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While some people try to put a positive spin on the increase in credit card spending, this article points out that much of what is being purchased on credit today are day to day expenses made necessary by the poor economy.
That means the poor are being penalized another 20%+ and possibly much more if they have a low credit rating.
For many who are still carrying balances from the days of 2.99% and 0% rollovers, the trap is sprung and they are at the mercy of bankers who have none.
For many who are still carrying balances from the days of 2.99% and 0% rollovers, the trap is sprung and they are at the mercy of bankers who have none.
Those days ended? I get an offer for 0% in the mail almost every week, in fact they are starting to get even better. Citi-bank is now offering 0% for almost 2 years.
Anyhow, I have always wondered to what degree increased credit card spending in response to increased costs plays a role in distorting short-term inflation. That is, credit allows more wild swings in the costs of some items because people don't have to immediately adjust to the price increases, it is only after time that they will have to adjust their consumption.
Its going to be funny watching everyone wonder where the "hyper inflation" went in 6~12 months.... The economic and political discourse in this country just gets weirder and weirder....
Those days ended? I get an offer for 0% in the mail almost every week, in fact they are starting to get even better. Citi-bank is now offering 0% for almost 2 years.
Anyhow, I have always wondered to what degree increased credit card spending in response to increased costs plays a role in distorting short-term inflation. That is, credit allows more wild swings in the costs of some items because people don't have to immediately adjust to the price increases, it is only after time that they will have to adjust their consumption.
Its going to be funny watching everyone wonder where the "hyper inflation" went in 6~12 months.... The economic and political discourse in this country just gets weirder and weirder....
Interesting point about the relationship of credit purchasing and perceived rate of inflation.
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
Hyper inflation could still be a possibility although I have never considered it likely due to the cost destruction going on through deleveraging.
It is possible though... if the egomaniacs in DC screw up the budget deal, and cause a large spike in interest rates.
I didn't read the article, but keep in mind the increase could be due to special incentives offered by the banks that issue the cards. I use my credit card like crazy because I get back 1.25 points for every dollar I spend. I use the card for everything imaginable from car insurance to the electricity bill. The banks end up paying me money to use the card instead of the reverse.
Those days ended? I get an offer for 0% in the mail almost every week, in fact they are starting to get even better. Citi-bank is now offering 0% for almost 2 years.
I think between my husband and myself we get one nearly everyday - preapproved, zero percent on new purchases and transfers for 18 months......
We do have some family members living on and rotating their high interest cards.... bot only do they pay more in interest, they pay more from the get-go. I use my Macy's/Kohls cards every now and then, I get a cheaper price than someone paying cash (I pay them at the register with a check)
Recently , we bought a washer/dryer and I noticed several stores (Sears in particular) offered a cheaper price if you used credit to purchase the set...
While some people try to put a positive spin on the increase in credit card spending, this article points out that much of what is being purchased on credit today are day to day expenses made necessary by the poor economy.
That means the poor are being penalized another 20%+ and possibly much more if they have a low credit rating.
For many who are still carrying balances from the days of 2.99% and 0% rollovers, the trap is sprung and they are at the mercy of bankers who have none.
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.
I think between my husband and myself we get one nearly everyday - preapproved, zero percent on new purchases and transfers for 18 months......
We do have some family members living on and rotating their high interest cards.... bot only do they pay more in interest, they pay more from the get-go. I use my Macy's/Kohls cards every now and then, I get a cheaper price than someone paying cash (I pay them at the register with a check)
Recently , we bought a washer/dryer and I noticed several stores (Sears in particular) offered a cheaper price if you used credit to purchase the set...
^^^Yep, this has gone on forever back to the days of buying as part of a christmas club, layaway or making payments....heck I bet the ancient romans or greeks had something like this.
I remember as a very little child going to the laundramat with my mom to wash clothes until we could afford a washer\dryer of our own. (early 1970's)
I remember as a very little child going to the laundramat with my mom to wash clothes until we could afford a washer\dryer of our own. (early 1970's) [/QUOTE]
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.
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