topic Re: Anyone who carries a balance on a credit card is financially illiterate in Credit Cards

Anyone who carries a balance on a credit card is financially illiterate

Anonymous — Fri, 16 Jan 2015 06:10:21 GMT

I know that the thread headline may sound disrespectful, and I apologize for any offense, but I think a blunt, tough message on that one is appropriate. I have been browsing these forums and I have been stunned to see people talking like this as if it is anything other than truly dire circumstances.

Running a balance on a credit card is digging yourself into a hole. The interest rates are ludicrous.

Anyone who has a balance on their credit card, regardless of how low, should be figuring out how to get rid of that balance this month -- ideally by paying it down, if not, by taking out a loan at a better rate, or remortgaging. Once paid off you should never, ever carry a balance again.

Do people just not know this?

I pay off my credit card balance in full every month. I use the cards because they are a convenient way to pay, and I like earning the rewards points and such, but I would do anything possible to avoid carrying a balance.

Re: Anyone who carries a balance on a credit card is financially illiterate

Anonymous — Fri, 16 Jan 2015 06:13:35 GMT

@Anonymous wrote:

I know that the thread headline may sound disrespectful, and I apologize for any offense, but I think a blunt, tough message on that one is appropriate. I have been browsing these forums and I have been stunned to see people talking like this as if it is anything other than truly dire circumstances.

Running a balance on a credit card is digging yourself into a hole. The interest rates are ludicrous.

Anyone who has a balance on their credit card, regardless of how low, should be figuring out how to get rid of that balance this month -- ideally by paying it down, if not, by taking out a loan at a better rate, or remortgaging. Once paid off you should never, ever carry a balance again.

Do people just not know this?

I pay off my credit card balance in full every month. I use the cards because they are a convenient way to pay, and I like earning the rewards points and such, but I would do anything possible to avoid carrying a balance.

What about balance transfers?

Re: Anyone who carries a balance on a credit card is financially illiterate

Anonymous — Fri, 16 Jan 2015 06:19:52 GMT

Balance transfers are a desperate strategy to deal with a debt you should never have had in the first place.

Credit card debt of any kind is bad debt. You didn't get a valuable asset in exchange (like a house or a car). You just over-spent and got debt. Now sometimes people get into really dire circumstances and do what they have to do just to survive -- but 99.9% of people carrying these balances are not in dire circumstances, they have just decided to live that way.

Anyone who tells these folks that what they are doing is anything short of reckless is doing them a disservice.

Re: Anyone who carries a balance on a credit card is financially illiterate

Anonymous — Fri, 16 Jan 2015 06:19:58 GMT

@Anonymous wrote:

Balance transfers are a desperate strategy to deal with a debt you should never have had in the first place.

Credit card debt of any kind is bad debt. You didn't get a valuable asset in exchange (like a house or a car). You just over-spent and got debt. Now sometimes people get into really dire circumstnaces and do what they have to do just to survive -- but 99.9% of people carrying these balances are not in dire circumstnaces, they have just decided to live that way.

Anyone who tells these folks that what they are doing is anything short of reckless is doing them a disservice.

Honestly. 90% of what I have riding on a BT offer right now is from the emergency purchase of an HVAC unit for my rental.

Could I afford to pay it off tomorrow? You can bet dollars to donuts I could. But why waste a good 0% BT offer and deplete part of our cushion?

Re: Anyone who carries a balance on a credit card is financially illiterate

core — Fri, 16 Jan 2015 06:21:31 GMT

Anyone who tells these folks that what they are doing is anything short of reckless is doing them a disservice.

Preach on, brother!

Keep in mind many members wouldn't be here if they weren't in trouble at some point in the past, though.

Re: Anyone who carries a balance on a credit card is financially illiterate

lhcole77 — Fri, 16 Jan 2015 06:22:30 GMT

Very broad, sweeping generalizations in this post, OP.

What precipitated you starting this thread?

Re: Anyone who carries a balance on a credit card is financially illiterate

Anonymous — Fri, 16 Jan 2015 06:24:42 GMT

Oooh...this one's gonna be good....

Re: Anyone who carries a balance on a credit card is financially illiterate

Anonymous — Fri, 16 Jan 2015 06:24:49 GMT

While your general message is correct, it's difficult to pigeon hole everyone into some category without considering that there might be unexpected reasons once in awhile for someone to have to carry a balance. Emergencies do arise and while it's nice to think that everyone has a large enough egg nest to cover those emergencies, it doesn't always happen that way.

Also, joining a message board and have one of your first posts be to call other members 'illiterate' isn't going to make you any friends.

Re: Anyone who carries a balance on a credit card is financially illiterate

Anonymous — Fri, 16 Jan 2015 06:28:05 GMT

@Anonymous wrote:
Emergencies do arise and while it's nice to think that everyone has a large enough egg nest to cover those emergencies, it doesn't always happen that way.

Heck, most people that I know that aren't in the six figure household club, and even then, more than enough of them that are tend to use their CC's as an extension of their salary!

Re: Anyone who carries a balance on a credit card is financially illiterate

Anonymous — Fri, 16 Jan 2015 06:28:18 GMT

And I'll add that if you happen to have credit card that has 0% APR, it can make sense financially to carry a balance so it's better not to generalize in such a broad manner.

Re: Anyone who carries a balance on a credit card is financially illiterate

Anonymous — Fri, 16 Jan 2015 06:28:26 GMT

I joined the forum looking for advice on another topic and was just stunned at what I read here, so I felt I had to speak up.

It is a very broad, sweeping, and true generalization: Carrying credit card debt is destructive. Anyone who tells you different is not helping you. You are going to wind up paying a significant chunk of your paycheck to credit card interest -- a chunk of your paycheck that should be going into an IRA, paying down a mortgage, or topping up an emergency cash fund.

How are you going to save for your retirement carrying a balance on your credit card? Your retirement savings will be earning what, 4% to 8% returns? Meanwhile your credit card is running what, 10% on a very good card? More likely 20%? It's ridiculous.

Carrying credit card debt is just WRONG.

Re: Anyone who carries a balance on a credit card is financially illiterate

Anonymous — Fri, 16 Jan 2015 06:31:33 GMT

@Anonymous wrote:
I joined the forum looking for advice on another topic and was just stunned at what I read here, so I felt I had to speak up.

It is a very broad, sweeping, and true generalization: Carrying credit card debt is destructive. Anyone who tells you different is not helping you. You are going to wind up paying a significant chunk of your paycheck to credit card interest -- a chunk of your paycheck that should be going into an IRA, paying down a mortgage, or topping up an emergency cash fund.

How are you going to save for your retirement carrying a balance on your credit card? Your retirement savings will be earning what, 4% to 8% returns? Meanwhile your credit card is running what, 10% on a very good card? More likely 20%? It's ridiculous.

Carrying credit card debt is just WRONG.

Well if you had made this post instead of calling people illiterate I would have agreed with you but you didn't and there are times it is financially smart to carry a balance (0% APR)

Re: Anyone who carries a balance on a credit card is financially illiterate

Anonymous — Fri, 16 Jan 2015 06:36:20 GMT

0% APR is a trap. Did you read the fine print? If you have any charge go through on that card then the debt will be structured so the interest bearing portion of the debt gets paid LAST. And that will run at some enormous interest rate. You may be able to carefully manage it by putting that card in a drawer, but it's a financial landmine. The 0% deal will also expire at some point, and you will either have to kite the balance to another card or start paying the credit card interest.

If because of dire circumstances (or plain bad judgement) you HAVE a huge balance, then sure, look around for the lowest rate you can get -- preferably 0 -- while you work really hard to pay it off.

My point in starting this thread is that if you read this forum you can come away with the impression that carrying credit card debt, in any form, is OK. It's not OK.

Re: Anyone who carries a balance on a credit card is financially illiterate

Anonymous — Fri, 16 Jan 2015 06:36:43 GMT

@Anonymous wrote:
I joined the forum looking for advice on another topic and was just stunned at what I read here, so I felt I had to speak up.

It is a very broad, sweeping, and true generalization: Carrying credit card debt is destructive. Anyone who tells you different is not helping you. You are going to wind up paying a significant chunk of your paycheck to credit card interest -- a chunk of your paycheck that should be going into an IRA, paying down a mortgage, or topping up an emergency cash fund.

How are you going to save for your retirement carrying a balance on your credit card? Your retirement savings will be earning what, 4% to 8% returns? Meanwhile your credit card is running what, 10% on a very good card? More likely 20%? It's ridiculous.

Carrying credit card debt is just WRONG.

1. Only if you're paying interest. Believe me, I paid more than my fair share before actually learning my lesson.

2. Agreed, 5% of my day job's salary goes straight to my 401K (Work matches up to 5%), Wife's only matches up to 3%, so we fill in the other 7% with hers.

3. I bought my rental, and our home outright. No mortgage here. Emergency fund is set up, and growing.

4. I wish! My last 401K status update indicated a 0.4% return for the quarter, the wife's wasn't much better!

5. 14.24% is currently my best out of promo APR. I currently have 3 cards of my own with 0% promos, as does the wife. I think we're fine.

Re: Anyone who carries a balance on a credit card is financially illiterate

chalupaman — Fri, 16 Jan 2015 06:37:49 GMT

Something feels off here but I can't put my finger on it.

Re: Anyone who carries a balance on a credit card is financially illiterate

Imperfectfuture — Fri, 16 Jan 2015 06:41:10 GMT

Unless it's 0%. Um, where are you losing this part of the conversation? I like to apply for staggering 0% offer cards, then can float a month of expenses, or an emergency, and sock that money into investments, high interest savings. Yes, I do have the money to pay it off, but it WILL be payed off by the time the 0% is done. Oh the joy of good credit.

The rest of my cards either get paid before the statement cuts, or shortly thereafter. Since May 2013 (my first rebuild card) I have NOT PAID ONE EVEN TINY IOTA OF INTEREST. Cogitate on that.

Re: Anyone who carries a balance on a credit card is financially illiterate

mongstradamus — Fri, 16 Jan 2015 06:40:23 GMT

@Anonymous wrote:
@Anonymous wrote:
I joined the forum looking for advice on another topic and was just stunned at what I read here, so I felt I had to speak up.

It is a very broad, sweeping, and true generalization: Carrying credit card debt is destructive. Anyone who tells you different is not helping you. You are going to wind up paying a significant chunk of your paycheck to credit card interest -- a chunk of your paycheck that should be going into an IRA, paying down a mortgage, or topping up an emergency cash fund.

How are you going to save for your retirement carrying a balance on your credit card? Your retirement savings will be earning what, 4% to 8% returns? Meanwhile your credit card is running what, 10% on a very good card? More likely 20%? It's ridiculous.

Carrying credit card debt is just WRONG.
1. Only if you're paying interest. Believe me, I paid more than my fair share before actually learning my lesson.
2. Agreed, 5% of my day job's salary goes straight to my 401K (Work matches up to 5%), Wife's only matches up to 3%, so we fill in the other 7% with hers.
3. I bought my rental, and our home outright. No mortgage here. Emergency fund is set up, and growing.
4. I wish! My last 401K status update indicated a 0.4% return for the quarter, the wife's wasn't much better!
5. 14.24% is currently my best out of promo APR. I currently have 3 cards of my own with 0% promos, as does the wife. I think we're fine.

where is your ira !!! :-)

Re: Anyone who carries a balance on a credit card is financially illiterate

core — Fri, 16 Jan 2015 06:40:47 GMT

@lhcole77 wrote:
What precipitated you starting this thread?

I think hour 3 of the Dave Ramsey show just ended out there on the west coast.

Re: Anyone who carries a balance on a credit card is financially illiterate

Anonymous — Fri, 16 Jan 2015 06:43:20 GMT

I'm going to say one last thing and then off to bed. First, welcome to the U.S. and I wish you well in your quest to buy a house. I'm not sure how old you are or your overall situation but there are times in people's lives when they may face a truly dire circumstance like going thru a horrible divorce, losing their job thru no fault of their own or God forbid have a child have a serious health issue that may lead to a temporary need to carry a credit card balance to be able to cover life necessities. Yes if you are carrying credit card balance on high interest CCs as a general practice you are doing yourself great harm but I'll be damned if I'm going to tell someone that has to use a credit card to feed their children because they lost their job and has to carry a balance for a short term, illiterate.

Re: Anyone who carries a balance on a credit card is financially illiterate

Imperfectfuture — Fri, 16 Jan 2015 06:41:55 GMT

@core wrote:
@lhcole77 wrote:
What precipitated you starting this thread?
I think hour 3 of the Dave Ramsey show just ended out there on the west coast.

LOL, I missed it, dang.