alt Hacker NewsWhole Europe does this.
I never understood why whole nation wants to live in debt just to have one extra month of cash flow (which they’ll probably squander soon).
Replies
Using a credit card isn't only about living on debt. Some people pay them off every month, and use them for the fraud protection and rewards.
Ex-European here. It is very common to overdraft your bank account in Europe. The overdraft interest fees are very similar to the credit cards here in the US. It is basically the same service but with a different execution.
Because it gives me 2.5% cash back, which is basically free money.
Yet many European countries have high household debt. Switzerland, Sweden, Netherlands, Denmark, some of the highest in the world. I guess it has to be mortgages, since it's true they are not that "big" on credit cards. Although Klarna is a Swedish company.
https://en.wikipedia.org/wiki/List_of_countries_by_household...
I'm American, and I don't use the extra cash flow (in fact, I make sure to keep more money in my checking account than I spend on the credit card, so I can always auto-pay my bill and therefore never pay any interest).
If I could get a debit card that gave me 2% cash back on all transactions, I'd use that instead!
Pay your credit card balance off every week, and it's an overly complicated debit card but you technically build up a score for future loans. Also maybe you get cash back on that?
Rational if you want a mortgage in the US at least.
While I hate that it's like this, you're leaving money on the table.
Currently you're keeping money in the bank accruing the bank interest to occasionally pay for stuff.
With a credit card you would get various bonuses/cashback/gameified returns by owing them money, and it costs you nothing as long as you pay them back once a month interest free.
If you however slip up/miss a payment it will cost you a lot.
Both cases suck, but the latter saves you money if you play that game.
That's from a EU perspective. From a US perspective you also require it from a credit score perspective, which EU thankfully hasn't adopted... yet.
This is arguably partly because the EU caps card interchange (at 0.3%, generally). So these reward schemes don’t exist, because there’s no money for them, so why would anyone use a credit card over a debit card or bank transfer unless they need the credit? Most people in the US presumably don’t start using credit cards thinking “I’ll get in debt, that’ll be great”; it’s the reward schemes.