Economists out there. Could the Credit Card companies' cash

[rzemanfl]

flow be dried up if everyone just made the minimum payment on their account for say 6 months to protest the Bankruptcy Bill? I know the interest would accumulate, but could we hurt them more than it would hurt us?

[DebJ]

1. not as much as paying them off and refusing to use them again

will.

[walldude]

2. Exactly..

I haven't held a credit card in 15 years.

[lslaux]

13. Best advice is don't use credit cards.

Remember, every credit card purchase you make, the credit card issuer gets a percentage of the sale. This is usually 2% -4.5%. With Bush and the current "bought out" congress, we're going to have to go back to barter anyway.

[Stephanie]

3. I am cancelling MBNA in honor of Biden -

I will let them both know that is why. Anyone with me?

[Walt Starr]

4. Nope, it wouldn't affect them at all. In fact, it wouldprobably help them.

The minimum payment is just barely above the interest for the month, so you would actually be helping them by basically making nothing but interest payments. You'd still owe the principal and would owe future interest on that.

What would hurt them more would be for everybody to pay them off completely and never use them again.

[K-W]

5. That would just make them richer.

With the interest. They dont need you to neccissarily send in the cash. Thier entire operations are run on debt. They are basically banks. They would just watch thier bottom line go up as interest charges mounted. More money on paper means more money whether you send them the check or not.

[mcscajun]

6. That's the credit card company's favorite wet dream

That all we'd ever do is make minimum payments -- that gives them maximum interest from us -- like putting a 30-year mortgage on that coat you bought last week.

STOP using them at all after you pay them off; OR -- pay the revolving balance in FULL every single month, giving them NO interest at all while you have full use of the buy now, pay later feature each month.

The banks have entire departments devoted to how to get people to use their credit more frequently -- they pay particular attention to the monthly payers and the non-users.

[Atman]

7. I paid off my card completely, so they raised my credit limit

They needed to find ways to get me in deeper, so they can charge me more.

[rzemanfl]

9. For years, whenever I charged an airline ticket (which you should

do in case the airline goes bankrupt) they raised my credit limit.

[rzemanfl]

8. So they can pay all their overhead, salaries and advertising

just out of what they'd get from minimum payments?

[Walt Starr]

10. If everybody who had a credit card only made minimum payments

for the next six months, the profits of the credit card companies would increase at least threefold.

[Lydia Leftcoast]

11. Yup, because they know that minimum payers are a steady income source

I took a credit seminar a few months ago, in which the lecturer pointed out that if you bought an $1800 piece of furniture on a credit card and made only the minimum payment, it would take you twenty years or more to pay it off.

I'm carrying a balance now due to car repairs and office equipment replacement that came up during a low-income period (I'm self-employed), but you'd better believe I'm paying that off as fast as I can.

[mcscajun]

15. Banks don't always hold their 'debt portfolios' in-house.

They 'securitize' (sell in the open market in Securities form)
many forms of debt: home mortgages, credit lines, credit cards, certain types of commercial and consumer loans.

So the minimum payments you make may not even go to the bank, although the bank still acts as a clearinghouse for those payments; they go to the person(s) or institution(s) who've purchased the securitized portfolio or portion thereof to receive the 'income stream'.

Trust me, the game is rigged, we can't win by playing by their rules.

[K-W]

25. You dont understand how money works on those levels.

It isnt like if you were running a business, they dont take the cash register money and pay the employees out of it. They have budgets and funds and credit structures.

We are talking about banks here, that is who issues credit cards.

No they would not have a hard time paying thier employees, you are talking about people who sell money.

[rzemanfl]

28. That probably comes from my having to make a payroll every

payday for years and years in the past.

[Neverarepublican]

12. What I want to know is

what is the percentage of Credit Card holders who roll over their balance
every month? I stopped rolling over our balance and paid off the total almost 20 years
ago. We keep credit cards for convenience only and haven't paid one dollar of
interest in those 20 years. They keep sending requests to open new accounts.
I think they are hoping we will slip up.

[rzemanfl]

14. It's a pretty big number, but I can't remember how big, around

30 to 40 percent.

[mcscajun]

18. Funny you should ask that…

An article from this week:

45% American cardholders are making only minimum or no payments on their outstanding credit card balances, up from 42% who did so in 2004, the Cambridge Consumer Credit Index reports. 37% paid less than half but more than the minimum payments, down from 39% in 2004, and 17% paid more than half the balances due, down from 19% last year. 39% paid their balance in full, the same as last year but down from 43% in 2003. 33% did not use a credit card in the month prior to the survey, up from 29% in 2004 and 26% in 2003.

http://www.internetretailer.com/dailyNews.asp?id=14352

[EVDebs]

16. The Usury laws and state's rights...States could re-institute usury caps

since the feds let the lid off the banks...

Read this 'U.S. Consumer Debt Grows at Alarming Rate
Debt Burden Will Intensify When Interest Rates Rise '

http://www.washingtonpost.com/ac2/wp-dyn/A10011-2004Jan12?language=printer

""What's alarming is that doesn't accurately reflect the true distress on various segments of the American population," he said. Not included in the Federal Reserve figures are "new kinds of hybrid financial institutions and new loan products," such as those offered at rent-to-own stores. There, interest rates typically work out to more than 200 percent a year, and sometimes more, Manning said. In one such store catering to middle-class African Americans, he said, the annual interest rate came to 800 percent.

Overall, Manning said, "the cost of borrowing on credit has tripled in real terms since the early 1980s." While many credit card companies offer zero percent introductory interest rates to customers with good credit, he said, the rates typically jump after the introductory period, and many Americans do not qualify for the low rates in the first place.

Although the credit card industry says average household consumer debt comes to $9,000, Manning said, it is actually closer to $13,000 when the roughly 40 percent of households that pay their balances each month are taken out of the equation."

How did this get so bad ? See "Our addiction to credit interview with Credit Card Nation author Robert D. Manning" http://www.lipmagazine.org/articles/feattalvi_121.shtml

" happening so fast, and the industry has presented it in a very individualistic manner. They have been pretty successful in making sure people don't see the larger picture. The whole moral underpinning of the dramatic increase in consumer credit is that it's an individual decision and individual cost, and if you play, you pay. In other words, if you don't want to pay 24% interest, you don't have to....

The double-digit rate of inflation during the Carter administration made it economically rational to be in debt ... s wages stagnated and started to fall in the late 70s, being in debt to pay off your washing machine or your car was financial feasible ...

At the same time, this is when the banks finally got deregulation, and they were not prepared for it. That's when they got clobbered by their third world loans, their bad real estate investments, and the recession of 1981-82 hit . It was kind of like a purging. It was a shakeout period. That's when banks realized that retail services would work, although in the past they were looked down upon ... That's where the confluence really hit. Low wages, high inflation, banks desperate for new markets, and people willing to pay unprecedented high interest rates for credit cards."

Predatory unregulated lending IS NOT AND SHOULD NOT BE LEGAL. Democrats, the mere charging someone 800% interest and it being LEGAL... Someone has lost their mind in the Beltway...It is time for STATES to reassert their right to protect consumers and cap interest rates. If enough BLUE STATES do it, the red ones will eventually have to follow !

[CountAllVotes]

17. use em!

That is what I do.

Discover home remodeling card - 5% cashback - pay off ASAP.

Discover - 1% cashback (well after awhile) - use Shopcenter links for deals online.

MBNA L.L. BEAN Visa card - buy clothes - free shipping ...

buy via ebates.com link to L.L. Bean (and other places) and get 2% back besides the 3% they give you.

Other card:

1.25% cashback every month.

Just obtained:

COSTCO American Express card - 1% cashback; 3% restaurants; 2% traveling.

Secret: Pay them all off every month. Don't let the interest accrue.

You win, they gain nothing while YOU draw interest on YOUR money while they WAIT to get the payment (in full).

:dem:

[PeterPuck]

29. none of those cards have annual dues?

I agree with you 100%. Use the cards that give you something in return. Cash-back or other rewards are better than using cash and getting nothing.

Although it is true that retailers are paying 2-5% to the credit card companies, it would take everyone to stop using credit to see the retailers pass on the savings. Even then, I doubt they would.

[CountAllVotes]

30. none of the cards have fees

I just pay them off and use them to my advantage. The Discover Home Improvement card was very handy when I had my bathroom remodeled recently. I got $120 cashback on a bill I would have had no matter what.

I have 4 credit cards right now and I plan to get no more. I only use the 1.25% cashback one for the most part.

We'll see how long this lasts (something "new").

:kick:

[EVDebs]

19. We can make better friends with our Islamic brethren by capping interest

19 Thou shalt not lend upon usury to thy brother; usury of money, usury of victuals, usury of any thing that is lent upon usury:
usury Exod 22:25, Lev 25:36, Neh 5:7, Psa 15:5, Prov 28:8, Jer 15:10, Eze 18:13, Eze 22:12, Matt 25:27, Luke 19:23

And usury is not allowed at all in Islam, but Islamic banking makes other arrangements for lending money. Someone can educate me.

My point is that Usury itself may be seen in the Muslim world as a reason to avoid Western ways. I see no reason why we would want these usurious credit card companies sullying the reputations of Westerners when bringing 'freedom' to the world. That would be hypocritical.

[GetTheRightVote]

20. I am going to not use mine anymore, just cash from now on & only if I have

it to use, I believe that the bank & credit card companies could be put into the position to which they shot themselves in the foot by us not using them anymore, I begin today with my new budget.

:kick:

[phusion]

21. No..

We all just need to max them out and stop paying all at once...:)

[rzemanfl]

22. I am waiting until I find out I am terminally ill to do that. n/t

[CountAllVotes]

23. good plan

Hang on to the suckers. You never know. When you are in this boat, :wtf: difference does it make. CHARGE AWAY!

:kick:

[EVDebs]

24. Maybe that's what those Identity Thefts with our information overseas is

leading up to. Read this:

"Alan Paller, director of research at the Bethesda, Md.-based SANS Institute, said the California law is probably necessary because of the kinds of crime that are occurring. A group in Russia and Ukraine has been acquiring customer data, extorting money to prevent its release and then selling it anyway. Paller believes some companies are paying off the extortionists in an attempt to contain the damage." from

http://www.computerworld.com/securitytopics/security/hacking/story/0,10801,76721,00.html

So in secret financial institutions are paying off these guys...but for how long and how much will US customers be forced to pay before the lid blows on this 'secret' arangement ? Hmmm ? Globalization has its price.

[Kazak]

26. Pay it off, and...

never carry a balance again. That's the way to get to them.

[Dcitizen]

27. It wont work! n/t