How prevalent is the use of credit in your country/society

[edkwon]

In the wake of the massive credit collapse and stock market crash in the USA and its domino effect on the other major world markets, it just made me wonder, outside of the US (EU, Asia, central asia, africa, whereever you are from) how much do you (meaning the collective you, not you as an individual) people live off of credit instead of solid cash. Obviously in the US, its WAY TOO MUCH, seeing ppl of low to moderate income buying relative luxury items (big screen tvs, large SUVs, houses) that are clearly well beyond their normal means, how much of that irresponsible spending is present in your countries? I'd imagine in some parts of the EU credit card use is pretty similar to the US, but i know for example many Chinese immigrants here do not believe in credit at all and its cash or nothing.

What say you folk?

[SuperStalin]

Here in Serbia, up to maybe four years ago, almost nobody used credit,
now, everyone is forced to use it ( with criminally high rates ). I suppose this economic catastrophe is now bound
to push thousands into poverty in countries like Serbia.

[avanti]

I it is very common, and a lot of people use them to arrive to the end of the month since their salary doesn't cover all their expences, then you are in a evil circle that its hard to get out of. I personally have 4 credit cards and use them a lot, but I pay it back at the end of the month so its not a problem

edit: Stalin; when you say forced, do you mean because they run out of cash, like I mentioned above, or is it another reason?

[Hidden_Hunter]

Fairly common here,

[Cobol74]

Lend us a quid?

Naw- its is obligatory really. But you got to know how to use it to your advantage.

[ViperVX]

Very uncommon here in Russia. The best bank loan you can get is about 11% (7% for employees), which is a lot. Buying stuff via credit is even more expensive, therefore most ppl don't bother, and do what they've been doing for decades, - loan money from friends/relatives with no interest, buy the thing, and pay back later on.

[chaos386]

Fairly common on large-ticket items like houses and cars, but not very common for everyday purchases. It's probably worth mentioning that interest on loans is illegal according to Islamic law, so banks use alternate methods to make money from loans.

['CruiserMan]

chaos; Big account fees, I guess?

In Australia, it is pretty common. We're not up to our eyeballs in debt, although we do have quite a lot of people living right on the razor's edge of being able to pay back their credit card debt and housing loans... I suspect a lot of people here are pretty relieved by the big rate cuts.

Personally, I don't have one and don't wish to have one. I have a debit card, and I use that if I don't have cash handy. If I can't afford it, it can wait until I can afford it.

[Shawn]

Quite prevalent in Canada, although seems like a lot less people have credit woes up here than in the US. America seems to have a huge problem with spending on credit, even the current economic issues aside. Even living a comfortable life in Canada, I've always marveled at how so many Americans seem to always have such new, shiny things... luxury consumer goods basically.

I've lived in Iran too, and there's pretty much zero credit over there. You'll be able to get a mortgage on a house or car, but even that's not prevalent. Because the rich people can just buy outright, and poor people can't even cover the monthlies. Another big hindrance I believe is that there's absolutely no credit system in place, so most of the population wouldn't even be able to secure loans. Loans for opening up a business or going to university are non-existent, only possible privately through some well-endowed acquaintance.

[CyberMonkey]

Fairly uncommon here, Belgians are a people of savers. Although it changed in the last few years.
However, I know almost nobody who buys a car on credit. Most people save first and buy it at once and for things like televisions or computers almost nobody buys on credit.
In fact the only purchase on credit which is "socially accepted" over here is a house. For all the rest, you simply save and not having at least a couple of thousand euros on your bank account for "just in case" is considered plain stupid and a sign of bad housekeeping.
I do have a credit card though, but that's just for convenience. I never ever want to buy something with that which I haven't covered on my bank account. I wouldn't like the feeling of being "under zero", even if it's only temporary.

But as I said, lately it has changed with lots of elektronics shops offering cheap credit on their stuff and the huge rise of shop-dependant credit cards (even for normal household shops with food and stuff). Every now and then there is a public outcry because socially weak people get in trouble because of all those credit systems and luckily the government does regulate it some.

[vikiradTG2007]

Extremely common and over-abused around here.

[Viper007Bond]

I don't own a credit card, but I really, really need to get one so I can start building credit (so I can buy a car, apartment, etc.).

When I do get one however, I'll be treating it like cash -- if I can't afford to pay it off at the end of the month, then I won't buy it in anything but emergency situations and even then I'd rather ask my parents for a loan or something than have my credit card balance gain interest.

['CruiserMan]

I'd never associated "credit" with a home loan. Credit in our vernacular is entirely focused on credit cards.


Almost every house in this country is bought, at least in part, with money from a loan. When the absolute cheapest little apartment is $200K, and you want to be out of home before you're 30, you're not left with much of an option. Interest rates are pretty reasonable, but people do tend to run right on the edge, as I've said. There's been much commotion about a 0.25% interest rate rise in the past, and how that will drive many more families closer to defaulting on their home loans...And these same people have two new cars. Both on finance.
I really wonder about the sanity of our consumeristic society.

[CyberMonkey]

Hmm you're right, I just thought the threadstarter meant "money you don't have right now". Indeed a house loan is a different matter since for most people it's just impossible to buy that without a loan (or you would have to rent something for twenty years and save everything else).

[Cobol74]

In the UK you can still get cards that return you between 1 - 5% of all your spending at the end of the year. So http://www.moneysupermarket.com/cards/cardsresults.asp

It is a very very bad idea to borrow against these because that is not what they are for and are therefore very expensive but if you use them like cash and ALWAYS settle fully then it is a nice bonus - I never use my debit card for purchases, just for the odd cash point transaction. Also I get a bit of credit interest on the current account so as I do not settle the debt until the statement from the credit card comes in I get additional days interest too - not much, but it helps (oh and free banking at the moment).

[Shawn]

^ I have a cashback Mastercard. The limit is only $50/year, but at least I actually get it. If I was to collect air miles or loyalty points I'd never have enough for anything.

The interest is atrocious though, I think 19.x percent. Scary!

[h-p]

Not at all common here. Most of us have credit cards, but we don't use them often. At least that's the case with my friends and family.

[edkwon]

Originally Posted by CyberMonkey

But as I said, lately it has changed with lots of elektronics shops offering cheap credit on their stuff and the huge rise of shop-dependant credit cards (even for normal household shops with food and stuff). Every now and then there is a public outcry because socially weak people get in trouble because of all those credit systems and luckily the government does regulate it some.

I like how you use that term 'socially weak' because an awful lot of ppl in this country have demonstrated themselves to be such, and its moreso prevalent in the lower/middle social classes, ppl who don't earn much money in the first place who are lured by the quick and easy way of elevating their social status with easy attainment of more luxury material goods. I admit i've fallen victim to the same thing for years when i wasn't making much money, but now that i'm earning a full salary i've stopped using credit cards altogether and pretty much pay everything cash (or in the form of a bank debit card which is more convinient) and have eliminated most of my lingering CC debt. The only loan of substance im paying off right now is a car loan.

While most ppl would cry out in protest at the suggestion of government intervention/regulation on their personal right to spend money they do not have, this behavoir has more or less brought disaster onto the country, coupled with lender/creditor greed to take advantage of such stupid ppl, but now they themselves are hurting or going out of business (seen in the collapse of many major banks). At a point like this govt intervention may be a necessary evil because we americans as a whole kind of failed to act like responsible ppl.

And the biggest burn is those of us who were responsible with our savings and spending have to help bail out all those greedy idiots

Originally Posted by 'CruiserMan

I'd never associated "credit" with a home loan. Credit in our vernacular is entirely focused on credit cards.

You may not make that association, but house loans is considered part of credit as well. After all youre buying something with money you don't have. And it's primarily the unregulated and irresponsible housing loan crisis that's causing all the bank failures since they were giving out low interest home loans to ppl who nobody in their right mind should have given credit to.

[jetsetter]

I don't own a credit card, but I really, really need to get one so I can start building credit (so I can buy a car, apartment, etc.).

When I do get one however, I'll be treating it like cash -- if I can't afford to pay it off at the end of the month, then I won't buy it in anything but emergency situations and even then I'd rather ask my parents for a loan or something than have my credit card balance gain interest.

That is what I do. I like to carry a credit card because it's easier to use than cash. Because I use online banking after I purchase something I can just pay it off a few hours from when I bought the item. I never spend more than I have and treat it like cash.

[katwalk]

From what i have heard the entire economy issue is based on bad use of credit, people buying things they didn;t have the money for, so I'd say A LOT.
I use my credit card a lot, mostly because my bank closes at 4 PM and that is when I either have to go or just get out of work so i never have time to get any cash. Checks are annoying. I just paid my this month's credit bill + a extra hundred for stuff I've bought this month so it will be taken care of already, So i think I'm personally pretty good with it.