How Americans Get Out of Credit Card Debt • Hacker News Board

Re: How Americans Get Out of Credit Card Debt

#21

Post by jarin » Fri, Feb 04, 2011, 8:26 PM UTC

ithayer wrote: post #15

jarin wrote: post #4

I love this idea, but I've been getting "We're sorry, our server is under heavy load. Please try again." during the verify phase for the last few days.

Thanks for checking us out - I'm really sorry about that. We are dealing with issues with some of our backend service providers. One of the difficulties of a financial site such as this is that the data which comes back is not very well normalized nor homogeneous, and we are seeing issues and response types which we have never seen before. Please send an email to support@readyforzero.com and we will track your issue.…

Sent! Let me know if I can help in any way.

Re: How Americans Get Out of Credit Card Debt

#22

Post by geuis » Fri, Feb 04, 2011, 8:31 PM UTC

So my question is what about people that aren't in debt, but need help improving their credit score? I had a lot of debt from about 5-10 years ago and it killed my credit score. The debt has all been paid off for a few years, I haven't had credit cards in years, and I still have a few notices from closed accounts that won't fall off for a few years.

So I'm currently doing what I can to remove the closed notices and have had some minor success. But a lot of people don't know the right things to do to improve their scores.

Having a service that tracks the 3 credit bureaus and provides guidance on steps to take to bring your score up would be mighty useful.

Re: How Americans Get Out of Credit Card Debt

#23

Post by kirpekar » Fri, Feb 04, 2011, 8:33 PM UTC

In the context of getting out of debt: Is anyone a Dave Ramsey listener here? I've been an avid listener for a few years now. I recommend his podcast to everyone -- not only for the financial advice, but also for the cultural education about what America really is.

Re: How Americans Get Out of Credit Card Debt

#24

Post by BlazingFrog » Fri, Feb 04, 2011, 8:34 PM UTC

The infographic reads that 1/3 of Americans have credit card debt and further below that over 100 MM Americans carry a balance from month to month.

1. Isn't carrying a balance from month to month the definition of "credit card debt"?

2. As of July 2009, the US population is about 307 million people.

That would mean that virtually everybody with a credit card carries a balance from month to month. That's simply not true.

Re: How Americans Get Out of Credit Card Debt

#25

Post by dstorrs » Fri, Feb 04, 2011, 8:38 PM UTC

ithayer wrote: post #13

kirpekar wrote: post #2

"How Americans get out of credit card debt." Don't most of them just pay it off? Sure takes a long time, but eventually don't most people pay what they owe? BTW, there are only about 1.5Million bankruptcies in the US every year ... that's <1% of borrowers. So I wouldn't use it as the first kind of "traditional option".

Hey there, thanks for the comment! You are absolutely right that there were about 1.5M bankruptcy filings last year [this number is growing (1)]. Note that we haven't made any claims about the ordering on the graphic, but bankruptcy is an option which is often under-considered, because people are scared of it, and driven by FUD to pursue other options which often have lower success rates. Rod and I have learned a tre…

If the debtor pool varies as widely as you claim, that reinforces something I've been wondering for a while:

Is it true that Americans are in debt because they are fiscally irresponsible, or is it because the playing field is tilted?

It is hard for me to believe that 33% of all Americans can't grasp the idea of "spend less than you make". Sure, a lot of it is consumer culture / media pressure, etc. But other countries have the same sort of culture and lack our level of credit card debt. Could it be that the field is tilted -- e.g. wages are simply at a level that does not allow the average person to save much even if they try, meaning that as soon as they hit a financial bump (job loss, non-insured surgery, car repair) they are in debt and the interest rates on the card spiral?

This is not a conspiracy theory -- I don't think there is a literal collection of people in a room saying "how do we stick it to them this week?" -- but I do think that many economic actors (credit card companies, credit bureaus, major retail stores, etc) act in their own self-interest to continue this situation.

I've seen bits and pieces that support this theory, but I lack the economic and political background to tell if this is right or not. Can anyone point me at good sources?

Re: How Americans Get Out of Credit Card Debt

#26

Post by dalore » Fri, Feb 04, 2011, 8:38 PM UTC

Retric wrote: post #19

randrews wrote: post #8

Earlier quoted context omitted.

You can buy things you don't need, and you can buy things with money you don't have, but doing both at the same time is a really bad idea.

The most useful way of thinking of CC debt is how much it INCREASES THE PRICE of what you buy. That nice lunch might cost 20$ if you paid cash, but use your CC and it's really 20$ + the interest you are going to pay. If it's going to take you 4 years to pay off your 20% APR CC debt then that 20$ lunch is really 41$ 50c. PS: That is not to say paying cash for lunch changes the numbers when you are in debt; CC increase…

If you pay it off in full, and get 2% cashback then that lunch cost you $19.60

Re: How Americans Get Out of Credit Card Debt

#27

Post by innovate » Fri, Feb 04, 2011, 8:39 PM UTC

BlazingFrog wrote: post #24

The infographic reads that 1/3 of Americans have credit card debt and further below that over 100 MM Americans carry a balance from month to month. 1. Isn't carrying a balance from month to month the definition of "credit card debt"? 2. As of July 2009, the US population is about 307 million people. That would mean that virtually everybody with a credit card carries a balance from month to month. That's simply not tr…

1/3 of Americans carry a balance from month to month (revolving) = ~100 million people; sorry layout is confusing but this is in fact correct. Of course, more than 100MM actually have at least one credit card but not all of them carry balances.

Simply put, way more than 100MM people have credit cards, only ~100MM or 1/3rd carry balances from month to month.

Re: How Americans Get Out of Credit Card Debt

#28

Post by lurker17 » Fri, Feb 04, 2011, 8:43 PM UTC

BlazingFrog wrote: post #24

The infographic reads that 1/3 of Americans have credit card debt and further below that over 100 MM Americans carry a balance from month to month. 1. Isn't carrying a balance from month to month the definition of "credit card debt"? 2. As of July 2009, the US population is about 307 million people. That would mean that virtually everybody with a credit card carries a balance from month to month. That's simply not tr…

The way I read it, the two facts are redundant, they mean that virtually everybody with credit card debt carries a balance from month to month. That's tautologically true.

I would guess that more than 1/3 of Americans have a credit. card account (not necessarily debt).

Re: How Americans Get Out of Credit Card Debt

#29

Post by chrisduesing » Fri, Feb 04, 2011, 8:49 PM UTC

geuis wrote: post #22

So my question is what about people that aren't in debt, but need help improving their credit score? I had a lot of debt from about 5-10 years ago and it killed my credit score. The debt has all been paid off for a few years, I haven't had credit cards in years, and I still have a few notices from closed accounts that won't fall off for a few years. So I'm currently doing what I can to remove the closed notices and h…

Once you hit the 7 year mark those late payments fall off your record. Just keeping your current bills paid on time is probably the best thing you can do if you already have several years without any problems.

Re: How Americans Get Out of Credit Card Debt

#30

Post by ithayer » Fri, Feb 04, 2011, 8:50 PM UTC

BlazingFrog wrote: post #24

The infographic reads that 1/3 of Americans have credit card debt and further below that over 100 MM Americans carry a balance from month to month. 1. Isn't carrying a balance from month to month the definition of "credit card debt"? 2. As of July 2009, the US population is about 307 million people. That would mean that virtually everybody with a credit card carries a balance from month to month. That's simply not tr…

The most recent Survey of Consumer Payment Choice estimates that there are 178M card holders. The 2009 Survey of Consumer Finances (2) estimates that percentage of card holders of "bank-type" (eg: not Macy's) cards that revolve balances is just under 50%. With store cards, this number is right around 100M.

(1) http://www.bos.frb.org/economic/ppdp/2009/ppdp0910.htm (2) www.federalreserve.gov/pubs/bulletin/2009/pdf/scf09.pdf