Those that carry CC balances: Why?

[sarge12]

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@Creditplz wrote:
I often carry small balances just for the sake of carrying a balance on one card, that I could pay at any given time.

But I have some friends who make more money then me by a long shot and carry balances, most of them just tell me they like keeping their finances flexible and don't mind paying a few hundred dollars or even a thousand dollars a year in interest.

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Bankers love your friends, it is your friends money and I defend their right to waste as much of it as they wish.

[galahad15]

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@redpat wrote:

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@galahad15 wrote:

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@redpat wrote:

Because someone needs too or wants to overspend for a lifestyle that can't afford to have.

That was easy........

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To be fair though, it's not always about overspending or living above one's means.  I have the means to pay off virtually all of my carried balances using my accumulated savings, I just prefer to use the benefit credit cards offer of being allowed to revolve a balance at super-low interest rates and pay it off over time or in phases, should I choose to do so.

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What do you consider low interest other than 0-1% unless all of your savings are in the market for dividends and capital appreciation regular saving after tax is less than the interest that you would be paying.  Looking at your sig I don't see any interest rates lower than a conventional saving rate even before tax.

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In the past, I have considered cards with interest rates within the single digits (i.e., less than 10%) as acceptable for carrying a balance.  I don't carry any balances on any cards at or above 10% unless they also have 0% promotions, as all cards at or above 10% without 0% promos are PIF.  I freely admit that I'm not an expert when it comes to financial matters, and so savings that are used to pay off debt are currently residing in conventional checking and savings accounts.  I am presently at an estimated 11% total util (and when updated balances report soon, less than 11%).  I have been paying off existing balances rapidly over the past several months, and hopefully anticipate to have 0% util and am aiming to have all carried balances paid off, sometime in early 2017.

[Anonymous]

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@Anonymous wrote:

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How is one to consider these things in advance when we don't know the future? I moved 1200 miles to take a new job so we were renting. Landlord decides to sell. Buy or move. I shelled out a lot of cash to get the deal done, but I again it's about the deal. The house appraised $65k more than I paid. There is a huge difference between debt used as a tool that you can afford and debt because you are living beyond your means.

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Evidently you didn't read my complete post.  I never suggested someone should or could plan for that type of expense or any of the others I listed.  I specifically said "I get it" when it comes to situational expenses, which is what you referenced.

What I was talking about was "splurge" expenses, that is ones that aren't necessary... and the only example I gave thus far in the thread is buying a TV for $1000.

[Anonymous]

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@sarge12 wrote:

Part of the problem people have with credit card debt is also caused by what they call unexpected expenses. The thing is, these expenses should not be called unexpected at all. They should be called unknown expenses. If you live long enough, every appliance in your kitchen will need to be replaced. The alternator, shocks, brakes, starters on a car will eventually go bad. Roofs will need to be repaced, and illnesses will happen. What these expenses often are is actually unknown, and unplanned for. If you are not putting a sizeable amount of money in savings for the unknown, but not unexpected expenses, you are setting yourself up for credit card debt. It may make someone feel better to be able to say...how was I suppose to know the refigerator was going to quit working...to explain why someone is too deep in debt. Truth is,so-called unexpected expenses are not only expected...they are an absolute certainty, they happen to us all. It is wise to plan for them...maybe 10% of your take home pay should be saved for these expenses. 

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Very solid post, and very true.

[Anonymous]

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@Creditplz wrote:
I often carry small balances just for the sake of carrying a balance on one card, that I could pay at any given time.

But I have some friends who make more money then me by a long shot and carry balances, most of them just tell me they like keeping their finances flexible and don't mind paying a few hundred dollars or even a thousand dollars a year in interest.

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That's all fine and well, but my question is why?  Are your friends willing to throw away a few thousand dollars in interest a year simply because their income makes them comfortable doing so? 

[Anonymous]

Have you ever watched Suze Orman's shows? The woman makes a living off of telling people, "if you can't afford it now, don't buy it now." Go figure. There are plenty of people even on this site (where the avg user is much more educated about credit than most) who say they "cannot trust themselves with credit cards." We live in a hypersaturated, advertisement-controlled capitalist society, people are duped into thinking they "need" something every day. No surprise that many end up with a bunch of credit card debt beyond their means. Then there's the baffling people who just don't care enough that they're paying a bunch of interest for no reason. Different strokes for different folks. -shrugs- But some strokes are obviously much better and logical

[sarge12]

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@Anonymous wrote:
Have you ever watched Suze Orman's shows? The woman makes a living off of telling people, "if you can't afford it now, don't buy it now." Go figure. There are plenty of people even on this site (where the avg user is much more educated about credit than most) who say they "cannot trust themselves with credit cards." We live in a hypersaturated, advertisement-controlled capitalist society, people are duped into thinking they "need" something every day. No surprise that many end up with a bunch of credit card debt beyond their means. Then there's the baffling people who just don't care enough that they're paying a bunch of interest for no reason. Different strokes for different folks. -shrugs- But some strokes are obviously much better and logical

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I have a concealed weapons permit, so when I leave home I am always very aware that the most dangerous articles in my pockets are a loaded gun, and unloaded credit cards. I respect the harm either can cause if used carelessly.

[Anonymous]

I get the unknown/unplanned expenses and even the splurge expenses on occasion that one may not have the money to pay off all in one shot... but there are literally people out there with say a $2k CC balance that spend $1k per month on the card and pay off $1k per month on the card but they just float that $2k.  Those are the people that I'd like to hear from most as it's simply not a rationale that I understand so I'd enjoy hearing their perspective on this practice.

[805orbust]

DW and I have never carried balances.  However, for me, when I was younger (48 now), it was a psychological thing.  Like you're using other peoples money.  Pushing it out on them... Stupid I know, however when I bought my first house at 30 I really took a look at what interest costs and I was done.  For life.  Car payment, house, nothing else will I pay interest on.  Except the occasional impulse purchase because... Earned it 

[Anonymous]

I'm about to carry a balance for the next 5 months or so.....new AC unit 😩

I could use savings and/or sell stock but since my BK, I get really nervous about dipping in my savings.