Credit Cards Question

Miller you are missing my point.

These 0% teaser rates are poison. The credit card companies offer them to get people hooked because they know that a significant porportion of poeple will end the "free period" with a signicant amount of debt.

Once the credit card company has you, they have you. They can raise your interest rate, they can assess fees for trivial reasons.

The fact is that, as another poster noted, the average American family has over $8,000 of credit card debts. After the introductor teaser rate ends, the rates typically range between 8% to as high as 21% (and it rises exactly when you don't want it to-- if you have financial difficulty).

This means the average American is paying hundreds of dollars a year on debt without getting anything in return.

The sad part is that there are often alternatives.

First of all, think of how much money Americans would save if they would simply wait until they have cash before they make purchases.

Unless you are unusual you have paid hundres of dollars in high interest rates... this is much more than a high FICO score will save you.

Secondly, I was making a difference between credit card debt.. which in my opinion is nearly always a bad thing, and good debt.

You can get a loan for college at a low interest rate and decent terms that covers your books. (Better yet, you can save for books.) A student loan is generally 6 or 7% interest (or less) and the terms are fixed (meaning they can't be raised at will by the lender). A credit card is 9% up to 21% without the protection of fixed terms.

Credit cards make it very easy for us to buy things with money we don't have. Credit card debt means that we have fallen... it always means we are paying interest at high rates.

Good overview, ebrown. Thanks.
I use my CREDIT card in order not to have to carry my check book and a lot of cash with me. I pay if completely off at the end of each month.
I use my DEBIT (checking account) card for withdrawing cash from the ATM. And, for no pariticular reason, I always use the "fast cash" option for $100.00 and pass $40.OO of it to my wife. Little by little she's building up a nice stash (she's very thrifty, never buying anything on impulse as I tend to do).

I'm a little bit more generous to myself when I withdraw cash from the ATM; it's usually $200, and I keep it all for myself. I also have small stash of cash at home in a wall safe. I have never felt comfortable not having "enough" cash on my person whether I carry my credit cards or not - those insecurities of youth still reins.

Ha, followed by your shadow.

ebrown...I've been doing those "teasers" for years...it's a matter of moving your money around and keeping on top of it....seriously, I don't think I've paid more than $50.00 in interest in the last 13 years...yet I've bought a car, a work van, remodeled and furnished an entire house, paid for 1/2 a wedding and I'm sure a lot of other things life throws at you.

I know what my expenses for debt will be monthly for the next 5 years, and it's in my budget, all at 0% interest, and have all the benefits of the use of my purchases. I live a simple life too, small things please me, but I needed a better place to live, and I do literally mean NEEDED.

Yes, it is very easy to get into trouble with credit cards...that's why you have to be smart.

JLN - did you answer what walter and I mentioned about paying your credit card on line before you leave for Europe, and why you were thinking you had to cancel your card....I'm really curious.

Hah! That's exactly the MBNA card I canceled for low quality, uninformed people on the customer service extention. And my reason for having it in the first place was also to get the free LL Bean shipping.

I'm one of those that canceled my MBNA credit card; that was some years ago.

I agree that the customer service is not good. I signed up with MBNA because of the credit toward buy art books and magazines and Barnes and Noble. Now that they changed that system, I'll probably want to quit them anyway. I can't pay the May bill off in advance because, of course, I don't know what the balance will be. So I think I will just pay off the April bill and then cancel the card--that is, if I can use my Visa card in Europe.

Visa is accepted all over Europe - actually the most-used credit card.

I also have written in permanent (red) ink on the front and back of my credit card: 'PHOTO I.D. REQUIRED."

My credit cards both were supplied with my photo - since ten years now (but I gave them a new pic last year )

Really, C.I.? On the back of my debit card, I wrote "Do Not Accept." I once used it, thinking it were a credit card, and spend hours working over the reconciliation.

Thanks Walter and C.I. Good points.

I once received an automated call from the security dept of my credit card company. The voice was rattling of a number of purchases that I had made that afternoon and then said, "$3406.85 at a supermarket." Huh? What? I quickly hit "0" in hopes of talking to a human. A review of my purchases that day showed a number of purchases being made in Oklahoma City at the same time I was making purchases in Chicago. Both of our cards were present and accounted for and neither of us were in Oklahoma.

The review showed a $1.00 purchase at a gas station (deemed a 'test purchase', a 30-something dollar purchase at a Walmart (card presented), followed by the $3406.85 at the same Walmart a little while later. It seems that someone had taken my number, made a real-enough looking VISA card with their name on it, done a test purchase of gasoline, a trial run through the Walmart checkout, and then *really* went shopping.

Our cards were immediately cancelled (pain in the a$$ because of the automatic charges that we have going to our accounts) and we were issued new cards the next day. It's amazing how much energies are put into ripping people off.

When unemployment and underemployment are so high, when people feel so betrayed by their employers (downsizing and outsourcing, pension usurpation and cancellation, etc.) and government (the list is too long), I suspect their civic morals decline. They'll even injure people like you, who have never hurt them.

They are not poison to me. They are what is called other people's money. I would not recommend most people do what I do because it is a mine field. I never use more than the amount of cash I have on hand.

I am financing $18,600 in cosmetic surgery at 0% for 12-15 months. I have built up over 110K in available credit. And as of now, I owe nothing. Carrying the 18k debt will bring my FICO down temporarily but it will skyrocket when I pay it off. BTW I have ten years in retail finance an d have been a licensed mortgage broker, so I know what I am doing. Maybe I should say; "Don't try this at home!" Also, I might add that I am single and able to control my own finances.

This is probably the worst advice I ever seen posted on the internet. It is essential to build an excellent credit history and FICO score. Of course, the alternative is to pay thousnads of dollars more in interest when you buy your home. Of course, you could always just save until you can pay cash for your home but you will probably die in the process.

I thank you for the compliment. "Worst advise ever" is quite an accomplishment. But I disagree.

But I think it is easy to see that you are wrong.

What is worse? Having no credit history ... or having $8,000 of credit card debt at between 12 and 21% APR.

The average family has $8,400 dollars of debt and pays hundreds of dollars in interest and fees each year.
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Let's think about FICO score when buying a house. If you are an average person you will have good credit from a couple sources-- You will probably have a student loan you pay on time and a car loan (the first one you buy will be with a low FICO score anyway). You also can pay your bills on time.

So you can build up some credit score without credit cards.

Your estimate of "thousands of dollars of interest" seems exagerrated to me for a somewhat higher FICO score, but even if you are correct it is irrelevant. Over the life of the house you will pay more "thousands of dollars" of higher interest to the credit card companies.

Buying a house gives you the opportunity to negotiate with lenders (plus guarantees for first time buyers) and I don't think the cost of not having credit card debt is very high.

If you want to continue this debate, do you have numbers? Can you tell me how much Americans lose in interest for home Mortgages because they don't have credit card debt?

I can certainly give you numbers of how much money Americans lose because they do have credit card debt.

I don't believe I wrote that phrase... but the cost of not having credit card debt is what we are arguing about.

What angers me is the extent to which the credit card industry is deceiving the American public. Think about what the argument is.

If you don't have debt with us (and pay us hundreds of dollars each year), it will cost you in the end

It is dismaying to me that Americans swallow this at the cost of billions of dollars each year.

I stand by my advice... "Dump the stinkin' credit cards", and I have the numbers to prove that if the average American followed this advice, they would be much better off-- mortgage included.

Good points ebrown.

The worst advice I ever heard was when a mortgage broker advised me to sell some land in the middle of nowhere, that just had a trailer on it. "It's just chattel" he said.

My response.."It's chattel that I'm renting out and making money off of" Little did I know that piece of land and trailer would provide a roof over my head for about a year, when my life was in the crapper in a lot of other ways....His motive for advising me to sell that land was so that he could show the little lady how smart he was....anyway......

I have a question, maybe naive, but I've never been able to figure it out...

It seems like so many people aspire to have an American Express Card?

Why? You have to pay it off every month, it's got an annual fee, and when the rubber hits the road, it's just another card to charge stuff on.
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I've often wondered about the credit card companies success with marketing things like frequent flier miles, cashback, and a host of other stupid worthless crap.

It just goes to show how "the public" will swallow hook line and sinker stuff that really doesn't work in their favor, just because it's the latest gimmick.

Actually, that kinda answers my next question, but I'll ask it anyway....

What are your feelings toward people (like me) who with knowledge of the system enter into credit card dept, and are able to pay off worthwhile expenses, such as my remodel of the house, with out paying a dime of interest?

At the present, I do have a high debt, but it's going to go down very quickly, especially with no interest.

However most of the time in the last 15 years, being a homeowner, there's always something you need for the house. Ususally there would be, oh, 4000 of debt floating around, no interest, payments made on time, all that good stuff...

What are you're feelings toward people who can do this, without getting into trouble?

Many times I see others that are prime candidates to shuffle their debt like this, and they don't take advantage, even though they would be quite responsible, and I don't understand why.

Rox, you have my agreement in that way, but honestly, I don't think having way too much credit out there is a great idea. I have actually called credit cards to LOWER my limit, knowing I was going to be trying to get a line of credit somewhere else, and having a large limit elsewhere would be trouble.

Also, I do cancel my cards after I'm done taking full advantage of them. Again, too many cards to me is a red flag.

Credit card companies hate me, but that's ok, they make enough off those who are ignorant.