Why do you all sometimes have more credit than you could ever reasonably use?

[wa3more]

some types of student loans can be BK'd, pretty sure private loans can.

-fastest growing population filing BK is the under 25 crowd.

-average age of bk filier about 35. Seniors over 65 are a growing group for bk as well.

-in a recent survey, half the people could not come up with 400 in an emergency.

- the average person reaches 65 retirement age with less than 10k.

what happens to one of these young kids making 30-40k who have 10+ credit cards with 20, 30 or 50k outstanding then they lose their job ? It is outsourced or eliminated due to cost cutting. It is happening everyday and is a large reason the 25-34 age group have to move back home. That and the huge college loans and inability to get jobs they went to college for. My kids are 27 & 23 and I see how their friends are living. Many have spent huge amounts on college and are severely underemployed.

[Revelate]

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@wa3more wrote:

some types of student loans can be BK'd, pretty sure private loans can.

-fastest growing population filing BK is the under 25 crowd.

-average age of bk filier about 35. Seniors over 65 are a growing group for bk as well.

-in a recent survey, half the people could not come up with 400 in an emergency.

- the average person reaches 65 retirement age with less than 10k.

what happens to one of these young kids making 30-40k who have 10+ credit cards with 20, 30 or 50k outstanding then they lose their job ? It is outsourced or eliminated due to cost cutting. It is happening everyday and is a large reason the 25-34 age group have to move back home. That and the huge college loans and inability to get jobs they went to college for. My kids are 27 & 23 and I see how their friends are living. Many have spent huge amounts on college and are severely underemployed.

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What are you citing as sources here?  I severely doubt people are going to private student loans as their first choice, I certainly didn't when I was trying to finance my own education recently, so I'm not certain the fact which they can be discharged is meaningful statistically.

From a 2010 article I can find your assertion regarding 65 year olds but there's a massive caveat that needs to be included:

"Forty-three percent of those surveyed say they have less than ten thousand dollars saved for retirement, excluding the value of homes and pension plans."

http://caffertyfile.blogs.cnn.com/2010/03/09/cafferty-43-have-less-than-10000-saved-for-retirement/

The rest, I don't know; by a similar small anecdotal sample I can state I'm not seeing people living paycheck to paycheck generally (it's a small fraction that bounce checks to the soccer league I'm temporarily treasurer of, and this isn't a high income / wealth neighborhood either for Los Angeles).  The fact half of the payments come in cash is a little concerning regarding being underbanked but I'm not convinced that means they're in dire financial straights.

[Anonymous]

Revelate - just a point to consider on this thought "The fact half of the payments come in cash is a little concerning regarding being underbanked but I'm not convinced that means they're in dire financial straights."      I almost always give cash for thse types of payments - in this age of identity theft, I try not to hand over checks and credit card information in situations where the information may not be secured.  Perhaps that is the reason you receive cash and nothing to do with being underbanked.

[Anonymous]

In my case, I just hate writing checks - I have it down to 1 per month for rent...and if I could figure out a way to automate that one I would, lol

[Anonymous]

Curiously, the one young guy I know (alert N=1 sample!) does indeed feel himself at risk from having a high credit limit, no doubt based on the direct experience of his own difficulties controlling CC spending.  So he has deliberately limited himself to exactly one credit card with a CL of $300.  And his annual income is at least 150 times that.  He still has plenty of CL for all the oridinary expenses of life (groceries, eating out, getting his shirts cleaned, paying his cell phone bill, etc.) but also has a huge choke collar to prevent him from ever using his card in a way different from a debit card.

And I am sure there are folks just like him in every age bracket.

Likewise, I am sure there are people (of many ages) who are at zero risk of getting into trouble with their cards, including people with 60k salaries and 180k total CLs -- because they are temperamentally so intensely allergic to spending and to paying interest.  I am like that.  It's hard to get me to take a vacation somewhere because I am such a Scrooge about money.

So in both cases, whether it is someone like me or someone like my spendthrift friend, the issue is really one of temperament.  (And I hope I am not suggesting that there is a right or wrong personality style to have here.) The best thing to do (in my opinion) is to develop a clear awareness of who you are.  There's really no substitute for the Delphic injunction Know Thyself.  Once you do, you can figure out what risk a given CL poses to you. 

That's a lot better than trying to impose a CL based on some equation and your gross income.  If my friend tried to use some rule of "CL should equal gross income" (even half of it!) he'd be in terrible shape.  Likewise, if I did that I'd have to be scrambling all the time to lower the CLs of all my credit cards (especially every time I got a new one).

[Revelate]

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@Anonymous wrote:

Revelate - just a point to consider on this thought "The fact half of the payments come in cash is a little concerning regarding being underbanked but I'm not convinced that means they're in dire financial straights."      I almost always give cash for thse types of payments - in this age of identity theft, I try not to hand over checks and credit card information in situations where the information may not be secured.  Perhaps that is the reason you receive cash and nothing to do with being underbanked.

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That's a possibility; numbers next year will be interesting since we're moving towards integrating credit card payments (I know I know, so last millenium) and this is a more cash based neighborhood than many places in Los Angeles: two restaurants I occasionally visit here are cash only, and that's a rarity everywhere else I've been in LA/OC/SD counties.

[jamie123]

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@wa3more wrote:

some types of student loans can be BK'd, pretty sure private loans can.

-fastest growing population filing BK is the under 25 crowd.

-average age of bk filier about 35. Seniors over 65 are a growing group for bk as well.

-in a recent survey, half the people could not come up with 400 in an emergency.

- the average person reaches 65 retirement age with less than 10k.

what happens to one of these young kids making 30-40k who have 10+ credit cards with 20, 30 or 50k outstanding then they lose their job ? It is outsourced or eliminated due to cost cutting. It is happening everyday and is a large reason the 25-34 age group have to move back home. That and the huge college loans and inability to get jobs they went to college for. My kids are 27 & 23 and I see how their friends are living. Many have spent huge amounts on college and are severely underemployed.

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With every passing year, this is becoming more and more a cashless society. You can't rent a car or buy a plane ticket without a credit card nowadays. Yes, did you know that most rental car companies won't rent you a car if you only have a debit card and they won't take cash?

It starts in training our youth the proper way to use credit. I for example made my 14 year old son an AU on one of my credit cards and gave him the card for his 14th birthday. This does many things. It opens a discussion on the proper use of credit whenever he uses the card. He knows that the easy part is using the credit card but the hard part is paying the bill at the end of the month. He needed a credit card so he could buy online games and always needed me to pay for them so that is why I thought this could be the great learning experience it has been for him this past year.

Talking about credit and income is still a great taboo in our society and it leaves most young people at a disadvantage and wide open for preditory lending practices when it should be very easy for an educated consumer to make the right decision.

There is a reason that consumer economics is not taught in our schools. Bankers need a certain percentage of gullible people.

[Anonymous]

I skimmed.

I guess I have the credit in case of an emergency. I also enjoy hitting the luv button on my cards...

As to losing all credit cards I would miss my Von Maur account more than anything else.

Before mainstream credit cards people would hold accounts with specific stores... Many forget that store cards started it all...

[wa3more]

i guess it all depends on the areas we live in too. I'm an accountant on high priced long island.

As far as Chase debit being the choice card for millenials ? No. When Chase launched the Sapphire , they actual ran out of cards. A senior person at chase told me the strongest demand came from millenials.

[wa3more]

Also private loans student loans may not be first choice but they are available and can be BK;d