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Credit-Card Debt Nears $1 Trillion as Banks Push Plastic

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Re: Credit-Card Debt Nears $1 Trillion as Banks Push Plastic

#161

Post by uuoc »

distances wrote: post #73
koenigdavidmj wrote: post #35

Earlier quoted context omitted.

Even those of us who don't carry a balance often prefer credit for the additional fraud protection features. Can't do a chargeback on a debit card.

I don't know how general this is, but I'd say it's common for banks to cover also fraud costs for the customers in Europe. Be it fraudulent debit card payments or Internet banking transactions, I've seen news of banks covering the customer's ass on both. Not sure how often they can reclaim the money, and how often they just take the loss for better publicity.

US banks make the same promises too.

But which would you trust more when something goes wrong and your "card number" racks up thousands of stolen purchases:

1) credit card dispute/chargeback process that is mandated by law

2) the promise from your bank that, on their good will, they will fix things

Not only that, but thousands of dollars on your credit card is "loaned" to you by the bank, the money's not out of pocket on you yet.

However, thousands of dollars of stolen debit card transactions means your bank account is thousands of dollars lower immediately, and you have to hope your banks promise to give it back will actually pan out.

Re: Credit-Card Debt Nears $1 Trillion as Banks Push Plastic

#162

Post by mikeash »

toomuchtodo wrote: post #138
nametakenobv wrote: post #131

Earlier quoted context omitted.

If they have their CCs maxed out for clothes and bar tabs, of course that's gonna be the case.

Do you truly believe half of Americans are maxing out their credit cards on bar tabs and clothing? Does that make sense when the majority of bankruptcies are from medical debt?

I don't think credit card debt is driving people into bankruptcy, mostly. From what I've seen (which isn't a ton, but some), people just build it up slowly buying toys and treats. Eventually they stop, either because they get smarter or just can't get any more credit, and then either sustain the debt or very slowly pay it down.

It's hard to go bankrupt from this directly because they're careful not to lend you more than you can pay back. It doesn't always work, of course, but they do a decent job of figuring that out.

Note that a lot of medical bankruptcies aren't bankruptcies due to medical bills alone, but are people with insurance who go bankrupt due to a combination of deductibles, additional non-medical expenses related to the illness, and a sudden reduction in their ability to work. Having a bunch of credit card debt instead of a bunch of savings could easily put someone in that situation, so the two probably work together a lot.

Re: Credit-Card Debt Nears $1 Trillion as Banks Push Plastic

#163

Post by gnaritas »

gcr wrote: post #160
gnaritas wrote: post #141

Earlier quoted context omitted.

Both median and mean are averages.

The median of a list of numbers is the value that minimizes the sum of absolute differences to each value, sum([abs(median - x) for x in list]) The average of a list of numbers is the value that minimizes the sum of squared difference to each value, sum([squared(mean - x) for x in list]) They're both summary statistics in that they're single numbers used to describe a dataset, but a median is not a "kind of average."…

Incorrect, median, mean, and mode are all types of averages. Usually when people say average they mean the mean, but they're all different kinds of averages trying to identify the central tendency.

"Average: a number expressing the central or typical value in a set of data, in particular the mode, median, or (most commonly) the mean, which is calculated by dividing the sum of the values in the set by their number." -- Google

Re: Credit-Card Debt Nears $1 Trillion as Banks Push Plastic

#164

Post by mikeash »

siscia wrote: post #27

Honest question. There aren't debit cards in the united states? They are simple plastic cards like credit carda but the bank is withdrawing your money directly from your account. There is not debt involved.

In addition to the fraud protection and rewards, credit cards also give you some float, which translates into a bit of additional free money. As long as you pay your balance in full each month, there are no additional charges. The result is that I pay for my purchases 20-40 days after the purchase. Interest rates are amazingly low so this doesn't do much, but it's nothing.

Credit cards are great if you can be responsible with them. That's a big "if." For many people they are a disaster.

Re: Credit-Card Debt Nears $1 Trillion as Banks Push Plastic

#165

Post by dragonwriter »

gnaritas wrote: post #163
gcr wrote: post #160

Earlier quoted context omitted.

The median of a list of numbers is the value that minimizes the sum of absolute differences to each value, sum([abs(median - x) for x in list]) The average of a list of numbers is the value that minimizes the sum of squared difference to each value, sum([squared(mean - x) for x in list]) They're both summary statistics in that they're single numbers used to describe a dataset, but a median is not a "kind of average."…

Incorrect, median, mean, and mode are all types of averages. Usually when people say average they mean the mean, but they're all different kinds of averages trying to identify the central tendency. "Average: a number expressing the central or typical value in a set of data, in particular the mode, median, or (most commonly) the mean, which is calculated by dividing the sum of the values in the set by their number." -…

> Incorrect, median, mean, and mode are all types of averages.

There's a bunch of means (arithmetic, geometric, and harmonic, for instance), and they are all (as well as median and mode) averages.

Though, usually when people say "mean" without further specifics they mean the "arithmetic mean", and usually when they say "average" without further specifics they also mean "arithmetic mean" (though "median" is also fairly common, and "mode" isn't that uncommon.)

Re: Credit-Card Debt Nears $1 Trillion as Banks Push Plastic

#166

Post by madelinecameron »

itchyouch wrote: post #87
lifeformed wrote: post #78

Earlier quoted context omitted.

How do CC companies make money off of minimum payments? Don't they lose money by lending more than what's paid back?

You ever see the new disclosures on a credit card? It usually says something like: On your $1000 balance, paying only the minimum will take 7.5 years to pay off the balance and you will pay a total of $3500. Pay $35/mo and will pay off your balance in 3 years and pay a total of $1500.

Which is still kind of deceptive considering if you can't pay back that balance immediately, you likely won't be able to go 7.5 years without putting more on.

The issue isn't predatory lending by credit cards (necessarily anymore), it is our obsession with having material goods and "keeping up with the Joneses"... who are also in debt up to their eyeballs.

So, in my mind, it is just a race to the bottom (of your lifetime bank account).

Re: Credit-Card Debt Nears $1 Trillion as Banks Push Plastic

#167

Post by FireBeyond »

vox_mollis wrote: post #59
rco8786 wrote: post #29

Earlier quoted context omitted.

> stick up middle finger when repayment is due Err, what a terrible idea. That might work once, sure. Then you're pretty fucked for a long time. The only way to avoid the collections would be to full on declare bankruptcy. Honestly there's basically no situation in which that's a good idea unless you're actually bankrupt.

Then you're pretty fucked for a long time Depending on amount owed, this may not be true. Any unsecured default under ~$10k, the only consequences are usually a credit report hit and incessant calls from debt collector call center workers. Over ~$10k, and yes, you're talking attorneys, judgments, garnishments, etc.

Hah. I got divorced. I got served a while back over a joint debt that got overlooked. The principal was $1,050.

The firm had also tacked on $2,000 in "preparation and legal costs, filing fees". Which is pretty rich for what likely amounted to a mail merge in Word. But it's no coincidence that most collection firms are owned by lawyers.

Re: Credit-Card Debt Nears $1 Trillion as Banks Push Plastic

#168

Post by cloudjacker »

joslin01 wrote: post #44

Gather round and I'll tell you a tale of how to lose at the credit card game. When I turned 18, I got my first credit card. I asked my father "good idea?" and he said yea, good to build up credit. Ok then. A week later, my new card with a whopping limit of $750. Never having experienced not paying with cash I had, it gave me an odd thrill and I went out to eat with my friends and joked "It's like free money!" And des…

The only thing you didn't admit to learning is what household income really means.

You aren't married so you lied about income as household would only equal you. This is going to be a problem for you in bankruptcy court.

Re: Credit-Card Debt Nears $1 Trillion as Banks Push Plastic

#169

Post by madelinecameron »

josefresco wrote: post #38
throwawaykeno wrote: post #7

One thing that's unclear for the article: does this include debt that never incurs any interest? I typically have an outstanding balance in the 3-4 figures on my credit card because I pay for rent, gas, and airline tickets with credit. However, it gets paid off every month. I guess that's technically debt, but it's not problematic or anything... I feel like the majority of credit card debt is the type of "debt" that…

I do this too, and many Americans probably start with the same tactic or strategy. The problem arises... when problems arise. You start carrying a balance to cover short term issues, which can turn into long-term issues which are made worse by your new high interest credit card debt.

Can confirm. $300 monitor spiraled into $2,500 of debt by the end of college (The downfall was precipitated by that month-long gov't shutdown which I was told not to worry about, "it might be a day or two, if that"... and then I wasn't paid for two months because I was a contractor)

Re: Credit-Card Debt Nears $1 Trillion as Banks Push Plastic

#170

Post by lukewrites »

siscia wrote: post #27

Honest question. There aren't debit cards in the united states? They are simple plastic cards like credit carda but the bank is withdrawing your money directly from your account. There is not debt involved.

I try not to use my debit card for two main reasons: fear of fraud and lack of rewards.

While I believe my credit union would reimburse me if someone were to steal my debit card information and use it to make a bunch of crazy charges, that would also mean that I could literally have no access to cash for some period of time. This isn't a fear with my credit card since fraud never becomes "real" to me - I've never had to pay back fraudulent charges.

Second, I pay a nominal fee ($75/year) for an American Express card that offers higher cash back rates on the purchases that happen to make up the bulk of my expenses (6% back at grocery stores!). Without that $75 fee, cash back would be 3% at grocery stores...still pretty good.

I have never carried a balance on my credit cards - I set the closing dates for all my cards to be the first of the month, and I set an automatic payment for the balance of the card to be processed on the second. Clearly this is something most consumers don't do, but it has worked well for us.

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