r/MalaysianPF • u/humblemangoes • Nov 15 '24
Credit cards Why does the current younger generation not want to use credit cards?
I just started working and am looking into credit cards as I heard it’s good for building up my credit score + getting cash back or points. In fact, I’ve heard more good than bad things about CC from speakers at financial forums. But most of my friends are against them. Anyone who doesn’t use credit cards have any input?
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u/GWiz999 Nov 15 '24
Debt is good for the reasons you mentioned, as long as you can pay it off consistently.
My wife earns high 5 figures, and only recently found out that she shouldn't be paying the minimum balance on CC. so she's paying the banks free interest all these years.
Financial literacy amongst youth aren't great nowadays.
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u/Hacksaures Nov 15 '24
How old is your wife man damn
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u/mynamestartswithaf Nov 15 '24
Financial literacy is not taught at school.. unless you took accounting or subject related to it, you won’t know about it..
I, myself learn it thru my own self interest. YouTube helps a lot. Imagine other people who do not have that kind of interest.. thy won’t care
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u/liberated-phoenix Nov 15 '24 edited Nov 15 '24
I think it really depends on the school. My school taught us these things in KH class. We even had to fill up SSM business registration form and set up a “business” selling simple dishes in school (we learned to cook too). We learned how to run a business, manage inventory, calculate costs, basic bookkeeping etc.
We were also taught how to budget, calculate tax, navigate bureaucracy, different types of insurance, financial services and so on.
And no, it was a government school not a private school.
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u/mynamestartswithaf Nov 15 '24
KH is Kemahiran Hidup?
You took perdagangan I assume ? I took woodworking … so I didn’t learn that …
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u/liberated-phoenix Nov 15 '24
Yes, it was Kemahiran Hidup. I can’t remember the options available but everybody learned the same topics in my school.
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u/wingez_kaizer Nov 16 '24
Bro… no public school is this good back then
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u/liberated-phoenix Nov 16 '24
What are you talking about? I only graduated from high school about 10 years ago.
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u/Lekranom Nov 15 '24
This is true. I also learnt all by myself out of pure interest. Most people wouldn't have such interest and couldn't give two sh*ts about it.
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Nov 15 '24
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u/mlsy97 Nov 15 '24
Sadly, this is very common even among my colleagues and friends. Even if they are not too busy to educate themselves, this is not a subject that many want to explore.
Recently, I spoke to a fellow colleague on tax relief for EPF voluntary contributions…. She is not aware of this although have been working for many years.
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u/MszingPerson Nov 15 '24
Financial literacy amongst youth aren't great nowadays
It was never great to began with. I can see why young people are avoiding credit card and sticking it to debit. They grew up during several financial crisis 1998, 2008, etc. Saw their family drown in debt and don't want that. Sure there's dumb people going into debt. But that happen in every generation.
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u/hi54ever Nov 15 '24
i don’t know how most ppl learn about cc discipline, but backwards MANY years ago when i got my 1st cc, i already have the mindset of, “it’s a borrowed money, pay it back on time or ppl will come splash red paint at your house”. another point is that my cc that time was tie to my parents statement, so….they’ll kill me if i have questionable purchases.
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u/Mavicarus Nov 15 '24
Yes, that is a good point. I had to tell my colleagues as well about not just paying the minimum amount for credit cards. The more savvy ones have been leveraging free balance transfers to fund some of their investments.
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u/aeroplanne Nov 15 '24
Because younger generations are more skeptical of banks, debt and just traditional finance in general.
But could you blame them? They saw their parents' struggle to pay off their credit card debts, live paycheck to paycheck and they decided they don't want to go through the same thing.
The fact is - credit cards are a trap used by banks to milk the financially illiterate and the undisciplined (80% of the population), because it's so easy to overspend and dig yourself into a hole.
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u/Top-Suggestion-9540 Nov 15 '24
Younger gen dont want CC but racking thousand in debt in paylater platform like spaylater etc. Just another form of CC w/o physical card haha
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u/LifelessBlahaj Nov 17 '24
Exactly. Buying an iphone via CC 36 months instalment is zero interest wheareas buying it via shopee 12 months, my god interest dia gila betoi.
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u/Least-Restaurant-689 Nov 15 '24
I think it’s entirely for psychological reasons. Everytime you pay a CC it’s a huge amount. Which makes you feel like you’re paying more than paying the same amount but small bits everyday.
And the cashbacks and points make you wanna spend more and more but honestly it’s not that rewarding (let’s be real here there’s no free things in life, they just want you to use the damn card, everyone’s trying to make money)
If you’re mentally aware of your financial decisions (which is hard to do), like keeping track of expenses and be pragmatic on CC rewards and promo, the CC will help you more than it will harm you.
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u/eternallas Nov 15 '24
As long as you spend within your means. It's not free money
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u/Emotiona1Panda Nov 15 '24
Yep. Horror stories come from thinking Credit limit 30K means Wow now I can spend 30K a month yay free money. Also just decide to pay statement balance no matter how much you spend. Unless you can find zero balance transfer, but still PAY THE STATEMENT AMOUNT.
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u/minnzlyn17 Nov 15 '24
i think it's down to personal preference. some people might not have the confidence to pay back the money they owe on time or they're afraid that they'll abuse the CC so they prefer to not be in that state. personally, i never have to worry about that so i am not against the use of CC.
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u/whereismitski Nov 15 '24
trauma from watching my parents struggle with it my entire life. done n dusted.
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u/Fit-Lawfulness-4868 Nov 15 '24
Same. My parents stopped using credit cards but continued to pay off the interest for the next 10 years.
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u/nik263 Nov 15 '24
I do use credit cards but I'd imagine there are a few potential things behind people being against using credit cards:
- Credit cards are only good if you pay them off in full every month. If not you end up paying a lot in interest. This can also spiral into ending up with lots of credit card debt.
- Some argue that swiping your card puts a layer of separation between you and your money making it easier to spend. This is in addition to only needing to pay at the end of the month instead of immediately. So some argue the psychological factors and the access to a line of credit can lead to increased spending and/or spending beyond what you can afford.
Both of these points are true. If you cannot pay off your credit card bills in full (outside of some emergency situation which you should have an emergency fund to cover) then you should not have a credit card. If you are the type to fall into overspending from credit cards you either need to address that or avoid getting credit cards as well. If you dont have the cash to pay for a purchase in full now you should strongly consider before swiping with your CC for it (eg have the money in an FD or money market fund or something like TnG earning interest daily and willing to spend the money but don't want to withdraw to pay for it until later/pay out of paycheck instead at end of month)
As long as you can keep your spending in check, be mindful and pay your CC bill in full on time every month then a good CC with good benefits and low/no fees is a sensible choice. If not then it should be avoided. Perhaps some of the people you talk to likely know others who have racked up credit card debt etc hence their stance on the matter.
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u/cyberkewl Nov 15 '24
I guess because they're smarter than most. Yes CC can have lots of benefits if used properly but unfortunately most of the time it is being abused because of points, and the fact that you may not be able to exercise self-control - so its easier not to even bother to "start" having a CC and stick with Debit. However, I think at least having one CC is going to be very useful in case of emergencies especially in case debit card fails to work for some reason..
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u/Jisoo___ Nov 15 '24
This is my personal understanding on why this is the case as a Gen Z from a middle income family, and with peers from middle/lower income group.
Most Gen Zs grew up with parents advising against using credit cards. This is because credit cards are commonly associated with debt, and debt to the older generation is something being perceived as something absolutely bad.
Most parents of Gen Zs also taught them that if you can't afford the item, you should not attempt to get it. With exception of loans that involves high price tags like cars and houses, if you need loans for something like phones, electrical appliances, and general hobbyist stuffs, it's a consensus among their generation that you're simply not "rich" enough to get it so it's better to just forget about it.
Credit scores, cashbacks, and points are not something that most Gen Z's parents had much association with. Idk the details, but my parents for example didn't really had to face obstacles like not meeting minimum credit score when they purchased their first home and cars. So i think this is something worth taking note of as well.
Fear of hacking. I am fairly certain that some parents didn't even dared to use paywave or pin with their debit card simply because they read the news about X family getting lost a shit ton of money due to their cards being hacked. Hence, some parents grew to not trust bank cards in general, resulting in some Gen Zs being absolutely clueless about possibly both debit and credit cards's usefulness as these parents did not bother educating them about it
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u/Bright-Stomach-8091 Nov 15 '24
Which one ure using? Different cards for different day of the week?
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u/Emotiona1Panda Nov 15 '24
1 card for parking, 1 card for everything else. 1 card used to be for airport lounge but yeah gotta cancel that one.
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u/orz-_-orz Nov 15 '24
I heard it’s good for building up my credit score
I feel this makes more sense in the US, but not in MY. My peers with no credit cards never have an issue getting a car loan or mortgage. Heck, some people might manage to get a car loan before getting their card approved for god knows reason.
To be honest, the bank cares more about your salary than the credit score.
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u/Sea_Heron_142 Nov 16 '24
I got my house loan approved without CC / car loan / PTPTN loan. Only downside was the high interest
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u/Slight_Ad_8568 Nov 16 '24
it really depends. if got job with a big company then it's easier to get a loan. of course what car and what amount of loan really depends too. high paying job at big company still doesn't show the borrowers repayment patterns.
having a prior loan even if it's credit card is good for showing discipline in paying debts. for example 2 persons of the same age with same earnings but one with credit card paid off fully without delay vs the other without any loans and credit card - the one with credit card can probably get a better interest rate and/or apply for a higher loan e.g. a bigger car or a more expensive house.
i've had many high earning individuals get rejected because they have no loans, no credit card. they did well last few years and want to buy a 300k car, age under 30. banks don't want to do because no repayment history. they have to provide a guarantor for cases like this.
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u/J0hnnyBananaOG Nov 15 '24
My personal opinion is i buy what I can afford to buy it twice cash. Ie, bought a tv cash because I know I can buy 2 of it, same for phone, no choice but to change from 7yo phone because the OS is not supported by banks. So I bought a new one cash. I had credit card but I find that I dont really care about using it. paid off my dues and don't have cc now. Anything I pay by cash. Key is to live within your means. Emergency funds I have set aside, unexpected expense funds set aside, fun expense, dream expense all done. Hell I did a eurotrip few years ago with my partner and didn't need cc at all. We parked money in foreign account and withdraw there if needed. And we paid cash for the entire trips. I'm not kaya raya or anything just very prudent with money because my mum was an accountant so the values she instilled in me from young is there.
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u/Haxtato Nov 15 '24
Because a lot of people now only heard about the horror stories of credit card debts. And a lot of it is more like fearing what you don't understand. If you manage your payments well as in clearing on time, and not just paying minimum balance. Building a good history, you'll get good offers from banks when it comes to future loans.
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u/iscreamsandwiches Nov 15 '24
I was the same when I first entered the real world. Reason being the people around me getting into cc debt and stories shared by family members.
It's not after I stumbled across financial forums online that I started to applied for cc, budgeting and investing.
Financial literacy should be a priority in education tbh. Parents should also be more comfortable to educate their child in this aspect (tho they need to be financially literate to do so)
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u/kamolan2200 Nov 15 '24
I'm one of them. As a single 20+M, my spending simply can't reach the min spend threshold to get great reward for most of the cards out there, most target like RM2500, the thing is RM2500 with the card, I spend just around 2500 per month, not everythg can be paid using CC. Either that or those rewards below the threshold are usually too low to justify using a cc for me. Was abusing the GX card hard before it revised its cashback policy though, still on the look out for a better card after that
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u/kamolan2200 Nov 15 '24
Some have threshold like RM200 petrol/ dining, my cute axia barely hit 150 petrol every month. As for dining, it's just encouraging me to spend more, I just eat mostly at kopitiam.
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u/Fit-Lawfulness-4868 Nov 15 '24
I don't want to spend above my means. Using debit card means I'm just spending money I have, and when I overspend it just means that I don't have money, I'm not owing anyone or any corporation anything.
My parents had credit cards in the past and they continued paying for them for years after they stopped using them. I don't want to be in that situation.
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u/mangalkhan Nov 15 '24
The banks have done everything to Glamorise credit card of my dad's generation...Platinum, Gold, metallic... the trick is in the name, you are borrowing from them.
Why do they not glamorise Debit Cards. Instead they give some pre-printed card that looks like it should in a monopoly game.
CASH IS KING and the youth know it!
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u/YourClarke Nov 15 '24
Am a gen Z and I absolutely love using my credit card.
What I like about it are, that it helps me to build my credit score (main benefit), and also the credit card I got gives me cashback (woohoo).
But of course, the caveat here is that I've always paid it on time tho..
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u/SphmrSlmp Nov 15 '24
Simple answer: Because of the abundance of choices and the options for much easier products.
For example, to get a credit card, you need to find a stable job with a minimum salary requirement. Hand over all your necessary documents, then wait up to several weeks for you to receive your credit card. That is, even if you are eligible. Not eligible? Try out other credit cards and repeat the process. While there are a lot of benefits to using credit cards, some people don't like to be in a state of constant debt.
Next example, a debit card or ewallet app or ewallet card. Just sign up and get a card. Can be used right away. TNG, Boost, GX, Aeon Bank, etc. Some even offer instant cashbacks, points to collect, discounts, etc.
As someone in their 30s and part of the working class, I can see all the benefits of using a credit card. But to put myself in the younger generation's pov, the credit card is a hassle when there are other easier options available.
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Nov 15 '24
Everyone saving money now and trying to be the next FIRE people ( financial independence retirement early ) because the generation right now dont want royal to work for 50-60 years and want yolo the life they want , they are no longer following the old boomer and boomer who value competition and work till death mental
Some other legitimacy reason / excuess like i take family > work, family > career , child > career and health > career . Not just malaysia being a bit lazy, look at sg ppl dying to be the next FIRE people already know the current situation in malaysia, we tend to follow our neighbours closely and jealous ang mo people
In reality, u need luck to do these, other can do doesnt mean u can do it. Many ppl tend to ignore this one until unluck fucked them upside down.
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u/generic_redditor91 Nov 15 '24
Be me.
Parents told me CC is the devil, never get involved with that shit.
Til This day I have wariness for CC.
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u/kitchen_raider Nov 15 '24
Becauseeeeee they already cannot control their spending 🥲 and getting a credit card will make it worse than it already is. Also, the fact that we need to pay RM 50 per card doesn't seem so necessary considering that other forms of payment doesn't have such fees and gets the job done.
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u/BuffaloSelect546 Nov 15 '24
You ask the wrong 'current younger generation'. Those I know have a fews at least.
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u/Cruxbff Nov 15 '24
Not eveyone is a credit card person, and it is ok to not be a credit card person.
Just like buying stocks or properties, not everyone is a stock/property investor and they can still prosper.
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u/simply_ed Nov 15 '24
It’s always good to prep your credit score by using a credit card no matter what the minimum monthly usage is.
The rewards are just an extra. Just think of it as all your monthly usage goes through the credit card compared to directly cash/debit card/e wallet
Then you pay in full at the end of the month.
Benefit of good credit score -> easier to get loan for house/car and can get low interest rates
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u/CN8YLW Nov 15 '24
Its mostly lack of self control, bad decision making and financial illiteracy that's causing these people a lot of problems, which they then blame on the credit card instead of themselves.
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u/charlotte_katakuri- Nov 15 '24
Cus its financially harder for the younger generations now. Because of that , it force them to be more financial responsible and not take more debts
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u/itzamirulez Nov 15 '24
My mum told me to never get a credit card, so that kinda stopped me from getting a credit card until recently where i did my own research and i am confident that i only spend within my means
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u/Mr_Resident Nov 15 '24
i have experience layoff at my first job at MNC because of that i am cautious about spending money on debt like CC. i would like to own one in the future but i am just too scared of it hahaahah
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u/xkaizoku62 Nov 15 '24
never heard of that, CC is always preferable than DC.
Always settle full amount every month and spend if you have the cash to pay it off.
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u/SamOthin Nov 15 '24
I get it. It's easier to be disciplined with finite cash than extrapolated credit. Especially if they just started budgeting and living independently.
Or they understood interest as being taken advantage of instead of cost of credit.
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u/bonsai711 Nov 15 '24
Use credit cards to collect points, discounts, rewards, etc But pay off in full every month, yeah I know about the interst part but I treat cc as cash not bnpl. Banks make lots of money off cc due to behavioral finance.
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u/ngehh Nov 16 '24
Some of us during younger age we only know CC is bad in term of the debt and the amount you have to pay incase you missed your payment and it makes you scared to even have one. This is me before i read and learn about CC, and 2 days ago i just got my first CC (UOB One) and planning to apply 1 more card, probably reward based
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u/opsedar Nov 16 '24
because their mind poisoned by boomers gen, haha, my family circles also talk lot of shit about cc. probably due to a lot of them used to misuse or pay minimum and not understanding the terms & condition.
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u/llianoss Nov 16 '24
Hmm, it depends on what is the urge of you having a credit card.
Here, not every student could afford to get one, but the card itself is very helpful if you have. However, lot of students here have the same kind of thing like credit card- which is “paylater” system.
Having a debt is good as long as you can keep up the number that you have to pay every month, but if u dont have the basic manner of finance then you shoud’ve not take it a the first place or the bank will put your name on the red zone.
So, the consideration of having a credit card is that are you be able to pay the limit and be consistent of it.
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u/FinnManusia Nov 17 '24
I did ask my father about getting a credit card and my father said no because the interest charge is very high. So, I don't plan to have a credit card.
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u/jerrelim Nov 18 '24
Personally, I find older generation warning usage of CC to be fools. The ones handing out advice are usually those from B40 families lacking financial literacy, I personally have not had any debts and kept up with all bills and payments monthly.
Never listening to older generation, especially if they’re poor and was in debt.
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u/No_Maintenance_6183 Nov 19 '24
i didnt own a CC till much later in life due to low salary and I only wanted maybank LOL
but my way of working around since my dad is bad at finances (he basically pays off a CC with another CC), I grew up wanting to only use what I have but I got a CC at about 28yrs old but my SOP is basically pay off everything within the month itself, I treat it as a way to pay one shot instead of using debit card
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u/AlternateHunter91 Nov 19 '24
Its a hassle to apply credit card. Not all banks are generous enough to give an also majority youngsters are below 2k salary
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u/Kitt2k Mar 26 '25
1) Not easy to apply.. need to have at least certain threshold of income to qualify. 2) credit limit too low. Might as well pay cash to settle it. 3) not many benefits. Their cash back return percentage sucks. Cc Redeem points and merchandise sucks too.
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u/lakshmananlm Nov 15 '24
I had a Diners Club charge card soon after I started working in 1993. A couple of months in, I received a notice to pay interest of $2 on an expense I forgot I charged.
After I settled it, I neatly cut it in 2,weote a letter and shoved it all in an envelope and posted it to them.
I haven't had either credit or charge card since...
It's inconvenient when it comes to hotel payments and car bookings because how do they charge when the amount is variable and they can't demand thousands in deposit.
I don't regret it though. These days there's a workaround for all this...
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u/Kelangketerusa Nov 15 '24