The billing statements provided by these vendors, if taken at face value, clearly encourages the holding of a balance. Avoiding a balance is a reasonable goal and a smart fiscal policy, but the penalties for holding a balance, in my opinion, should not be so high.
I think a 28% APR is way high and their tiered financing strikes me as complicated. Do they clearly describe the tiers and payments required to stay in compliance and avoid that hefty interest rate? I bet they don't, that certainly isn't the case with other Synchrony cards.
Every single credit card statement I’ve ever seen clearly states the balance and payment due date before which interest will begin to accrue. Every single one offers an option to automatically pay it every month so you don’t even have to do anything, other than not spend more than the cash you have in your bank account.
Yep, same here. But this card has broken the interest free purchases into three tiers based on their cost. That is a $25 item will be interested free for 30 days but a $250 item might be interest free for sixty days. This seems pretty complicated and could be difficult to manage for a consumer.
It’s the same, but people tend to pay large bills using bank accounts (in the US, landlords, mortgage issuers, taxes for government, insurance, utilities, tuition, etc typically don’t accept credit cards for payment.)
So you don’t want to give someone access to your bank account unless you absolutely have to, since they can “authorize” or “hold” funds in your account which can cause other expenses to not get paid.
Somewhat related, I'm guessing from this that card usage limits are not common in US? Here almost(?) all debit/credit cards have daily limits that you can change via web/app/call, so there can be no arbitrarily sized holds.
There probably are, but they apply to the total of all transactions, so it wouldn’t seem useful against protecting from a single merchant using up all of your funds/credit.
It's the same size, but smaller impact on credit cards. If there's a $1000 hold on your debit card, your bank account needs to have at least $1000. If there's a $1000 hold on your credit card, you only have to wind up fronting the cash for what actually ends up getting charged.
AN: this all is US-centric, other countries typically have lower cash-back rates and may have differing laws and regulations.
1. Cashback. You can expect a minimum of 2% with relatively easy to get cards.
2. Consumer protection. A bunch of this has been extended to debit cards, but it's more of a courtesy from Visa et al rather than a legal obligation. In short, you are legally protected from being made to pay debts that you do not rightfully owe. Anything you pay for with a credit card is incurring a debt rather than giving someone money. This is important because if the merchant uses fraud or misrepresentation and is not willing to fix things, you can assert your legal protection against the invalid debt through a charge-back. If you use cash, your legal recourse is suing them, which at the minimum will cost you a full day in small claims court.
3. Credit card float - buy now, pay a month from now. This isn't as big of a deal as the cash back, since you should have cash at least a month in advance, but at least it gets you the interest payments. The real benefit is that you can largely eliminate non-planned transactions from hitting your bank account balance, which gives you certainty of avoiding overdraft fees. If your everyday spend is on credit, you can look up last month's credit card statement balances and known fixed expenses (like rent) and verify that your bank account will remain positive through the end of the month.
4. Better fraud-handling flow. Your bank has 10 days to refund or give provisional credit for debit fraud. So it means you can be out thousands of dollars for over a week while they investigate. Credit card fraud has a much better flow - the issuer cancels your card and mails you a new one, and never collects any money from you.
Cashback is free money to you. It's also a proxy to your bank account, easier to cancel and get a new one than my debit card at least, easier to dispute transactions, better app than my bank (quality of life I guess), can lock the card if you lost it on a night out, and unlock it if you find it in your jeans later that day.
1) A month-long interest free loan. That's a nice-to-have.
2) Benefits - purchase protection, extended warranty, return protection, travel insurance, rental car insurance, free checked bag, etc.
3) Earn cash/miles on purchases.
4) Ease-of-use, I don't have to go to the ATM and take out cash. Sure, I can use a debit card, but that's giving someone access to my checking account, with a credit card I'm playing with someone else's money, I don't have to worry about my mortgage bouncing if there's unauthorized charges, for example.
Because I get an interest free loan for somewhere between 20 to 45 days which with I can earn interest on (currently 2.25% per year), and I get an additional minimum of 2.5%+ cash back on the amount I purchase, and I get the ability to call up a bank and dispute a payment if a merchant tries to screw me.
And various other benefits such as airline and hotel status.
