Float. If I charge $10k to a card, I get an interest-free loan until the balance has to be paid off. In a zero-rate environment that's meaningless. But even at the 30-day's 2.22% [1], that's almost twenty bucks. I'm probably paying about 1% more for the CC fees, but I can use my card that gives me 1.5% back on everything.
Your going to pay with some sort of payment card, and credit cards are easy to sign up for and less hassle to use with payments than debit cards, which require you to tap in a pin all the time. Also less fraud protection, etc.
Here in Europe it's the complete opposite. They're hard to sign up for (banks don't like giving them) and you get registered for the loan which means you will have a harder time getting a mortgage or car loan. The more loans you already have the harder it gets. I heard in the US it works the opposite way.
And the pin is required here on both (and rightly so IMO to protect against skimming). Only for minor contactless payments it isn't. But the same goes for both.
And we don't get much additional fraud protection or other benefits like insurance on them that we don't get with our debit cards.
I'm surprised the payment systems are so completely opposite. Despite being the same tech from the same companies.
The only reason I have one is that my work insists that I get an Amex due to some dirty deal they have. Which is a horrible card for traveling in Europe, nobody accepts it besides hotels. Try getting a taxi in Paris for example..
I also had my personal one as my debit sometimes didn't work but these days it works everywhere.
>They're hard to sign up for (banks don't like giving them) and you get registered for the loan which means you will have a harder time getting a mortgage or car loan. The more loans you already have the harder it gets. I heard in the US it works the opposite way.
In the US, loans are distinct from lines of credit and credit cards. Just having a credit card won't make it easier for you to get a loan, but having a history of on time payments while making use of the credit cards will increase your credit score. Having high utilization on your cards will decrease your credit score. Mortgages will take a variety of factors into account, with credit score being among them.
>The only reason I have one is that my work insists that I get an Amex due to some dirty deal they have. Which is a horrible card for traveling in Europe, nobody accepts it besides hotels. Try getting a taxi in Paris for example
I've actually been quite successful in utilizing my Amex card across roughly two dozen countries in Europe and Asia, so this doesn't really match my experience. I haven't specifically tried to use it for a taxi in Paris, however. I do keep a Visa in my wallet in case I need it, but my bigger issue has been places that don't take cards at all, and having to carry cash. Cash only locations are basically nonexistent in the US - even the smallest hole in the wall type places and random food stalls in gas stations tend to allow for cards ever since Square became popular.
> I've actually been quite successful in utilizing my Amex card across roughly two dozen countries in Europe and Asia, so this doesn't really match my experience. I haven't specifically tried to use it for a taxi in Paris, however. I do keep a Visa in my wallet in case I need it, but my bigger issue has been places that don't take cards at all, and having to carry cash. Cash only locations are basically nonexistent in the US - even the smallest hole in the wall type places and random food stalls in gas stations tend to allow for cards ever since Square became popular.
I've never used it in Asia, but for example the main Taxi companies like G7: https://www.g7.fr/en/paris-taxi-fares do accept credit cards but are very difficult about amex. When you wait at Charles de Gaulle airport there's some bouncer in the taxi queue who will ask specifically what card you have and if you have Amex then they have to haggle with the queue of waiting taxi drivers for one to accept it. And often when you do get to your destination the machine is suddenly 'broken'.
One of the taxi drivers told me that amex charges them a lot more than the others.
In Romania you'd be hard-pressed to find a taxi that accepts cards at all and if you show them an Amex they will laugh in your face (though taxi drivers aren't very nice people there generally speaking, two of my colleagues even got literally robbed).
The same with other minor expenses. Like rail tickets, food in a 7/11 style shop etc... The big hospitality outlets like upmarket restaurants and hotels do generally accept it. But my work requires me to pay all my travel expenses with amex and I get a lot of bitching from them if I don't. But especially in Eastern Europe I just don't get anywhere with it.
Amex is a clear example of where the power and focus lies here.
Amex gives its customers great benefits. It charges merchants an arm and a leg to do that. Literally double the fees. Merchants then refuse to accept it a lot of the time, but every time a customer "only has an Amex card" they lose business, so a lot do accept it, grudgingly.
Of course customers prefer to use their Amex card whenever they can, because benefits. So they often pretend to "only have an Amex card" (much like "the machine is broken" in taxis, that then miraculously fixes itself when you pull out some loose change as "the only cash I have").
> Here in Europe it's the complete opposite. They're hard to sign up for (banks don't like giving them) and you get registered for the loan which means you will have a harder time getting a mortgage or car loan.
Which part of Europe? That's not how it works in the UK. You build up a record by using credit products and it benefits your score to keep them in good order.
Though it is how it works here in Australia. When you apply for a mortgage they take your credit card limit into account as a negative.
> And we don't get much additional fraud protection
That's interesting. The UK (again) has significant legal protections for credit that mean the credit card company is jointly liable for the debt in some circumstances, like fraud, and must return your money pending an investigation. There's much less protection with debit cards.
> Which part of Europe? That's not how it works in the UK. You build up a record by using credit products and it benefits your score to keep them in good order.
Good point, Europe is not one entity. The UK is more aligned with the US legally (common law etc) than the rest of Europe. Especially now with Brexit.
In the Netherlands it's definitely something that works against you. Even something simple like a phone contract with subsisided hardware will lower the credit score.
The UK (again) has significant legal protections for credit that mean the credit card company is jointly liable for the debt in some circumstances
And the advice for customers is often to buy mid-to-high value items using a credit card for this reason. If you order £10k of furniture for your new home from an online retailer that goes bust before delivery and you paid by credit card then you might well have a claim against your card provider instead for example.
Of course the direct connection between whether you have certain consumer protections by law and whether you technically paid on credit doesn't actually make much sense today and mostly exists for historical reasons. The corresponding risk created for card companies also contributes to the raw deal that merchants get in the terms for accepting card payments, which is a drag on the whole economy.
I'm not sure they do get such a raw deal for accepting card payments do they?
Lots of (for example) food stalls in London were popping up as card-only businesses over the last few years, because it was easier than dealing with cash. The EU rules (which presumably still apply until actually repealed) capped the fees pretty effectively.
Oh sure, yeah no contest there. You want to accept cards here's your list of arcane rules and if you step over the line no money for you. I guess I was thinking in terms of fees etc.
> pin is required here on both (and rightly so IMO to protect against skimming). Only for minor contactless payments it isn't.
Across Italy, France, Britain, the Netherlands and Portugal, over the last thirty days, I never had to provide a PIN over contactless. This was true for minor purchases to €5,000+.
Is that with your phone perhaps? With those there is no pin needed because you already authenticate on the phone itself. I don't have to with Samsung Pay either.
But on the card itself I have to above €75 (or after transactions accumulating to that amount)
In France, contactless has a legal limit of 50€.
(It used to be 25€ before covid, but they tried to incentivize contactless to reduce well... contacts)
There's also generally a limit over the volume and the amount of consecutive payments, so that if someone steals your card, they won't be able to spend huge sums with contactless. It is set by your bank though
Even when paying with a phone though? Here there is a similar limit with cards but with my phone it works (Samsung Pay). And I never have to enter a PIN either, I assume this is because I have to authenticate on the phone for every payment (biometric or separate PIN).
But I haven't been to France since I got Samsung Pay so I haven't had the chance to try it out. Here in Spain it works with any amount. Well, up to a few hundred anyway, I haven't bought anything over 1000 in ages :)
I had simply assumed it would be the same, but after a bit of research, on the phone, the legal limit is way higher (300€). It does require a pin code above 50€ though
I really wish US credit cards would finally switch to PIN as well. We all end up paying for lost/stolen card fraud indirectly, and PINs are extremely effective at preventing that.
The downside would be if banks would use that as an opportunity to shift the liability for all remaining fraud onto cardholders as well, but the same scenario already exists with ATMs and debit cards.
> Also less fraud protection
Practically, not really. Most banks go above and beyond the legal requirements for limiting fraud liability for unauthorized debit charges and offer zero liability as well. The same chargeback framework that exists for debit also applies to most credit transactions.
While your waiting for your fraud process to finish, you don't have money in the bank. Also as you said, more fraud liability is shifted to card holders, so if someone stole your pin then it's even more pain.
While with a credit card, you do still have money in the bank and less instances where you are assumed to be the liable person.
Also culturally in the USA it's a common feeling that debit is not as good or the consequences are more dire with debit cards and fraud.
Bank balances are very important for most Americans to avoid late fees and so on to pay their bills, while you can hypothetically walk away from a credit card debt.
Card companies decided that the friction & support burden that PIN entry gives is not worth the revenue decrease vs. the cost of fraud AFAIK.
IMO I want push permissioned payments and not have this basically auth-free pull system of payments, but that wont happen for a long time. Subscriptions should be a subscription request send to a card, you approve in your bank app and then you can cancel unilaterally on your side on you app. None of this pull crap. Same with tap to pay.
> While your waiting for your fraud process to finish, you don't have money in the bank.
In many circumstances, banks are required to either resolve the issue quickly or provisionally credit you in case of disputes. Fraud liability is also limited by regulation, in addition to card scheme rules and bank policies:
> Also culturally in the USA it's a common feeling that debit is not as good or the consequences are more dire with debit cards and fraud.
I suspect that it's primarily that: Common knowledge with a lot of truth to it, but not entirely up to date and correct in many instances. Germany obviously has a lot of that as well, but with very different axioms leaving to very different outcomes in terms of guidance and behavior ("only cash is real money", "debt is bad/a moral failure" etc.)
> Card companies decided that the friction & support burden that PIN entry gives is not worth the revenue decrease vs. the cost of fraud AFAIK.
The problem is that due to market dynamics (leaving aside card scheme rules for the moment), it's really not up to individual banks to change that. The first bank to introduce a PIN on their credit card would lose a lot of purchases to their competitors due to convenience, forgotten PINs etc.
In Europe, it took heavy regulation to get banks to use 3DS – the dynamics there in terms of a first-mover disadvantage were very similar, and the existing (significant!) financial incentives were not enough.
> IMO I want push permissioned payments and not have this basically auth-free pull system of payments, but that wont happen for a long time. Subscriptions should be a subscription request send to a card, you approve in your bank app and then you can cancel unilaterally on your side on you app. None of this pull crap. Same with tap to pay.
The various stakeholders (card schemes, regulators, banks) are well aware of that customer demand. This industry is one full of legacy technology, and it'll take a while, but I think we'll get there eventually.
I use one for two reasons. One is that it puts a layer between my purchase and my bank. Any fraudulent purchases can be dealt with before any money is taken from my account. The second is for the rewards and the ability to build credit.
Why would I not use a credit card? It's essentially a better debit card in every scenario, except for when paying with a credit card has an additional fee.
1. Extra hassle of interaction with a second company other than your bank, extra credentials, tracking balances, etc. etc. When I was living in the Netherlands I had my bank-account-attached Maestro card (or sometimes cash) and that was that. Except when foreign companies needed a credit card.
2. Fees. The whole point of credit cards - for the CC companies of course - is fees.
> Fees. The whole point of credit cards - for the CC companies of course - is fees.
On the merchant side, yes.
On the consumer side, no. There aren't many examples than Amex which is mostly popular in US charging high fees for their credit cards.
Most credit card companies make money from merchant run programs and overdraft & interest on late payments and penalties. They make half of their profit from vulnerable and poor people to pay rewards.
Merchants can forward the fees they pay onto you. And, in fact, some definitely do. So cash/debit card price would be X, credit card price might be X + 1% or X + 3 EUR or whatever. Others just refuse to accept credit cards: Direct debit or cash only.
As others have noted, basically every bank in the US offers credit cards, but I do make use of American Express as my primary purchasing method, and for me this is a feature and not a bug.
They offer excellent customer service, the concierge offering has done quite a few excellent things for me (for free!), every time I have had to perform a chargeback the experience has been painless and the investigation concluded quickly, they generally have promotions related to merchants I frequent, etc. It's a much better experience as a customer than any bank I have ever had an account with.
Pretty much every major bank in the US issues credit cards, so you don't need to deal with a second company. For most consumers, there are credit cards without fees (the CC companies charge fees to merchants, but unless you're dealing with a place that offers a cash discount, that doesn't affect you at all).
> Extra hassle of interaction with a second company other than your bank
Nearly every (probably every) bank issues credit cards (they'll ultimately be Visa or MC, but cobranded by your bank) if you want to get everything from one place.
> Fees. The whole point of credit cards - for the CC companies of course - is fees.
What fees? There are no fees. In fact there are nearly always cash back (or points, or something) that benefit you.
Sure, the merchant pays CC fees, but those are bundled in the price of the item so you'll be paying those even if you pay cash. So might as well use a credit card and get all the legal protections that only credit cards guarantee + some cash back.
I guess that depends on the legal system. In some places the merchant frequently passes the fees on to the customer (and any contract between the payment network and the merchant which prohibits it is invalid to that extent by law). Then you need to consider the rules of the place you're in and decide which card to pull out, and you probably have your default card on Apple/Google/Samsung Pay set to be the debit card.
I think it's also common for a credit card to have an annual fee that probably doesn't apply to a debit card.
> In some places the merchant frequently passes the fees on to the customer
In the US that is exceedingly rare. The only exceptions I've seen are the government and a few discount gas stations.
But, you're right, in the end it's important to always be aware of the payment rules of each place and optimize accordingly.
> I think it's also common for a credit card to have an annual fee that probably doesn't apply to a debit card.
Most normal credit cards (at least in the US) have no annual fee. A good one is the Citi Double Cash card, no annual fee and unlimited 2% back on everything.
The premium cards have fees, those are rarely worth it unless you travel so much that you can take advantage of all the discounts.
I use it for cash back. It helps to significantly offset sales tax for me.
Yes, the money is always coming from somewhere and arguably products might be cheaper without credit cards. However, it’s the game we’re in, so why leave money on the table?
For anyone downvoting the solid advice in the parent comment, please be aware that "cash back" has been a widely used term in some countries for getting a shop where you're paying by card to charge an extra amount to your card at the same time and give you that amount in cash. It was a popular alternative to ATM use here in the UK for a long time for example. However if you were paying using a credit card instead of a debit card then the same (often very expensive) charges and interest rates would apply as if you used your credit card to get cash at an ATM and sometimes people didn't realise that and thought it was a free and convenient way to withdraw extra cash (as it typically would have been if paying with a bank debit card instead).
Don't think of it as a credit card. Think of it as payment mechanism. It comes with certains costs (to some users, and to all merchants) and also with certain benefits. It also comes with a certain aggregate cost to the whole of society, since essentially prices are increased to cover fees, and then some fraction of the fees are refunded to the wealthiest users (redistribution, just more subtle than taxes).
Predictability in cash flow and free rewards in India. Most places do not charge extra for credit cards and nor do you pay annual credit card fee in most cases.
It's an interest free loan for upto 45 days. Many banks will provide 3.5 - 6% interest without risk. If you spend a lot monthly, it's a free nice dinner every month without doing anything. If you can use the capital, it can be worth more.
They provide free lounge access and food at airport + concierge service for discounted bookings at hotels.
