Nope doesn't have to do with the government.
Cheryl posted about financial responsibility. A few people commented that they use credit cards but don't carry a balance from month to month. They say that credit card debt is a useful tool. See to me that isn't credit card debt. To carry credit card debt you have to carry it from month to month, you must be deficit spending. Or to put it another way you need to spend more than you bring home.
What do you all consider credit card debt?
Just for laughs what do you think about the payday loan people? I think they are evil incarnate!!!!! Leaches!!! Trolls!!!! Evil doers!!! Yeah I don't like them much. :-/
8kidsdad I sincerely hope that your explanation of "lost leader" was not for my benefit. If I have given any indication that I do not understand such a simple concept I have failed somewhere in my writing. I apologize for not further explaining that if you have the money in savings to cover a debt it also is not considered deficit spending though I would have thought my caveat spend more than you bring in covered that. :)
Thank you Everly, you are very right and I should have pointed out what 8kidsdad does is really smart. I do it, my dad does it in a big way. My favorite being dad puts his down payment on his Discover and pays it off. Lord, Discover must hate that man! Yes, so long as we are in a time of inflation, so like all the time, 0% interest is a win win.
Just for the record (and I agree with you btw), I don't think credit card debt is a useful tool. Credit cards are. Not the same things. ;)
Credit card debt is not useful. Credit cards can be. Not the same things. To me, if a person thinks having a credit card will be financial armageddon for their bank account, then they shouldn't get one. If a person racks up their card to the max and can't pay it off, I don't feel sorry for them. But if a person wants a credit card to build their credit, keep for emergencies, and make purchases they can pay off month to month, then more power to them, because they're using the system to their advantage.
Thanks J.!! I think we are "bouncing" off each other today!! :)
Credit card debt is the UNPAID balance on a credit card...i.e. deficit spending.
AMEX is/was a charge card - where the balance was paid off every month...that's the difference - a "charge" card, in essence - paying cash just not at the time and credit....putting on and paying a minimum...
I had EVERY credit card - seriously - MC & Visa, Discover, AMEX, Target, Mervyns, JCP, Macys, Nordies (God how I miss Nordies!), Spencers, Zales, Kay Jewelers, Victoria's Secret - seriously - all of them...i was able to pay them (minimum to a chunk) each month ON TIME - so I had a wonderful credit rating...but Bob and I decided that we were tired of spending money on "things"....it was hard to let go of the MBNA with a $30K limit...that's a GREAT safety net to have...but in reality - it's not a safety net...it's just money I really don't have...urgh...yeah - i miss the MBNA credit card...I probably would've purchased a new car on it!! LOL!!!
Payday Loan people? OH MY WORD!!! Bad, bad, bad...
Title loan people - even worse...
I don't ever borrow money. Even if you pay your credit card balance you are still borrowing money even if it is just for a couple of weeks. If you have the cash get your item, if you don't have the cash, then you can't afford it period and should not buy it. People that have credit cards and pay the balance off every month are just waiting for Murphy to move in. Eventually something will happen and they won't be able to pay the balance and then they are in debt. This is a stupid way to handle money.
Payday loan people are horrible but then you also have to put some of the blame on the people that use them. They need to control their finances better so they don't have to use those places.
And one other thing- My grandfather was a millionaire and I have known a lot of millionaires and like Dave Ramsey says none of them ever told me they made their money using reward points and airline miles. If you play with snakes, eventually you will get bitten!!
I think what they were really trying to say, is active credit is a good tool. Purchasing and paying it off, is not debt, but active credit...in my opinion. Actual debt, is not a good tool for anyone!
My family was VERY poor when I was little. My mom got a payday advance at one of those places, because our electricity had been off 2 weeks. It literally took her years, to finally dig out of the debt to that place. They are such scams and prey on people. I don't even understand how they are legal. Oh, and my parents were NOT irresponsible. They went through and unfortunate series of events, with loosing their jobs, because of industry in the area changing. They payday loan and home mortgage are the ONLY debt they've ever had. They've actually paid off their mortgage twice, in 25 years. They took out a mortgage loan to update the home (it needed it, desperately, The place was falling apart.) and paid that off over a decade early. Gotta love it when people ASSume that because a person is desperate enough to go to a payday loan, they must just not pay their bills, or are too stupid to figure out how. They never even used credit cards and still don't.
Well since you ask, the payday loan people are in the bottom of the bucket below the leeches and such. They get away with way too much and even though regulations have been suggested and advise, there is not enough out there to help people get past them. Now, that said, I know they can help someone in an extreme crunch but the fees they charge, on top of fees etc is the absolute worst.
Now, for credit card debt, I consider anything I charge to be debt. Even if paid off at the end of the month. I still have to make sure it is paid and I run a risk of something happening in the month to prevent a full payment. It is kind of like borrowing money from someone on the 1st and paying it back on the 20th. you still owe it and have to pay it at some point.
I use my credit card to accumulate United miles. You are right though, when I pay it off monthly, it is not debt.
I gave the card to my daughter to pay her college tuition the other day (her college accepts it) with the plan to pay it off when the bill came. She tried to be nice and write a check for her college tuition (not cheap)!! Not only did I want my miles, I would never expect my daughter to pay for college. Oh well, I paid her back!
Well we technically carry credit card debt at least according to the bank. When we applied for our home loan we had 350 on one card and 120 on another card...that was factored into our debt amount, if it is on the card and not paid it is technically debt. whether it be short term debt or long term. I revolving debt is the bad debt...IMO
I was just responding to Cheryl's post! You are right - if you pay off your balance each month then that is not credit card debt. Credit card debt is when you let balances roll into the next month. Simple as that. Having credit card debt does NOT help your credit score, but having a few cards that you pay off monthly definitely does.
Some times I use credit cards and carry a balance from one month to the next.
Example: I needed a new truck. I saw one that was a loss leader that would do what I needed it to do. (A loss leader is a item that a store or business will sell at a loss to get people into their business so they will buy other more expensive items. Grocery stores will put turkey on sale at Thanksgiving for less than they pay for them. That's because they expect that you will buy other items that they have marked up to make up for the loss on the turkey.)
I received an offer fom a credit card company for a 0% interest on a credit card. I charged part of the truck on the credit card and paid 0% interest on the balance I carried for just over a year. Then I recieved another 0% interest credit card and moved the balance from one credit card to the other. I paid off my loan first and my credit card second. I paid less than $500 in interest on $17,000 truck over 30 months. I got a $1500 rebate for paying "cash". So I made $1000 profit off the credit card companies.
Like I said earlier, a credit card is a tool. I used these credit cards to my economic advantage. In other words, I used a hammer to drive in a nail, not a screwdriver.
The payday loan people are legal thieves preying on those that can't (or haven't learned to) handle their money. But they are brothers to Pawn shop operators. The people that use payday loan sharks haven't learned to pay their bills on time and therefore their credit is so bad they can't get a credit card, which can take the place of a payday loan.
Good luck to you and yours.
I've never done a pay day loan or a car title thing. You are right that they are evil.
I consider using a credit card to spend more money than you in savings or earnings to be "credit card debt". I consider what 8kidsdad did to be SMART. That is truly using a tool and the system to save money. (and thank you for explaining loss leader. Many of us knew the definition already, but I'm sure those who didn't were happy to learn something interesting today)
My parents put me through college using a US Airways Visa. They charged my entire tuition to the card, then paid it right off. Every year they earned enough points to pay for me to fly home at Christmas. Again, smart thinking!
I wrote a response to you on my cell phone, and lost the whole thing. Rather than go through what I said again, since most of what I said is already here, I just want to tell Everly how lucky she is to get to pay college tuition with her credit card to get miles. Our son's college doesn't accept credit cards. Big bummer! I had to write a check!
Dawn
