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Hey, I use credit cards unwisely. Started with vacations, then moved to having to put a new septic system on a card. I apparently have a great credit score, so got offers like 2.9 for life for balance transfers, etc. I have learned the error of my ways and am paying down the debt, highest interest rate being 2.9 percent for life. If I use a card now, I pay it off each month. I have a card that gives back 5 percent for gas, two percent for groceries, and 1 percent for everything else.
Pentagon Federal Credit Union is my friend. For everything credit-related.
My sister got the entitlement bug, living large bug, keeping up with whoever bug. She had a paid-for house, her late husband's pension, and a good job. She ended up selling the house, paying off some 30K in cc, and $90K+ in home equity, from paying off credit. I don't even know what she bought- lots of CDs, dinners out, clothes, beauty products, re-do the house. Just before she sold the house, I lent her grocery money. She spent some $1100/month above all her income for some 11 years. I do not know what she was thinking, except maybe an idiotic "prosperity consciousness" where she imagines that someone rich and handsome is going to marry her, if she just envisions it.
Hasn't happened. If it does, I'll start hallucinating myself.
What was I thinking? That I could always work and pay it off. That has been true (and as I said, the interest rates have been very low) but I've been fortunate not to be out of work for medical reasons, and my job is as secure as a job can be. Not an excuse, but I think that's what I was thinking. Now I'm thinking, pay it off and stay out of the credit game.
I view it as a interest free 30 day loan with some having rewards.It also saves me on checks and is convenient.I use them as i would cash bascially and have for years.I spend abotut 80% of my money using them each month to include man bills. Then I pay it at end of month.
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.
A very insightful post indeed! However,I would expect no less that this from a person with enough summers under their belt to be on Social Securtity. which brings me to my opinion of who is able to solve the problem of the corruption of the young and the foolish by the banking industry. The short simple answer is "we" are.
Everyone from the parent to teacher to the young and the foolish is responsible to school the young person in the proper value system that is money. As it is today this task is left to the wolves that is the banking industry.
I've watched for long time as friends/family get themselves deep, deep in debt due to mis-management of their CC due to lazy and/or misconceptions in their attitudes towards money.
What none seem to get ,or understand, is that a Credit Card is nothing more than an open ended line of credit that is a LOAN!
Imagine , if you will, that every time you needed to use (read borrow on) a CC that you had to fill out a loan application. Would that slow a lot of people down since they know that they wouldn't qualify for that loan. Sure, we all have been brainwashed into believing that somehow that loan was 'free' money since that is no pain (up front) to "spending" free money.
So my question to all is how do you view your Credit Card spending?
Do you view this debt as free money?
Do you view this money as a loan?
Do you even have a clear understanding of what a Credit Card really represents?
I view credit card spending as an easy way to pay without having to carry cash. I do not spend only the amount that I will pay at the end of the month and avoid finance charges. Actually, with my Barnes and Noble Vias card I get a $25 gift card every $2,500 charges I make on the card. These charges are not only at the bookstore, anywhere. So I get to pay less for books since I like to read a lot.
No, it is not free money at all. Anyone that thinks it is free money is a idiot in my opinion.
No, I do not see it as a loan because I simply use it so I do not have to carry cash or checkbook to pay. I do have the money to spend. I am not using it to pay for something I do not have the money to pay for.
I believe the problem is due to many factors. One of them is that people simply do not know how to manage their money. Other is the attitide that many do not think about being accountable for their actions and get the money and find ways to not pay it back.
Some were not trained by anyone on finances.
Regardless of the reasons, people either are stupid or do not care. Anytime you use money that is not yours because you did not earn it yourself should know it is not free and they have to pay it back somehow.
That is why to some degree I do not agree with some of the consumer protection laws. Many consumers take advantage of this and not pay their debts. What that does is that companies will simply pass the losses to us the responsible consumers.
I agree with the OP about changing the way we think about CC's...they are a loan and people need to keep that in mind.
When I got my first store CC I was 18 years old and went hog wild buying clothes and stuff. I only had a $500 limit but at the time that was a lot of money and when he bills started coming I really didn't know how I would cope. Fortunately I managed to pay it off. Over the years I got in more trouble with CC's even though I "knew" the trap but I always told myself I would pay it off with my next paycheck. Trouble is that my money was always gone before I even got it and that is a place you don't want to be.
Now I am older and wiser and use CC's responsibly, for convenience, for points and rewards, etc. I don't carry a balance and have more available credit in my name than I could ever use. But I'd be lying if I didn't admit it took me 25 years to get to this place.
That's what I'm trying to find out. Why don't more people know ,as you say, "how to work them"??????
Most everyone knows how credit cards work, they just have a spending problem. (Of course some use them for emergencies and get way behind ala emergency medical problems etc.)
It's no different than say....casinos. We ALL know that you will long-term lose money at them and yet some people get hooked and blow every dime they have there. Most of us have SOME sort of issue so I'm not throwing stones from my glass house, just stating the facts.
For example, my buddy keeps after me to get a new flat-screen HDTV. I've come into some extra money lately....and I still haven't gotten a new TV because mine works just fine.
Most everyone knows how credit cards work, they just have a spending problem. (Of course some use them for emergencies and get way behind ala emergency medical problems etc.)
It's no different than say....casinos. We ALL know that you will long-term lose money at them and yet some people get hooked and blow every dime they have there. Most of us have SOME sort of issue so I'm not throwing stones from my glass house, just stating the facts.
For example, my buddy keeps after me to get a new flat-screen HDTV. I've come into some extra money lately....and I still haven't gotten a new TV because mine works just fine.
Nice post, mate. I'd like to comment on the colored part of what you said.
People don't have a "spending problem" as you say. People have a sickness that keeps them from thinking clearly about just what money is and the rules that apply to money.
These people know only "want" doing anything to satisfy that 'want' in their lives. Folk's like you know "need" and will use that understanding to control their use of money. What I seek is to understand how to convert those that "want" into those that "need".
Last edited by Grandpa Pipes; 03-02-2010 at 11:30 AM..
Actually, with my Barnes and Noble Vias card I get a $25 gift card every $2,500 charges I make on the card. These charges are not only at the bookstore, anywhere. So I get to pay less for books since I like to read a lot.
Please assure me that you do not think this is a good rate of return.
I only purchase things with my credit card that I would otherwise be paying for with cash or check. Stuff like bills, grocery, gas. It adds up to be a good amount, so much so that I get close to $1000 cash back (up to 3% cash rebate) every year for not writing my checks. Cash is actually my emergency way of funding things (like getting a slice of pizza at Costco).
I don't carry cash. I'd lose it. Plus, I spend too much to carry giant wads of cash everywhere.
So carrying a credit card is a convenience.
And, if you think about it, it really is a 30 day free loan. On top of that, I get 1-5% cash back on all my purchases.
So I actually make money off of using a credit card. The amount of interest I earn on my money in the bank + the 1 to 5% additional cash back 'rewards' the company gives me.
My dad told me when I was a kid, getting ready to go off to college:
Never charge on a card what you don't already have in the bank to cover it. The card is there only for your convenience.
Look, they have done studies that show that people don't react to using a card (metaphorical spending) and using cash (actual spending) the same way. The card is too abstract and it doesn't give them the same sense of loss as when they see the money actually leave their hands.
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I'd like to comment on the colored part of what you said. 
