Credit Cards? Whats The Catch?

so a credit card gives cash back? 1-5% usually, cash, not "points or travel miles", unless that's a card you pick

so when I buy a $200 groceries,I get 2% back using the Bank of America c ash Rewards card.
which means actual cost of $ 200 food is $196.

and if I buy food before payday, on the 10th, my money isnt due till the 21st, and I get paid on the 15th, so its all good
dont miss a bill, or the interest will cost you a ton.

but I get like 3 week grace period where i owe no money that I've spent..

so what is the catch? the credit card is waiting for me to just miss paying? and get charged $$$ of interest/late fee, etc?

cause I'm thinking if I dont miss payments, I'm good to go and can save a lot of money

 

I mostly use a card that gives me 5% back on gas and 2% on every other else.
We use to have a mail carrier that continually put some of our mail in the neighbor's mail box and theirs in ours. I always put the neighbors back in the mail box to be picked up by the next day. I believe the neighbor sometimes never put our mail back in the box and sometimes when they did it would be opened. So there have been a few times when I did not received my credit card statement and there would be late charges and interest on the next month bill. Each time I called the credit card company and told them I did not get the previous months bill. They could see I had a record of paying on time and in full each month before, so they have always taken all late fees and interest off my bill when I ask them to. Just ask nicely!
On the bright side we now have a better mail carrier than before.

 

A lot of people don't pay off the entire balance on their credit card statement. That's one of the ways that charter banks make billions in profits.

 

It is like Vegas, odds favor the house... (or CC company). On average, people will not use the CC like the OP stated, they will be late on a payment, buy something they shouldn't have... Also, some do have a time limit on the lower interest rates. Read the fine print.

 

Yes. I use a Mastercard and a Visa card to pay for my daily purchases. I always pay the full amount on the statements; I pay the statements in person at our local bank and keep the receipts until my new statements arrive.

 

The CC company gets a small transaction fee from the merchant from every purchase through the card. Enough transactions and it adds up.

 

I forgot about that, plus peoples late fees mean I get my cashback!

 

yeah, I have lost bills that way
but
I dont need any mail. I look at my CC statements on line and pay them via my banks bill pay(dual monitors ftw)_

the only time Ive had an issue was with my property tax check, I just asked my bank via bill pay, to look into it and they said, it was paid and the city is just slow to give credit.....

 

I never undertood that, because I have friends who do that and it's not like they are paying for food/water/power, they are buying just crap
https://res.cloudinary.com/value-penguin/image/upload/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_1600/v1/average-credit-card-debt-by-net-worth_0_nxb0es.png

 

My discover card is linked to my bank account, so it pays off in full every month, and I still get statements; i rarely use this card which is why it is linked that way
I'm not sure what you mean by, "pay at the bank"? you go to a bank? do they not have billpay?
I was late once and asked to waive interest/late fee and it was taken care of.
no harm in asking, eh?

 

Indeed. I have difficulty understanding this as well. I enjoy the convenience of using a free credit card to pay for my stuff. I get to use their money for one month to buy my stuff and as long as I pay the full balance I don't pay any fees.

 

As to not paying off your card every month, it happens even when you have the best of intentions. Sure, you buy stuff and intend to pay off the balance when you get your statement. But what if something happens before you can do that? I bought some stuff (not necessities, just stuff) meaning to pay my card off as I'd been doing for a year to increase my credit score. And then a week later found myself in the hospital for 5 days, 3 of them in the ICU. When I got out, I had more money in medical bills than I gross in a year even with insurance, plus I've been unable to work full time ever since and the medical bills are ongoing (I have three weekly appointments, plus prescriptions, plus several other appointments that happen anywhere from monthly to quarterly). Turns out I still haven't paid off my CC, and that was in September.

I do pay more than the minimum required because otherwise it all goes to interest and I'd never make any headway, but I'm carrying about a $2k balance. Because even though I haven't paid it off, I've still had to use it for some things when I needed something and had no actual money. Like gas for the car, or that surprise day when I discovered I needed to buy two new tires.

 

Sgt. Tibbs,

Very sorry to hear about your financial set-back. It sounds like you are doing everything correctly in my opinion. I hope that you're soon able to get out of debt; I know how stressful that can be. Best wishes!

 

Sgt. Tibbs sorry about your health issues. Hope things improve for you.

It is easy for people to get complacent when things are going good but one serious illness can change things for most everyone. The number of households that are one pay check away from financial disaster is staggering.

 

Wishing good thoughts for you Sgt. Tibbs. Unfortunately, CC companies make money off stuff like this. That is why I don' t have one, just a debit card.

 

Jeez Sgt Tibbs you aren't having a very good run. I hope you can keep your head above water and I send my best wishes
I don't have any credit cards but I do have a transaction card so I can pay at eftpos or get money from ATMs.
CCs are handy while you can pay them out on time but when your situation changes due to ill health or losing your job and can't pay, then this is when the finance companies and banks really make their money on extra interest and late charges. In Australia when late fees were becoming a main part of financial institution's income the government stepped in and said that you can only charge late fees equal to the amount you are out of pocket due to non payment. This caused late fees to drop mostly below AU$10 because if they charge more then they have to show to the courts the actual cost that the late payment caused and this is now very difficult because bills are computer generated and this means they don't have a high cost to send another one so this makes it difficult for them to continue to rip their customers off with $40 or more late fees without facing huge fines from the government. One of the big foreign owned banks thought they could beat this Australian law but a huge fine and a court order to refund the late fees soon changed their mind
The same with ebay spending AU$45 million fighting the Australian government in the Supreme Court. Ebay wanted to only offer Paypal as a payment option but the government said they can't because they own Paypal and the anti monopoly laws mean they have to accept all forms of payment. In Australia you can pay by any credit company or bank cheque or cash when you buy stuff on ebay.

 

Thanks, everyone. It's been special, but I'm managing. I'm just glad I spent the last 18 months or so building credit so I have a bit of a cushion! It's really a cautionary tale... even if you think you're going to pay off your CC, things can happen... so be careful.