Credit Card "Deadbeats" Beware

[glock35ipsc]

His statement was "There are many reasons why you need credit...mortgage, small business loan, etc.", which I take to mean needing a FICO score or past credit history to get a mortgage or and SBA loan.

Past credit history nor a FICO score was needed for her to obtain a mortgage, as the new mortgage is the only debt she has on record. She pays cash for "things", paid cash for school, paid cash for her pickup, has no credit cards, etc.

[parafly]

Originally Posted by swanson719

The point is that we have a very real need for personal responsibility in this country.

That was exactly my point. I agree that credit cards use predatory practices to maximize profits, but that doesn't make the victims faultless.

[parafly]

Originally Posted by glock35ipsc

His statement was "There are many reasons why you need credit...mortgage, small business loan, etc.", which I take to mean needing a FICO score or past credit history to get a mortgage or and SBA loan.

Past credit history nor a FICO score was needed for her to obtain a mortgage, as the new mortgage is the only debt she has on record. She pays cash for "things", paid cash for school, paid cash for her pickup, has no credit cards, etc.

This may be the case for your sister, but she would be in a very small minority. In order to obtain a mortgage with no credit history, you would most likely need a very substantial down payment and optimal employment history. I am sure that having no credit history limited her loan options and lenders.

What are some of the details of this 15 year mortgage? I highly doubt she received an optimal interest rate, which could make a difference of tens of thousands of dollars over the life of the loan.

A credit history is not "necessary" per se, but it can be a very beneficial tool and save you very significant amounts of money.

[parafly]

Originally Posted by glock35ipsc

Smart, well run business can be successful without loans. I am lucky to work for a growing company that has never used debt to grow the business, and has been debt free since day one.

Very few small businesses can start up without getting a loan. That's just a fact, and pointing out the exception doesn't make it the rule.

Having a good credit history is beneficial in many ways. I'm not really sure how you can argue otherwise.

[Inkstain82]

Originally Posted by parafly

That was exactly my point. I agree that credit cards use predatory practices to maximize profits, but that doesn't make the victims faultless.

But it's sort of irrelevant to the larger issue.

As a society, we can't force people to be rational. It's simply not human nature.

But we can regulate business practices.

[wnlbutterfly]

Teaching finance in school. Actually my daughter took a WONDERFUL class in high school and made a HUGE impact on her. It was an elective though, and really should be mandatory.

The problem is many parents can't handle their own finances, so it would be the blind leading the blind. This really should be something that could and should be taught at school as well as at home. An ongoing lesson for our children.

[watsoninc]

Originally Posted by disneysteve

This is VERY different than what happens with a credit card. If there is a fraudulent charge on my credit card, I am never out a penny, even for a moment. There is nothing that needs to be returned.

If, however, there is fraudulent activity on a debit card, that money is gone from your account until they investigate and eventually refund it to you. In the meantime, you don't have those funds, which could cause other payments to bounce and result in a slew of late charges and other issues that you need to spend time cleaning up once you get the money back.

I never said that fraudulent charges were never taken out of your account. Just as if your credit card account was fraudulently charged, your account will initially reflect the bad charges. If you have check card fraud, your bank account would get drafted. However, my point is that you are afforded the same protection: zero liability for fradulent charges. For me that's enough.

Additionally, this is why I also carry ID theft insurance (they will spend the time cleaning up the bad charges) and overdraft protection (no late fees). The money will be returned and fees reversed in the event of theft.

Additionally, according to a report by Dunn and Bradstreet, people generally spend 12-18% more on purchases when they used credit vs. using cash/check card. There is a phenomenon called the "pain of paying cash." Thus, one generally spends less if it comes directly out of their account. This is why I choose to use my check card.

It's a preference mostly. I definitely choose the inconvenience of having my ID theft protection service clean up the mess (if fraudulent charges are made) than paying a credit card bill each month, especially if that means that statistically I'm likely to spend more. Everyone's different though.

[am_vanquish]

So if my credit card company starts charging me interest compounded continuously from the time of my purchase, is there any federal regulation that will require my company to pay my bill as often as I want? I don't mind paying my CC bill every night if needed to lessen the impact of eliminating the grace period (in fact, maybe the transaction costs will make them think twice about eliminating the grace period). However, my Citi card currently allows for only 4 online payments per month. Seems pretty unfair to me.

I'm also trying to figure out if I would want to keep my CC's if they start charging me fees, eliminate my rewards, and/or eliminate the grace period. If I have to pay a fee and have no chance at getting enough rewards to pay for the fee and the new interest they're going to charge me, then I don't want the card. However, this will negatively impact my credit score because it will shorten my average account history length. Would it be worth an annual fee of $75 a year just to keep the account for another year or 2 to help my credit score?