Credit-Card Debt Nears $1 Trillion as Banks Push Plastic • Hacker News Board

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

#181

Post by morgante » Fri, May 20, 2016, 9:08 PM UTC

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.

Actually, my anecdotal experience is that there are firmly too camps.

Some people pay off their full balance every month without fail and would never consider carrying a balance.

Others have never paid their full balance. They see the "minimum payment" and think it's a great deal.

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

#182

Post by joslin01 » Fri, May 20, 2016, 9:10 PM UTC

cloudjacker wrote: post #168

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.

Do you feel good about yourself now?

FWIW: This story is not a present tale but one that happened to me. I'm shrewd enough to see my way out of foolishness -- a quality you spare me in your claim that I'll be in bankruptancy court.

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

#183

Post by morgante » Fri, May 20, 2016, 9:18 PM UTC

joslin01 wrote: post #96

askldfhjkasfhd wrote: post #67

Earlier quoted context omitted.

Can you elaborate on how you perceive the difference between the two examples here? Being financially foolish and negligent seem both to apply to your experience. "Was I being outright financially foolish ordering $100 bottles of Chardonnay at the club? Not at all. Was I being financially negligent ordering whatever small thing came my way that I wanted?"

Outright as in "completely" or "immediately" financially foolish is like going to the club with your friends and announcing drinks are on you. My negligence (as in, I didn't stay on top of it as good as I should have) I meant as more drawn out and not so painfully obvious. It's like a hole in a boat that you keep meaning to get around to, but hey the boat's still moving just fine.

> Outright as in "completely" or "immediately" financially foolish is like going to the club with your friends and announcing drinks are on you.

Why is that ipso facto financially foolish?

Personally, I have a great time going out with friends and having drinks with them. I like being able to pay for their drinks. I also pay off my bill every month and have a very healthy savings account.

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

#184

Post by maxxxxx » Fri, May 20, 2016, 9:18 PM UTC

maxerickson wrote: post #177

maxxxxx wrote: post #176

Earlier quoted context omitted.

When I came to the US I couldn't figure what "minimum payment" means. It took a while to realize that it's a totally arbitrary amount and really has no meaning for any kind of financial planning. I bet a lot of people think they are paying off their debt by making minimum payments.

It's not entirely arbitrary. It has to cover the interest for the payment period and some portion of the principle balance. Only paying the minimum will certainly result in paying a large amount of interest.

The "some portion" part is certainly arbitrary. In any case, it's named in a way that people feel safe but they absolutely aren't.

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

#185

Post by joslin01 » Fri, May 20, 2016, 9:18 PM UTC

johansch wrote: post #111

joslin01 wrote: post #96

Earlier quoted context omitted.

Outright as in "completely" or "immediately" financially foolish is like going to the club with your friends and announcing drinks are on you. My negligence (as in, I didn't stay on top of it as good as I should have) I meant as more drawn out and not so painfully obvious. It's like a hole in a boat that you keep meaning to get around to, but hey the boat's still moving just fine.

You pretty much fit the description of a financially irresponsible person, I have to say, I'm afraid. (You seem to be aware too so that's good I guess.)

What did you think when I told a story how to lose at credit cards? That I was financially responsible? Did you think I thought I was financially responsible. Honestly your comment states the obvious and is just rude, so no you did not "have to say" it I'm afraid. I bear the tolls my financial foolishness cost me. Keep your judgments in your head and do not justify them with a smug veil of concern ("I'm afraid" "good, I guess")

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

#186

Post by uuuter » Fri, May 20, 2016, 9:19 PM UTC

rm_-rf_slash wrote: post #54

throwanem wrote: post #49

Earlier quoted context omitted.

The initial usage is correct; credit card companies could care less about customers who pay off their balances every month, because such customers generate negligible revenue and are thus on the whole a nuisance.

If credit card processing fees are so high as to encourage small businesses to refuse payment by credit cards unless the total exceeds a minimum sum, I would hardly call that revenue "negligible." Otherwise, there would be no reason to offer (paltry) "rewards" points. Not to mention, people who regularly pay off their card in full are more able to spend far more than than their credit limit in a given month.

"Rewards" points aren't paltry. A good card allows "points" to be redeemed directly for actual cash and 2% to 5% adds up to a nice chunk even on non-extravagant expenditures. It usually exceeds the pay with cash incentive that some firms (gas stations especially) try to entice with -- a rewards card will give you 3% CB for gas. The best rewards are reaped by those that pay their balance as early as possible and have the best credit. Paying your balance in full improves your credit score, since it keeps your debt-to-credit level low.

And it is not true that those that regularly pay can spend more than their credit limit. After years of no balance carrying and numerous cards one accumulates a credit limit that would drain their savings whatever it was ($100ks). Unless you think millionaires are the only ones that pay their balance in full. I somehow managed to pay in full when I earned minimum wage.

CC companies are fine with non-balance carriers, because the conversion rate to balance carriers is quite high. A few of us just don't spend what they don't have.

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

#187

Post by morgante » Fri, May 20, 2016, 9:20 PM UTC

dionidium wrote: post #179

morgante wrote: post #178

Earlier quoted context omitted.

Wealthier people are the ones who have unsecured credit cards. Banks apparently have no problem giving me a limit of $50k without any sort of collateral, but my dad can't get a credit card without depositing his entire limit.

I was given an unreasonable amount of unsecured credit when I turned 18, by virtue, apparently, of the fact that I was now 18. It certainly wasn't because I had any stable income or assets.

My point was that larger credit limits typically come on unsecured cards, not secured ones.

For example, I can get a $20k limit card. It's pretty unlikely that you can get a secured card with a $20k limit.

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

#188

Post by [deleted] » Fri, May 20, 2016, 9:20 PM UTC

exhilaration wrote: post #43

harryh wrote: post #20

Earlier quoted context omitted.

How do you pay your rent on a credit card? I'd imagine you do that to get rewards of some kind?

There's a few services that will act as intermediaries for you like https://www.plastiq.com/ which charges 2.5%. I learned about these services on Slickdeals in a discussion on how to quickly rack up credit card reward points. A Google search turns up this list http://www.doctorofcredit.com/complete-list-of-options-for-p... (I'm not affiliated with the author).

[deleted]

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

#189

Post by morgante » Fri, May 20, 2016, 9:21 PM UTC

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.

> There aren't debit cards in the united states?

Of course there are debit cards. How do you think people use ATMs in the United States?

Unless you have psychological issues, it doesn't make sense to use a debit card for purchases though. Credit cards give 2% cash back, an interest-free loan for 30 days, and great consumer protections.

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

#190

Post by morgante » Fri, May 20, 2016, 9:23 PM UTC

chinathrow wrote: post #122

karcass wrote: post #41

Earlier quoted context omitted.

Many credit cards have cash-back or other rewards. It's easy to see the dual appeal of the reward, plus a month's worth of float on the payment.

The rewards system is the wrong incentive here in my eye. It corrupts everyone and everything down to each penny, on every transaction. Everyone along the line where the money flows is incentivised to get you a) hooked on credit cards and b) on paying by credit cards. The issuer, the merchant, the card institute, the processors in between and even the buyer get's a cut from the exorbitant high fees.

> It corrupts everyone and everything down to each penny, on every transaction.

I'd love to know how I'm supposedly being "corrupted." I've never once carried a balance, but have flown thousands of miles for free.