Sallie Mae Credit Cards Poor Decision

[Merlin]

I've never had any debt, credit cards or loans of any kind but credit cards do have a value to people with financial discipline. One can get a credit card that has no fees and use it the same as they would a debit card, then be sure to pay it off in full and avoid all interest. Some of those credit cards then offer cash back or other rewards which are basically free money. Then, this allows one to build credit, which can get one a better interest rate on their home loan.

All this only works of course if someone uses their card with discipline, spends only what they can back up with cash, and always pays it off immediately (some cards allow you to set this up automatically if connected to a bank account).

I think better financial training could certainly help but there will always be an imbecilic segment of the population that will make poor choices.

I try to avoid debt as much as possible as well. The only debt financing I carry is the mortgage on my home, which has a balance of like 25% of the last appraised value of the house.

However, I do have credit cards, but I only use them as a way to manage my money and avoid carrying cash. The main card I use also has a cashback program, so a lot of time I end up making money back on stuff I'd be paying cash for anyway. I also use the cards as a means to categorize expenses. For example, one of my cards is only used for business expenses.

All the credit cards I have charge no interest as long as you pay off the balance in full at the end of every month. Which I do.

People get into problems when they get into the habit of making minimum payments (which is effectively an interest-only payment) and spend beyond their means to pay back.

Managing money and credit is something I'm planning to teach my daughter about once she's old enough to start worrying about such things.