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Have you been to a laundromat lately and seen what it might cost if you did a week's worth of family wash there today? In about 3 months you would have paid as much for a basic washing machine. (I know the actual cost b/c in my recent move I didn't have my washer hooked up for several weeks.) There are very few ways to live cheaply any more. That is why so many families must rely on credit, for the basic necessities.
Yep. This is very much in-line with the point I was making about the credit. Here it allows a family to actually SAVE money by having a company make them an unsecured advance in order to accelerate their ability to purchase those items.
Interest rates for unsecured advances are high because of default rates.
Remember, the premise of this thread is that credit like this is BAD. Several posters have indicated that people offering the credit are dishonest and so forth.
Just an interesting discussion. I probably charge 20k a year on my credit card, pay no fees or interest and walk away with hundreds of dollars of money in return.
No one is forced to use a credit card. If however your argument is that they NEED things like food and to pay the electric bill etc. I'm left wondering why the alternative of having them go without those things is better?
Credit is a double edged sword like many things in life. If you restrict it, people complain, if you don't people will complain....frankly being a person that favors personal liberty I'd rather have access to credit and then take personal responsibility for myself.
Outside of reasonable safeguards I'm glad I don't live in a country where we are allowed all the choices we want along with zero responsibility....as that is unsustainable.
The point I am trying to illustrate here is the trouble you can get into if you let credit get out of control.
Like another poster pointed out there is a good way to use charge cards if you pay your balances monthly and benefit from the cash back programs. Even then, you have to realize the merchants include the 3% they are charged in their price, so you are only recouping a fraction of what the cards cost you to begin with.
The people who do carry balances and have problems with their credit can find themselves in a quickly deteriorating situation if they begin to depend on their cards at the same time as the bank is hiking their interest because of them paying minimum payments.
Even then, you have to realize the merchants include the 3% they are charged in their price, so you are only recouping a fraction of what the cards cost you to begin with.
And yet even if you don't use your card for the cash back, prices are still higher because of everyone else using their card, so we may as well get back what we can in rewards.
You know what I wish? I wish stores would give you a 3% discount for using cash. Their revenue wouldn't change, but I'd definitely be a frequent customer to a store like that!
That means the poor are being penalized another 20%+ and possibly much more if they have a low credit rating.
Um, the "poor" don't have credit cards.
And I see absolutely ZERO evidence people are using credit cards to purchase "basic needs."
How do you know that credit cards aren't being used to purchase cell-phone or cable services?
You don't know.
And it's smart to use "credit" if you have a check-cashing or debit card, because, for example, when I use my debit card I always select "credit" instead of "debit" to avoid paying the POS fee charged to debit cards.
Quote:
Originally Posted by Philip T
And in the end will never re-pay the principle nor the ridiculous interest charges, pushing the failing bank one step deeper.
A beautiful thing, all-in-all.
Burn, baby, burn.
I would suspect many people would delay bankruptcy this year until next year, so that their income falls below the State Median Income and they can automatically qualify for a Chapter 7 (total liquidation) instead of having a Chapter 13 as their only option.
If you are getting 0% offers it is only because you do not need the credit, and the banks know it, if you were struggling to make your payments (which is a large portion of the population) they would be taking advantage of the situation
The banks have no way of knowing what I "need", despite having more than $100k in available credit nobody has asked me to verify a single thing.
Credit is still very loose...
Quote:
Originally Posted by jimhcom
It is possible though... if the egomaniacs in DC screw up the budget deal, and cause a large spike in interest rates.
High interest rates don't cause inflation, its the other way around. Large spending cuts, or not raising the debt ceiling will just be highly deflationary.
Have you been to a laundromat lately and seen what it might cost if you did a week's worth of family wash there today? In about 3 months you would have paid as much for a basic washing machine. (I know the actual cost b/c in my recent move I didn't have my washer hooked up for several weeks.) There are very few ways to live cheaply any more. That is why so many families must rely on credit, for the basic necessities.
I dunno about that unless it's that expensive by you.
When my washer broke I had to do the laundromat thing..$.75 per machine and I used 2 machines. Didn't dry though..took them home and put them on the clothesline out back. So for $1.50 I did 2 loads of laundry.
We have been getting an increased amount of credit card offers lately with 0% for 12 months. Kind of started about three months ago and been pretty consistent every week since then. Hell if they can hook people for 20% its worth the bait of advertising dollars.
I have one CC and use it for almost everything. Then I pay it off in full each month.
It's a real easy way to track your budget as my CC bill is itemized.
Someone told me that's how they tracked their budget and I eventually got sold on it. Sure beats a spreadsheet and keeping receipts and then recording them all.
I spend about the same each month and know ahead of time if I have a big purchase coming up or do extra spending. And I still pay in full each month.
The point I am trying to illustrate here is the trouble you can get into if you let credit get out of control.
Like another poster pointed out there is a good way to use charge cards if you pay your balances monthly and benefit from the cash back programs. Even then, you have to realize the merchants include the 3% they are charged in their price, so you are only recouping a fraction of what the cards cost you to begin with.The people who do carry balances and have problems with their credit can find themselves in a quickly deteriorating situation if they begin to depend on their cards at the same time as the bank is hiking their interest because of them paying minimum payments.
I agree with this post, however, in your initial post you described interest as "penalized".
SO, tell me what we should do. Restrict credit ONLY to those that will not carry balances and have collateral OR allow higher rates for unsecured debt? Either one is socially unacceptable in a culture of no personal responsibility.
P.S. The portion I bolded above is a fallacy in that EVERYONE carries that cost as the merchant (usually) doesn't discriminate pricing between credit and non-credit costs. To the extent they do not I benefit. Kudos for spotting that nuance though.
I have one CC and use it for almost everything. Then I pay it off in full each month.
It's a real easy way to track your budget as my CC bill is itemized.
Someone told me that's how they tracked their budget and I eventually got sold on it. Sure beats a spreadsheet and keeping receipts and then recording them all.
I spend about the same each month and know ahead of time if I have a big purchase coming up or do extra spending. And I still pay in full each month.
Good stuff. Some of the ways they categorize things can be pretty wack but these days my monthly (and annual) credit card summary offers a pretty nice financial snapshot.
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