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For the same reasons that so many people screw up many facets of their life: lack of education and/or common sense to manage their affairs prudently, lack of personal responsibility and self-discipline to control harmful urges, susceptibility to sales pitches and peer pressure about just having to have whatever "right now", an overbearing compulsion to measure oneself's status or value as a person by what one owns (even if they really don't own it, but have purchased it with debt that they can't hope to pay back), and a general feeling of entitlement--even when one is sacrificing one's own financial security to fund the "entitlement." Credit is just another "substance" like alcohol or drugs. Some people can use them responsibly and prudently, but far too many people can't--and they become a real problem for themselves and others.
A very real and pleasant freedom is being debt-free.
We pay our credit cards off almost every month. I have carried a balance a handful of times, but I've MAYBE paid $100-200 in interest in 15 years of CC usage. I look at CC like a tool. They provide benefits that buying in cash can't provide. For example, we bought a $300 digital camera 5 years ago. We bought it specifically in mind for a vacation. Well, it was stolen out of my wife's purse at a concert about a week after buying it. American Express reimbursed us for it in full. We also have Starwood Hotel points, which are incredible. We use them all the time on vacation to significantly reduce the cost of the stay, and we typically stay in nicer places than we would otherwise. For example, we stayed in Hawaii (Kauai) and had an oceanfront room that usually would be $400/night. We paid $100/night plus hotel points for a week. Hotel points are awesome, they are MUCH more flexible and convenient than airline points. Plus, the hotels treat you like a loyal customer when you redeem them, whereas the airlines seem to treat you like you are trying to steal money from them.
You don't need to have a low allocated limit to not feel "tempted" to go over the limit. You just don't go over the limit! Don't spend more than you make!
Having a large credit line with a low % of that taken up is advantageous to one's credit score.
I got a credit card for emergencies when I went off to college at 18. I rarely ever used it, maybe a $100 here and there. Over the years, the credit limit just kept going up because I paid it off every month. By the time I finished my Master's when I was 25, the limit was over $20,000!!! That is insane. I'd never had a real freaking job! I'd never probably put more than $500 on it in a month. The problem is that CC companies prey on people. I can't count the number of times I saw CC companies on campus giving away pizza and 2 liters to those that signed up. I just think that handing out CC to kids that don't have JOBS is sleezy. I realize they are adults legally, but 18 year olds do stupid stuff and the CC companies are hoping that they screw up and rack up debt so that they become a lifelong source of revenue.
Poster after poster has said they pay it off each month.
I have no reason to doubt them.
If the thousands who don't started posting here, this thread would be one of the biggest on city-data .
If you want to talk to those who abuse credit cards about how they justify it in their own minds, you are not going to get the answers here.
People who view credit cards as "free money" wouldn't be caught dead reading a personal finance forum. That is until they are beyond help. Those are the threads here about "help!" and "bankruptcy" and so forth.
When I was out of control on my credit cards (not now) it was in denial when I did it. Since my salary was going up, I thought my expenses could do the same. But when spending exceeded income, I so enjoyed the good life I just kept doing it. I didn't think about things like that. It was buried, deep.
That all came to an end about a decade ago, and it took years to settle all the damage. Today I am retired on Social Security and only have one credit line which I use judiciously.
Still I would not so much solely blame "them" as being foolish. The credit card companies do everything they can - like the tobacco industry before it - to addict people to using them - by making it seem that using cards is smart, quick and easy. As Visa once promoted, it's better than using money.
Planting seeds like that has repercussions. People hang a million rationalizations on ideas like that.
Seeing how pervasive advertising and promotion is in our economy and how effective the siren call of television convinces people to focus on the wrong things, it is no surprise that a lot of people are out of touch with reality.
How do we go about solving this? And is it a problem important enough to address in a serious way is the question. Then, tell me, who is going to do it? Certainly not business, the government or the churches.
Money makes the world go around. And the lure of credit cards can unbalance any family.
The problem is that CC companies prey on people. I can't count the number of times I saw CC companies on campus giving away pizza and 2 liters to those that signed up.
Whatever happened to personal responsibility? This is coming from someone who royally messed up his finances when I was in my early 20's, but it was no one's responsibility but mine.
Whatever happened to personal responsibility? This is coming from someone who royally messed up his finances when I was in my early 20's, but it was no one's responsibility but mine.
I'm not saying that people shouldn't be responsible for their debt. I'm just saying it is a sleezy way to make a buck to prey on kids just out of their parent's house, luring them in with free pizza and soda. It is completely legal, but it isn't the right way to do business, IMO.
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