They're far and away the most convenient payment method in the US, both for customers and merchants.
They work globally, for values of "globally" which include "most parts of the first world which you, as someone in the middle or upper middle class, are likely to find yourself in." You can take a wee little bit of plastic issued by a small bank in central Japan and buy dinner in Prague or take a cab in Portland.
They are the cheapest way to access short-term credit, which is an astoundingly useful thing to have available. Poor folks in the US pay through the nose for it; middle class folks pay an amount between "It's literally a we-pay-you-to-access-it situation" and "A relatively modest APR in the teens, which -- in real terms -- means you can borrow $2k for an unanticipated expense without anyone judging you and it will cost you ~$25 a month." (Examples of unanticipated expenses can include medical expenses, car repairs which are necessary to continue one's employment, responding to sudden family emergencies like e.g. a parent's stroke while you're a student living in another state, etc.)
A credit card amounts to a no-haggling 1% discount on all your spending.
They create an instant, durable record of all spending, which is very useful for e.g. businesses or individuals who are attempting to budget better.
Why would anyone ever want debt?
I get the mindset behind this; I was terrified of debt growing up, for family/cultural reasons. I've matured a bit in my relationship with debt as a businessman. $100 in interest is not morally different than $100 in SaaS expenses. If it allows you to grow the business faster than you would be able to from your cash flow, than it's not a particularly difficult decision to borrow.
> They work globally, for values of "globally" which include "most parts of the first world which you, as someone in the middle or upper middle class, are likely to find yourself in."
For the record the same middle/upper class Westerner, if dumped in the global south, will be able to pay for things with credit cards. You can pay for some hotels in Africa with credit cards. You can pay for expensive restaurants there. You can go to an ATM and withdraw money to pay for things that need cash.
To help start building a credit history so that if/when you do want to borrow more for some reason you've already established a history of successfully repaying debt.
Plus don't forget that the discounting of future cost v money now doesn't just have to be financial. A reliable car and debt repayment now versus saving up whilst running a clunker (with its associated running costs) can have all sorts of related negatives.
"Building a credit history" also seems to be a US phenomenon. If you want to buy a house where I live, you save up about 25%-50% of the price, and apply for a loan for the remainder. To get the loan you prove that you have a stable income, provide some collateral (e.g. your car) and prove that you never defaulted on debt (which doesn't mean that you need a history of loans).
Is that really necessary with a 25-50% down payment?
A 50% down payment in many places in the United States, would mean foregoing home ownership until one was in their 30s. Depending on the market the person is in, (and, of course, the current interest rate, which right now is at historic lows) - the person would then end up spending more money on rent than they would have by purchasing a house and instead paying mortgage+upkeep+insurance+taxes.
It's a little difficult to say exactly where housing prices would be without government incentivized 30 year mortgages.
(there are several incentives, tax deductions, cheap loan insurance, etc)
In a decent housing market, one of the things people consider when choosing a house/making an offer is how large of a payment they can make each month. Feed that payment into a 15 year loan on 60% of the purchase and you end up with a much different level of buying power than if you feed that payment into a 30 year loan on 95% of the purchase (and thus one way of thinking says that you can expect higher prices in general when 30 year loans on most of the principle are easy to get).
> Is that really necessary with a 25-50% down payment?
It's not necessary at all. First of all, a car is not going to be adequate collateral for half (or three quarters, or more) of a house. If it is, you are spending way too much on your car.
And yes, 50% down payment is untenable for the majority of people in the US, even those with upper middle class incomes. Hell, when my wife and I bought our first house we used the FHA and only had to make a 3.5% down payment. In our low cost of living area that meant our down payment was less than what I paid for my first car (which was a decade old when I bought it). No collateral was necessary for that, either.
They work globally, for values of "globally" which include "most parts of the first world which you, as someone in the middle or upper middle class, are likely to find yourself in." You can take a wee little bit of plastic issued by a small bank in central Japan and buy dinner in Prague or take a cab in Portland.
They are the cheapest way to access short-term credit, which is an astoundingly useful thing to have available. Poor folks in the US pay through the nose for it; middle class folks pay an amount between "It's literally a we-pay-you-to-access-it situation" and "A relatively modest APR in the teens, which -- in real terms -- means you can borrow $2k for an unanticipated expense without anyone judging you and it will cost you ~$25 a month." (Examples of unanticipated expenses can include medical expenses, car repairs which are necessary to continue one's employment, responding to sudden family emergencies like e.g. a parent's stroke while you're a student living in another state, etc.)
A credit card amounts to a no-haggling 1% discount on all your spending.
They create an instant, durable record of all spending, which is very useful for e.g. businesses or individuals who are attempting to budget better.
Why would anyone ever want debt?
I get the mindset behind this; I was terrified of debt growing up, for family/cultural reasons. I've matured a bit in my relationship with debt as a businessman. $100 in interest is not morally different than $100 in SaaS expenses. If it allows you to grow the business faster than you would be able to from your cash flow, than it's not a particularly difficult decision to borrow.