Watched a young couple today have 3 cards declined

[TwixVoy]

A young couple today was buying about $50 worth of items. I would say they were late 20's early 30's.

Pulled out a credit card. It was declined. They both instantly perked up. I heard the lady talk softly saying "Oh god they closed our account. I knew they were going to I can't believe it". Two more credit cards and two more declines later they finally had a card that was approved. All the while overhearing her mutter "this is so embrassing".

The general feel I got from them, both by mood and what they were saying, was panic at realizing their cards had been closed. Not panic along the lines of "Oh I'm surprised my card isn't working! I am worried why!".... but panic along the lines of "I've been worried they were going to close my card any day. This is how we were barely holding on. Now what are we going to do?" kind panic.

I have seen this similar situation happen more and more the past few months. What a sad state of affairs bush has left us to deal with.

[DS1]

1. Having 4 cards might be the problem

I know it seemed like a quick fix to them at the time

[AndyTiedye]

8. Having 4 Cards is Probably What Saved Them

If they had only one, and that bank was hurting, they might have no credit at all.

[Midlodemocrat]

12. I tend to agree.

We're quite a bit older and have two, MC and Amex and the Visa debit card. They are strictly for emergencies. And, in fact, we had to ask Citibank to quit raising our MC level. At one point, it was up to $25,000. That is flat out ridiculous.

I think it's pretty easy to get into trouble with too many cards. I have a friend who uses their Visa for everything and every month she and her husband fight about it. She shops all the time. Does the sales, but still. If you don't go into the stores, you won't be tempted.

[ejpoeta]

25. my sister and brother in law have excellent credit.

they are the ones who the card company keeps trying to raise their limit and my brother in law calls them and tells them to put it back where it was. when they were first married and had their son and were both working full time at walmart, they ended up using cards to buy groceries because they didn't have enough money. they did what they had to do at the time. they have never had a lot. they bought a new minivan like eight years ago and had it past paying it off and such. they went through rural opportunities to get a house. they have paid their bills on time. they regret all the cards and ended up getting a consolidation loan and getting rid of all of them but one which they use sparingly. what i am trying to get at is that when they used their cards they did it to buy groceries and gas. not to buy things. people do that. we have had to do that. when you have cut everywhere you can and still haven't got enough.... sometimes you rob peter to pay paul so to speak. i know it's easy to judge, but I try to think that there may be a reason. sure, maybe it would be better to not use the cards. but we all do what we feel we have to sometimes.

[gcomeau]

26. Having cards is not a problem.

USING them is.

The way the financial systems are set up these days you do not want to be walking around with only one or two available lines of credit. I went in for a pre-approval on a mortgage at my bank a little while back. I have an excellent credit rating, no outstanding debt, etc... I got dropped into a less favorable category for the loan because, wait for it... I only had three lines of credit in my name. Which means higher interest rates if I get the mortgage. Fortunately I was just doing a little advance work and had no intention of actually applying for a mortgage right away, so I went out and got myself one more line of credit which solved that little problem. That new credit cad will sit in my wallet, never ever used except for the one single payment I made with it so it would show as active.

Having a credit card doesn't hurt anybody. Having large credit limits doesn't hurt anybody. People being idiots and using them to buy things they can't afford to pay for hurts them. I never EVER put ANYTHING on a credit card I don't have the cash to immediately pay off, in full. If you do that is the freaking definition of living beyond your means, which is something most people just do not get even though it should be painfully obvious... they think credit cards are magic money multipliers. Can't afford a new TV? No problem, I have a $3000 credit limit on this card these people just gave me! Wheee!

Morons.

[Profprileasn]

42. Oh yes

Isn't that funny. Using them is a problem. We have one. Paid off now and intend to keep that way. Do enjoy watching and agree with Dave Ramsey on many points. Debt free is the way to go.

[XemaSab]

28. A few years ago there was an article about credit card debt

Most credit card debt is NOT due to big screen TV's and fancy stuff, most of it is due to groceries, utilities, and the like.

Without credit cards, this "recession" would have been ugly YEARS ago.

[dansolo]

37. In those cases, it may actually be better to get an additional card

Fortunately I am able to pay off my cards every month, but early on I decided on a strategy where I dedicated one card to smaller, frequent purchases like gas and groceries, and another card for larger items. If I ever needed to carry over a balance for a large ticket item, I didn't want to continually raise the balance with smaller purchases. That is what contributes to not being able to pay down your balances.

[pnwmom]

40. Unfortunately, if you need the highest credit rating, for example,

to qualify for the best mortgage rates, then you need several credit cards with significant limits. You get better ratings if you spread the same amount of purchases over several cards, keeping all of your balances relatively low.

I say unfortunately because that means that people who deliberately try to limit their use of credit get poorer credit ratings. And some people with high credit limits on several cards end up yielding to the temptation to use them.

[SheilaT]

2. Without knowing all the details

such as what they were buying, I'm seeing this as a scary example of how too many young people run up a lot of credit card debt.

[TwixVoy]

3. It was mostly consumables

[cherokeeprogressive]

44. What kind of car were they driving? What kind of clothes were they wearing?

What does their house look like, what kind of neighborhood are they living in, and do they both work? So many things you don't know about this situation. I see two people who've relied on their credit cards to get what they want short-term, and are only now starting to think about their future. Late twenties, early thirties. Old enough to know better?

[trotsky]

6. Yup.

Granted, there can be many other factors involved (medical bills, failed business, etc.) but I've seen it with my own younger cousin - no financial sense whatsoever. Spend and spend til they won't let you spend anymore. Whether or not you even have a job to pay for it!

[dixiegrrrrl]

34. Just as you said...

So when I was working, one card from my local community bank kept my limit below 1,000. ( got it 1994).
Fine by me. Paid card off every month.
Perfect credit score, no debt, etc.
I moved across country. Card still good.
I retired, card still good. Still 1,000.00 limit.

I put a 20 K into my savings account at that same local bank, 3 years ago. ( mutual fund cash out)
Just looked at the card limit while on this thread.
Credit limit is now 10,000.
I am not working, I have very small income, since I am retired.
At some point they decided I can have 10 K limit.

:shrug: :shrug: :shrug:

[elleng]

9. Do you know

how heavily card cos. have pressed teen/college age kids for last years, how many solicitations they received? HUGE number. I threw them out, for my 2 kids.

[cherokeeprogressive]

45. These two were late twenties, early thirties according to the author of the OP. OETKB.

old enough to know better.

[AndyTiedye]

10. A Lot of People With Good Credit are Being Cut Off or Having Lines Reduced

[Davis_X_Machina]

22. Then there's this cute two-step.

The bank lowers your limit.

Your balance was well below the old limit. But now it's +80 per cent of the new limit.

This dings your FICO score.

So the issuing bank lowers your limit again, and others do so as well, on the strength of your FICO dip.

Lather, rinse, repeat.

[SoCalDem]

32. As immdediately painful as it may be, a "re-ordering" MUST be done

The buy-now-pay-later society is toxic, and we are all finally feeling the disease.. We have been ignoring the symptoms, for decades..

Cards that were initially taken cheerfully, as "just for emergencies" have been converted into "let's get it NOW" cards....jammed with massive debt..

Adding $50 more to a card that has $7600 debt already is "no biggie"..especially if you can only pay the minimum or near minimum..you're never going to "pay that off" unless you win the lotto..and many families have multiple cards with near or maxxed out balances..

This is the dirty little secret of many families and MOST banks.. their "customers" owe a LOT more than their ability to pay, and sooner or later, the default dominos will start falling.. I say "start the dominos NOW", and get this mess out in the open..

It used to be shameful to owe more than you could pay, but in our time, it's almost a "normal" thing to be in debt, and that mentality has to stop..

Parents who are overburdened by debt cannot "be there" for their kids as they grow up.. People may not realize this until they start filling out the paperwork, but when those college loan papers are filled out, they use the family INCOME, but do not care one bit about how high the Visa & MasterCard debts the parents are.. They will disqualify a teenager from getting certain loans because the family "makes too much", but then the "other loans" may also be unavailable because they DO take the family debt into consideration..

Family debt can affect the longterm futures of those kids. The find themselves with parents who are "making" $50-80K incomes, yet are "broke"..they either take on shifty high-interest loans for themselves and leave college with $40K in debt themselves, or they piece-meal their college, and may never graduate..never knowing what they "could have been". At the very time they are aged out of their family's health care plan (if they had one), they face the future with little or no help financially, from a family that may want to help, but cannot afford to..

[AndyTiedye]

38. It Wasn't the Customers Who Screwed the Pooch Here, It Was the Banks

[SoCalDem]

41. Of course they did.. You may be younger than I am, but there was a time

when credit cards..the actual real card, just showed up in the mail.. They don't do that anymore, but sending a "pre-approved" credit card application to a person who's practically broke, is no "accident" of the bank.. They let , NO encourage people to take on unaffordable debt, then they bundle the "debt" and resell it to other "investors", and even though THEY are rid of it, they have made a few tarnasaction fees, and the customer is still on the hook for the debt, only now it's "owned" by who lnows.... These companies send out "just endorse this check" offers in the mail to people who are desperate, and of course they will "use that check"..many will..

No one is blameless, but if the credit card companies did not offer or approve , there would be a lot fewer people in debt..

[Bozita]

43. My son received an actual credit card in the mail about this time of year, 1967.

Other than his birth in July of '66, he had little in his past to suggest his credit worthiness.

[JerseygirlCT]

39. We've got excellent credit and the cc company

just raised our APR today - sky high, actually.

Not that we ever intend to have that be an issue - we pay in full monthly. But still... it makes you wonder. It seems they're just hoping that someone will step just over that edge so they can pounce.

[orleans]

50. i just put this thread up:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4519390

[SammyWinstonJack]

4. .

[wtmusic]

5. Oops! Might have to pay cash in the future

or sell that big screen TV.

[Bluebear]

7. Or maybe they have no big screen TV and are hungry?

[wtmusic]

11. Good maybe you'll lend them some money

the banks don't want to. Must be a reason.

[Bluebear]

13. I make fewer and fewer judgments these days, People are hurting out there.

[wtmusic]

True and I don't know their situation

but a clue: they apparently had no idea what their credit limit was and just kept using the cards until they "broke".

No budget, no plan, no responsibility. My sympathy is limited.

[Trajan]

16. Geeez ...

You can really measure a person by how they treat strangers ....

Brings out the evil in some .... I tell ya ....

[Doremus]

29. Yes, and in some it brings out their true compassion. Remember Obama

and the lady in front of him at the airline ticket counter?

'Nuff said.

[DBoon]

18. the bank's reason nowadays is "because we don't want to"

having less and less to do with how frugally someone manages their income, and more to do with banks pulling out of markets in response to a credit crunch.

[undeterred]

14. Maybe they have been living on credit cards because they lost their jobs

and have no income. Maybe they've already sold everything they have to sell. Why are so many people here so quick to judge "irresponsible"? There are a lot of people who do not have family who can help them when they lose a job. Unemployment insurance runs out and not everyone is eligible for it in the first place.

Maybe they're just doing the best they can.

[DBoon]

19. Maybe they were very responsible

right up to the point where they lost their jobs?

Maybe their banks are shoving the bank's bad financial condition on their credit card holders, pulling credit away from people who would have been good risks five years ago?

Maybe sometimes people don't have money because capitalism fails, rather than because they are morally deficient?

[undeterred]

24. The availablity of credit makes it a likely place

to turn to when times are hard. You lose your job and the unemployment compensation runs out. If you're still looking for a job you pretty much have to have a phone, internet, and a place to live or its going to be very hard to get re-employed. So you start puttng the phone bill, gas bill, and groceries on the credit card. You look even harder for a job knowing that you'll have to pay this down when you get one. You cut out paying for health insurance because it costs too much.

And that job never comes- or when it does it pays 20% less than the one you lost. Instead of paying down the credit cards you make minimum payments... and then the car needs repairs...and you can't get to work without the car. Your new job doesn't have health insurance you can afford so you pay for expensive prescriptions on the credit card too. You NEVER catch up and the card gets closed. It has nothing to do with extravagance or a large screen television.

[cherokeeprogressive]

47. Using a credit card KNOWING you can't pay the fee is the same as stealing.

Stealing isn't doing the best you can.

The only people who are not eligible for UI are those who quit their jobs voluntarily, or those who were working under the table. At least that's how it works in California. The gubmint just extended UI 13 weeks. Not the CA gubmint, but the federal gubmint.

[undeterred]

48. You're very naive and judgmental.

People who have had a small business fail are ineligible for UI. So are people who have been working as independent contractors. Some people may have not had enough work in the previous year to be eligible. In today's economy, many people are out of work for longer than a year. The extension is a help, but are you listening to the news? Thousands of people are being laid off every week. I haven't heard any news stories saying thousands are being hired.

Additionally, an employer can challenge someone's right to collect (and many employers challenge simply because they don't like paying into it) and leave the person with nothing. It takes more resources than most unemployed people have to challenge an employer who wants to get out of paying.

None of those situations are "under the table". And BTW, UI is not a whole lot of money to live on for an extended period of time.

FYI, when people are unemployed they don't know how long they are going to be unemployed. Nobody hands out a little piece of paper that tells you how long it will last. Everyone hopes they will find a job sooner, rather than later. Everyone wants to pay their bills and not run out of money. If you consider eating so you don't starve to be stealing, then its your moral values which are seriously screwed up.

[JVS]

49. There is a point there though.

When one intentionally writes bad checks it is against the law as being fraud. Using a card that you know you won't pay is not very different

[demodonkey]

51. The word is GOVERNMENT, not gubmint.

Geesh I hate cutesy mispellings, especially when coming from someone who is judgemental to boot.

[Trajan]

15. I saw one last week ....

I read that most credit card companies are closing the accounts of those who make 'minimum payments', considering them now to be unworthy of credit ....

I suppose there was a silver lining to my loss of credit 5 years ago (and my subsequent refusal to re-establish any credit cards) ... I now live within my means ... sparsely, but alive nevertheless ...

I still struggle with college costs for my boy though ....

You know : .... The economy based on 'easy' credit was false anyways .... This could signal a return to financial sanity for families, many who have grown up thinking their next bankroll was just a refinance away ....

That whole debacle for decades has boosted prices based on phony income .... expect a deflationary retrenchment that will eventually stabilize on REAL income ... hopefully, we can all survive the disruption ....

[rasputin5]

17. I saw something almost like that yesterday in the liquor store.

Just a guy, not a couple...and had only one declined...he paid cash after that. I really didn't know what to think about it, still don't.

[cherokeeprogressive]

46. Never feel sorry for a guy whose credit card is declined at a LIQUOR STORE.

You'll be happier that way.

[Chan790]

54. Why not?

As the homeless guy's sign on the off-ramp of the interstate near my store read: "Ain't gonna lie. No home, No heat, No job, No family. Need $ for a drink." He didn't want the coffee and doughnut I ran out to him.

I think if your life went to shit, you'd drink too.

[DBoon]

20. Credit cards are what Americans use instead of a government safety net

Unemployed? Instead of unemployment payements like most advanced countries provide, just use your credit card.

Expensive medical bills? Well, this is America - we don't have socialized medicine. Just charge it to your credit card.

Kids need an education? You don't expect to government to pay for that, do you? Go out and borrow some money like a real American

[wtmusic]

21. Good point

and how much more prudent it would be to tax enough *ahead of time* so that we can provide these services, when necessary, 100% interest-free.

[BB1]

23. Nah, that won't do.

If you're going to spend all the tax money, how will the fat cats get it?

[CRF450]

35. I'm on unemployment, no credit cards here.

Except the trusty ol debit card.

[W_HAMILTON]

36. Ain't that the truth.

That's pretty much what I do, or plan to use as my personal safety net. I have some savings, and what every is left of my IRA after the stock market plummeted. If worse comes to worst, I'll probably just put everything on my credit card, and pay just the minimum (or slightly more), and hope that keeps me going until things get better. I usually pay my balance off in full each month, but with the economy the way it is, and my hours being cut, I find that it's becoming increasingly harder to do that (actually had to take out $500 from my savings last month to pay my balance off).

[davidthegnome]

27. I've been there...

I was in that situation with my fiance years ago, when things weren't quite as rough as they are now. Let's just say I made some mistakes in my teens and ended up in a financial, and family situation I wasn't able to manage.

High school grad, lacking the money to go to college, not quite sure enough of my future to take out loans for it. I spent time working odd jobs, or telemarketing, or washing dishes at restaurants. Eventually that sort of work burned me out big time, went into a severe depression.

It was only through both my fiance and I working full time that they were able to support ourselves and two kids, and only through the extra income my odd jobs brought in that we managed to keep our heat, electricity, and telephone. When I had my breakdown and couldn't work anymore, we went broke. Moved in with her parents (neither who had really stable employment themselves), things became really miserable.

I remember one day we had to decide whether to buy milk or pay the oil bill or keep our heat (in the heart of a South Dakota winter, you don't survive too long without heat) so between the two of us we started charging things. Part of the reason I think we split up was misery over our financial situation. I did things I'm not proud of (including shoplifting milk once or twice) and I'm sure she did too.

Eventually, years later, I paid off the credit card debts, and now am up to my neck in medical debt instead. Due to my circumstances right now it will definitely be impossible for me to get out of debt for many years to come. I'm lucky my parents care enough about me to let me live with them. I'm really lucky and really grateful for that.

That poor couple... I certainly won't be the first one to cast a stone.

[dorktv]

30. I deal with a lot of credit card companies in a specific line and

so very many people are hurting.

Keeps me employed but at what cost to society?

[RagAss]

31. Maybe they were stolen cards and they were trying them all to see which worked.

[Bozita]

33. Paying off credit cards through re-financing the home is no longer an option.

It did give us the illusion of Bushco prosperity for a few years. No more.

Home values have dropped considerably nation wide.

Now the credit card companies are in deep shit.

[Horse with no Name]

52. That's terrible

I don't do credit cards.
If I need something I pay cash for it. It's not always easy...but it is doable.
I have a debit card.
But I tell you...everytime I go to the store--and the clerk asks me "DO you want to charge this?" and then looks down their nose when you say no, I'll pay cash for it...like I am scum and OBVIOUSLY don't qualify for their card pisses me off.

[riverdeep]

53. Bottom line-no one knows.

It could be some 'karmic justice' for living beyond your means and now the piper needs to be paid, or it could be a tragic story of people whose backs are against the wall trying anything they can to keep from going under.

Even if it's the first case, we might want to ask how they got the idea that having things, lots of things, is how you determine self worth? What part is personal failing and what part the natural result of a culture that indoctrinates its citizens to consume from the cradle? On one hand, we punish people morally who buy unneeded items, on the other we bemoan the state of the economy. The economy was propped up by people just like this! We needed their short sightedness, if that's what it was in this case, to keep the good times rollin'. Because the middle class sure couldn't have bought all that stuff if the mass of them had lived responsibly- they've been on the losing end of class war.

If it's the second case, I don't know if people know what's it's like to teeter on the brink financially. Sometimes you do the right things-have cash stocked away for six months, pay off your credit balances, live frugally, etc.-and life STILL gets you. Then the worry consumes your mind. You can't sleep, you can't get any enjoyment out of ordinary things, you feel both exhausted and wired at the same time. That fear at the back of your mind that one day you're going to come home and see all your furniture on the street with a formal looking note on the door, and then what? You start walking financial tightropes hoping you don't tumble, doing things that are unwise so you can buy just one more month. Do you know how many Americans live like this? A lot. And no one works for them. They just ask THEM for more money so William Moneybags the Third doesn't have to fly commercial.