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If you pay off your cards , they will cancel your credit cards.
I have been paying off my credit cards every month in full for years and they are still very much active. They close down cards only if you don't use them for a while (like 6 mos or a year).
This may be true , but , there are a lot of people and small businesses that can not get loans , that should. I have been told a lot of loan decisions are now based on the type of job you have. If the banker thinks you could get fired , or laid off , or are self employed , your chances of a loan are nil. Equity no longer enters into the approval decision. Same for Credit Card approval. If you pay off your cards , they will cancel your credit cards.
Basically, people who have a higher than average risk of defaulting should get loans? Is that what you want banks to do? More irresponsible loans? If these people have higher risks, that means higher interest rates... they should NOT be getting any loans... Small businesses aren't getting loans.. that mantra has been said for a long, long time... and yet when I look around small businesses are still in business... the ones that are missing are.. guess what? Ones that shouldn't be in business any more... they took out failing businesses by not propping them up with loans they will never ever pay back... Equity is always a consideration.. everytime you submit a loan application, you have to show equity... how else would they get their money back if you don't pay them... credit cards have been greatly abused by people who lack the responsibility to pay them back, already people are defaulting on credit cards... if I was a credit card company, I am not going to wait for someone who is likely to default to default before I close their account...
I'll be a case study for this in a few months and I will report back.
I have a very good credit score and my wife has an average to slightly above-average credit score (she just got her first CC a few years ago and is still building). I make roughly 45k a year and she makes around 12-15k a year. This summer we will be first time home buyers and plan to buy a starter house for about 70k. Will we be able to get a loan? Stay tuned. Maybe I should sell my story to the MSM .
The best way to answer your question is, would a complete stranger loan me $70 for a home? If they don't think you are worth the risk... then they won't... or better yet.. if a stranger came up to you and ask for $70k to buy a home, would you give it to him if he had average credit scores and make what you had said... would you be willing to risk YOUR money on him? Especially in this economic climate...
I pay off my credit cards every month. No one is canceling them.
Two weeks ago we were in the bank talking about possible loans. We weren't looking to borrow at that time, just finding out what could be available if we decide to purchase a house for retirement or some property for investment purposes. There is a lot of property becoming available around here from developers tanking. If it's cheap enough we just might pick some up through a bank foreclosure. Equity certainly came into the decision made by the bank!
If you have good credit and equity, in tandem with a decent income you can, and will get a loan. I do agree with the statement about a bank's fear of someone being laid off. Something we don't have to contend with as I am self-employed and my wife can walk out the door anytime she is ready. The bank will still lend the money if we want it.
Hi Tek_Freek,
Its working like this. With restricted lending standards and lower rates, credit is cheaper as in going from a 500 seat dinner for $2 a plate to a 100 seat dinner at $1 a plate. The food is cheaper but is less of it. This has ignited a deflationary phase as less money circulating in the economy will create less demand for assets used as the basis for money creation. As the assets for the basis for money creation decrease fewer loans for less money will continue. Loans cannot go any cheaper at effectively zero so there is no dynamic to increase the money supply that is bank credit. Again we must have inflation and perpetual debt of depression and bankruptcy. Those are the only option in this system.
Because most people do not understand this or that the only alternative is to increase the public or national debt(the money supply) we are going down the financial drain as it were. It appears big finance has won again and another generation will go down in defeat and poverty. The poor understanding of money as debt, the nature of the public debt and the scape goat of the American consumer is an across the board propaganda victory for big finance. They have the money and we are a mass of unorganized and quickly impoverishing ignorance.
Its working like this. With restricted lending standards and lower rates, credit is cheaper as in going from a 500 seat dinner for $2 a plate to a 100 seat dinner at $1 a plate. The food is cheaper but is less of it. This has ignited a deflationary phase as less money circulating in the economy will create less demand for assets used as the basis for money creation. As the assets for the basis for money creation decrease fewer loans for less money will continue. Loans cannot go any cheaper at effectively zero so there is no dynamic to increase the money supply that is bank credit. Again we must have inflation and perpetual debt of depression and bankruptcy. Those are the only option in this system.
Because most people do not understand this or that the only alternative is to increase the public or national debt(the money supply) we are going down the financial drain as it were. It appears big finance has won again and another generation will go down in defeat and poverty. The poor understanding of money as debt, the nature of the public debt and the scape goat of the American consumer is an across the board propaganda victory for big finance. They have the money and we are a mass of unorganized and quickly impoverishing ignorance.
What does big finance get out of the deflationary phase?
The best way to answer your question is, would a complete stranger loan me $70 for a home? If they don't think you are worth the risk... then they won't... or better yet.. if a stranger came up to you and ask for $70k to buy a home, would you give it to him if he had average credit scores and make what you had said... would you be willing to risk YOUR money on him? Especially in this economic climate...
Uh, I have a great credit history/score and a very good/decent salary for the cheap price of house I am going for - 70k. Hense, I am prettymuch risk-free, IMO. Are you saying I'm not with the information I provided? We'll find out if bankers agree with my opinion of myself this summer.
Basically, people who have a higher than average risk of defaulting should get loans? Is that what you want banks to do? More irresponsible loans? If these people have higher risks, that means higher interest rates... they should NOT be getting any loans... Small businesses aren't getting loans.. that mantra has been said for a long, long time... and yet when I look around small businesses are still in business... the ones that are missing are.. guess what? Ones that shouldn't be in business any more... they took out failing businesses by not propping them up with loans they will never ever pay back... Equity is always a consideration.. everytime you submit a loan application, you have to show equity... how else would they get their money back if you don't pay them... credit cards have been greatly abused by people who lack the responsibility to pay them back, already people are defaulting on credit cards... if I was a credit card company, I am not going to wait for someone who is likely to default to default before I close their account...
The report on the Credit card canceling , when you pay off a large balance , was reported on CNBC yesterday. The Companies are mostly interested in the profit they make from you , when you have a large balance. Most of them are reseting the rates now , that was also on CNBC,. I do not know how the credit score effects their decision to cancel your card , for , non use, or , having a 0 balance all of a sudden. I do know , they charge 1.50 service fee per 100.00 debt per month , and the new rates are as high as 30 per cent. Some real profit for these Companies , they want you to keep paying , for , the rest of your life.... I only have debit cards , no revolving stuff.
Now , as to the mortgage . My banker told me , that I did not qualify for a construction loan , because I was being my own GC. My Credit score was fair. I wanted 50 per cent loan. ... so , I went ahead , built the house , to 50 percent complementation.. ran out of money. Now , I still can't get a loan., even with 50 per cent equity. I was told , that equity , is not the big issue anymore. I am self employed , that was the reason , along with the fact , I had spent the cash building the house.... its a catch 22 , no cigar , for me.
I have no debt , good balance sheet , and only a car loan , which is a business deduction. I even tried private equity loans , at high rates , was told the funds have all but dried up in that market. Also , living in Michigan was a negative. ( not in depressed areas, I am talking about affluent expensive properties because of views , or lake frontage ).
I have a friend who makes about 2 million a year , from investments.. he just tried to buy a 500,000 home , lake property , very desirable. Got turned down , cause they said , his cash flow could be suspect if the Commercial real estate business slows.. Again he is self employed. Has great credit.
This stuff is being repeated all over the country , the bankers are running scared. If you do not work for a mega company that is recession proof , or , have the ability to become 100 per cent liquid , and pay off the loan , in a pinch , you will be turned down. Cash is King these days , don't leave home with out it.... or , I was told I would qualify for just about anything I wanted that the bankers already had on their books that they could not sell. ( i am renting from them now , while I build ). These is just too much available properties underwater , that they want to find buyers for , for the bankers to water down THEIR balance of lending funds.... So far I am screwed , along with a lot of other folks who in normal times would be good prospects for a home loan, or an available line of credit.
What does big finance get out of the deflationary phase?
Hi sheenie2000,
They have access to the Federal Reserve cash register and bailouts. They play the "too big to fail" game. During a depression their smaller completion dies off, the treasuries they swapped in grow in value and they can make acquisitions for pennies on the dollar. They delight in the fact that small banks are falling. Competition is a sin.
What if you had indefinite unemployment insurance and your neighbor did not? After a few months you can start buying up stuff pretty cheap at the garage sales. Eventually you could probably buy the house and then rent it out to your neighbor. Sure your unemployment might be half in nominal terms but when everything is pennies on the dollar your real buying power goes up.
Once everyone is essentially wiped out the game is done for a spell. People will work again and slowly build wealth through labor. Once this fattens up again loans will be made to allow people to buy these assets with bank debt to once again transfer from equity ownership, to debt ownership(at interest), to the creditor. With fractional reserves the money supply always grows fastest at the debtor who buys out the equity holders who now owe the banks and on it goes...
Meanwhile all this new money debases the existing money supply as well take a larger and larger share of interest on the circulating money supply. We essentially pay banks to use their money at interest that in reality just debased the money supply. The short answer is its a swindle . Do research on fractional reserves and swindle to discover the horrifying truth. The solution we have created once the fraud is discovered is to make the money appear from nowhere in FDIC and bailouts. The bill is passed to us.
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