.... and so are most people. Indeed the reasons banks get so rich is that they offer people instant wealth in the form of loans. Loans that people unfortunately see as free money....until the monthly payments come in.
Now the banks know that the majority of people, when given financial freedom, will end up killing themselves with debt. Easy debt to get in, easy monthly payments, and once their hooks are into you they will slowly milk you dry for decades. Of course forever is even better!
But if you are NOT greedy you can use these banks ploys to your advantage. I have done this over and over and over.
Credit cards are a mixed bag. In places like Nigeria I would steer clear of them because they are NEVER a good idea (at least from what I was reading before). In Canada they are an awesome idea. IF and only IF you are disciplined!
The reasons are simple: Cashback, Insurance, and Signup bonuses.
Now signup bonuses have one goal in mind. To get people to spend as soon as they get the card. Get some debt going and then pay the company interest for years to come.
Indeed, my son got an American Express card soon after he was 19 (legal age in Canada) and they gave him a $600 value bonus IF he spent $3,000 within 90 days. Now many 19 year olds would spend the $3,000 and not have the cash to pay off the card. The bank wins and the cycle begins.
However my son DID have $3,000 in the bank account. He had saved diligently for two years to fund a trip to Japan. He just booked his airfare and hotels with the card and promptly paid off the bill at the end of the month. The bank got no interest from him but he got a number of perks.
First: He got travel insurance for his whole trip. $79 value for free. That was nice.
Second: He got a hotel credit for $600.
Third: He got a cashback voucher for $90 (his regular incentive)
Fourth: The card had a promo of 10% cashback on airline tickets. So, he got a great deal on his airfare AND he got $150 cashback as well.
To top things off the hotel had a promo whereby their loyal points customers got half off the price if they booked with points. He ended up getting a room which was normally $1800 per night by using just the points given to him by the bank.
In essence.... A free night in a very luxury hotel!
Image from Marriott Booking site
Wow, $4,747 Cad/night, its gotten more expensive!
To 
Seriously though. I was so proud that I was able to teach him to work the system and see the benefit of using the banks greed against them. Plus how to avoid the trap of paying for instant gratification! The fact that he was able to experience such a luxurious place for free, well, that was just a nice bonus 😁😁
My favorite bank OFFER was one that had me shaking my head. It was so obviously bad for the bank and so obviously good for me IF I WASN'T GREEDY that I just had to take advantage of it.
I had just opened a secured line of credit against my house. It goes by the common name "HELOC" but regardless it was a low interest on demand loan backed by the value in my house.
Of course the bank wants me to take money OUT of my line of credit so they can start making interest every month. It was only 3% interest and the minimum payment was interest only. Many people use it to buy things they can't really afford but really want.
The bank promotion? Take out up to $35,000 and get 10% cashback if the loan amount was open for 90 days or longer. In short, withdraw $35,000 and get $3,500 cash in your pocket.
Of course I did the math to figure out how much 3% interest was going to cost me over the course of 90 days.
Here is the math: $35,000*3%/12 = $87.50 monthly
$87.50/month * 3 months = $262.50
I called up the bank to make sure the offer was legit. The loan officer assured me that it was. So, I took out $35,000 and put it into a 90 day time deposit. It only paid me 1 or 2%, nothing worth mentioning.
Then I proceeded to pay the $87.50/month for the next three months.
Then after 90 days I watched as $3,500 went into my account! Then the time deposit was up and I promptly repaid the money I borrowed.
$3,237.50 in my pocket because the bank thought I would be stupid and use the $35,000 as a cheap loan to buy a car or something I didn't really need!
Now loans aren't inherently bad. Without my student loan I wouldn't have gotten my degree and I wouldn't have had a reliable salary for the past 30 years.
Without a mortgage I would never have been able to purchase my home. An investment which has grown over 4x its original purchase price. I also wouldn't have been able to purchase investment properties which helped my mother and my sister get into homes of their own.
I also had a car loan when I needed a car badly to get to work and without it I couldn't have taken my first real job.
In short....loans made things possible that otherwise I couldn't have done. By weighing the pro's and con's along with making sure I could afford what I was getting and doing the math on the in's and out's of the loan, I've pretty much always come out ahead.
I can also say that loans can get people into trouble. I took out a loan to go to my grandmothers funeral when I was newly out of school. I was only making a small wage and it took forever to pay it off! The bank won on that one and I learned a valuable lesson.
In short, be shrewd, be patient...
..... and use the banks greed against them while simultaneously avoiding the pitfall of debt that so many people get themselves into.
Of course, you may have other ideas. I'm certain my grandmother would be horrified as she always hated ALL debt in any form.
I'd love to get comments and hear from the community at large!
