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

wsj.com

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

#31

Post by toomuchtodo »

tehwebguy wrote: post #24
toomuchtodo wrote: post #14

Earlier quoted context omitted.

> 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…

Main difference being the debt you walked away from was for property that the lender presumably got back.

My experience says otherwise (without going into detail). Consumer protections against creditors/debt collectors in the US are stronger than in the UK.

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

#32

Post by duaneb »

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.

Well, sure the US has debit cards. But people use credit cards because they want the credit.

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

#33

Post by Overtonwindow »

It was interesting that a year ago the media was saying that Americans were pulling back on credit use, and paying it down. [1] I'm curious if that was honest reporting, or if something changed which caused people to spend more?

[1] http://blogs.wsj.com/economics/2015/04/07/americans-pull-bac...

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

#34

Post by bradleyjg »

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.

They do exist. However "as a convenience" they allow overdrafts at ridiculously high costs. AFAIK you can't shut this feature off and just have charges declined if there isn't enough money in the account.

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

#35

Post by koenigdavidmj »

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.

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.

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

#37

Post by gtheodor »

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…

From the article: "Even American Express Co., which historically has focused on customers who pay their bills off every month, is now concentrating on lending money to consumers who keep a balance.

Outstanding balances reached nearly $952 billion in the first quarter, ..."

This seems to imply that, by "keep a balance," they mean not paying your bill off every month.

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

#38

Post by josefresco »

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.

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

#39

Post by dragonwriter »

toomuchtodo wrote: post #26
shanecleveland wrote: post #22

Earlier quoted context omitted.

That's incredible. I wonder how typical your experience is. I've considered this strategy on a home we are forced to rent at a loss, as we'd be unable to sell. But I couldn't bring myself to do it.

At the time, I was backed into a corner so to say. It wasn't something I went into willingly. My HOA would not allow me to rent the townhouse out (too many rentals already), nor could I come up with the $150K to bring the mortgage down to the new fair market value. So, mailed the keys back to the bank and walked away.

> My HOA would not allow my to rent the townhouse out (too many rentals already), nor could I come up with the $150K to bring the mortgage down to the new fair market value. So, mailed the keys back to the bank and walked away.

Note that this doesn't actually work to reduce your debt everywhere (even everywhere in the US); its basically voluntarily inviting the bank to foreclose, which they usually will do (because if you are abandoning the property and they don't, the longer they go before foreclosure the more likely that, just due to being abandoned, the property will lose more value.) But when they do foreclose, some jurisdictions allow foreclosure deficiencies -- that is, they allow the conversion of the amount of the mortgage debt that the lender doesn't recover in a foreclosure sale to be collected as an unsecured debt.

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

#40

Post by nkohari »

toomuchtodo wrote: post #31
tehwebguy wrote: post #24

Earlier quoted context omitted.

Main difference being the debt you walked away from was for property that the lender presumably got back.

My experience says otherwise (without going into detail). Consumer protections against creditors/debt collectors in the US are stronger than in the UK.

I think what they're saying is that the bank exercised their lien and claimed the mortgaged property, whereas card debt is unsecured and there's no collateral to claim.
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