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uncas
01-22-2006, 08:29 AM
This is an off shoot..from another thread dealing with the loss of our middle class...

Credit card debt.....Before credit cards...people were more likely to live within their means...paid cash for items they bought...budgeted their expenses....and saved.
The introduction of the credit cards brought a halt to fiscal management in the home or in our lives in general.
Firstly...if one travels...rents a car...that person has to have a credit card...
Secondly...credit cards are a means to borrow against an unknown future.
Thirdly...the rates on credit cards, unless paid off in full every month, are extremely high ( not taking into account the intro offers ). And so, the initial debt explodes with the increased financial penalties.
It is too easy to pull out a card if you don't have the 20.00 in your pocket.

I hear of people who are 40,000.00 in debt!!!
It is going to take years for them to pay it off...

Bottom line...credit cards have replaced cash on hand.

I know this does not apply to everyone...but generally...I have credit cards....two too many...I only need one...I owe...at the moment...approx 150.00....
But I try to be careful...

[ 01-22-2006, 08:30 AM: Message edited by: uncas ]

imported_GregW
01-22-2006, 10:41 AM
"Live within their means". What a quaint idea. smile.gif

uncas
01-22-2006, 10:43 AM
Sorry for being old fashioned.... ;)

George Roberts
01-22-2006, 11:04 AM
uncas ---

We run a lot of money through our credit cards, several thousands a month.

Credid cards are wonderful. I don't need to go to the bank for gas or grocery money. I can buy from people thousands of miles away without waiting for checks to travel.

I can take a vacation without worries of unexpected expenses.

I am sure that many people have misused credit cards and incurred a lot of debt, but I don't know those types of people.

Dolly Varden
01-22-2006, 11:56 AM
wont be long till your credit value will be determined by scanning a chip placed under your skin and almost no one will take cash.

i guess then, uncas will be dreaming of the good old days of credit cards

ssor
01-22-2006, 12:34 PM
I have friends that have always paid cash or done without. They wanted to buy a new car and couldn't get a loan. NO credit history. Their house was paid for, they were free of debt but the system can't determine your credit rating if you don't use the credit economy. They ended up drawing from savings and paid cash for the car.

uncas
01-22-2006, 12:48 PM
ssor was going to mention credit rating and credit cards...
Had a professor at college...same deal..always paid in cash.....
Couldn't buy a car...no credit rating...

Bruce Hooke
01-22-2006, 01:09 PM
It is maybe worth considering a bit of the history of credit cards. As I recall, 30 years ago or so getting a credit card was a sign that you had "made it" financially. In other words, the only people who got credit cards were those who were relatively well off financially. Having reached that status these people were naturally a bit more likely to understand how to use credit wisely. Of course I'm sure there were some who didn't and threw away their money, but credit limits were more tightly managed as well so there was a limit on how much you could loose.

Then the credit card companies figured out that they could greatly lower their criteria, gain a lot more customers, and make more than enough money to cover their increased losses.

Figment
01-22-2006, 01:18 PM
Originally posted by ssor:
Their house was paid for, they were free of debt but the system can't determine your credit rating if you don't use the credit economy.You gotta be kidding me. They own real estate free-and-clear, so there is no question of collateral. Presumably have paid bills to utility companies for years, so there is some level of credit history in place. They couldn't find anyone to give them a decent rate on a home equity loan? Sounds more to me like they had plenty of cash in savings and it just wasn't worth the hassle to draw the loan.
Not to mention that the lost interest from the savings couldn't begin to add up to the spent interest on a loan.

Don't get me wrong... I applaud these folks, whoever they are. I envy their situation.

Bruce Hooke
01-22-2006, 01:28 PM
Figment, as I understand it, utility companies do not generally report to the credit rating agencies. So, that is why there would be no credit history from that source. On a car loan I believe the car itself is generally the collatoral, so that is a moot point. I would guess as well that they did not want to go the bank for the car loan but instead wanted to get it through the car dealer because of the very good terms being offered by car dealers of late (well below market rate), so they couldn't shop around for different lenders. There house must have been paid off for a good while because otherwise I'd have thought that it would have shown up on the credit report.

jack grebe
01-22-2006, 01:41 PM
I'm one of those "debt free" people.I paid off my last loan in 1989 and have not had credit since :D . I buuy only what I have money in the bank for. As for a credit card, I use a debit card linked to my checking acct. that has a visa logo on. they take them anyplace they take visa.I also own property in Tx. that I paid cash for and would NEVER concider using it for collateral. why would I want to put something in debt that I already own?true I have no "credit history" but with that I also have no monthly headaches paying for said credit smile.gif also with the monthly payment I don't have comes the freedom to travel that I now have LIFE IS GOOD :cool:

Figment
01-22-2006, 01:42 PM
anyone and yes I do mean ANYONE can get a car loan. It may not be a wise decision. They might get raped on the terms. But they'll get the loan and get the car.

Just as the banks have figured out that lowering their standards to allow just about anyone to have a credit card eventually makes them a ton of money, they've also figured out that the same holds true for car loans.

as for "what ever happened to using money?"... the world just isn't set up for it any more. I've been on a cash-only diet for a while now and man when it's time to make big purchases it is one HUGE hassle. Any time a checkout clerk gets more than $200 cash crossing their palms they freak out and get the manager involved. The manager automatically assumes I'm a criminal and becomes hostile to the whole deal.
During the holiday shopping binge I actually had a checkout girl say "are you sure you don't have a card you can put this on? it's going to take forever to do this with cash." She was right. By the time the floor manager made her way over, assessed the situation, called in the general manager, obtained approval, found the sign-off form and actually got all of the ducks in a row, at least five other people had been checked-out on the adjacent register.
The world just isn't set up to handle cash any more.

[ 01-22-2006, 01:52 PM: Message edited by: Figment ]

George Roberts
01-22-2006, 01:43 PM
ssor ---

I believe that banks can and do report your accounts to credit reporting agencies.

Often times people are less than truthful in discussing their financial history.

Most car dealers in detemining a persons credit rating will ask if you have a bank account. It is possible these people did not wish the dealer to know the truth.

Meerkat
01-22-2006, 05:22 PM
IIRC, the first "credit" card was AmEx and it wasn't a revolving charge account as CC's are these days: the total was due and payable at the beginning of the next month and woe betide you if you didn't have the money. They still have such a card, but they now also have the loan type CC's too.

IMO, the big downside of CC's is that marketers and advertizers know everything about you: what you buy, where you go and what you do. iF all you've got is a CC, the government can find you whenever they want to - or shut you down in an instant.

I've got a Visa debit card - works fine and incurs no interest or indebtedness. Alas, they can still tell what I'm up to. :(

clancy
01-22-2006, 05:37 PM
I had a friend who kept all of his credit cards maxed out, paying only the minimum due each month. His reasoning was that you might die tomorrow. He was killed in a car accident. His wife had to pay off the cards and told me "I can't wait until I meet up with him again."

Meerkat
01-22-2006, 05:42 PM
I think they just doubled the monthly minimum as of Jan 1st. Now 5% of outstanding debt?

Peter Malcolm Jardine
01-22-2006, 06:08 PM
I live within my means, even if I have to borrow to do so. I'm kinda like Joe Foster, except I have rental income. :D