Cash or Credit which shoud you use?

@Frewin (42)
United States
December 14, 2007 1:42pm CST
A friend's son wants to by a new band-name jacket. I will cost him about $400.00. But he has not cash to pay for it right now. He has a credit card that his parents signed for, with the understanding that he would have to pay for any charges he made. The card had an interest rate of 19%. His payment would be about 15 a month. Decision, should he buy the jacket using the credit card or want until he has the money to pay for it?
4 people like this
14 responses
@makatas (1101)
• Greece
14 Dec 07
Always cash!For God's sake, that issue with credit cards is too much!Where I live thousands of people lose their fortunes just because they owe to the banks.Why take a loan or credit card if you cannot pay for it???!!??Why would people be so dumb these days?Ok i shouldnt generalize, but see where that condition has brought us!Is it so difficult to have some money in your pocket?If you cant pay it today, what makes you think you will be able to pay for it tomorrow? Thats my opinion.If you got money, you buy.If not, you wait :)
2 people like this
@Frewin (42)
• United States
14 Dec 07
How can he learn to use credit for when he needs if he is no able to start now? He will need to have credit to buy a home, car or other large ticket items.
2 people like this
@blueunicorn (2409)
• United States
14 Dec 07
The boy should definitely wait to buy that jacket until he has the cash! Sit down with him and figure out how much money that jacket will cost by paying the minimum payment each month and how long that will take to pay off. I think you all will be amazed! I don't use credit cards for that same reason. If there is something I want and I don't have the cash for it I find something that will work until I have the cash. Personally I think credit cards are a big reason for why so many people are in so much financial trouble now days.
1 person likes this
@Frewin (42)
• United States
14 Dec 07
Yes I agree, it would take a bit over 2yr at minimum and that without interest. I am trying to fig out to total cost and time.
1 person likes this
@calicot (256)
• Philippines
15 Dec 07
If I may, that's true blueunicorn. Credit card charges can get as high as 40-50% in total interest. It's like if you pay partially, they charge you interest then deduct from your payment, then next billing they charge you interest again deducted from your payment again and so on until you can pay the last amount. It's like you're being charge an interest on the interest they charged you previously already.
1 person likes this
@lpetges (3036)
• United States
15 Dec 07
i like to use credit so i get rewards, such as airline miles or cash back. i always pay my balance., and never pay a fee. good choice if you can afford to do this.
1 person likes this
15 Dec 07
I think he should buy it with the credit card cause he can buy it faster and it is more economic in some ways.
1 person likes this
@calicot (256)
• Philippines
15 Dec 07
Well it's not bad to buy it in credit, yes it's faster and maybe economical in some ways. But if he can't make payment in full when the bill becomes due and to avoid paying interest then there's the problem. Good credit use is buy now pay later, bad credit is buy now pay whenever.
1 person likes this
@Frewin (42)
• United States
16 Dec 07
great comments. Thanks
1 person likes this
• United States
20 Dec 07
How is it more economical to use the credit card? I'm sorry, I must be missing something.
@pinay81 (1538)
• Philippines
14 Dec 07
i always pay cash and atm cards because i dont have credit cards and i dont like to use credit cards because i know myself that i cannot control using credit cards everytime i go for shopping.
1 person likes this
@Frewin (42)
• United States
14 Dec 07
Good idea not to have a card if you know you can't control your spending. But how do you get a house and car, or other large items?
1 person likes this
@calicot (256)
• Philippines
15 Dec 07
if I may interupt, I agree with pinay81. Credit cards are great if you want something to buy but have payment for it later, otherwise having a credit card and a weak control over your spending, then your going to be in a heep of payment trouble.Just my pov.
@tigertang (1750)
• Singapore
15 Dec 07
Use cash and try and make the kid pay for it out of his own pocket money. Credit cards only encourage people to spend money they don't have and buying too many things for kids FOC gives them idea that all they need to do is to ask for it. But if a kids has to work for it out of his own cash...he'll learn to value to the jacket.
1 person likes this
• United States
14 Dec 07
He should wait until he has the money for it. Because if he uses the credit card he will end up paying $476 for it.
1 person likes this
@Frewin (42)
• United States
14 Dec 07
How did you come up with that fig?
1 person likes this
• United States
15 Dec 07
spider, that figure is really low. The initial 19% is $76, but credit cards don't just charge the interest once. They continue charging the interest for each month that there is a balance on the card. It is actually about $523.95 according to the chart I found. I think that number is low, actually.
@calicot (256)
• Philippines
15 Dec 07
Yup that's true, credit card companies use a revolving interest charge on diminishing balance. That mean's they charged you interest again and again but on a diminishing amount based on your remaining balance. Take in to consideration that credit cards charge a specific percentage on a monthly basis. Even as low as 1% monthly is still 12% in 1 year. That counts a lot.
@lyn2008 (444)
• China
15 Dec 07
I think you should choose the cash,it is better. but if you are in china,you can choose credit,because the rate is very low,and the credit is very convenient.I'd like to use it.
@Frewin (42)
• United States
16 Dec 07
Maybe he should contact you and get it from china...lol Thanks for comments
1 person likes this
@lyn2008 (444)
• China
17 Dec 07
haha,maybe he could,add me as a friend,please.
1 person likes this
@stacy624 (2777)
• Canada
14 Dec 07
All I can say CASH CASH CASH! Credit card debt is so not worth it for myself I know and am in =(If I could try to give some advice by far use Cash Best of Luck and Keep us all posted, Hope he makes the best decision Happy posting Friend Stacy
1 person likes this
@Frewin (42)
• United States
14 Dec 07
I think you for got to say "CASH" one more time, LOL. How do you think he should he get the cash?
1 person likes this
@stacy624 (2777)
• Canada
15 Dec 07
Great Question.....If he gets the credit card how will he make the payments? He should look for small jobs until he can afford the jacket....Debt are not good and he should ask the question is it a want or is it a need. I hope that he will think it through before doing what he decides =) Happy posting Friend Stacy
1 person likes this
@nichole1983 (1187)
• Canada
14 Dec 07
well its totally up to him what he wants to do... but i suggest that he get a little more money under his belt before he goes and gets this jacket.. at 19% he will be paying more of the interest charges than for the actual jacket...
@Frewin (42)
• United States
14 Dec 07
Good suggetion, maybe he can get some cash from parents at a good interest rate...maybe some work around the house.
1 person likes this
• Canada
14 Dec 07
totally he can do that.. if he really wants something make sure he has a good portion (if hes going to use the credit card) to be able to pay for it... i learned the hard way.. yes i do have a credit card... and i am/will not use it as i have been off work for almost 2 years with a back injury... i could go out and use them spend on them all i want but how am i going to pay the bill... so i froze mine haha... at least i cant use them :)
1 person likes this
@ozzie13 (177)
• Australia
15 Dec 07
i think he should save for it! lol but that doesn't mean i would! sometimes it is hard to save for something like that coz you always need the money for other stuff like.... your credit card repayments lol. I am a sucker for fashion and i sympathize i would do the same buy the jacket and worry about it late, you gotta make sure you look good.
@Frewin (42)
• United States
16 Dec 07
LOL...not sure I should show this comment to my friends son...LOL, but I know what you are talking about, my weakness is gadgets...computer stuff... Thanks for the honesty in you comments...
1 person likes this
@arkaf61 (10882)
• Canada
15 Dec 07
Buying with credit is never a good idea. Unless the person has the money and in that case why buy credit? Saving for that jacket would make more sense, of course. I can understand that maybe the jacket is at a good price now so he wants to buy it but in the end it will make things much more complicated, not count with the fact that it will make them more expensive too with the hight interest.
@Frewin (42)
• United States
15 Dec 07
It seems that everyone feels the same...don't purchase the jacket on credit...
1 person likes this
@calicot (256)
• Philippines
15 Dec 07
What is the purpose of your friend for giving his son a supplementary card? If it's to teach his son to have the discipline to pay for what he buys then that's foolhardy. The son will soon know that if he doesn't pay his bill, his father will eventually pay anyway. So he might or will then have an uncontrolled, undisciplined buying capacity. Then their relationship will be strained. Why not give the son a debit card account instead, that way whatever balance is in the card that's his son's buying capacity. If the amount is not enough, then the son would then "think" of ways to get the needed money. If there's nothing to buy yet, his son will learn to save. Just my 2 cents.
1 person likes this
@Frewin (42)
• United States
15 Dec 07
I will have to ask, but I think he was trying to help his son establish credit. I know he has taught him how to use credit and the importance of making timely payments. I am sure that if the young man did not pay his bills on time, than the father could take the card, end of that lesson. I don't think the issues is if he will pay. but if it is a good idea to use the credit in this way. Debit card, this is another topic for discussion I will post soon. Thanks for your participation in this discussion.
1 person likes this
@Zelmarq (11503)
• Cebu City, Philippines
14 Dec 07
Well, I guess saving up money for a particular band name jacket would be better than buying it with the card and then paying for the extra charges which is not very good on his part. t least if he is really motivated to have that brand mane jacket he will be able to save that amount in no time.Credit can be used but for very important things and I dont think a brand name jacket would be part of those very important things.
@Frewin (42)
• United States
15 Dec 07
I agree saving for this kind of purchase is a much smarter idea than paying all of that interst. And I am sure that he would appreciate the jacket even more if he had to earn the money to pay for it himself. This is a lot like nichole1983's suggestion. Thanks for your comments here and in other comment on this dicussion.
1 person likes this
@lynd0n (226)
• Philippines
14 Dec 07
Wow, 400 bucks is like a month's wages here. If your friend's kid really wants the jacket, I guess it would be ok to use his dad's credit card. However, I think that it would be unfair to his dad, if he would be the one to pay for his luxury item. If he really wants the jacket, I guess he should be the one to pay the $15 every month. That way, he would still be the one who bought the jacket.
@Frewin (42)
• United States
14 Dec 07
Yes that is a lot of money. The credit card is in the son's name, but it co-signed by parents. So if he did not pay it they would have to. Then I think they would need to take it back from him...
1 person likes this
@Low333333 (223)
• China
14 Dec 07
if the son is a little boy,if he likes the jack very much/ i think he should pay for it right now.lost this chance,he will never catch it. this is just my mind. hehe
@Frewin (42)
• United States
14 Dec 07
LOL, not so sure about this?
1 person likes this