European country and get paid my salary in Euros, I make some of my expenses with my credit card and pay them in installments. In this way, I pay installments in Turkish Lira and protect myself against inflation due to the constant depreciation of the Turkish Lira and I purchase many products below my cost despite the interest paid.

In summary, it is possible to turn credit card use into an advantage with correct use but if it is not used correctly credit card use can cause a huge financial chaos or collapse.

If we use a credit card just to fulfill our desires, of course this will be very bad because we will use it uncontrollably and this will have a bad impact on our financial condition, and also the income we have will easily run out to pay the installments the credit card we use. Your statement is correct, any cashback program from credit cards will not be profitable for credit card users and we will be trapped in debt if we use credit cards a lot.

I totally agree on this. I think it always depends on the person, and I don't think that whether you're using a cash, or a credit card would have an effect on you. But personally, I think using credit card is so much better than using cash because you're clearly demonstrating financial literacy for it is a manifestation that you are saving money on your bank. I think it is also convenient to use credit card instead of cash. But if you are aware that sometimes you cannot control yourself in being a compulsive buyer, then I think it's better for you to lean towards using cash instead of credit card. Because oftentimes, big spenders are using credit cards because it is an easier payment method and a more flexible way of paying.

Actually, that's the good part of using credit cards. Aside from having to continue to have a good credit score (only if you are a good payor), taking a big loan for your needs like furniture for your house, or even for your business, everything will be easy as long as it's within your credit limit. Most of the time, the bank itself will call you to offer a loan with a small interest rate, no documents needed, and can approved within a few days. Unlike if you take a personal loan directly from the bank, you need to have collateral or a lot of documents needed to submit.

Using a credit card doesn't mean you can purchase outside your budget. Of course, you still have to control yourself and manage your expenses. If you have the money to pay for your credit card bill, pay it as soon as you can. It's better as you can also enjoy the benefits in the long run.

There are many pitfalls concerning credit card. Without a doubt that credit card consumption affects physiological state of the owner. It makes them more likely to spend money, impulsive buying, generally they tend to spend money compared with cash usages. The feeling itself of giving away a direct cash versus getting the bill of the bought goods next month is different. That is one of many reason of the pitfalls.

Hence it does not necessarily make its user is financially literates. On the other hand, if the user using CC properly, maximising points, bonus, promo, and managing or handling their own cashflow, surely those are good way to utilize the credit card. With that in mind, we can see clearly the behavior that shows financial literacy.

Owning a credit card is tempting you to buy those things even you cant afford it in cash. I know there is nothing wrong with it but you will tend to buy useless things. I am living in a country where if you have a credit card you are in the middle class to the rich and most of what I've heard is that they have a credit card for credit score because of discounts and take out big loans but for me it is still better paying in cash mostly if I want to buy stuff and not tempted to buy it using a credit card.

I've seen multiple studies and surveys stating that the people, who are paying with cash are more financially responsible.
It all depends of how you are using the credit card. If you are paying the credit card debt on time I don't see any problem with using credit cards instead of cash. I also agree that credit cards can make the people financially irresponsible, because the process of spending money becomes easier and carefree.
All the cashback programs exist for a reason. The banks want more people to get hooked into credit card debt, which means more money for the banks.

I believe it's all about discipline within the nature of a person and it isn't about using cash or credit cards for you to have or don't have debt. There can be people who might be indebted even after using cash because they basically lack financial management skills and they don't know how they should use their money so that it fulfills all their needs and they don't require more money before they get paid again, and similarly, there can be people who might be debt-free even when using credit cards because they know their spending limit and they wouldn't cross that.

However, I do agree with the fact that when a person knows that they can use more money than they actually own, this might be tempting when they want to make a certain purchase but they don't have enough money for that but they can buy it using a credit card but in return become indebted to the bank.

For almost 5 years I no longer have a credit card because in my opinion having a credit card is 1:1 (between needing it and not needing it). The reason is, the cash I hold is always adjusted to my basic needs and I invest the rest. My view on credit cards is quite simple, I don't like the interest charged every month/year. Moreover, showing financial status is something I always avoid. I don't really need praise from other people just because I have a lot of money in the ATM, for me the important thing is that my personal pleasure is enough, because you could say I like everything covered.

And a pattern like this makes me feel free, not having any demands outside of my needs and the principle of upholding the freedom of life.

It can be said to be right and it can also be said to be wrong. Because, the problem of having a credit card and only using cash for shopping, has different perspectives from various groups of society. If seen from the perspective of someone who has very abundant economic conditions and wealth, perhaps not using a credit card and only using cash for shopping could be said to be an act of financial literacy. However, if you look at it from the perspective of people who have middle to lower economic conditions, they will probably choose cash for shopping and not use a credit card, because most likely they cannot afford to have a credit card and only have one option, namely using cash.

Therefore, financial literacy regarding the use of credit cards or cash is more likely to be used by rich people. Because rich people have a choice (credit or cash), while people in middle and lower economic conditions have no other option but to use cash.

I personally also agree with this opinion. Because using a credit card sometimes makes spending more difficult to control, because you feel like there is a lot of money and it will never end. In fact, a credit card system uses bank money for shopping and in the end the money has to be paid. So in essence it is better to use cash than to use a credit card. Because using a credit card = borrowing money.

For me, it still depends. There are people out there who can maximize the benefits of using credit cards. And I think they're the smart ones. Not all people who uses cash instead of cc are financially literate but for me it's the other way around. But not all people who uses cc are smart with using it. Credit is power, if you know how to properly use it. But if you're just using your credit card to buy the things you want without really thinking if you can pay for it, then you're just making yourself to be buried in debt. There are a lots of perks and benefits when using credit cards. And as long as you pay on time, have a good credit history, and can maintain a good status, then you're using your credit card properly.

I don't think that that's not the case. Credit cards offer convenience to a lot of people, and provide better flexibility especially in buying online. Using cash exclusively also does not mean one is financially literate. It may just meant that they don't have access to credit cards, too. Financial literacy is knowing how and when to spend money. Using whichever financial instrument does not make you more financially literate - it all boils down to your financial decisions e.g. buying wants vs needs, etc.

bottomline, you can only appreciate having your own credit card if you are responsible enough in managing it. but a nightmare if you happen not to control your spending habits.
for me, it is better not to use credit card at all, at least, there's no temptation. most of what we buy usually is the product of our impulses.

A credit card will only be useful and helpful when the card is used by the right and wise person. Of course, the presence of this credit card makes it very easy for us to carry out transactions because with a credit card we don't need to bother carrying cash when shopping in large amounts and the presence of a credit card can also help us in times of urgency, helping us to meet our needs. when we don't have enough money to meet these needs. because with a credit card we can make a loan without collateral. However, this can be inversely proportional when this credit card goes to the wrong person and is careless in doing something. The presence of this credit card could have bad consequences because it could allow someone to behave carelessly, namely shopping without any restrictions and doing this just to fulfill their desires, so that in the end this will only make someone become in debt.

People usually use debit cards, not credit cards in my country, so when a person's paying with a card, it's usually this person's money on it. I've never used a credit card, but there were times when I used cash more vs times when I used card payments more. I think that if one needs to stick to a rough budget, it's easier to use cash because you just take a certain amount with you and that's it, but in other situations, it doesn't really matter. Also, it's more of a matter of financial management rather than financial literacy to me because literacy is about more than sticking to a budget.

If you use your credit card properly they will make money for you.

I am 66 years old and have paid under 100 usd in credit card interest since 1985.  I have earned 50,000 usd in points. Used for trips mining gear gift card etc.

So basically CC's are a source of income for me. 

If you can't do this don't .
if you can do this and don't do it you are not using your good credit properly.

It is pretty much this simple.

I used to have a no credit card policy but I'm now reconsidering.

It's funny how not using a credit card is called dumb by some people running a business. They claim that if you are going to spend money on your necessities and business expenses anyway then you may as well get one so you could build your credit up and gain some perks. Treat it as if you are using a debit card. This is the part where I find it most logical and a smart move.

I don't have experience with credit cards and their features, so I can't relay how those debts work. In my country, what we make use of is a debit card, and it makes life easier than operating with cash wherever we go.
 
I have read about the feature that the credit card has that allows people to take a loan from their card, which they can pay back after a letter when they have the money. Those are good features, but most people seem to miss using them in the wrong way, as it always makes them spend more than they have.
 
But it's up to the individual who makes such a decision that people can still have access to the credit card and don't run into debt or start thinking about how to escape debt. It's all based on personal decisions. Even without a credit card, those who are not good spenders can still borrow to fund their lifestyles that they can't afford.

There is a concept that companies and governments are very familiar with, and that is friction. When you pay with cash, you feel the maximum degree of friction, one degree below is paying with a debit card, one degree below is paying with a credit card. The less friction you have, the more you tend to spend, that's why it is so important now that we go to a cashless society, because they want us to be broke consumers. It's inevitable to use cards from time to time and I do but if you want to get your finances in order and pay for everything digitally, you'd do well to go back to cash.