Posted on 08/11/2007 6:39:42 AM PDT by Hydroshock
WASHINGTON — A "dangerous cycle of debt" is trapping too many credit-card holders, making it increasingly difficult to protect their financial security, according to a report.
About one-third of cardholders pay interest rates in excess of 20 percent, according to a report from New York-based think tank Demos. Also, borrowers with one slip-up can incur a "cascade" of penalties and end up in a "trap" of high-cost debt, the report said.
"The excuse of risk-based pricing is used to justify everything. These prices go far beyond pricing for risk. Some of these interest rates and payment fees seem to not accurately reflect the risk," said Tamara Draut, a co-author of the report.
Draut criticized practices such as card issuers retroactively applying rate increases. The authors also noted that companies can change terms at will, and that there are no legal bounds to the amount of fees and interest that borrowers can be charged.
"As a result, cardholders often borrow money under one set of conditions and end up paying it back under a different set of conditions," according to the authors.
(Excerpt) Read more at foxnews.com ...
You and AndyJackson have a true grasp of the topic. Too many here are sounding like alcoholics, condemning the demon booze when the true weakness is within their own character.
It all comes down to personal responsibility. Successful management of your personal finances, like every aspect of your life, can be conducted planned & responsibly, or haphazard and recklessly.
I like it when my money works for me, not the other way around!
Maybe we could get a law passed which would dismiss all debts when they reach a certain limit. That would be the compasionate thing to do and it would satisfy some, I'm sure.
> If I wanted to max them all out I could ring up well in excess of $120,000. That’s insane.<
I imagine your assets are well above that puny figure.
I never carry a balance, so I don’t pay interest, but I’ve always assumed if you had money in the bank earning less than your rate of borrowing, you’d use it to pay off debt.
We felt that way about our mortgage, we used extra cash to pay it off (this was back in the day when interest rates were 8 percent.) Folks said, well if you pay it off you can’t take your interest then as a deduction on your taxes...so what...for every dollar I pay in interest to take as a deduction on my taxes, I only save a little more than a quarter in taxes.
If you prove you did not make the purchases you are covered the same. Of course a banker would tell you to use a credit card especially one from thier bank.
I know I’m not gonna win this argument with anyone that thinks credit cards are the only way to survive but I know better. sigh........
I think you're right. I actually favor the Democrats on this issue.
One time he did get a little edgy and told me he’s probably going to have to care for her as she gets older. He wants me to move out of state with him so we can find some adjoining property. Maybe enough room for a runway because I always wanted an ultralight aircraft although renting one a couple of times a year would be as much fun.
Duh.
How can you have borrowing without lenders, though?
Look at mutual funds with a ten year track record and invest in those. yes there is risk but not as much as depending on credit cards for every thing especially income.
Skip the double payment on the car loan and put the second payment in the bank. Car loans are usually structured in a way that assures there’s almost no interest savings in paying them off early. So, if you’re going to pay the interest anyway, you might as well have some pad and some interest income while you’re at it.
Credit card companies routinely offer credit to college kids, counting on them getting in trouble and getting a bail out from their parents. That’s been going on for years.
Now, Bank of America is offering visa cards to illegal aliens, and mortgages, too, all without any credit or background check. There’s no one to bail out the illegals. With the problems that we are seeing with the high risk mortgages, what do you think will happen with high risk credit being extended to illegals?
I would go there about twice a month and noticed his daughter who worked there getting out of a new Ford mustang. It was her high school graduation present, I commented on it and he told me he loved the look on the salesman's face when he decided on the car and went to his SUV and got a briefcase of $100 bills to pay for it.
My son ran into a situation that we'd all like to avoid, he used all his savings, sold everything he could and then charged all his credit cards to the hilt. He ended up with a large debt but since he had such good credit he was able to find a deal where he could transfer almost all the debt to a new card with 2.9% for the life of the debt.
It has all kinds of conditions, like if you charge anything else to the card the interest rate will change or if you are late,it changes, he just destroyed the credit card and pays the bill early.
I also know a lot of people who have used them wrong but that doesn't make the credit card bad.
Money itself is just a tool and so are credit cards if you use them correctly, they can be a very valuable tool.
Not quite. I am condemning the tyrant who runs the local zoning board who shut down the movie theater and grocery store and replaced it with a liquor store that sells peanuts and potato chips, and then is surprised that the local population is fat and drunk. That the population eats peanuts and drinks beer cannot be condemned as an irrational choice on their part. It is an irrational choice on the part of the zoning czar, unless, perhaps he is corrupt and owns a share in or takes payoffs from the liquor store.
You commented about Jews lending money. The thread was about incurring debt. I was always told that Jews were taught not to BORROW. I hope you now see my point.
(Disclaimer: I have nothing against Jews or their financial success)
These days, car dealers make so much money selling loans they would probably cancel the deal if you whipped out the cash on them.
No, why would I? Extolling the virtues of trying to live debt free and below your means does not mean I hate anyone. It does mean I love keeping my money where I think it belongs, my accounts.
Under TX law I do not think they can.
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