# Stupid Credit Companies **URL:** \ **Category:** In My Humble Opinion\ **Created:** [August 2, 2018, 9:54pm UTC](https://boards.straightdope.com/t/stupid-credit-companies/819003 "2018-08-02T21:54:57Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![DavidwithanR](https://avatars.discourse-cdn.com/v4/letter/d/3bc359/32.png) [@DavidwithanR](https://boards.straightdope.com/u/DavidwithanR)\ **Post date:** [August 3, 2018, 3:52am UTC](https://boards.straightdope.com/t/stupid-credit-companies/819003/21 "2018-08-03T03:52:23Z")
> [@DavidwithanR](#): > > If I’m offering to pay up front, what benefit do they get from insisting on credit? > [@ZipperJJ](#): > > Who? Well, anybody, but if it matters then please describe a common situation. ---
**Author:** ![Alley\_Dweller](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/alley_dweller/32/430_2.png) [@Alley\_Dweller](https://boards.straightdope.com/u/Alley_Dweller)\ **Post date:** [August 3, 2018, 3:54am UTC](https://boards.straightdope.com/t/stupid-credit-companies/819003/22 "2018-08-03T03:54:58Z")
> [@DavidwithanR](#): > > If I’m offering to pay up front, what benefit do they get from insisting on credit? Car dealers get a kickback from the bank for signing you up for a loan. Businesses that don’t accept cash don’t have to worry about making change or keeping cash on the premises or taking it to the bank. Businesses that operate over the internet or by phone don’t have to come by your house to collect cash or maintain public offices for you to drop off cash. Businesses can use your credit card number to automatically renew your subscription or replenish your stock “for your convenience.” Health clubs can make it difficult to cancel your membership which you never use. ---
**Author:** ![nightshadea](https://avatars.discourse-cdn.com/v4/letter/n/7ba0ec/32.png) [@nightshadea](https://boards.straightdope.com/u/nightshadea)\ **Post date:** [August 3, 2018, 3:56am UTC](https://boards.straightdope.com/t/stupid-credit-companies/819003/23 "2018-08-03T03:56:52Z")
actually due to money laundering laws you cant buy a house with all cash ---
**Author:** ![Hari\_Seldon](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hari_seldon/32/5173_2.png) [@Hari\_Seldon](https://boards.straightdope.com/u/Hari_Seldon)\ **Post date:** [August 3, 2018, 4:07am UTC](https://boards.straightdope.com/t/stupid-credit-companies/819003/24 "2018-08-03T04:07:31Z")
> [@DavidwithanR](#): > > If I’m offering to pay up front, what benefit do they get from insisting on credit? I just took a plane trip yesterday on Air Canada and their food service no longer accepts cash. Why? Because the stewardesses don’t want to handle money, make change, etc. They are willing to pay the CC fee for not having the bother. ---
**Author:** ![friedo](https://avatars.discourse-cdn.com/v4/letter/f/8edcca/32.png) [@friedo](https://boards.straightdope.com/u/friedo)\ **Post date:** [August 3, 2018, 4:37am UTC](https://boards.straightdope.com/t/stupid-credit-companies/819003/25 "2018-08-03T04:37:26Z")
> [@nightshadea](#): > > actually due to money laundering laws you cant buy a house with all cash Of course you can. WTF are you talking about? ---
**Author:** ![Joey\_P](https://avatars.discourse-cdn.com/v4/letter/j/919ad9/32.png) [@Joey\_P](https://boards.straightdope.com/u/Joey_P)\ **Post date:** [August 3, 2018, 4:43am UTC](https://boards.straightdope.com/t/stupid-credit-companies/819003/26 "2018-08-03T04:43:09Z")
> [@DavidwithanR](#): > > If I’m offering to pay up front, what benefit do they get from insisting on credit? Many things, especially services (as opposed to goods) are difficult to get a good number on beforehand. The benefit [to them] is that they aren’t guessing how much to charge you beforehand. For example, if you hire someone to paint your house, they may tell you it’s $xx per hour + supplies and give you a good faith estimate. If you agree, they’ll paint your house and you’ll get a bill a few days/weeks later to pay (that would be extending credit to you). They may very well take cash after they know what to charge you, but they don’t have a total beforehand. Another example would be a doctor’s visit or medical procedure at a hospital. Often times they can’t even get a roundabout number for you until you’re done, they know what to bill the insurance for and the insurance company tells them what to bill you for. As stated above, people there are also people/business that for many reason don’t want to be handling cash (safety being one of them). They would rather take care of whatever they’re doing and have you send in payment later. Don’t forget the ‘benefit’ isn’t always that they make more money, it’s just that it’s easier for them. ---
**Author:** ![Joey\_P](https://avatars.discourse-cdn.com/v4/letter/j/919ad9/32.png) [@Joey\_P](https://boards.straightdope.com/u/Joey_P)\ **Post date:** [August 3, 2018, 4:46am UTC](https://boards.straightdope.com/t/stupid-credit-companies/819003/27 "2018-08-03T04:46:32Z")
> [@nightshadea](#): > > actually due to money laundering laws you cant buy a house with all cash If you’re paying, say, $100,000 for a house, depositing that money into your checking account and getting a cashier’s check for the same amount is still paying cash. Granted, it’s not actual paper money, it’s cash in the sense that you’re paying the entire amount upfront as opposed to taking out a loan to do it. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [August 3, 2018, 5:38am UTC](https://boards.straightdope.com/t/stupid-credit-companies/819003/28 "2018-08-03T05:38:27Z")
> [@friedo](#): > > Of course you can. WTF are you talking about? Well, some extra paperwork with the Feds will need to be filed. ---
**Author:** ![friedo](https://avatars.discourse-cdn.com/v4/letter/f/8edcca/32.png) [@friedo](https://boards.straightdope.com/u/friedo)\ **Post date:** [August 3, 2018, 6:21am UTC](https://boards.straightdope.com/t/stupid-credit-companies/819003/29 "2018-08-03T06:21:23Z")
> [@DrDeth](#): > > Well, some extra paperwork with the Feds will need to be filed. Only if you’re talking about actual _cash_ cash, in which the bank will file a CTR and possibly a SAR. And that’s not an impediment to the purchase. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [August 3, 2018, 6:34am UTC](https://boards.straightdope.com/t/stupid-credit-companies/819003/30 "2018-08-03T06:34:33Z")
> [@DrDeth](#): > > Well, some extra paperwork with the Feds will need to be filed. Indeed. We know someone who sold their house for over a million bucks (back when that was real money) for cash. The buyer came from China. Happens all the time here. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [August 3, 2018, 6:37am UTC](https://boards.straightdope.com/t/stupid-credit-companies/819003/31 "2018-08-03T06:37:50Z")
> [@CelticKnot](#): > > Have you read all of this? No debt, ever, no credit score. Not incurring it in the first place is not a good thing in this debt-driven society. If you are never going to want to borrow money, you don’t care what your credit score is. If you do, however, the lender is not going to be the first person who ever lent you money. If he is, he is going to charge you more because you are riskier. Today credit card companies and other lenders do massive data mining to try to predict credit risks, and, for credit cards, try to predict the risk of default. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [August 3, 2018, 6:43am UTC](https://boards.straightdope.com/t/stupid-credit-companies/819003/32 "2018-08-03T06:43:26Z")
> [@RivkahChaya](#): > > A couple of weeks ago, I bought a plane ticket, made hotel reservations, and bought some theater tickets on a credit card. It had seemed to be working, I guess, because my credit scores were inching up a couple of points a month. Then I charged all that stuff for the trip, plus some other unusual expenses I had last month (I broke my glasses, and had to pay for the new ones, new prescription, everything, OOP, due to a catch in my insurance, and my laptop started to malfunction, etc., etc.) I will pay the card off when it is due, but it’s got a pretty big balance sitting on it. > > Just checked my credit scores: Equifax went up 22 points, and Transunion went up 26 points. > > What a stupid system. That’s what the data told them to do. A month or so ago we put a huge home repair bill on credit cards, which we paid off immediately. The card with the biggest amount raised our credit limit by 50%. Our credit score was unchanged, but it can’t really go up. Nothing wrong with getting short interest free loans from the credit card company. ---
**Author:** ![Machine\_Elf](https://avatars.discourse-cdn.com/v4/letter/m/82dd89/32.png) [@Machine\_Elf](https://boards.straightdope.com/u/Machine_Elf)\ **Post date:** [August 3, 2018, 11:37am UTC](https://boards.straightdope.com/t/stupid-credit-companies/819003/33 "2018-08-03T11:37:09Z")
> [@Chronos](#): > > Yes, exactly. And the best way to manage debt is to not incur it in the first place. :dubious: Suppose you and I each want to buy a new car. Further suppose that you and I are middle-aged, and each have significant savings squirreled away in mutual funds that earn an annualized 6% per year. You sell $30,000 worth of shares so you can pay cash for your car. I take out a loan at 3% to pay for the car, paying down that loan over 5 years. At the end of five years: [ul][li]you will have paid zero interest, but you will have missed out on $9000 worth of returns from the shares of the mutual fund you sold to pay for your car.[/li][li] I will have paid $2344 in interest, but I will have those $9000 worth of returns from the shares of mutual fund I didn’t sell.[/ul][/li] So by incurring debt, at the end of five years I’m $6656 ahead of you. Alternatively, suppose we’re both in our mid-20s, and we each want to buy a house. I’m willing to take on a mortgage to do so, which means I get to buy a house this year; if you’re not willing to incur debt, then you are stuck being a renter, with all the restrictions that entails, while you save for the next twenty years to gather enough cash to buy a house. Credit cards also are safer for daily use than debit cards. If your credit card gets compromised, the account gets closed, you get a new card, and life goes on. If your debit card gets compromised, you’ll probably get your stolen money back, but it may take some time, and your checking/savings account may get frozen in the meantime, which could be a problem for some people. Credit cards also often come with perks that may tally up to something like 3-5% of the purchase. My wife and I each have AmEx cards that get us frequent flyer miles on Delta Airlines; over the years, we’ve enjoyed several free flights to Japan because of it. A debit card won’t do that for you. Got an Amazon Prime credit card? Presto, 5% back on everything you buy at Amazon. Got a debit card? Pay full price. All of this seems like a better way to manage debt than a blanket refusal to ever incur any debt in the first place. ---
**Author:** ![AHarris](https://avatars.discourse-cdn.com/v4/letter/a/bcef8e/32.png) [@AHarris](https://boards.straightdope.com/u/AHarris)\ **Post date:** [August 3, 2018, 1:55pm UTC](https://boards.straightdope.com/t/stupid-credit-companies/819003/34 "2018-08-03T13:55:20Z")
> [@Joey\_P](#): > > I plan to get a credit card in my daughter’s name when she turns 18 and use it just a little here and there. For no reason other than to start building up her credit so when she’s ready to buy a house/rent an apartment/get a car etc, she’s not starting with a blank credit history. I’m pretty sure that this would be fraud and/or identity theft and is illegal. ---
**Author:** ![Slash1972](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slash1972/32/6461_2.png) [@Slash1972](https://boards.straightdope.com/u/Slash1972)\ **Post date:** [August 3, 2018, 2:04pm UTC](https://boards.straightdope.com/t/stupid-credit-companies/819003/35 "2018-08-03T14:04:45Z")
Is it fraud and/or identity theft if his daughter knows about it and gives her permission? ---
**Author:** ![AHarris](https://avatars.discourse-cdn.com/v4/letter/a/bcef8e/32.png) [@AHarris](https://boards.straightdope.com/u/AHarris)\ **Post date:** [August 3, 2018, 2:22pm UTC](https://boards.straightdope.com/t/stupid-credit-companies/819003/36 "2018-08-03T14:22:20Z")
> [@Slash1972](#): > > Is it fraud and/or identity theft if his daughter knows about it and gives her permission? I’m not an expert on the subject, but I don’t think that it is illegal as long as the daughter filled out the paperwork. A quick search suggests that it would be against the cardholder agreement (unless the parent was an authorized user) and may result in the account being closed if the credit card company finds out. ---
**Author:** ![Joey\_P](https://avatars.discourse-cdn.com/v4/letter/j/919ad9/32.png) [@Joey\_P](https://boards.straightdope.com/u/Joey_P)\ **Post date:** [August 3, 2018, 2:26pm UTC](https://boards.straightdope.com/t/stupid-credit-companies/819003/37 "2018-08-03T14:26:51Z")
> [@AHarris](#): > > I’m pretty sure that this would be fraud and/or identity theft and is illegal. > [@Slash1972](#): > > Is it fraud and/or identity theft if his daughter knows about it and gives her permission? > [@AHarris](#): > > I’m not an expert on the subject, but I don’t think that it is illegal as long as the daughter filled out the paperwork. > > A quick search suggests that it would be against the cardholder agreement (unless the parent was an authorized user) and may result in the account being closed if the credit card company finds out. Or cosign with her on it. I don’t recall all the ins and outs right now, but as far as credit reports are concerned, there’s a difference between two people cosigning on a credit card vs one person having a card and making another person an authorized user. It may even make a difference if one of them is a minor. I know I looked into making her (still very much a minor) an authorized user on one of my cards, but IIRC, being a minor, and not even having a credit report yet, meant it wouldn’t make a difference. Plus, as I said, there’s all kinds of ins and outs about what, if anything, goes on the other person’s card. ETA, also, for all I care, she could go and apply for it and get it on her own. It wouldn’t even matter what the interest rate is if I’m just using it a few times a month and paying it off. I’m also pretty good about calling every 6-12 months to request a credit limit. A card that starts off with a sub $1000 limit can easily be turned into 5000-20000 over the course of a few years. ---
**Author:** ![Slash1972](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slash1972/32/6461_2.png) [@Slash1972](https://boards.straightdope.com/u/Slash1972)\ **Post date:** [August 3, 2018, 2:29pm UTC](https://boards.straightdope.com/t/stupid-credit-companies/819003/38 "2018-08-03T14:29:57Z")
> [@Joey\_P](#): > > I know I looked into making her (still very much a minor) an authorized user on one of my cards, but IIRC, being a minor, and not even having a credit report yet, meant it wouldn’t make a difference. Plus, as I said, there’s all kinds of ins and outs about what, if anything, goes on the other person’s card. I made a family member (adult) an authorized user of one of my cards. And she got her own card with her own name on it with the same account number as my card. In addition, the card showed up on her credit report as well. Maybe that is the way to go with an adult daughter? ---
**Author:** ![Textual\_Innuendo](https://avatars.discourse-cdn.com/v4/letter/t/898d66/32.png) [@Textual\_Innuendo](https://boards.straightdope.com/u/Textual_Innuendo)\ **Post date:** [August 3, 2018, 2:32pm UTC](https://boards.straightdope.com/t/stupid-credit-companies/819003/39 "2018-08-03T14:32:47Z")
> [@begbert2](#): > > Well in my case it’s because I don’t have one, never have, and wouldn’t know where to get one that’s not a ripoff. > > I’ve occasionally thought about getting a credit card, annoying as it would be to have to manage it, but I honestly wouldn’t know where to start. ANY credit card is not a ripoff if you pay the balance in full every month. In fact, if you’re responsible enough to do that, you’re actually coming out ahead by the amount of rewards they offer (with 2% on spend being a good amount of rewards), so they’re the _opposite_ of a ripoff for the fiscally responsible. As to how to find one, I’d go to nerdwallet or creditkarma or somewhere like that. Credit karma will give you an idea of what your current credit score is, too, so you know what cards you can shoot for. If it’s below 720 or so, go for any card you can without an annual fee and use it and pay it off monthly and your score will go up. If you’re 720 or above, find the best rewards card for your situation (ideally with no fee, but sometimes the reward with annual fee cards are worth it depending on your anticipated spend, and you have to do some simple math to determine that). Citi double cash is a good 2% rewards card with no fee if that’s your case (at least IMHO), but there are lots of others that are worth it. Many of them even have signup bonuses triggered by a certain amount of spend in the neighborhood of $300-$500, making them even MORE of an anti-ripoff if you just spend and pay them off every month. ---
**Author:** ![Textual\_Innuendo](https://avatars.discourse-cdn.com/v4/letter/t/898d66/32.png) [@Textual\_Innuendo](https://boards.straightdope.com/u/Textual_Innuendo)\ **Post date:** [August 3, 2018, 2:34pm UTC](https://boards.straightdope.com/t/stupid-credit-companies/819003/40 "2018-08-03T14:34:01Z")
> [@Slash1972](#): > > I made a family member (adult) an authorized user of one of my cards. And she got her own card with her own name on it with the same account number as my card. In addition, the card showed up on her credit report as well. Maybe that is the way to go with an adult daughter? Yes, this is a solid strategy to help your loved ones build credit, I have done it myself multiple times. I think it may be more effective if you have to actually enter their SSN’s, but I’ve seen it improve credit even in cases when I haven’t had to do that, just going on name and address. [Previous page](https://boards.straightdope.com/t/stupid-credit-companies/819003.md?page=1) [Next page](https://boards.straightdope.com/t/stupid-credit-companies/819003.md?page=3)