Many in U.S. behind on their credit cards

[NNN0LHI]

http://www.upi.com/view.cfm?StoryID=20040308-025133-2535r

WASHINGTON, March 8 (UPI) -- Around four out of 10 Americans recently polled are not really keeping up with their credit cards.

In a survey conducted by the Cambridge Consumer Credit Index, 42 percent of those polled said they were just making minimum payments or no payments on their credit card balances. Of those respondents surveyed with revolving balances on their credit cards, 39 percent made only the minimum payment due and 3 percent made no payments at all in February.

The survey also asked Americans who are taking on more debt why they are doing so. Forty-nine percent of respondents reporting that they are adding debt because they don't have funds to pay for purchases in full when credit card bills arrive, while 51 percent of those polled say they are taking on debt because they are confident of their ability to pay the balance off in full.

Overall, the Cambridge Index reported that 39 percent of those polled paid off their credit card balances in full last month.

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[Donkeyboy75]

1. More bad economic news

At some point the White House is really going to have to face these issues (rising oil prices, jobless recovery, deficit spending). I can't believe they are so naive as to pretend everything's fine. Normally I blame Americans themselves for poor money management, but many are left with no choice since they have no influx of cash. We need a change in the WH.

[Art_from_Ark]

19. But everything IS fine

in their world. They have huge tax breaks, no-bid government contracts, red carpet treatment wherever they go. It's just like Will Rogers' version of Calvin Coolidge's State of the Union speech:

"Everyone I come in contact with is prosperous. They HAVE to be prosperous, or they don't come in contact with ME!"

[loftycity]

36. I think people with enormous debt don't know the

consquences.
I feel for them when the Sh*t hits the fan. Bankruptcy is a very,very painful experience for a family or indivdual.
Another form of State Terrorism brought to the people.
The finanicial sector knows exactly what they are doing. Yet, are unaware of the mess they are causing.
The finanicial sector are the villans here and they give away slavery and we grab it up.

Denial and delusion works well on both sides. Once the traction of the customer base erodes and the companies cannot replace their lost revenue, trouble is here. And I believe it is already here.

[Character Assassin]

2. A bit of advice:

Never, ever, unless under the most extreme of duress, spend what you do not have.

[freeforall]

11. Very good advice, which I have always lived by

May not have a lot, but I don't have any debts.

[Character Assassin]

14. This is how to live life

[Occulus]

16. Would being cast out of your house

at 19 with no money in the bank, disallowed your car, and nowhere to go be considered duress?

Yeah, that's how my CC debt really took off.....

[midnight armadillo]

23. How's this

Get shitty student health insurance for you and your wife. Wife gets ill, needs surgery. She burns through the $500 annual drug benefit in 3 weeks, after which we lose the discounted price on the antibiotics and need to pay full price: $10/pill, 3x/day, for 5 months. Next, the shitty insurance pays for only 60% or so of costs after months of battling them when they decide to claim the surgery was not pre-approved, which it was. This left us with a $10,000 credit card hangover, although I suppose we could have chosen chronic infections for my wife instead. All this on a student stipend of $20k a year for me, with student loans supplementing our income. This was 2+ years ago and we're still paying it off. Thank goodness for 0% interst balance transfers! I won't mention our student loans...or how my wife went to school to get certified to teach while borrowing a lot of money while the state of MA decided to send a team to the frickin' PHILLIPPINES to recruit teachers. But that's another story.

Moral of the story: to all of you delivering smug, condescending quips about how you live debt free unlike us idiots, well, blow it out your ass. Over 50% of those who file for bankruptcy do it for medical expenses (Norton's Bankruptcy Adviser, May 2000). Not everyone in debt is that way due to flagrant spending.

[JNelson6563]

26. that's right!

Some debt is due to circumstances that benefit the rich. Ithink those who feel onlythe stupid incur debt should read The Jungle. Tho' from long ago it clearly demostrates how those not well off get the shaft.

The attitude in this thread reminds me of the boy king saying poor people are poor cause they're lazy.

Ugh!

Julie

[callous taoboy]

27. midnight

Your story sounds like what my good friends went through when their 4 year old daughter was diagnosed with a bad form of cancer. Here they were being told by the docs that the mortality rate with this cancer is incredibly high, and in the meantime having to battle the insurance company every step of the way. It about did them in. Their daughter is now 11 and she's been cancer free for over 5 years.

[Fargin Ice Hole]

18. Try buying a home with cash these days.

[wickerwoman]

21. Guess I shouldn't have gone to college then.

And my loans are peanuts compared to most of the people I know.

We live in a society where in order to get a decent job you have to go to college and in order to go to college you have to borrow money.

Does it count as duress to want a better job than assistant manager at McDonalds when your parents happen not to have $80,000 to send you through college (and that's only a BA at a public school)?

[Enraged_Ape]

24. There is a difference between secured and unsecured credit

You're right that it's just about impossible in today's society to go to college and buy a house without going into some kind of debt.

But when you finance a home or a college education, that debt is backed up in some fashion. Student loans are insured by the Federal Government. If you can't pay them, some arrangements can usually be made for repayment, and if you default altogether, the Government will theoretically cover that debt, although your life will be made extremely, and I mean EXTREMELY, difficult for a long while. And though it may take a long time to recover, you will eventually emerge in something like one piece, because the terms of what you owe were set in stone from the beginning.

If you can't pay your house loan, you will lose the house and whatever equity you have in it and your credit rating will get dinged, but you can still walk away and stop owing; and besides, once again repayment arrangements can almost always be made because they have your house as security. Same thing goes with a car loan. These, too, are survivable.

But credit card debt, or any other type of "revolving" perpetual credit for that matter, is a whole other story. It is positively evil. Because there is no security to back this debt up in any way, the credit card companies can legally f*** you over and over and over and over again without mercy. They can--and will--make it literally impossible for you to ever crawl out from under them. They can make you go to your grave owing them more and more money.

To make it worse, the CC companies have a powerful lobby with our legislators, who are constantly passing laws to make it ever easier to go into an endless unsecured credit death spiral.

There are perfectly good reasons for getting a student loan or a mortgage. There is NEVER a good reason for having a credit card except to cover an extreme--and I mean EXTREME, as in literal life and death--emergency.

[NNN0LHI]

29. Little correction here EA

"If you can't pay your house loan, you will lose the house and whatever equity you have in it and your credit rating will get dinged, but you can still walk away and stop owing"

Actually if you lose your house the house will be sold for whatever the bank can get get for it. They really don't care what they get for it either because if the selling price is below what you owe on the house (which is usually the case) you will still be responsible for that difference, so you will not necessarily stop owing. You will just owe money for a house you no longer own.

Don

[shanti]

37. yes, and debts like this

are a good reason to go for a 'short sale' instead of just giving it up.

[NicoleM]

32. There are lots of good reasons

to have a credit card. I have no credit card debt, but I did through college and for a few years afterwards. Here are some of the things I bought with my credit cards:

*Food
*Clothes
*Books for college
*Auto repairs

None of those was a life-and-death emergency, but I needed all of that stuff when I bought it, and I didn't have the money to pay for it. When my circumstances changed, I paid the debt off as fast as I could.

[AP]

35. Credit cards are evil, but it is an interest-free 15-45 day loan.

And some cards give you cash back on your purchases.

One of the things I'd like to see change with credit cards though is that I'd like to see businesses be able to give discounts for cash, which is currently illegal.

Credit card companies get a % of everything you buy with your card and retailers aren't allowed to give a discount for cash purchases in order to avoid having to share that money with the bank.

And, take note, if you do business with people you like, and pay cash instead of with credit, you're giving the retailer an extra 1-2.5% of the purchase price if you don't use the credit card.

[wickerwoman]

39. That's still a bit extreme.

I was responding to CA's claim that you should never, ever spend money you don't have. Obviously, to go to college or buy a house most people need to.

On top of that, student loans often don't begin to cover the real costs of college. When I was in grad school I made about $12,000 a year off my TA plus $3000-4000 a year in student loans but it was impossible to find even a studio apartment in that part of the world for less than $780 a month. (Even sharing an apartment- which would have driven me insane in a very short period of time was impossible for less than $600 a month.) So after taxes I was forced to pay 60-75% of my income on housing alone. After food and student fees I was broke. So if I wanted to buy books or clothes (let alone see a movie now and again) I had to use a credit card. And my job (teaching) required a fairly professional wardrobe so I did have to buy some clothes. I didn't have a car, cable TV, Internet access at home, etc. None of the frills. Result after 5 years- student loans and credit card debt. I'm paying them back because I got a good job but it still requires saving 50-60% of my income over the next 2 years.

So I appreciate the fact that credit card companies are evil, but I would still argue that they can be a necessary evil for many especially in part of the US where the cost of living is absurd.

[Name removed]

3. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Donkeyboy75]

4. I really hope you're kidding

It's either that, or you're posting as a member of the White House displaying typical willingness to pay the consequences of your actions.

[Character Assassin]

7. He is. Nothing he's said makes any sense, financially or legally.

[loftycity]

6. Are you for real? I don't think so..

[Florida_Geek]

5. And why is MBNA one of Bush's biggest donors

Mmmmm

edited to add from OpenSecrets

MBNA Corp
MBNA Corp is the nation’s top credit card company and one of the world’s biggest finance companies. The company was also the biggest campaign contributor to the Bush-Cheney ticket during the 2000 election cycle and has been one of the Republican Party’s most generous contributors over the last decade. For the last five years, MBNA has been pressing lawmakers to pass legislation that would make it harder for individuals to file bankruptcy—a bill that, if approved, stands to earn MBNA at least $100 million in additional revenues each year, according to press reports. The bank also has lobbied against legislation to protect consumer privacy rights and was a leading proponent of banking deregulation.

[captain_change]

10. Just dumped MBNA

I was laid off from my job in Sept so I kind of let my balance grow a bit. Luckily I have been able to free lance and have matched my previous 6 figure salary in just the last 6 months by contracting. Great credit, never late, always paid more than the minimal. So MBNA takes my rate from 9.9% to 19.8%. What did I do, sent a check for 17 grand and paid it off, now they are calling me

[AP]

8. Man, those banks must be making money hand over fist with all those

people making only the minimum payments.

Even with the bankruptcy rate at the point it's at, that's still a huge profit, with interes rates and fees at the levels they're at.

[hatrack]

9. On top of that, didn't consumer debt rise by $14 billion-odd in January?

As I recall, it was an annualized rate of 9% or something horrific like that.

Not a promising development.

[FlashHarry]

12. Can you say 'bubble?'

Boy, when this baby bursts, it'll be pandemonium...

[alittlelark]

13. CREDIT CARDS WILL DESTROY YOU

Only utilize them as charge cards. NEVER, NEVER as expenditures, as they will destroy you if you maintain a balance..

Do you want to become a servant to your interest debt (they hope you will. mega %$$$%% if you do)....hope not.

CHARGE CARDS are the only way to go. Pay off ALL at the end of the month.
I know some cannot.... I wish you well:-)

[Enraged_Ape]

25. I absolutely agree. Credit cards are the Biblical mark of the beast

And I mean that sincerely. They are a legalized way to create a mass of indentured servants. That's the only thing they are good for.

My household is just $2,000 away from paying off a substantial amount of credit card debt. Once that is gone, it will be like getting a $500 a month raise. Barring some unforeseen medical emergency, we will never have another credit card again.

[Rebel_with_a_cause]

15. The federal govt. sets the example for other Americans

"Let's all be massively in debt!"

Meanwhile, Japan's govt. encourages its people to save 25% of their income. Different world...

[Art_from_Ark]

20. Japanese are natural savers

Lots of people here (Japan) remember the "bad times" and don't want to return to that period. The Japanese government actually tried to discourage savings (at Reagan's behest) by charging a tax of 20% up front on all savings interest, regardless of the income of the recipient (it's still in effect, by the way).

However, if the government is actually encouraging savings these days (and I haven't heard yea or nay about it), then I would suspect it would be for one or two reasons:

1) There is constant talk on Japanese radio and TV about the viability (or lack thereof) of the national pension plan (sound familiar?), so one should save for the proverbial rainy day, or rather, the typhoon looming on the horizon.

2) The Japanese government recently announced a plan to appropriate 79 trillion yen (and perhaps up to 100 trillion yen-- nearly 1 trillion dollars) to intervene in the currency markets if need be. The best place to secure funding would be through the tremendous amounts of money sitting in private banks and postal savings accounts.

[American Renaissance]

17. I don't have a credit card,

After seeing what my father went through when my parents divorced, I have been totally spooked by debt in general, I don't have a credit card, I live in a house not much bigger than a two-car garage, but it's paid for. I drive a 1997 Ford Escort. If it wasn't for my girlfriend, I would probably wear nothing but radio station t-shirts.

Alot of prosperity is just an illusion, people were just racking up a shitload of debt. I work with a woman (who I know makes less than me) she drives a lexus and spends the combined GDP of latin america on clothing. She isn't married, so unless she is whoring on the side there is no way she can afford her lifestyle.

she is probably a pay cheque away from bankrupcy... genius eh?

[Bridget Burke]

28. American Express isn't exactly a credit card....

If you don't pay in full every month they get really annoyed. You can sign a form to defer payment on part of the bill--and risk going into debt.

However, if you pay it off every month, as they prefer, it can be handy to have. Things like renting a car are much easier if you have plastic.

[NNN0LHI]

40. I did not know that. And I have had an American Express card for years

Just never used it. Learn something new every day.

Don

[JCMach1]

22. I love my Islamic Banking Credit Card

0% interest...

But you must pay a minimum of 10% of your balance each month. Regardless, your card is paid off within 1 yrs. time.

:)

[wjittermoss]

30. I said it before; I'll say it again: Low interest rates and credit card

debt are fueling what is left of this economic burst...NOT TAX CUTS FOR THE WEALTHY!!! (And there were no tax cuts for anyone else because the states and localities had to make up for what the Bushites cut in order to cover the tax windfall to the wealthy.)

[BigBigBear]

31. I don't really use mine anymore

Been paying > minimum for 2-3 years and am slowly working my balances down.

Last Christmas, I only put $9.00 on credit cards.

[llmart]

33. I don't think that people here

are necessarily being smug or critical when they say they have no debt. I truly do sympathize with those of you who are forced to have massive amounts of debt because of unforeseen medical expenses. However, let's face it. When I look around me I see that the majority of people with debt are those who just can't live without the "stuff", most of which is unnecessary. And that goes for a brother and his wife who are massively in debt and their attitude is that they will just file bankruptcy if they can't keep up their payments. They make one-third of what my husband and I do and spend 5 times as much. It's those people that are truly the majority in this country. Right now I can name about 10 people at work (I work with about 45 people) who are all planning to take winter trips or have already taken one and charge it all even though there are rumors of layoffs. And when we have conversations about "savings" they admit they don't save other than a nominal amount in their 401K's (not the max allowed). It's those people I don't feel sorry for and to whom I say, "My husband and I have no debt."

[colonel odis]

34. imagine what would happen if everyone with credit cards

simply refused to send in a payment one month.

target a particular organization. mbna. citibank. then millions of people go a few months without sending them any money.

there'd be lots of late charges, etc. it would show up on credit reports that you were 30 days late with a payment. but credit reports tend to focus on your behavior in the last 6 months, don't they?

imagine the sound of banks shitting cinder blocks when no money came in that month. imagine them all whining and crying to dubya about it.

just a thought. it would only work if, literally, millions of people refused to pay.

[davsand]

38. Haven't you noticed the Consumer Credit Counseling commercials?

You rarely heard about those guys a few years ago-and now you see ads for them on TV ALL the time. When I started seeing THOSE proliferate I realized just how bad the household finance situation really is in this country.

In part, I do blame it on the current economic situation, but I also feel that credit card companies are predators. How many times have you been sent offers for cards--pre approvals--or even cards themselves? IT never stops.

If you actually look at the terms for some of those cards it is staggering how much people pay just to have the priveledge of owing somebody money! Annual fees, activation fees, application fees, late fees, over balance fees--the list goes on and on. I really think a lot of folks just don't have any clue how much they are paying for this stuff.

When you couple those add on fees with the idea that people do have emergencies and miss payments sometimes it scares hell outta me. I have no idea how folks with 10, 15 or 20K in credit card debts have any hope of ever getting out from under them.

I know some folks opt for a home equity loan or roll it all over into a second mortgage at a lower interest rate. I guess that must sound really good except for the fact that some of those folks THEN turn around and run those same cards back up again! So now they owe not just the original debt--but they now have a second mortgage to boot!

I have no idea how this is gonna end, but i do have an idea for a possible solution: What happens if everyone stops paying? Just says, Nope--NO MORE...

Laura

[sendero]

42. Also be aware...

... that many, if not most, of those "consumer counselors" are working directly for the credit card companies. They are not remotely interested in anything other than figuring out exactly how much they can squeeze you for, and then getting it.

Please - if you are in credit card trouble, be very careful where you get your help.

[sendero]

41. I have eschewed debt...

.... since 1980, except once to buy a house (now paid for).

That is the main reason that the fact I've been unemployed for a year and a half is not killing me.

It doesn't matter how much you make. You should be putting a minimum of 10% of it away for later. PAY YOURSELF FIRST. Someday, you'll be glad you did.

And - I'm not talking about folks making minimum wage or thereabouts - I've been there, and there is no 10% left no matter how much you cut back. But way too many middle class people live at the edge of their income. That's a real bad idea.