12-23-2007 Unpaid credit cards bedevil Americans

[Arglebargle]

Originally posted by: Engineer

Originally posted by: jhu

Originally posted by: WhipperSnapper

....

the usa still has the highest manufacturing output in the world still. we just have robots doing the job instead of people.

That's partially true. We are shipping jobs to Mexico and China (even with Robots) as fast was we can ship them (my company shut down four more US plants this year). Down to 2 main manufacturing plants in the US.

And for the record, robots are taking place of workers in Mexico (not sure of China). I know this for a fact as I've programmed and set up several cells in Mexico and will be doing more in the future.

And Mexico has been losing jobs to China, Vietnam, et al, for years now. $2.00 an hour jobs being dumped for the 44 and 22 cent and hour labour.

But we are working hard an installing a 3rd world work force here as well. Maybe next we can redo debtor's prisons.....

The credit card companies are not blameless in this. They encourage the overspending, 'cause that's where the big, high interest, profits are. Or were. But now that the individual wants to be as crooked as they are, the house of (credit) cards is starting to tumble.

 

[blackangst1]

Dave, although I agree some of the problems are due to layoffs, but certainly not a large majority. People just do not know how to make and live by a budget. Talk to anyone in the credit industry. People are overextended. Gone are the day of using CC to pay for emergencies. People buy everyday things like food, Starbucks, dinners, etc with them every day and then pay 18% interest on their grocieries! Theyre paying for their $30 dollar dinner two years later! Ask anyone who carries a balance on a CC if they pay it off every month. Your results will be less than 10% easily.

The problem is people think money problems are solved by money. They arent. Theyre solved by lifestyle changes. Another example is lottery winners. A survey of lottery winners a few years ago of 10 mill or more winners showed 60% were either bankrupt (have filed) or worse off than before they won within 5 years. If someone cant make a budget and intelligently live on 20k/yr they arent going to do it on 2 mill/year. If you cant manage a little bit, you cant manage alot.

There is ALWAYS exceptions for the rule. But the exceptions MAKE the rule. And the rule is, it's their own fault, and they dont know how to manage money.

BTW I read youre in the NE now? Sounds like you got a job. Congrats

 

[Ozoned]

Link
? Total US consumer debt (which includes installment debt, but not mortgage debt) reached $2.46 Trillion in June 2007, up from $2.398 Trillion at the end of 2006 (Source: Federal Reserve)
? Total US consumer revolving debt reached $904 Billion in June 2007, up from $879 billion at the end of 2006 (Source: Federal Reserve)
? The median U.S. household income is currently $43,200 and the typical family's credit card balance is now almost 5 percent of their annual income. (Source: Federal Reserve)
? Of the households that do owe money on credit cards, the median balance was $2,200 -- meaning half owe more, half less. (Source: MSN Money)
? 8.3 percent of households owe $9,000 or more on their cards (Source: MSN Money)
? Approximately 40 percent of credit card users paid their balance in full each month in 2006 (Source: Federal Reserve Bank of Philadelphia)
? The majority of U.S. households have no credit card debt. About a quarter have no credit cards, and an additional 30 percent of households pay off their balances every month. (Source: Federal Reserve)
? On average, today's consumer has a total of 13 credit obligations on record at a credit bureau. These include credit cards (such as department store charge cards, gas cards or bank cards) and installment loans (auto loans, mortgage loans, student loans, etc.). Not included are savings and checking accounts (typically not reported to a credit bureau). Of these 13 credit obligations, nine are likely to be credit cards and four are likely to be installment loans. (Source: myfico.com)
? 51 percent of the US population has at least two credit cards (Source: Center for Media Research)
? Approximately 14 percent of Americans use 50 percent or more of their available credit, and this group carries an average of 6.6 credit cards (Source: Center for Media Research)
? Those utilizing at least 50 percent of their credit lines have an average credit score of 645, compared to the national average of 674 (Source: Center for Media Research)
? One in six families with credit cards pays only the minimum due every month. (Sources: American Bankers Association, Federal Reserve)
? On average, today's consumers are paying their bills on time, with less than half of all consumers have ever been reported as 30 or more days late on a payment. Only three out of 10 have ever been 60 or more days overdue on any credit obligation. Seventy-seven percent of all consumers have never had a loan or account that was 90+ days overdue, and less than 20 percent have ever had a loan or account closed by the lender due to default. (Source: myfico.com)
? About 40 percent of credit card holders carry a balance of less than $1,000. About 15 percent are far less conservative in their use of credit cards and have total card balances in excess of $10,000. When you look at the total of all credit obligations combined (except mortgage loans), 48 percent of consumers carry less than $5,000 of debt. This includes all credit cards, lines of credit, and loans-everything but mortgages. Nearly 37 percent carry more than $10,000 of non-mortgage-related debt as reported to the credit bureaus. (Source: myfico.com)
? The typical consumer has access to approximately $19,000 on all credit cards combined. More than half of all people with credit cards are using less than 30 percent of their total credit card limit. Just over one in seven are using 80 percent or more of their credit card limit. (Source: myfico.com)
? The average consumer's oldest obligation is 14 years old, indicating that he or she has been managing credit for some time. In fact, we found that one out of four consumers had credit histories of 20 years or longer. Only one in 20 consumers had credit histories shorter than two years. (Source: myfico.com)
? The average consumer has had only one credit inquiry on his or her accounts within the past year. Fewer than 6 percent had four or more inquiries resulting from a search for new credit. (Source: myfico.com)
? There has been a 23 percent increase over the past five years in the number of credit cardholders who use cards that accumulate points for merchandise and/or airline tickets. (Source: Vertis)
? At least one in 10 consumers have more than 10 credit cards in their wallets. However, the overall average number of credit cards per consumer is four. (Source: Experian's "National Score Index")
? Twenty-nine percent of low and middle income households with credit card debt reported that medical expenses contributed to their current balances. (Source: www.demos.org)
? U.S. consumers racked up an estimated $51 billion worth of fast food on their personal credit and debit cards in 2006, compared to $33.2 billion one-year ago. (Source: www.carddata.com)
? Americans over 50 are more likely to have a credit card than those 25 ? 49 years old, but tend to use them less frequently (Source: 2007 AARP Payments Study)
? Eighty-eight percent of consumers surveyed admitted to immediately shredding or simply throwing out credit card offers they receive in the mail (Source: GfK Roper Survey)
? Only 50 percent of consumers survey are satisfied with their primary credit card (Source: GfK Roper Survey)
? Low interest rate is by far the most important factor when choosing a new credit card, cited by 58 percent of respondents (Source: GfK Roper Survey)
? Nearly one in every three consumer purchases in the United States is made with a payment card?including credit, debit, and prepaid products. (Source: Visa USA)
? Of every $100 spent by consumers, nearly $40 is in a form other than cash or check. (Source: Visa USA)
? Consumers carry more than 1 billion Visa cards worldwide?more than 450 million of those cards are in the United States (Source: Visa USA)
? U.S. Visa cardholders alone conduct more than $1 trillion in annual volume (Source: Visa USA)
? The average ticket for Visa purchases is consistently more than cash (Source: Visa USA)

----------------------------------------------------------------------------------------------

Obviously, the companies that want you to use credit cards aren't going to operate their business at a loss, long term, so the people that do use credit cards within their means are paying the bill for those that aren't. Also footing a large portion of the bill are the people that use credit cards, and pay their bills in full. (Vendors pay a fee for accepting cards)


In short, trickle down (or trickle up if you prefer) economics are at work in the private sector. Not just for the poor people, but also the unfortunate, the stupid, and the leeches. Those that can, pay the way for those that can't, or won't.

 

[blackangst1]

Thanks for that link Ozone. The ones that are appauling to me?

Approximately 14 percent of Americans use 50 percent or more of their available credit, and this group carries an average of 6.6 credit cards

On average, today's consumer has a total of 13 credit obligations on record at a credit bureau. These include credit cards (such as department store charge cards, gas cards or bank cards) and installment loans (auto loans, mortgage loans, student loans, etc.). Not included are savings and checking accounts (typically not reported to a credit bureau). Of these 13 credit obligations, nine are likely to be credit cards and four are likely to be installment loans (HOLY SHIT)

 

[Engineer]

A phrase from a Citibank commercial rings out loud every time I read one of these.....

"Citi - Live Richly" (true commercial that ran for a year or so from Citibank credit card services).


Sums it up (if you don't think that the credit card companies encourgage living beyond your means at times).

Originally posted by: Arglebargle

Originally posted by: Engineer

Originally posted by: jhu

Originally posted by: WhipperSnapper

....

the usa still has the highest manufacturing output in the world still. we just have robots doing the job instead of people.

That's partially true. We are shipping jobs to Mexico and China (even with Robots) as fast was we can ship them (my company shut down four more US plants this year). Down to 2 main manufacturing plants in the US.

And for the record, robots are taking place of workers in Mexico (not sure of China). I know this for a fact as I've programmed and set up several cells in Mexico and will be doing more in the future.

And Mexico has been losing jobs to China, Vietnam, et al, for years now. $2.00 an hour jobs being dumped for the 44 and 22 cent and hour labour.

But we are working hard an installing a 3rd world work force here as well. Maybe next we can redo debtor's prisons.....

The credit card companies are not blameless in this. They encourage the overspending, 'cause that's where the big, high interest, profits are. Or were. But now that the individual wants to be as crooked as they are, the house of (credit) cards is starting to tumble.

Most of the boarder state jobs in Mexico are high turnover (50% per month at times) jobs that pay around $0.85 per hour but you're right, they are still being displaced with robots or shipping them to China (other cheap Asian countries).

By the way, not all is lost in American skilled trade or manufacturing. My company shut down the Mexican Tool Plant at the end of the year because it was beat out by the only remaining US Tool Plant (my plant) of the company. Sometimes, skills beat out cheapness.

 

[dmcowen674]

Originally posted by: blackangst1
Dave, although I agree some of the problems are due to layoffs, but certainly not a large majority. People just do not know how to make and live by a budget. Talk to anyone in the credit industry. People are overextended. Gone are the day of using CC to pay for emergencies. People buy everyday things like food, Starbucks, dinners, etc with them every day and then pay 18% interest on their grocieries! Theyre paying for their $30 dollar dinner two years later! Ask anyone who carries a balance on a CC if they pay it off every month. Your results will be less than 10% easily.

The problem is people think money problems are solved by money. They arent. Theyre solved by lifestyle changes. Another example is lottery winners. A survey of lottery winners a few years ago of 10 mill or more winners showed 60% were either bankrupt (have filed) or worse off than before they won within 5 years. If someone cant make a budget and intelligently live on 20k/yr they arent going to do it on 2 mill/year. If you cant manage a little bit, you cant manage alot.

There is ALWAYS exceptions for the rule. But the exceptions MAKE the rule. And the rule is, it's their own fault, and they dont know how to manage money.

BTW I read youre in the NE now? Sounds like you got a job. Congrats

I agree on the people that use cards that way.

I leave me wife and family for New Jersey Thursday morning.

Hopefully goes well and get an apartment up there soon to get debi with me as soon as possible.

 

[smaky]

I have to say that I am little confused by all this. I do blame myself for getting huge credit card bills. On the other hand I hope many people declare bancrupcy and take down the greedy credit card inslavers.

I was layed off for 6 months last year and I am expecting the same into the new year. Just no work to be had at my company. (automotive manufacturing, my company has opened a shop in mexico).

The other day I was out on field service. Used my checking card a few times. Didn't know I was overdrawn and my bank charged me 25$ and 30$ overdraft fees totaling close to $200.

So I called them up and told em to shove it, they could have just refused charges imediately and I would have known something was wrong right away. Instead they just piled up the overdraft fees!! They agreed to dismiss 150$ of the fees. Then had the balls to OFFER ME A CREDIT CARD!!!!!!!!!!!!

I told her " how stupid are you people, dont' you see I am already having enough money problems? and you still are shoving more credit cards at me"

 

[WhipperSnapper]

Originally posted by: jhu

the usa still has the highest manufacturing output in the world still. we just have robots doing the job instead of people.

In that case, why haven't the cost and efficiency savings trickled down to the American middle class and why is it that we still have massive and unsustainable trade deficits? With this kind of innovation and productivity gain, shouldn't we see improvements in the standard of living for lower and middle class Americans? What kind of manufacturing is being done? Is it high-value-added manufacturing of electronics? The fact remains that we're still importing for consumption close to $1 trillion/year more than we're exporting.

Also, if you think that America has some sort of a capital-type advantage over slave-wage labor countries, think again. One of the reasons why comparative advantage is no longer applicable to international trade is the ability of capital to move across borders and overseas. American factories have robots--and now Mexican and Chinese factories can have robots.

If our trade deficit were $800 billion/year and if the trade deficit represents a loss of middle class jobs paying, say, $50,000/year at a ratio of 1 job for every $100,000 in trade deficit, then we should have 16 million more middle class jobs. At a ratio of one $50,000/year job for every $200,000 we'd have 4 million more middle class jobs. Of course, those jobs would also support other jobs in other areas.

As for credit cards, I agree with you that Americans should spend more responsibly and not carry credit card debt. However, if that were to happen, our economy would really begin to suffer because debt-based spending is keeping the U.S. economy afloat right now. Of course, that's unsustainable and the hollow house of cards will have to collapse eventually.

What's sad is that all of those U.S. dollars that we've sent overseas--our trade deficit and trade debt--is in fact coming back to be spent in the U.S.--but not to buy consumable goods and services, but rather to purchase hard capital assets such as real estate and investment firms like Merrill Lynch. In other words, we're starting to lose control of our hard wealth-generating and maintaining assets. How long will it be until the Chinese are our employers and landlords?

 

[blackangst1]

Originally posted by: WhipperSnapper

In that case, why haven't the cost and efficiency savings trickled down to the American middle class and why is it that we still have massive and unsustainable trade deficits? With this kind of innovation and productivity gain, shouldn't we see improvements in the standard of living for lower and middle class Americans? What kind of manufacturing is being done? Is it high-value-added manufacturing of electronics? The fact remains that we're still importing for consumption close to $1 trillion/year more than we're exporting.

Also, if you think that America has some sort of a capital-type advantage over slave-wage labor countries, think again. One of the reasons why comparative advantage is no longer applicable to international trade is the ability of capital to move across borders and overseas. American factories have robots--and now Mexican and Chinese factories can have robots.

If our trade deficit were $800 billion/year and if the trade deficit represents a loss of middle class jobs paying, say, $50,000/year at a ratio of 1 job for every $100,000 in trade deficit, then we should have 16 million more middle class jobs. At a ratio of one $50,000/year job for every $200,000 we'd have 4 million more middle class jobs. Of course, those jobs would also support other jobs in other areas.

Cost and efficiency HAVE trickled down to some extent. Look at the cost of, for example, traditional big ticket items...cars (under 10k for a decent NEW car)...home entertainment (under 400 fora decent LCD big screen)...PC's...lots of examples. Yeah yeah yeah some things havent, but alot has.

As far as the trade deficit...do some reading on trade deficit vs the dollar. Up intil this year the dollar has been very strong, thus US products more expensive = less exports. Recently, with the weak dollar, the benfit is higher exports due to cheaper products. It's simple economics. Not sure where youre getting "loss of middle class jobs"....but anyway. Has nothing whatsoever to do with the trade deficit.

 

[Engineer]

Originally posted by: blackangst1

Originally posted by: WhipperSnapper

In that case, why haven't the cost and efficiency savings trickled down to the American middle class and why is it that we still have massive and unsustainable trade deficits? With this kind of innovation and productivity gain, shouldn't we see improvements in the standard of living for lower and middle class Americans? What kind of manufacturing is being done? Is it high-value-added manufacturing of electronics? The fact remains that we're still importing for consumption close to $1 trillion/year more than we're exporting.

Also, if you think that America has some sort of a capital-type advantage over slave-wage labor countries, think again. One of the reasons why comparative advantage is no longer applicable to international trade is the ability of capital to move across borders and overseas. American factories have robots--and now Mexican and Chinese factories can have robots.

If our trade deficit were $800 billion/year and if the trade deficit represents a loss of middle class jobs paying, say, $50,000/year at a ratio of 1 job for every $100,000 in trade deficit, then we should have 16 million more middle class jobs. At a ratio of one $50,000/year job for every $200,000 we'd have 4 million more middle class jobs. Of course, those jobs would also support other jobs in other areas.

Cost and efficiency HAVE trickled down to some extent. Look at the cost of, for example, traditional big ticket items...cars (under 10k for a decent NEW car)...home entertainment (under 400 fora decent LCD big screen)...PC's...lots of examples. Yeah yeah yeah some things havent, but alot has.

As far as the trade deficit...do some reading on trade deficit vs the dollar. Up intil this year the dollar has been very strong, thus US products more expensive = less exports. Recently, with the weak dollar, the benfit is higher exports due to cheaper products. It's simple economics. Not sure where youre getting "loss of middle class jobs"....but anyway. Has nothing whatsoever to do with the trade deficit.

Find products made in the USA at those prices (with or without improved productivity) and you'll be right, otherwise, you're backing up what whippersnapper said 100%.

So importing more items and shipping jobs offshore has nothing to do with loss of middle class jobs? The over 5,000,000 manufacturing jobs lost in the last 6 years (first "recovery" in history that did not feature an increase in manufacturing jobs) doesn't = middle class jobs (and technology for that matter) lost? Wow...just wow.

 

[m1ldslide1]

I know a lot of people who are either currently off-grid, or were off-grid for a decade or so and are now returning to the fold.

I'm not sure you can point the finger at bankruptcy reform or economic factors, given that a lot of these people do waste all of their cash/credit on consumer goods. Seems to me that the real problem is our consumer society. People can live on SO much less than they choose to. Somehow this fact has gotten lost along the way. I'm guilty to some degree as well.

 

[blackangst1]

Originally posted by: m1ldslide1
I know a lot of people who are either currently off-grid, or were off-grid for a decade or so and are now returning to the fold.

I'm not sure you can point the finger at bankruptcy reform or economic factors, given that a lot of these people do waste all of their cash/credit on consumer goods. Seems to me that the real problem is our consumer society. People can live on SO much less than they choose to. Somehow this fact has gotten lost along the way. I'm guilty to some degree as well.

Therein lies the problem with middle class America.

Im not understanding this "off grid" crap. Are you all referring to not using credit at all? Im not sure sure that is a bad thing...

 

[LegendKiller]

Originally posted by: blackangst1

Originally posted by: m1ldslide1
I know a lot of people who are either currently off-grid, or were off-grid for a decade or so and are now returning to the fold.

I'm not sure you can point the finger at bankruptcy reform or economic factors, given that a lot of these people do waste all of their cash/credit on consumer goods. Seems to me that the real problem is our consumer society. People can live on SO much less than they choose to. Somehow this fact has gotten lost along the way. I'm guilty to some degree as well.

Therein lies the problem with middle class America.

Im not understanding this "off grid" crap. Are you all referring to not using credit at all? Im not sure sure that is a bad thing...

More or less, it's almost all-cash living.

After having worked for one of the more nefarious CC companies for a year in a higher-up function, I can say that I found the practices a little less appetizing than chicken gizzards left out on a Manhattan sidewalk for 2 weeks during summer. Universal repricing/defaults, charging interest in on late fees or over-balances, manipulating grace periods by 5+ days during a billing cycle to throw payers off balance, allowing overages and then charging fees when a denial would be easy, upping limits when it's known the person keeps upping utilization, advertising low balances to keep risk of default low but soliciting multiple cards, masking sub-prime exposure by using off-balance sheet funding.

I think one of the most disgusting practices is charging late fees even if your payment is 1-day late, then automatically jacking up your interest rate to 25%+. The 0-30-days late bucket for delinquencies is almost ignored by most investors, it's 30+ that matters. However, the second you are late they will reprice you, even if you have shown 10 years of good repayment. However, if you ask for a rate decrease they, many times, tell you to piss off.

I personally think CC companies are one of the most reprehensible groups in the world. Their whole scheme is to shackle you by enticing you to spend more and more. Then, when you need time to pay, or more favorable rates, they don't care. They use *any* and *all* tricks in the bag to fsk you over and pump up the interest rate on the portfolio. In some cases, these guys make 30%+.

What's funny is that they claim that it's needed in order to make up for the "risk" of doing business. Bullshit, their defaults are, on average, far lower than many other asset classes, yet their interest charged is *much* higher. There are several credit risk mitigating factors they can use, such as ratcheting down credit line for a troubled obligor once that obligor pays down (as opposed to keeping the whole credit line open).

This is probably one of the areas I favor regulation the most. I can tell you that I felt sullied for even having worked at the company for a year. Not to mention many of the people there are utter tools.

 

[Vic]

Originally posted by: XZeroII
You have a very unique gift. You can take any story and turn it into a worst case scenario and make others believe that you actually believe it. The real questions is...do you actually believe what you post?

Sadly, he does. People go out and borrow money they don't have to buy things they don't need solely because Corporate America put a gun to their heads. Didn't you know?

 

[LegendKiller]

Originally posted by: Vic

Originally posted by: XZeroII
You have a very unique gift. You can take any story and turn it into a worst case scenario and make others believe that you actually believe it. The real questions is...do you actually believe what you post?

Sadly, he does. People go out and borrow money they don't have to buy things they don't need solely because Corporate America put a gun to their heads. Didn't you know?

I would normally agree with you and still, partially, do, since this comes down to personal responsibility. However, in most other cases, there is a bilateral contract that locks in terms and has other safe-guards for all facets of the agreement. Even with the recent magical mortgages that are still safeguards at several levels that protects consumers from themselves.

However, with CCs there are so many shady and unilateral ways the company can screw the obligor. The contractual rates aren't locked and the way they can manipulate those rates are so voluminous as to make it essentially limitless to what they can do to screw consumers.

I am a firm proponent of risk-based pricing, charging the correct interest for the correct risk. However, with CC companies, the interest they charge and the fees gathered is certainly not in alignment with the risks they take. They have so many other ways of trapping consumers, who otherwise made good decisions, that it's difficult to unwind the problem.

Then, the recent bankruptcy law changes with regards to all credit, have essentially given the CC companies a carte blanche way of reducing risks but *still* not charge any lower rates. If anything, it allowed them to charge *more* interest, which is utterly insane.

You know I am one for increasing regulatory oversight for certain things and I am all for the government reducing the worst ways of manipulation. However, for everything else, it's sink or swim. But to counter that, you still need to not make it so CC companies can tie lead bricks to the feet of consumers.

 

[blackangst1]

Originally posted by: LegendKiller

Originally posted by: blackangst1

Originally posted by: m1ldslide1
I know a lot of people who are either currently off-grid, or were off-grid for a decade or so and are now returning to the fold.

I'm not sure you can point the finger at bankruptcy reform or economic factors, given that a lot of these people do waste all of their cash/credit on consumer goods. Seems to me that the real problem is our consumer society. People can live on SO much less than they choose to. Somehow this fact has gotten lost along the way. I'm guilty to some degree as well.

Therein lies the problem with middle class America.

Im not understanding this "off grid" crap. Are you all referring to not using credit at all? Im not sure sure that is a bad thing...

More or less, it's almost all-cash living.

After having worked for one of the more nefarious CC companies for a year in a higher-up function, I can say that I found the practices a little less appetizing than chicken gizzards left out on a Manhattan sidewalk for 2 weeks during summer. Universal repricing/defaults, charging interest in on late fees or over-balances, manipulating grace periods by 5+ days during a billing cycle to throw payers off balance, allowing overages and then charging fees when a denial would be easy, upping limits when it's known the person keeps upping utilization, advertising low balances to keep risk of default low but soliciting multiple cards, masking sub-prime exposure by using off-balance sheet funding.

I think one of the most disgusting practices is charging late fees even if your payment is 1-day late, then automatically jacking up your interest rate to 25%+. The 0-30-days late bucket for delinquencies is almost ignored by most investors, it's 30+ that matters. However, the second you are late they will reprice you, even if you have shown 10 years of good repayment. However, if you ask for a rate decrease they, many times, tell you to piss off.

I personally think CC companies are one of the most reprehensible groups in the world. Their whole scheme is to shackle you by enticing you to spend more and more. Then, when you need time to pay, or more favorable rates, they don't care. They use *any* and *all* tricks in the bag to fsk you over and pump up the interest rate on the portfolio. In some cases, these guys make 30%+.

What's funny is that they claim that it's needed in order to make up for the "risk" of doing business. Bullshit, their defaults are, on average, far lower than many other asset classes, yet their interest charged is *much* higher. There are several credit risk mitigating factors they can use, such as ratcheting down credit line for a troubled obligor once that obligor pays down (as opposed to keeping the whole credit line open).

This is probably one of the areas I favor regulation the most. I can tell you that I felt sullied for even having worked at the company for a year. Not to mention many of the people there are utter tools.

I agree with you on all your points, which is why I guess I've been "off the grid" with exception to a small car loan for many years.

Funny thing is, as you know, if you dont use your cards, they raise your CL every 6 months lol I started with a 3k line at Citi 6 years ago, never carried more than 1k on it, havent touched it in 3 years or so, and it's now at 16k ROFL. Ah well.

Cash living FTW

 

[Vic]

Originally posted by: LegendKiller

Originally posted by: Vic

Originally posted by: XZeroII
You have a very unique gift. You can take any story and turn it into a worst case scenario and make others believe that you actually believe it. The real questions is...do you actually believe what you post?

Sadly, he does. People go out and borrow money they don't have to buy things they don't need solely because Corporate America put a gun to their heads. Didn't you know?

I would normally agree with you and still, partially, do, since this comes down to personal responsibility. However, in most other cases, there is a bilateral contract that locks in terms and has other safe-guards for all facets of the agreement. Even with the recent magical mortgages that are still safeguards at several levels that protects consumers from themselves.

However, with CCs there are so many shady and unilateral ways the company can screw the obligor. The contractual rates aren't locked and the way they can manipulate those rates are so voluminous as to make it essentially limitless to what they can do to screw consumers.

I am a firm proponent of risk-based pricing, charging the correct interest for the correct risk. However, with CC companies, the interest they charge and the fees gathered is certainly not in alignment with the risks they take. They have so many other ways of trapping consumers, who otherwise made good decisions, that it's difficult to unwind the problem.

Then, the recent bankruptcy law changes with regards to all credit, have essentially given the CC companies a carte blanche way of reducing risks but *still* not charge any lower rates. If anything, it allowed them to charge *more* interest, which is utterly insane.

You know I am one for increasing regulatory oversight for certain things and I am all for the government reducing the worst ways of manipulation. However, for everything else, it's sink or swim. But to counter that, you still need to not make it so CC companies can tie lead bricks to the feet of consumers.

I won't argue. That's why my personal solution is to avoid CC debt.

However, CC's are a double-edged sword. Yes, they can be abused. But they are also a tremendous tool of convenience for consumers. I'm not very willing to forgo the latter just to protect the irresponsible from the former, no matter how Dave wants to spin it.

 

[bamacre]

Originally posted by: Vic

Originally posted by: LegendKiller

Originally posted by: Vic

Originally posted by: XZeroII
You have a very unique gift. You can take any story and turn it into a worst case scenario and make others believe that you actually believe it. The real questions is...do you actually believe what you post?

Sadly, he does. People go out and borrow money they don't have to buy things they don't need solely because Corporate America put a gun to their heads. Didn't you know?

I would normally agree with you and still, partially, do, since this comes down to personal responsibility. However, in most other cases, there is a bilateral contract that locks in terms and has other safe-guards for all facets of the agreement. Even with the recent magical mortgages that are still safeguards at several levels that protects consumers from themselves.

However, with CCs there are so many shady and unilateral ways the company can screw the obligor. The contractual rates aren't locked and the way they can manipulate those rates are so voluminous as to make it essentially limitless to what they can do to screw consumers.

I am a firm proponent of risk-based pricing, charging the correct interest for the correct risk. However, with CC companies, the interest they charge and the fees gathered is certainly not in alignment with the risks they take. They have so many other ways of trapping consumers, who otherwise made good decisions, that it's difficult to unwind the problem.

Then, the recent bankruptcy law changes with regards to all credit, have essentially given the CC companies a carte blanche way of reducing risks but *still* not charge any lower rates. If anything, it allowed them to charge *more* interest, which is utterly insane.

You know I am one for increasing regulatory oversight for certain things and I am all for the government reducing the worst ways of manipulation. However, for everything else, it's sink or swim. But to counter that, you still need to not make it so CC companies can tie lead bricks to the feet of consumers.

I won't argue. That's why my personal solution is to avoid CC debt.

However, CC's are a double-edged sword. Yes, they can be abused. But they are also a tremendous tool of convenience for consumers. I'm not very willing to forgo the latter just to protect the irresponsible from the former, no matter how Dave wants to spin it.

:thumbsup:

I also used CC's to start up a now successful home business.

 

[LegendKiller]

Originally posted by: Vic

Originally posted by: LegendKiller

Originally posted by: Vic

Originally posted by: XZeroII
You have a very unique gift. You can take any story and turn it into a worst case scenario and make others believe that you actually believe it. The real questions is...do you actually believe what you post?

Sadly, he does. People go out and borrow money they don't have to buy things they don't need solely because Corporate America put a gun to their heads. Didn't you know?

I would normally agree with you and still, partially, do, since this comes down to personal responsibility. However, in most other cases, there is a bilateral contract that locks in terms and has other safe-guards for all facets of the agreement. Even with the recent magical mortgages that are still safeguards at several levels that protects consumers from themselves.

However, with CCs there are so many shady and unilateral ways the company can screw the obligor. The contractual rates aren't locked and the way they can manipulate those rates are so voluminous as to make it essentially limitless to what they can do to screw consumers.

I am a firm proponent of risk-based pricing, charging the correct interest for the correct risk. However, with CC companies, the interest they charge and the fees gathered is certainly not in alignment with the risks they take. They have so many other ways of trapping consumers, who otherwise made good decisions, that it's difficult to unwind the problem.

Then, the recent bankruptcy law changes with regards to all credit, have essentially given the CC companies a carte blanche way of reducing risks but *still* not charge any lower rates. If anything, it allowed them to charge *more* interest, which is utterly insane.

You know I am one for increasing regulatory oversight for certain things and I am all for the government reducing the worst ways of manipulation. However, for everything else, it's sink or swim. But to counter that, you still need to not make it so CC companies can tie lead bricks to the feet of consumers.

I won't argue. That's why my personal solution is to avoid CC debt.

However, CC's are a double-edged sword. Yes, they can be abused. But they are also a tremendous tool of convenience for consumers. I'm not very willing to forgo the latter just to protect the irresponsible from the former, no matter how Dave wants to spin it.

That's our situation after I get my bonus this year. When my wife had cancer she was out of work for 4 months, it came at a bad time and we had to use CCs to supplement our income. Despite making a substantial amount of money, we had a lot of fixed costs and cut down significantly on variable ones. During that time is when I worked for the CC company and I, first hand, saw how bad they are, both on the consumer and on the lender side.

When it came time to pay things off we have been making good progress, but the way they work it can be difficult. I had one card switch my payment period, which was 5 days before the prior month's and I forgot about the switch, which is ultimately my fault, but the switch is ridiculous to begin with. I realized it the day after it was due and promptly made a payment. However, that caused them to jack up my rate to 30%, which they refused to reduce until I made 6 months of consecutive on-time payments. I did and made the payments on time and got it reduced. I have had that card for 10 years, never late once.

I am not saying anybody should forgo the convenience, I just think it needs to be regulated better. IMHO this is what needs to happen.


1. No universal defaults, meaning that if you get a hard hit on your credit report they should not be able to reprice you automatically even if you are on time for all of your other obligations.

2. Limit the repricing of accounts unless there is a significant deterioration in performance (30+ days delinquent) and even then, limit to 5% per delinquency bucket.

3. Eliminate overage fees. They can easily decline a card if it goes over, do so. If it goes over due to accrued interest, or late fees, no charging overage.

4. No interest on fees accrued. Interest on interest should also be eliminated.

5. No double billing, double interest, double accrual or double anything. You pay interest on whatever you carry for a grace period, not interest upon interest within the grace period.

6. Eliminate unilateral changes to the agreements that are significant terms changes, such as rate, fees, fees on fees, overage charges...etc.

7. Fix the due date, it should be due on *one* day and one day only, switching it every month is bullcrap. With the advent of online billpay and transactions occuring instantaneously, it shouldn't matter what day it is.

8. Institute manditory same-day billpay for electronic and phone-paying systems. Furthermore, if a payment is in processing it should be considered on-time provided it has been verified against NSF.

9. If an obligor is 1-14 days late, no late fee, no interest increase, nothing. 1-14 is not a risk indicator, 30+ is.

10. If a troubled obligor pays down revolving balances, then the credit line should be decreased in-line with the pay down until the credit line reaches where the obligor would be approved for a new line of credit given the current performance.

11. Regulate the size and number of cards offered and approved to a "prudent man" rule.

12. Manditory investigation into why CC rates have not declined, in comparison to historicals, after the 2005 BK law. also investigate who pushed for the law, how they were influenced, and what lobbyists/special interests were behind it.


None of these changes would significantly alter the use of CCs, but would protect consumers' rights. If the companies get their rights significantly enhanced by the 2005BK law, then there should be a balance that limits the amount of abuse they can dish out to consumers.

 

[Vic]

Originally posted by: LegendKiller
That's our situation after I get my bonus this year. When my wife had cancer she was out of work for 4 months, it came at a bad time and we had to use CCs to supplement our income. Despite making a substantial amount of money, we had a lot of fixed costs and cut down significantly on variable ones. During that time is when I worked for the CC company and I, first hand, saw how bad they are, both on the consumer and on the lender side.

When it came time to pay things off we have been making good progress, but the way they work it can be difficult. I had one card switch my payment period, which was 5 days before the prior month's and I forgot about the switch, which is ultimately my fault, but the switch is ridiculous to begin with. I realized it the day after it was due and promptly made a payment. However, that caused them to jack up my rate to 30%, which they refused to reduce until I made 6 months of consecutive on-time payments. I did and made the payments on time and got it reduced. I have had that card for 10 years, never late once.

I am not saying anybody should forgo the convenience, I just think it needs to be regulated better. IMHO this is what needs to happen.


1. No universal defaults, meaning that if you get a hard hit on your credit report they should not be able to reprice you automatically even if you are on time for all of your other obligations.

2. Limit the repricing of accounts unless there is a significant deterioration in performance (30+ days delinquent) and even then, limit to 5% per delinquency bucket.

3. Eliminate overage fees. They can easily decline a card if it goes over, do so. If it goes over due to accrued interest, or late fees, no charging overage.

4. No interest on fees accrued. Interest on interest should also be eliminated.

5. No double billing, double interest, double accrual or double anything. You pay interest on whatever you carry for a grace period, not interest upon interest within the grace period.

6. Eliminate unilateral changes to the agreements that are significant terms changes, such as rate, fees, fees on fees, overage charges...etc.

7. Fix the due date, it should be due on *one* day and one day only, switching it every month is bullcrap. With the advent of online billpay and transactions occuring instantaneously, it shouldn't matter what day it is.

8. Institute manditory same-day billpay for electronic and phone-paying systems. Furthermore, if a payment is in processing it should be considered on-time provided it has been verified against NSF.

9. If an obligor is 1-14 days late, no late fee, no interest increase, nothing. 1-14 is not a risk indicator, 30+ is.

10. If a troubled obligor pays down revolving balances, then the credit line should be decreased in-line with the pay down until the credit line reaches where the obligor would be approved for a new line of credit given the current performance.

11. Regulate the size and number of cards offered and approved to a "prudent man" rule.

12. Manditory investigation into why CC rates have not declined, in comparison to historicals, after the 2005 BK law. also investigate who pushed for the law, how they were influenced, and what lobbyists/special interests were behind it.


None of these changes would significantly alter the use of CCs, but would protect consumers' rights. If the companies get their rights significantly enhanced by the 2005BK law, then there should be a balance that limits the amount of abuse they can dish out to consumers.

I'd be in favor of all of those. The big CC providers have only brought this onto themselves.

 

[m1ldslide1]

Originally posted by: Vic
I'd be in favor of all of those. The big CC providers have only brought this onto themselves.

Me too. I'm not sure we'll see any improved regulation however, until the economy utterly crashes. I can't imagine that Financial industry lobbyists will allow something like this to happen unless it allows them to reap some rewards (ie stay in business).

 

[m1ldslide1]

Originally posted by: blackangst1

Originally posted by: m1ldslide1
I know a lot of people who are either currently off-grid, or were off-grid for a decade or so and are now returning to the fold.

I'm not sure you can point the finger at bankruptcy reform or economic factors, given that a lot of these people do waste all of their cash/credit on consumer goods. Seems to me that the real problem is our consumer society. People can live on SO much less than they choose to. Somehow this fact has gotten lost along the way. I'm guilty to some degree as well.

Therein lies the problem with middle class America.

Im not understanding this "off grid" crap. Are you all referring to not using credit at all? Im not sure sure that is a bad thing...

It means that you have/use zero credit until the 7 or more years have passed that this stuff rolls off of your credit. It's sort of an alternative to bankruptcy, or at least has become one. After that point, you have no credit, and it's like you're 18 all over again trying to get a Sears card. To some, that is preferable to being tens of thousands in the hole and having to deal with bankruptcy. I'm not sure if that's because there are actual benefits to going that route, or if it's just due to ignorance / intimidation about the legal processes of filing for bankruptcy.

 

[blackangst1]

Originally posted by: m1ldslide1

Originally posted by: blackangst1

Originally posted by: m1ldslide1
I know a lot of people who are either currently off-grid, or were off-grid for a decade or so and are now returning to the fold.

I'm not sure you can point the finger at bankruptcy reform or economic factors, given that a lot of these people do waste all of their cash/credit on consumer goods. Seems to me that the real problem is our consumer society. People can live on SO much less than they choose to. Somehow this fact has gotten lost along the way. I'm guilty to some degree as well.

Therein lies the problem with middle class America.

Im not understanding this "off grid" crap. Are you all referring to not using credit at all? Im not sure sure that is a bad thing...

It means that you have/use zero credit until the 7 or more years have passed that this stuff rolls off of your credit. It's sort of an alternative to bankruptcy, or at least has become one. After that point, you have no credit, and it's like you're 18 all over again trying to get a Sears card. To some, that is preferable to being tens of thousands in the hole and having to deal with bankruptcy. I'm not sure if that's because there are actual benefits to going that route, or if it's just due to ignorance / intimidation about the legal processes of filing for bankruptcy.

For clarification, only NEGATIVE credit falls off. 7 years give our take. Everything else stays indefinately. Banko's and IRS liens are 10 years.

 

[StageLeft]

This is how your typical stuff goes dmcowen: You make 1000 totally insane predictions and 1 of them is kind of accurate and then you make a thread about how you were right. For somebody with such great skills of prophecy, why can't you set yourself up with a decent economical situation that doesn't require constant whining if the rest of us are perfectly capable of that without the super-human powers?

Anyway, this isn't one of those 1/1000 times; there is no mass exodus.

Yep, definitely makes you wonder if the recent years of economic "prosperity" have been nothing more than a prop - First the mortgage industry, now credit looks to be heading in the crapper.

Much of it has been a facade, no doubt.

--

I don't know why so many want extra regulations. CCs are not a charity; if you don't like them, don't bother with them. Never apply for one, never get one. Are they evil? No, they are instruments that people with poor financial skills used to creat their own evil. I've seen it as have most of us. I use mine less and less because they beg for a person to get in over their head. Some can use it for better but most don't do a great job so they'd be advised to forgo credit cards altogether and truly ONLY use them in an emergency.

Although I have some tens of thousands of available CC credit (not bragging; that is pretty typical), I start to get uncomfortable now when I have a total exceeding more than a week of salary. They can be naughty, naughty!

 

[LegendKiller]

Originally posted by: Skoorb

I don't know why so many want extra regulations. CCs are not a charity; if you don't like them, don't bother with them. Never apply for one, never get one. Are they evil? No, they are instruments that people with poor financial skills used to creat their own evil. I've seen it as have most of us. I use mine less and less because they beg for a person to get in over their head. Some can use it for better but most don't do a great job so they'd be advised to forgo credit cards altogether and truly ONLY use them in an emergency.

Although I have some tens of thousands of available CC credit (not bragging; that is pretty typical), I start to get uncomfortable now when I have a total exceeding more than a week of salary. They can be naughty, naughty!

Nobody ever said CCs were charity nor should they be treated as such. However, there is an asymetrical and very disproportionate advantage that the CC companies have. The very fact that they are one of the only forms of financial contract that allows unlimited adjustment of the terms gives them such a one-sided advantage as to be inherently anti-consumer and dangerous. Many say that they are "unsecured" borrowers. Sure, they are, but with the 2005 BK law, they became much less exposed to risk.

I only propose additional regulations because, thus far, the industry is much more concerned with trapping, milking, and screwing consumers than adhering to a modicum of reason. Take a look at a Master Trust report from any credit card company, you'll see that their performance is surprisingly good for "unsecured credit" and historically has been so, even during challenging times. Yet, somehow, they still are able to charge 30% interest in some cases.

I worked for a timeshare company who had a worst interest rate of 18.99%, *FIXED*, meaning that no matter how far you slid, you still had that rate and it was for obligors with very bad FICOs. The company never charged interest on late fees. This was a modern and large timeshare developer with a huge parent company, so they weren't abusive as timeshare companies in the past, however, they weren't predatory and knew that their rep depended on it.

What are defaults on a typical middle-market timeshare? 15-22%. About 66% of defaults occured by the 2nd year of ownership.

What are the defaults on a typical credit card? 6%-10%, with them being a lot more back-end loaded. What that means is that the timeshare company charges *LESS* interest that is *FIXED* while the CC company charges *MORE* interest that is *VARIABLE* and they have 1/2 the defaults.

To me that is blatant predatory activity, especially when you consider all of the other manipulations they use to screw consumers, such as changing due dates by a week at times.

Frankly, I hope that the companies get buried under a mountain of defaults and more than a few go out of business. I then hope there is such an uproar in the consumer space that Congress has no option but to heavily regulate them in the future.