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Credit Card Debt





b|ade
I think Americans are becoming very foolish in their spending and money usage. The total debt in the country is over 8 trillion dollars. That is just mind-blowing. How do we rack up this debt? Are we so stupid that we consider instant gratification over our well-being? Do we realize the consequences before or after our actions? I think we could reduce our debt drastically if people used common sense. It seems now days that everyone has collection agency letters and credit card bills. Is it that hard to pay off? People need to learn that if you use money, you better darned well be able to pay for it. Mad
hunterm
It's pretty bad in the UK too. I think credit card debt here is around £2.5 billion and works out to around £2000 per person. It's unbelievable. But it is what's bailed out both the UK and US economies over tough times.

They've recently introduced new rules that make it easier for people to become bankrupt and this is now starting to hurt the lenders. This coupled with rising interest rates means the lenders are going to have to tighten their lending criteria which should, in turn, lead to the shrinking of this massive debt bubble.
jmwarshay
About 70% of the US Gross Domestic Product is consumer spending. Much of this is financed by credit cards, home equity loans, and other forms of debt. People do need to save more, especially if Social Security will be revamped, causing lower guaranteed benefits in the future. The problem is that if everyone stops spending at once, the economy will crash. That is called the "paradox of saving."
sky217
Well the credit card companies make it so easy. We tend to pay our credit card off in large amounts at a time. When we do that, it seems like the credit card company gets a little worried because shortly after, they send us a letter saying they'll give us a super low interest rate for a while. Now we have an incentive to spend on it again because it isn't really costing us... until later if we suddenly can't pay it off like we were planning. Home equity loans are another way they like to entice us. I think it's a big problem because they're so good at selling it.
gxdrifter
I just want to chime in and say on behalf of the everyman... Credit card debt sucks. You have no credit rating until you start borrowing money Sad
Whong
The credit card has truly become a curse for people, there in America and also elsewhere in the world!

People have become very loose with their money! That is very bad... !!!!! Evil or Very Mad
KatanaSky
8 Trillion Dollars - yep that sounds right. People like to blame the military for spending so much on weapons and what not when actually - I'm not sure what the exact percentage is but I know that A LOT of that debt is money we owe to ourselves.

Schools... I think they should spend more time teaching economics (I know I enjoyed it in my senior year of high school). Too many people are ignorant when it comes to money.

One rule when using a credit card to purchase something: NEVER charge an amount you don't already have in the bank. It's a simply concept - and people know it but they just ignore it and think "oh, I'll get paid later so I can afford to charge this now."
evilryu530
it's the american way, we are fat bloted pigs...we cant stop spending...it's tryin gto keep up with the jones.....never ending cycle....we are screwed....
friuser
have any of you actually did a history on the credit cards? Supposely back in the day it's just unheard of to give someone credit with a card and it was reserved for the filthy rich. It's kinda sad now that even those that are classified as poor have them and those in the middle class have 0 savings and several thousands of dollars in debt.

Isn't it a strange world that we live in?
silverdown
My Credit Card monthly bill is $159.65 out of 500.00 limit to pay
back! I told my friends not to drag me to Best Buy! Laughing Laughing Well ill pay it or cancel credit card till i fully pay it off.
James007
And for people with bad habits we have some tips.

And always start by paying off your biggest dept!
ktak1
I think people (most people) were never properly taught to live within their means. If you don't earn a lot of money, you simply cannot spend a lot of money. The basic concept people are not able to grasp is the fact that credit cards are borrowed money. I think it's so funny when a person gets a new credit card (let's say a $10,000 card) and that person thinks that that $10,000 is free money for him or her to spend. They rush out and buy things that they've ALWAYS WANTED... but certainly don't need. I mean I see people who probably only earn 2-3K a month, but rush out to buy that new plasma big screen tv cuz they got a new credit card. It just doesn't make sense. People who never learn to manage their money are the ones who keep our economy afloat and unfortunately, never get out of the hole that they dig.

Poverty and debt is a mind set. Learn to live within your means, cut out unnecessary expenses you cannot afford, and stop using your credit card. =)
greatfire
i personally dont use a credit card. i have a visa debit to do all my transactions that need a credit card,
Alaskacameradude
That's why I don't believe in debt. If you can't afford to buy it, you don't get it until you have saved up the money that you can pay cash for it. I know it's almost 'un american' but that's how I handle my finances. If I want something expensive (like a car) I work and save my money to buy it.....I DON'T finance it and get hit with stupid interest and fees that just make it MORE expensive.
scrub
b|ade wrote:
I think Americans are becoming very foolish in their spending and money usage. The total debt in the country is over 8 trillion dollars. That is just mind-blowing. How do we rack up this debt? Are we so stupid that we consider instant gratification over our well-being? Do we realize the consequences before or after our actions? I think we could reduce our debt drastically if people used common sense. It seems now days that everyone has collection agency letters and credit card bills. Is it that hard to pay off? People need to learn that if you use money, you better darned well be able to pay for it. :x


In order: Yes, Yes, Yes, Very Easily, Yes, No and No, Yes, Yes, Yes, and Yes. Does that help? :)

One interesting thing to note is that we exist in a debt-based economy. If everyone paid off all the money they owed, banks would collapse and the system would break down because then there wouldn't be any way to circulate money again (until someone took out a new loan!) And not only that, but our economy requires constant growth to function. All the debt (loans) require repayment with interest. That extra money for interest can only be created if the economy grows each year...otherwise people will default on their repayments and you get back to the system starting to break down.

Of course, on a finite world the economy can't grow indefinitely, so at some point all this *will* break down. It looks like the coming peak in energy available (peak oil) might be the trigger to end our growth. Who knows what the system will look like once we physically *can't* grow our economy any more? But one way or another it's unlikely to be pretty, or to work out well for those who aren't in power.

Scrub
roxys_art
People in this country either do not know how to manage money or just don't care. It is mind blowing how many credit cards some people carry. This obviously leads to trouble because even if they do not have the proper funds to pay for what they want, they can always just swipe some plastic and pay for it later (maybe). This is a dangerous way of thinking, and explains the huge debt.
Dimaod
Actually, in reality, overspending is not such a big deal.

Credit is the greatest system, that allows one to have SIGNIFICANTLY more in life NOW, not when you are 60.

Overspent, ... the hell with it, there is another great thing for such occasion: bankruptcy.

You can't pay bills anymore, file the B up and off you go.., you are debt free man again.
Ironically, once you write off the debts, you go, and do it, all over again and don't think creditors will not give you new credits, they LOVE right-after-bankruptcy people. Why? because they know, you can't file another B for at least 6 next years. So if you've got a job, creditors WILL take their earnings and you WILL get back to luxury life...

... Just kidding.., am I?
Jerome_vZ
I was told there was no way you can file bankruptcy anymore... Well you can but it doesnt pay off your debt. Who ever you file your bankruptcy with, They charge you a smaller fee then what you are paying. You have to pay it off but in smaller lump sums every month. Until the final bill is paid off. This will wreck your credit as well for those who dont know that lol, shame on you who dont know these things.

Well thats just what I Herd. Im not sure if its true or not, But my parents said they were just in time before they passed a lay or bill stating you must pay back everything just get a very small bill every month until its payed off

- Jerome
Afaceinthematrix
Yeah that is pretty bad. I'm extremely cheap, the cheapest person I know. So I'd only use credit cards for things that I have to get anyways, like food.
LumberJack
I just think it is an education problem. I don't think government has been in a rush to fix it either. I don't think people realize how much of a limit they can actually afford, and then when they reach the limit, all the fees that are charged to keep you there Sad

It is really nasty business.
LumberJack
That, and they don't know how to calculate interest rates properly.
Molle
I can only use the money that I've got on my credit card. Nothing more... So I haven't got a credit card debt.
metronome
ah, credit card debt almost ruin my life. at first you think it is easy to pay them up, but hell, the bank has a lot of ways to obstruct you from paying it. eg. (this happened to me): I paid 100 USD to my credit card, that money will not go inside to credit card directly, the bank will wait until you take out some money from the credit card, charge some interest fee, and then there my 100 USD after, not before the interest. it is really bad.
cybernytrix
Check this website out: http://mwhodges.home.att.net/nat-debt/debt-nat.htm which plots the US debt over the past 30 years or so.
Very interesting...
There was also a correlation on the GDP, republican/democrat govt somewhere. Any one have a link to that?
scrub
KatanaSky wrote:

One rule when using a credit card to purchase something: NEVER charge an amount you don't already have in the bank. It's a simply concept - and people know it but they just ignore it and think "oh, I'll get paid later so I can afford to charge this now."


I've always used my credit cards in this way...I only use them if I know I can pay the full balance when I get the next bill. That way I never have to pay the credit card company any interest or fees. And with a lot of the cards the credit card company gives you cash back or other incentives! So if you play their game in a smart way, you can use credit cards well. It does all come down to mindset and how you see and use those cards!

Scrub
whitehole
In 2006, we in America had a negative savings effect produced. It is pretty bad and people are living beyond there means. It's great for the numbers of the economy when people are spending, spending, spending. I mean walmart loves that anyways. It's ultimately unsustainable and people are being affected in a negative way.

It's kinda sad that people go to such great lengths to drive cars and wear things to impress persons they don't even know. Live below your means and try and save is a much smarter way of life.

I kind of agree with lumberjack in that it is partially an eduction problem. I really think economics at least some of the basics needs to be taught better in middle and high school. If people were aware about compound interest and other things I doubt they would be over spending.

Gl.
edzofcit
I think even if this debt is way too high, the government can handle this issue. USA is a very rich country and is one of the powerful countries in the worl because of its richness. It can't be easily put down in matters of credit card debt.
GSIS
The answer is really very simple.

1 - Arrange a transfer to a card that will give you an interest-free balance transfer.

2 - Cut up the credit cards. All of them.

3 - Tell your bank to withdraw any overdraft facilities you might have.

4 - Pay off as much as you can and certainly more than the minimum payment.

5 - Close the accounts as soon as they're paid off.

6 - Live within your means. If that means living in a cardboard box somewhere then so be it!

I guarantee you'll be happier and - in real terms - wealthier than if you were paying all of that interest to the credit card companies and banks.
roxys_art
***When you start paying for daily NEEDS (not wants) with a credit card that you are not able to pay off before interest kicks in, I think it's time you stop and reevaluate your budget***
poly
You are definitely right, but pretty much all countries/governments live on debts, mostly they owe their own people.. and a trillion dollars sounds like a whole lot, but the main problem here are the gigantic tax cuts by the bush administration and the Iraq war. But in your person finances you should be really careful with deb, as, especially with credit cards, there are huge interest rates.
sopetite
Its because with credit cards, you don't know how much you've spent already
4x4all
Well I really learnt something with these credit cards. I used to have 9 cards (from 5 different banks) with total credit limit of MYR100k (One Hundred Thousand Malaysian Ringgit). Thing went well when we have a good job with nice monthly income. As an ordinary human, we never knew that one day in our life, we will be facing difficult moment. In my case, I lost my job and looking for new job in 2 years. We can imagine how difficult to pay our outstanding debts without any secured income. 3 out 5 banks had filed bankruptcy notices against me. I've to wait for 2 more years to clear all the debts. Now I'm a debt free man and I'm not there to apply for credit card anymore? Thank god and my sincere appreciation to my beloved wife for her understanding...
ptfrances
Here in France few people have got this kind of debt card.
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