211–220 of 231 posts
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?
Lenders just want debt service, not principal paid back. Loans are an asset on a bank's balance sheet.
Earlier quoted context omitted.
Sticking up a middle finger will trash your credit rating and make it impossible to get a mortgage. In the UK you'll also be put through collections, which can include attempts to force you to sell a property - if you own one - and/or most of your possessions to repay the debt. Credit cards may not be secured, but lenders have risk management divisions who make some attempt to estimate default rates. The biggest prob…
> Sticking up a middle finger will trash your credit rating and make it impossible to get a mortgage. I walked away from an underwater mortgage on a townhouse. It only caused my dropped my credit score ~100 points, and was eligible for another mortgage after 3 years (My credit card provider didn't blink, and had no problem allowing me to keep a charge card with high five figures of credit available). The repercussion…
Earlier quoted context omitted.
Analogies from federal budgets to household ones are specious at best
Why? In both cases a deficit imposes a burden on our future selves or our descendants.
And if you don't run any debt, it's like having zero body fat in cold climates. No insulation, and any caloric deficit causes much more severe problems.
Nobody said it had to be simple.
Earlier quoted context omitted.
Your feelings are way off. Most credit card debt is not paid off every month. Not by a very very long shot. Average credit card debt per U.S. adult, excluding zero-balance cards and store cards: $5,232.43 Average debt per credit card that usually carries a balance: $7,494.44 Average number of cards held by cardholders - bankcards: 2.24 Average debt per credit card that doesn't usually carry a balance: $1,128.44 http:…
Ignore these statistics, they're reporting average debt of credit cards. The level of debt per card is not an independent variable. You need to be reporting median debt.
To settle the question you'd really need to know how many people carry a balance.
Earlier quoted context omitted.
In a country with a GDP per capita (not per adult, to be clear - this includes non-adults) of around $50k, why would you feel that's terrifying?
It's not the amount by itself, it's the ridiculous interest rates on top of the amount.
Earlier quoted context omitted.
I thought all overdraft protection is opt-in now? (I thought they passed a law about it in the past few years)
Based on both these replies I went to go look at my account. Apparently the way it works is that you can shut off overdraft protection and if you strictly use the card as debit than any overdraft should be rejected. However if the card is run as credit, which it can be since it has a visa logo, then there's no way to force it to always decline the charge if there isn't enough money in the account.
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?"
A single large purchase is usually planned for and budgeted. E.g. buy computer for $2k and pay it off over the next couple of months $300/mo at a time. Though IMO, $100 of chardonnay at a club is pretty frivolous. Usually it is a death by a thousand cuts when it comes to racking up credit card debt. $20 for lunch, $50 for gas, $65 for some clothes, $100 for the electric bill. The problem is that pseudo-necessities li…
Earlier quoted context omitted.
There was an eerily prescient 2006 documentary about consumer credit called "Maxed Out," which featured a scene where someone recalled going to a conference of bank and credit card executives, and one of the CC CEOs plainly stated: "The bulk of our profits come from people making minimum payments for the rest of their lives." As for "pay-in-full" folks like you and me, credit card companies could care less. Whenever…
How do CC companies make money off of minimum payments? Don't they lose money by lending more than what's paid back?
Earlier quoted context omitted.
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.
Yes, corruption might be a too strong word here. The way I see the whole rewards system is that the users actually got paid in order to use their payment method again and again. They pay you. They bribe you, the incentivse you and eventually, it corrupts the way you're spending.