Is there any time when a consumer is at an advantage using a credit card and not paying it off (i.e. using it and paying interest, I know there is an advantage to using a cc when you pay it off each month)?My answer to that was a big, fat NO. There is no reason that anyone should have to use a credit card. Society would have to adjust, for sure, it wasn't so long ago that there were no credit cards for everyday consumers.This is stirring in multiple issues that are really separate.Is there any time when a consumer is at an advantage using a credit card and not paying it off (i.e. using it and paying interest, I know there is an advantage to using a cc when you pay it off each month)?My answer to that was a big, fat NO.Generally, this is true. There are some exceptions, e.g., to handle a sudden expense that would take two or three payments to pay it off. However, generally an emergency fund is better.There is no reason that anyone should have to use a credit card. Society would have to adjust, for sure, it wasn't so long ago that there were no credit cards for everyday consumers.This suddenly shifts into a bunch of different issues.There are reasons why one would use a credit card instead of, for example, carrying around large amounts of money: one can generally get one's money back from fraudulent use of the card, whereas if cash is lost, one is out of all that cash.Credit cards also provide a certain amount of consumer protection: if the good aren't delivered, one can complain to a card issuer. Some cards also extend manufacturer warranties, provide supplemental insurance for car rentals, or have other perks (e.g., cash back or airline miles).Credit cards are also the normal payment method for items purchased over the Internet and for catalog sales when the order is phoned in.None of these features require the paying of interest.That being the case, how ethical/moral is it for banks to issue credit cards to any and everyone, knowing that the ONLY way they make money is from people who cannot pay them off? If everyone paid their cards off each month, there would no longer be a credit card industry, right?Card issuers get a cut of the "merchant fees", so card issuers do get some money from those of us who pay off our credit cards every month. Also, many card issuers charge membership fees (annual fees). The big numbers, of course, come from those who have high balances, have been late on a payment so they are paying penalty rates, but still keep on making payments and don't default on their cards.Does anyone remember layaway? Has anyone lately used a layaway to buy something?Growing up, I remember stores offering layaway, most typically on school clothes (one goes to the store and try on the clothes and those specific items are then placed on layaway by making an initial deposit of 20% or 25% of the purchase price): TV commercials on school clothes often ended with "... also available for layaway". Some of the more expensive Christmas presents would also be available for layaway. It makes sense: the store gets some money in advance of the actual sales (and usually a restocking fee if the sales falls through) and the customer has the item reserved without having to to tie up all of the customer's money in advance. And there are many big-ticket items that can be reserved in advance of the final payment and delivery.Even today, jewelry and artwork are often sold on layaway. Google shows 2,680,000 hits for layaway. For general information on layaway, I came across this article: "The Unlost Art of Layaway" http://www.sptimes.com/2003/11/26/Business/The_unlost_art_of_lay.shtml I was surprised to learn that WalMart has layaway.Another approach, with much more flexibility and no risk of the store going out of business (and your layaway merchandise and payments disappearing in that bankruptcy) is to make use of a "Christmas club": last July my credit union was decorated in Christmas ornaments with the employees wearing green stocking caps. They were promoting their "Christmas club" accounts.Come to think of it, I don't recall my parents ever putting an item on layaway, but they usually saved up in advance of a major purchase. Well, occasionally we would take expensive tours and my parents occasionally mentioned having made a deposit (final amount due before the plane takes off).That is also the way I normally operate: I don't have a specific commitment to a specific item at a store, so I could shop the sales or features when I have saved enough, and I still have the flexibility of changing my mind without having to pay a restocking fee. 8)
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