Financial differences between the Dutch and Americans

I enjoy discussing the financial differences between Dutch people and Americans with my co-workers. The most obvious differences are the use of the credit. The majority of Dutch I have met live with with very little debt. Most purchases are made with cash. Actually there are several stores that don’t even accept credit cards. Major department stores and international chains may accept credit cards. Most people I speak to say they only use their credit cards when traveling.

I remember when I first arrived I could not fill up my rental car because the gas station didn’t accept credit cards and I did not have Euros yet.

Another difference is the lack of checks. No one uses them here. Everyone uses their debit cards.
Here is an example of when I may have used a check in the US:
Several co-workers and I had BBQ at co-worker home. The host provided the total cost per person for the food and drinks. I saw the other guests requesting the host bank account number. They deposited their portions directly in to her bank, using online banking. I loved this. I had no need to get cash, didn’t have to worry about her holding my check, and she got the money right into her account. I actually have been able do this in the US for over a year with my ING Direct checking account but many Americans are leery of giving up their account numbers (even though it is on the bottom of their checks). ---Side note ING is a Dutch bank. I have been banking with them for over 5 years. They have high saving rates compared to traditional banks. (email me privately if you are interested in an account. I can get a referral bonus, and you get $25)

This week I had an interesting discussion about home mortgages with my co-workers. A very popular mortgage product here in the Netherlands involves an interest only mortgage tied to an investment account. The borrower can cause the investment types in the account ( stocks, mutual funds, bonds, CDs, etc..) depending on how much risk the the borrower is willing to take. They are able to deduct the interest payments from their taxes. Because they never pay down the principle they always have the maximum possible deduction (not decreasing as in an traditional US mortgage). They can chose how little (or much) they want to contribute to the investment account. The account is tax free.

I thought this was a very interesting product. I was initially apprehensive because of my dislike of the US interest only and ARM products. However I have been playing with savings calculators and with a minimal investment ($250 per month - starting with $10K) and a return of 10% over 10 years, you could save ~$78K. So you could get the full tax deduction and save enough to payoff the house at the end of the loan term. I believe there restrictions on the investment accounts (similar to an IRA in the US) that include penalties and tax implications on withdrawal for uses other than paying off your home. I am really intrigued by this product. Maybe it or a product like it will be available when I come back to the US.