Not affected by the credit crunch yet? It may be coming in the form of your credit card soon:

http://www.nytimes.com/2008/10/29/business/29credit.html?_r=1&hp&oref=slogin


If anyone has large credit card debt I would serisouly look into consolodating your debt now before even that may not be option.

If anyone has run away credit card debt then I would suggest cutting up all your credit cards now, it will save the lenders the time and effort.

After decades of credit misuse of these flimsy little plastic cards the industry is finally reining in some of its loose practices, mind you it took the collapse of the credit industry to bring about these changes.


Cheers,

I would suggest cutting up all your credit cards now, it will save the lenders the time and effort.

This.

I haven't used a credit card in nearly a decade. That choice has significantly increased the quality of my life.

This.

I haven't used a credit card in nearly a decade. That choice has significantly increased the quality of my life.

That isn't the trick of it. The trick is to have MORE money in your checking / savings account than you spend with your credit card. I.E. spend what you can afford to pay off immediately. Every product you buy is now at LEAST 2% more expensive than it was simply because of credit card use. A few retailers give a 2-3% discount for using cash, but most don't.

If you just use cash / checks to pay for things, you are losing out on the "cash back" rewards from using the credit card (which the money for this directly comes from the charges credit card companies charge retailers for their service) AND you are losing out on the month's worth of interest between the purchase and the day you pay your credit card bill.

My credit card has a $30k limit. Obviously I could never dream of paying that off in one month, I keep my purchases with bills and every down around $5k so its manageable. On top of that I keep 4 months worth of expenses in the bank ($20k) in case for some reason all of my clients stop calling for 4 months - plenty of time to find a new job or something. But to stop using credit cards would simply penalize me a large chunk of change for nothing.

For example:

$5,000 a month spent on goods, bills, and services. My Chase card gives between 1% and 3% depending on what I'm buying (3% for my top 5 used purchases, like groceries and restaurants). Lets average this out to 2%, and that's $100 free per month.

And of course, that $5,000 gets to sit in the bank an extra month every month between purchase time and paying off my credit card bill. At a 3% APY that's another $15 or something like that. Free, every month.

That's a difference of $1380 per year not counting compound interest for not using cash.

And I just refinanced my home. Apparently my credit score is 793. Every day I still get 0% interest for a year offers. These companies need to keep customers to stay alive, they just probably won't be giving out cards with high limits to the 650 and below crowd anymore.

You spend $5000 a month on goods and services? The cost on prostitution is up heh?

My mortgage is $2112, that eats up a large chunk of that. I'd even think if I was married and not single the expenses would be higher since it's 2 people, no? But the formula scales. Say you only spend $2500 a month, that's still $690 free per year.

*edit* To include what Rover posted below, there are certainly debit cards that give cash back, since their use also charges the retailer a fee. That may be a better option for someone who is afraid of overspending - as there isn't much in the way of credit attached to them at all (normally a $300 "overdraft protection" or something nominal like that). Your only loss there is the interest, but that's a smaller gain than the cash back.

This.

I haven't used a credit card in nearly a decade. That choice has significantly increased the quality of my life.


Same here, the only Visa and MC I have are debit cards.

I use C.C.'S to purchase things online, emergency repairs ect... Thing is to always pay them off each month. The wife and I haven't in over 10 years ever carried a monthly balance on one. I am still very very leary of using my debit card on any purchases other than gas at the pump, because if someone does get that number they will drain your checking..or your real time cash. Sure they will protect it but then again there is a chance things start bouncing before the figure out the mess. I'd rather use a non debit CC for purchases like that.

Much like Ibudin, I don't like having a card directly tied to my bank account in any way. I have a couple of credit cards but don't carry a balance under normal circumstances -- it's easier to have services bill my card and then pay a single thing at the end of the month for me.

Thanks for the reminder, Lokase - I have about 6,500 in high interest credit card debt (dating all the way back to my divorce for the most part) that I've been meaning to consolidate for a year or more and keep putting off, largely because my preferred lender doesn't do these type of loans per se, but only lumped in with their 'personal' loans. I think I will give them a call this afternoon, however...

For the last several years, I've been either using my debit card (or American Express for anything I have to float) and paying off the balance every month; this keeps me from increasing my debt as I pay down (as I acquired quite a bit post-divorce, while on disability, and in graduate school also supporting Faervas).

Regards,
Nydia

11K here. Not like I can do much about it except pay it down.....

Wish I had something nice to show for it.

11K here. Not like I can do much about it except pay it down

Have you looked into a consolidation service Six?

They will accumulate all of your debt into one lump and then charge you a MUCH lower rate of interest than what the credit card companies rape customers for all the while making sure you make resonable monthly payments.

You are probably paying around 15-20% interest on your credit card. A consolidator would bring that down to below 10%?

Some consolidators even go as far as investing some of the money you owe so that by the time you pay off your debt you have a nice little investment earning interest and setting you on the right path for future financial growth.

The consolodator gets you into the practice of "paying yourself first" then living off what is left. Usually the rule of thumb is pay yourself 10% of your NET per month/paycheck and put that towards your investements, preferrably tax sheltered vehicles. In your case you would be paying your 10% to go towards your debt. Once your debt is taken care of then you have that habit engrained and are setup well for the future.


It's worth looking into. A fair warning though the consolidator will probably get you to cut up your credit cards, in front of them, seriously, getting you out of debt and staying out of short-term debt is their business and they are good at it.


Cheers,

Heh, the thing is the credit card is expired, so I can't really use it anymore.

While I appriceate the info, the fact of the matter is the credit card isn't in my name.

I'll just pay it off as I can, till it's all gone.

Man, I thought the penalties and interest the IRS tacked on owed back taxes was bad, they have nothing on Bank of America! :eek:

Even a line of credit at a bank has lower interest than your "expired credit card". Get a line of credit, pay off the credit card then pay back the bank loan.

You owe it to your wallet to at least look into any alternative that is going to save you any where from 10% to 15% annually on your 11k debt.


Cheers,

If I could get a line of credit, the credit card would be in my name..... ;)

That isn't the trick of it. The trick is to have MORE money in your checking / savings account than you spend with your credit card. I.E. spend what you can afford to pay off immediately. Every product you buy is now at LEAST 2% more expensive than it was simply because of credit card use. A few retailers give a 2-3% discount for using cash, but most don't.

That's what I was doing before.

2% is nothing compared to being free from that cycle of juggling debt to function. Especially since my money earns 1.5% in checking anyway.

In regards to the article, I'm glad they have to write off all that money. That's the risk of doing business, and that's what they fucking get for having retail stores shove a credit card application in your face whenever you walk in the door. Amen :)

Also high five on *most* everyone's credit balances (roflz Sixee wtf bro).

Using credit cards isn't an issue as long as you pay them off :)
After my divoce I didn't touch a credit card for 4 years. Then I started using them more wisely; I like the rewards points mine offers (something I never bothered with before). When that stops being an option from creditors I'll stop using CCs again.


It's funny though I just got a Discover offer for 0% interest till 2010 on purchases and 2.9% on balance transfers till 2012 yesterday. I said to Leah I bet these stop getting mailed to people soon :) I usually don't even bother looking at them but this one came in a conspicious envelope so I actually opened it. *CURSES* junk mail.

It's very difficult to live any more without some sort of plastic, but the real key is teaching people to use them responsibly. I had about 12k debt when I graduated college, mostly tuition when I ran out of money, and paying that off taught me to be very careful. We pay off our cards every month, but we use them for all sorts of things, including ordering online. The cash back rewards are nice, and a tad above what we'd see in a savings account considering how little money we actually have.

I expect we'll see more stores charging the customer a fee for using the card, and that should slim down card purchases as well. I'm not wild about it, but we as a nation earned this with our run away credit lines.

I use my lowest credit line card for online stuff, like paying game scrips and ordering ITunes or stuff from Amazon; if it gets hacked, I won't be in too much trouble if I don't catch it right away.

I have a Discover card (Yes Fil) that I use for gas and groceries, etc, which has a nice pay back program; it increases by 20's, so when I get to $100 I just have that applied to that month's balance.

I also have a Target Visa for the fact that it has some nice discount features when shopping at Target.

But, credit cards suck, for the most part.

Couple of things:

I run everything I can through one of my cards to get "points" which I use for travel (rooms, plane tickets, car rental etc..)

I pay it off every month.

I never cancel my cards now. I don't use them but just keep them in a file with all pertenent info. Canceling cards worsens your credit score, which is rediculous, don't get me started on that...

And also, has anyone ever heard of App-o-rama? I have been watching a guy at work do a smaller version of this for a year.... it is a lot of work for very little money but interesting concept... and it takes no money to do out of your pocket... that being said, I will never do it. Too much risk if you screw it up. I found it on Fatwallet a while back.

I don't own a single credit card, neither does my fiance. We don't rent, we don't have a car on finance, we don't have loans, and we don't have big overdrafts. We consciously made these decisions and, as poor as it feels we've been over the past years, we are not even remotely affected by the credit crunch of anything like this thread suggests - and it's been worth it!

We don't have a 42inch LCD like everyone I know, but they got theirs on credit. We don't have a BMW or a Mercedes, but they got theirs on finance. We have a nice 32inch tele, and a brand new little Citroen C1, and a nice 2 bedroom apartment, and a take-away every friday night, with date night on a saturday *wink wink* the cinema, wine, and cuddles! None of it is on borrowed money - and I love it!

I don't own a single credit card, neither does my fiance. We don't rent, we don't have a car on finance, we don't have loans, and we don't have big overdrafts. We consciously made these decisions and, as poor as it feels we've been over the past years, we are not even remotely affected by the credit crunch of anything like this thread suggests - and it's been worth it!

We don't have a 42inch LCD like everyone I know, but they got theirs on credit. We don't have a BMW or a Mercedes, but they got theirs on finance. We have a nice 32inch tele, and a brand new little Citroen C1, and a nice 2 bedroom apartment, and a take-away every friday night, with date night on a saturday *wink wink* the cinema, wine, and cuddles! None of it is on borrowed money - and I love it!

You going to be the next James Bond? Sounds like you live life on the EDGE!

<3k in credit that is going away soon... Then i'm an cutting that FAWKER up!

'You going to be the next James Bond? Sounds like you live life on the EDGE!'

- Financially? No, no Bond here. I know how important money is, and I know how important it is not to be a bank's bitch :P We just don't spend money that's not ours, I think it's quite a good ethic - considering the circumstances.

Kudos to you Halo, you've figured out what something that most people will never understand.

Bise is right, if you cancel those cards it's going to hurt your credit. Just pay it off or transfer to another card and put the thing some place safe or cut it up if you're never going to use it again.

Halo I;m pretty much like you except I own a large 4BR house, and have two new cars, and 1 52inch HDTV and 1 42inch HDTV and umpteen gadgets and gaming crap and the only things on credit are the cars and house. I'm not affected by the credit crisis b/c while I know my home value has decreased I don't intend to sell any time soon and I make enough to live the way I want and still save a little money at the same time :)

Like Bise I charge for points/rewards and pay the suckers off at the end of the month. My mantra is if you can't pay for it in cash do you really need it right now? If I really need it can I pay it off in 3months? If I do that how does that affect other things in my life? Leah and I have the type of relationship that neither of us spends more than $50 without first telling the other we're doing it and what we are spending it on. It's like having a discussion with your conscious and if one of us disagrees then we don't spend the cash regardless of if it's coming from her account or my account our our joint account. I think people too often just spend without considering consequences or maybe they do consider them but don't stick to their plans for paying things off.

Something else I've learned recently. Look for things you're spending money on that you really don't need. For us it was cable, we were spending $180 a month on our cable bill. That was premium channels, internet, and phone service rolled into one. We said screw this our TVs have HD tuners and there is nothing we can't watch online or download from itunes/xbox marketplace and stream to our TVs why pay for something we use less than3hrs a week? Then we switched to vonage so our $180 went to $70 ($30 vonage and $40) internet. Next up, TiVo. It's only $12.95 a month but do we really need this? No. We coupon clip, we bargain shop/hunt, I don't care if I can afford something if it's over priced I look elsewhere. We're nerds when it comes to finding deals and bargains we joke that some of our friends are lazy and just accept paying the price without looking. I haven't done any cost analysis but I'd wager to say our activities save us sizeable sums and it's not hard stuff either. Leah went shopping this morning and bought $80 of groceries for $21, I love her! :D

You are not your FICO score.

Thinking you can play these guys and win is like thinking you can beat the house in Vegas. They've spent billions, if not trillions, in research on how to get your money. I know a lot of people who played those games for years and thought they were winning, yet every single one of them eventually got behind.

I always thought it was terrible. I remember back as an undergraduate in my first year living far away from home, I was having some money troubles (spending all my money on playing EQ) and went to the University local banking branch on campus. I asked for some advice, maybe an overdraft for my account? The woman threw a credit card application at me.
My parents have always been financially astute, and I was taught how to handle money from a young age. My reaction to the woman was one of disgust, and to this day I wonder how many young, struggling students that campus branch has trapped in debt since then.

Aye San and I'll go one further. The FICO powers that be have pushed to help create their importance to everyone that they've become a power reaching beyond mere cash.

I agree, this is an area that when and if it crashes will reveal a house of cards.

I've been thinking about getting a credit card lately, simply because I'm not sure how I'm supposed to buy a house at some point with nothing on my credit history except a paid off vehicle loan that's about eight years old at this point. I'd rather not ever have another credit card for the rest of my life, so are there any other decent options for building a credit history?

The credit crisis or huge jump in no pays, BK flooding the system on these banks arent near as painful as these credit companies make it out.

there getting billions of dollars to dole out again from the good ole USA, The bad debt gets written off then sold to collectors. Some of these banks are set pretty well set up with the amount of money they will get to write off taxes for the next ten years. Wells Fargo buying Wachovia is a great example but you dont hear to much about that side of the equation.

The people who are hurt most is everyone, as they tighten standards raise rates and lower limits. Less choices become available for finiance options with the consildations for people who got trapped for whatever reason in the credit using mess. To even get a fresh start.

My GE money bank rep who does most of my finaincing told me two weeks ago you can pretty much shave 80 points off of everyones score at this point in the game a 720 is bieng treated like a 640 ect.

Bieng in a business that financing is the pretty much the be all of a sale more than 80% of the time. Ive been seening alot of people get very limited finicaing options or small amounts even with stellar credit and great equity in there homes.

I feel really blessed to have locked up GE finiancing for my customers less than 4% in my industry can offer it. Or Id be hurting like alot of my competition. I was the 4th largest volume dealer in Texas for two of my manufactors and have became number one in the last 4 months from others not bieng able to secure finiancing to get there projects done.

anyway i only use credit cards for dailey expenses to help track for tax and ledger purposes and pay them off monthly. I'm a pretty good deal shopper bought a 60 inch sony for 2100 that would reg cost 2800 since it was a demo last year model. and my most happy purchase of late a $1400 grill island to put under my cabana in hte back yard for 580. Out of season I wanted it all year again floor model last one. FTW


Shorty My best friend I posted about before in another thread similiar to this has the same issue everything paid for only has ever used cash and has had a nightmare of a time getting a descent home loan.. The mortgage guy told him to buy new furniture cars ect on credit and get cards and use them keeping small balances to establish some credit.

I agree you are not your FICO score, but having a good one wont hurt you.

About 10.5k here on a home equity loan, but most of it was used for repairs and upgrading the house, so money well spent imo. Got about 8% interest rate on the card so thats good too. Figure i can pay it off in about 2 years, then aside from the house payment and monthly bills, i'll be fairly well off.
All my other cards have long been payed off or used very sparingly. (Having Sears jack up my interest rate from 7-8% to 20%+ for a one day-late payment cured me of major overspending...lol)
Still get a ton of offers for credit tho...(My credit is around the 780 range)

We coupon clip, :D

My mother needed a lift the other day after dropping her car off for winterizing, and I told her she would have to put up with stopping in at Cub Foods with me in exchange for the ride, since I needed a few things. We both went our way, and met at the cashier, where upon seeing me use a $1.00 off coupon on some Tide she beamed and proclaimed "I knew I could teach him eventually."

BTW, she showed me when we got to the car the two Bic Charcoal starters she got for 29 cents each, normally $2 something, using the 2 $1.00 off coupons she had and having got them from the sale bin where they were priced at $1.29.

Coupons can have a pleasant impact on your cash flow. :D

Comically coupons are a net economic loss, it be cheaper if the sold whatever at a reduced cost factoring in not paying for coupon campaigns -- but good luck trying to wean people off them, bunch of arm-chair hagglers.