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

[Anonymous]

When I retire, I'll be converting my 401k to Roth IRA and MSing 9 to 5. I would love to MS.

[kdm31091]

While your overall point is correct, it's also kind of rude and condescending.

Most people (not all - some are just spend happy) carry balances out of neccesity. Because something came up and they had to. **bleep** happens. Emergencies. Some people don't have large savings funds. Some people work low paying jobs, or lose their jobs entirely and don't work at all right now. Some people can't afford to pay off a massive unexpected bill right away. Hence, they use a credit card. You may make a large income and not understand, but for the average person, sometimes it happens! And it doesn't make you a bad person. You can't always be ideal 100% PIF maximize FICO blah blah blah --> Life happens..

It is financially illiterate to carry a balance intentionally, and for long periods of time, but it doesn't mean everyone who has ever done it is an idiot. Way too general of assumption. Sorry we aren't all good enough for you

[jsucool76]

Those poor banks do so much for us, and you're telling me I shouldn't give them a measley few percent in return?


:-P

[chalupaman]

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@ArmyVietVet wrote:

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@Anonymous wrote:

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.  

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The concept of not paying interest is one that I clearly understand. However, virtually everyone will have "life happens" situations that Irish80 described and many others. People with their best intentions and emergency funds can't quite stretch far enough to cover them. If it hasn't happened yet to most people it will. May be extended family. Someone on here posted they stepped in to help out other family members financially while they try to get back on their feet after a major loss and used some of their own emergency funds to do it. In a perfect world ...  which it isn't. Telling people they are "financially illiterate" is not the best marketing tool for your idea or concept (remember that sometimes it isn't "what you say but, how you say it"). As a news reporter sometimes I have to stuff my honest view and put a little sweet on it to get people to read it.

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Completely agreed. Still trying to get a Balance Transfer card especially soon even though debt to credit ratio has been pretty low compared to my entire CL. A lot of the stuff I have now is on the 0 interest cards.

[Anonymous]

Everything I have a balance on interest is deferred until next year. Oh, except my Wal-Mart card which I owe 15 cents and my Apple card I owe $1.

[Anonymous]

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@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.

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If you have a 0% APR and you don't use it, you're financially irresponsible. Time value of money is a basic economic concept. Heck, if you have under 5%, I wouldn't pay it off until I had to. Of course, this relies on being able to pay it off any time I need to. 

The point is, putting everybody into the same boat is foolish. 

[longtimelurker]

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@Anonymous wrote:

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If you have a 0% APR and you don't use it, you're financially irresponsible. Time value of money is a basic economic concept. Heck, if you have under 5%, I wouldn't pay it off until I had to. Of course, this relies on being able to pay it off any time I need to. 

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5%?   Only if you a relatively safe vehicle making more than 5% after tax

[mikelo22]

Yes, carrying interest is dangerous and unless it's on a 0% interest it should be avoided at all cost. That said, my Discover is 0% at the moment, so I have $1.5k just sitting in it. I could pay it off right now if I want to, but instead I'm keeping that money in a savings account with a ~2% APY. When the 0% ends next fall, I'll pay it all off.

Managing your credit is rarely about absolutes. If anything, this site is to teach people to simply be more attentive and aware. If you learn these valuable tools, then you can successfully take advantage of 0% offers and have the mindset to pay it off before the offer expires. 

If we used your same logic, it would have been silly of me to get the Chase Sapphire Preferred since eventually the AF will hit and I won't be making enough return to justify keeping it. Nevermind that I just used the Promo offer of 40K bonus points to pay for almost my entire vacation this summer. Keeping the CSP, for me at least, is a silly move. But using the promo offer and then getting rid of it before the AF hits is of huge benefit to me. 

One of the main benefits of having good credit is being able to take advantage of all these great offers CCC's will offer you (like sign-up bonuses, 0% intro APR, etc). The only actual silly thing would be to not take advantage of these great benefits that the CCC's are handing out to you on a silver platter. But as this site is here to educate all of us, just be mindful and aware of the eventual drawbacks once the promo expires. 

If you're afraid to keep a balance on a 0% interest card simply because it's a trap!, then maybe you shouldn't be dealing with credit cards period, because there's always going to be some risk of potentially having to pay interest if you accidentally fall behind in payment, etc.

If you're that paranoid, then by all means go back to using a debit card. No risk there, right? Oh wait, yes there is. Because if it gets stolen, the money will be drawn directly from your checking. Whereas CC's offer a buffer where the CCC takes the hit and not you.

Point is? There is always going to be risk in the world of commerce. 

[elim]

Preaching to the wrong crowd here i think. Most people i read here are to busy beating up the CCC's with huge sign-up bonuses, waived annual fees, rotating cards for normal spend to get the best cash back and of course, pay in full.

i have never paid interest and i hope i never will.

as we speak, i'm plotting a spree and a way to pay the amount of a car loan (that i don't even have yet) that isn't cash on 0% BT checks to try to hit the lender even harder by paying $0 in interest on my next car.

i'm actually with the OP on this... "If you pay CC interest without an emergency... you're pretty much a financial trout. Just save for another month, run it through a cash back card and buy the item(s) outright by paying your statement in full"

[longtimelurker]

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@elim wrote:

Preaching to the wrong crowd here i think. Most people i read here are to busy beating up the CCC's with huge sign-up bonuses, waived annual fees, rotating cards for normal spend to get the best cash back and of course, pay in full.

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I think the crowd here is more diverse.    While there are a set of people going for rewards, there are also questions every week about "How do I pay down this debt", so at least some are carrying quite a lot of debt.  Of course, those asking how to pay it down know there is a problem!