GOOD LORD, Credit cards are evil.

[DesignDawg]

Hey all,

In rougher times, my wife and I were forced to amass a bit of debt on our credit cards. Nothing major, but having two cards with hundreds on them can be a budgeting concern. Well, we are thinking of getting a new car this week, so we did some HARD-CORE budget-figuring, and the reality of those credit card debts hit us. DID YOU KNOW that if you have only $500.00 on a credit card with a 15% interest rate, by paying off exactly $100.00 per month on that card, it will cost you over $800.00 and take 8 months! GEEZ! Multiply that by two, and you end up with a $200.00/month credit card bill, (almost as high as threst of our bills combined), and you pay 600 DOLLARS EXTRA for $1,000 worth of stuff! DAMN! That is some hard-core mess right there. Also, by having paid 600 dollars extra, you now have $600.00 NEGATIVE value on it. Basically, if you bought something with a credit card for $1000, and sell it at a "profit" down the road for $1500, you do NOT end up making $500, you end up LOSING $100!! DAMN, that sucks. Like I said, we incurred those debts at a time when we had no other choice. LUCKY FOR US, we don't have to pay only $100.00/month on that debt, and we don't owe quite that much. As a matter of fact, by Friday, I will have my tax refund, and it will pay down all but about $100.00 of our credit card debt. We'll just pay that off when we get paid next. AFTER THAT, we aren't gonna TOUCH those cards except in the case of major emergencies. As a matter of fact, I may even file mine in the house, and not carry it anymore. I'm not getting into debt again like that!

Ricky
DesignDawg

 

[JayPatel]

testifyyyyyyyyy brotha!! CC's are the root of evil......

 

[saxman]

Hopefully your warning will make some of these hot deal addicts think twice.

 

[jimmygates]

When I got my first American Express Blue card, I racked up $1200 over a period of 1 week


Damn them and their "No Interest for 6 months" offer



DeisgnDawg,


I would suggest finding or applying to another credit card with 1) lower APR or 2) one with special low interest APR for Balance transfers. Alot of credit cards now are offering %3.9 APR for balance transfers. You just transfer your total balance from your previous card to the new one, pay it off w/ %3.9 APR and cancel the card


-Jimbo

 

[DesignDawg]

FOR REAL about the hot deals! I have popped in there from time to time, and it never ceases to amaze me.... Some of those people buy EVERYTHING they can, at high volume, to sell at profit. Obviously, they are using CC's for that. Well, let's say you buy 5 flat panel monitors because they are only $299 each. You now have $1500. credit card debt. Well, you want one for yourself, but you put the others on sale on Ebay. Well, everyone else is doing the same, so the market is flooded, so you really don't get that much for them. You sell the rest of the monitors (4 remaining) for $400 each. You've made $1600. $100 profit! ROCK! But if you don't get that bill paid before the interest accrues on it, and you pay 15% interest, guess what? You pay $1600.00 on a bill for $1725. DOH!!! YOU LOSE $125 dollars. You might as well have just sent 4 people a check for $30.00 each. But maybe you're quick enough to pay your bill. --Well, you have $1600.00 Your minimum payment on that card is a lot lower than that! So you take half of it and buy yourself something cool. Pay the remaining 800 on the card. That's a good chunk, right? Yep, but when interest accrues on it, it'll cost you $125.00 DOH! SO much for that profit again! DAMN, CC's are evil.

Ricky
DesignDawg

 

[Napalm381]

They are only evil when used improperly. Used carefully, they can be quite a handy tool.

 

[JellyBaby]

It's surprisingly easy to inadvertantly join the Dark Side of living with credit card debt. The reasons vary from an unexpected emergency situation to just plain inattention. Bottom line: buying thingz with other people's (ie bank's) mo is only good for the bank.

CC companies hook 'em young and indebt 'em for life all the while preaching "responsible credit management" and lobbying government to make it tough to challenge the CC companies and control your destiny. They are not my favorite industry.

 

[RGN]

I hear ya man. I got caught, and its had to get out the the debt. I now have a solid understanding of my personal finances that will help me through the rest of my life. But, geez its gonna take awhile to recover. I never go into "Hot Deals" anymore...

 

[The Stigenator]

I try and pay everythign off in the biggest chunk I can think of.
Did you know a 2000 dollar debt paying minimum will take 20 years to cover.

 

[JayPatel]

long live the debit card...ive never supported CC's, never will.

 

[DesignDawg]

Here's some more food for thought:

If you have a credit limit of $500.00 (your first card), and you max it out, and then pay your minimum payment each month ($10.00 on a card that low), it will only take SIX MONTHS FOR YOUR DEBT TO MORE THAN DOUBLE TO $1055.86!!!!! WOW. Even though you are paying your minimum every month, the interest stacks up so fast, and the growth is exponential. HALF A YEAR, and from $500, you are already a thousand in debt. They don't teach enough about CC's in school, I think. I actually know people who think that the minimum payment has something to do with keeping your balance stable despite interest. WRONG! And after six months, and you owe $1055, guess how much you will ADD TO THAT next month? $158.00!!!! And it only gets worse!

Thanks for the advice about transferring balances, but I was wondering what to do with this refund check. I would much rather just blow it all and WIPE OUT our CC debt than transfer balances and still pay them down slowly with interest. We can't afford to pay too big a CC bill right now, and the longer it takes, the mosre it costs, no matter what your interest rate is. I want it GONE.

Ricky
DesignDawg

 

[DesignDawg]

<< They are only evil when used improperly. Used carefully, they can be quite a handy tool. >>



Explain how to &quot;USE ONE PROPERLY&quot; please. Explain how you can get out of paying much more for things than what they are worth. There's only one way I know to get out of paying interest: Pay off the bedt each month BEFORE interest accrues. Right? Well, if you can afford to do that, that means you make enough money each month to pay CASH for the things you are using a credit card for. --Which eliminates the need for a credit card. Sure, you may need to use a credit card to buy things online that you have the cash to cover, but you can also use a debit card.

Also, BTW, I do NOT consider using a credit card to pay bills you cannot otherwise pay or emergency expenses &quot;unwise&quot; use of a credit card. Sometimes people get in a bind, and need the padding a credit card gives them. THat was the case with us, and though the situation is better now, it's still not good enough to have just paid everything off in one lump sum. It's not &quot;imporper&quot; the way we used our card. Anyone who claims otherwise is not living in the real world, and has never really had to worry with the COST of living.

Ricky
DesignDawg

 

[jimmygates]

I didn't know you actually had the money to pay off the debt


Definetely paid the debt off if you have money to do so. With balance transfers, your APR is low but it's still interest you have to pay somewhere down the line. You will sleep better at night knowing you have no debts on your card


I suggested balance transfers only if you temperary tight for cash but will eventually have enough to pay the debt off. I definetely not a &quot;green light&quot; to continue spending



-Jimbo

 

[jimmygates]

Ah...forgot to mention..I got a new CC in the mail today. These evil bastards are now just SENDING you cards without you even applying to them. The only save way to save my money is to cut up my cards and to destroy FS and HD's forum



-Jimbo

 

[Moonbeam]

What would happen if all America maxed their cards and refused to pay.

 

[DesignDawg]

<< When I got my first American Express Blue card, I racked up $1200 over a period of 1 week >>


OOOOUUUUUCCCHHHH!!! SUCK SUCK SUCK.

My former roommate had a former roommate who was working 4 jobs to pay off his credit card debt from youth. He owed something like $12,000.00 in CC debt. AAH! That's right. TWELVE THOUSAND.

My sister got in a similar situation when she was in HIGH SCHOOL with a Sears charge. It wasn't 12,000, but here she is, 8 years later, and she's just barely out of that debt. --And has pretty bad scars on her credit also.

Ricky
DesignDawg

 

[Napalm381]

DD- You expressed my view perfectly, albeit in a rather sarcastic tone. Pay it off every month unless you are REALLY in a bind, and then pay it off ASAP.

As for carrying cash around...sure I could do that. But do I really wanna have to carry several hundred dollars of cash around with me for major purchases? Hell no.

I wasn't implying that your emergency usage of them was improper or unwise...I just thought your blanket statement of &quot;credit cards are evil!&quot; was a bit over the top and unjustified.

 

[DesignDawg]

<< What would happen if all America maxed their cards and refused to pay. >>


Most likely, a few things would happen:

There would be a MASS RUSH in schools and training centers to train people qualified to work for collection agencies

There would be a mad rush to build thousands of new jails

Businesses would no longer take credit cards

Everyone would go to jail

Business on the planet would stop

Everyone would die

The earth would crash into the sun.



Ricky
DesignDawg

 

[DesignDawg]

<< But do I really wanna have to carry several hundred dollars of cash around with me for major purchases? Hell no. >>



You have several hundred thousand dollars? Dude, aren't you 19 or something? HAHA. If you have that kind of cash, why are you asking us how to spend your $200.00 tax return you just got?

And OF COURSE I did it in a sarcastic tone! We're bound by oath in off-topic to treat outsiders like that. Back to FS/FT with you! Scat!

Ricky
DesignDawg

P.S.-- With a salary like yours must be (hundred of thousands?) why are you getting a $200.00 tax refund?

 

[sharkeeper]

Any decent card will have a 25 day grace period for purchases and NO annual fee.

The correct way to use this card is pay off the balance every month! NEVER keep a balance on your credit card. This way you're using someone else's money for that billing cycle. The card costs you NOTHING! They are great for buying stuff online and over the phone. Don't take them to the store!

Cheers!

 

[JellyBaby]

<< Any decent card will have a 25 day grace period for purchases and NO annual fee. >>

Would it surprise you to know that some CC companies are moving to 20-day cycles? Why certainly this is to benefit the consumer right? *EVIL BUZZING SOUND* Shockingly, no, it's to increase late-fee revenue.

 

[luv2chill]

<< DID YOU KNOW that if you have only $500.00 on a credit card with a 15% interest rate, by paying off exactly $100.00 per month on that card, it will cost you over $800.00 and take 8 months! >>



Hey Ricky... fortunately, I think your calculations are a little off. When a credit card states a 15% interest rate, that is quoted in terms of an APR (annual percentage rate), meaning that your account is asessed 15% on the balance per year. Credit companies use various compounding methods to charge you the interest(usually compounded daily on your average balance), but always quote the APR so you have a basis for comparison. To make the math simpler for me, say it's compounded monthly. To find how much interest you are charged per month, you would divide 15% by 12 months/year to get 1.25% per month. So, on a $500 balance, you would be charged $6.25 interest in the first month (I'm ignoring the grace period). For a balance of $506.25. Assuming you paid $100 the first month, your next bill would be for $411.33 (including $5.08 in interest). Your next bill would be for $315.22, of which $3.89 is interest. Next bill would be for $217.91, of which $2.69 is interest. Then a balance of $119.38, including interest of $1.47. Finally you'd have a bill of $19.62 including the $0.24 interest charge. So in the end you'd be charged a total of $19.62 in interest.

It's late... my math could be off, but that's the basic idea. When you're quoted interest of 10%, 15%, 20%, etc. it's almost always in annual terms. What you're charged per day is the APR/365 days (usually referred to as a DPR or Daily Periodic Rate) on whatever your balance is for that day. The terms each creditor uses to compute your finance charge are always listed in the disclosure included with the card, and also on each statement.

Hope that helps.

l2c

 

[sharkeeper]

<< Would it surprise you to know that some CC companies are moving to 20-day cycles? >>



Any of mine do and they're gone!

Cheers!

 

[Bryan]

Yeah, Ricky. The figures you're quoting are a bit off. They sound more like those shady car title loan rates. However, your message is still loud and clear, and I couldn't agree more.

 

[DesignDawg]

l2c,

You're right! You know, I don't know why I didn't think of it more in those terms. Damn. Well, that actually feels much better. That really throws most of what I said off. However, I still maintain that CC's are evil.

Ricky
DesignDawg