Author Topic: Have you noticed your credit card interest rates...........  (Read 17937 times)

Offline Lannis

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Re: Have you noticed your credit card interest rates...........
« Reply #60 on: August 28, 2016, 05:44:03 PM »
The seller gives a portion of every credit card sale to the credit card company for the convenience of collecting payment via customers' cards. The credit card company is, in effect, giving the money to the vendor in advance - and thereby assumes the collection risk from the buyer. Fees can be complex and based on transaction, dollar volume, sliding scales - or some combination. For simplicity, let's say the credit card company takes 3% from the seller. Then it gives 1% back to the customer (long after the customer has paid). Companies estimate what percentage will pay cash and what will pay by credit. Some mark up their products to cover the average credit card transaction costs. But I think most factor in CC fees for every transaction - and those who pay cash are, in effect, failing to claim their discount.

The credit card industry philosophy is essentially this:  To make transactions convenient, we'll advance the money, take net 2% of every sale for ourselves, and if any borrower doesn't pay us on time, we'll make money on that too.

In my own business I look at the amount we pay annually for the privilege of taking credit cards and it is enough to put several new motorcycles in my garage every year... but... when a customer pays with credit, the business gets cash immediately and doesn't have to spend any time/money on collections or facilitating other types of transactions. Whether it's a necessary evil or a cost of doing business depends on one's point of view. I see it as a cost of doing business - and I take advantage of airline miles, cash rewards, etc. as a consumer (and never pay interest).

Credit limits also provide a nice safety net in case of emergency - and the ability to take advantage of an opportunity (new guzzi content).

As to the original question re rates - if you have a good history and they've raised the rates, just call and ask to be put on a lower-rate program - you can threaten to cancel and apply for a new, low-rate card if asking nicely doesn't work.

That's an excellent summary of how the system works.   AND how you can make it work to your advantage.    I only spend about $20,000 a year using the credit card (groceries, equipment parts, most on-line purchases) so I send for the little $200 check each year as a result.   Not much but can't get that when you pay cash ... !

Lannis
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Offline Aaron D.

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Re: Have you noticed your credit card interest rates...........
« Reply #61 on: August 28, 2016, 09:34:25 PM »
What is a credit card?    I do have a debit/credit card with Chase. 36.?? something rate.  I have never used  it.  Unbelievable that a bank can make such excessive profits.  Paying less  than 1/2% interest on their capital and then selling at 72 times cost?   What other business can get away with this?  The overhead on the capital is very small.  Not like manufacturing or retail.

Uh..no.

Offline Kev m

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Re: Have you noticed your credit card interest rates...........
« Reply #62 on: August 29, 2016, 03:36:58 AM »
The sophisticated can apply for lines of credit or home interest loans. Those are scrutinized a little more closely now than they were a few years ago, and I'll bet a majority of us on this forum would qualify. But would you take one to buy a mint T-3? It's tempting at 2.9% for the first year. Almost free money, for a while.




Just a related note. I've had equity lines of credit in the past, but the landscape has changed significantly since the housing crash.

The amount of hoops necessary for a regular mortgage these days is incredible compared to pre-07, and I suspect there have been similar complications to the home equity market.

Our own bank turned us down for one last year, with over $100k in equity, credit ratings north of 800, and not insignificant income. The stated reason for rejection was "insufficient equity" which was shocking to us.

« Last Edit: August 29, 2016, 03:37:46 AM by Kev m »
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Offline Aaron D.

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Re: Have you noticed your credit card interest rates...........
« Reply #63 on: August 29, 2016, 06:09:18 AM »
The real reason is the price of money is too low. High interest, high profits allow banks to take more risk. Some underwriters and bank boards get very scared..

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Re: Have you noticed your credit card interest rates...........
« Reply #63 on: August 29, 2016, 06:09:18 AM »

Offline Cool Runnings

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Re: Have you noticed your credit card interest rates...........
« Reply #64 on: August 29, 2016, 08:13:54 AM »

Just a related note. I've had equity lines of credit in the past, but the landscape has changed significantly since the housing crash.

The amount of hoops necessary for a regular mortgage these days is incredible compared to pre-07, and I suspect there have been similar complications to the home equity market.

Our own bank turned us down for one last year, with over $100k in equity, credit ratings north of 800, and not insignificant income. The stated reason for rejection was "insufficient equity" which was shocking to us.

HARP ->FHFA Announces New Streamlined Refinance Offering for High LTV Borrowers: HARP Extended through September 2017

http://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-New-Streamlined-Refinance-Offering-for-High-LTV-Borrowers-HARP-Extended-through-September-2017.aspx

Offline JJ

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Re: Have you noticed your credit card interest rates...........
« Reply #65 on: August 29, 2016, 08:26:10 AM »
Best rule of thumb for ANY credit card / credit card rates.............. ...just PAY THEM OFF each month - then you have 0% interest!! :shocked:

"Debt is the modern form of slavery..." :cool:

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Offline Cool Runnings

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Re: Have you noticed your credit card interest rates...........
« Reply #66 on: August 29, 2016, 08:40:00 AM »
Best rule of thumb for ANY credit card / credit card rates.............. ...just PAY THEM OFF each month - then you have 0% interest!! :shocked:

"Debt is the modern form of slavery..." :cool:

JJC

Why even use them then? Do you like being tracked on every purchase? Why not just carry a few huns instead?

Offline Aaron D.

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Re: Have you noticed your credit card interest rates...........
« Reply #67 on: August 29, 2016, 08:44:57 AM »
The tracking thing cracks me up! Sure, use cash if you worry about that. Don't carry a cell phone if you don't like being tracked..

The convenience of a CREDIT card is safety in the purchase. If my wallet is lost or stolen, only a small amount of cash is lost-if any.

However, a debit card, not so much. Avoid using those for purchases.

Offline Lannis

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Re: Have you noticed your credit card interest rates...........
« Reply #68 on: August 29, 2016, 09:00:13 AM »
Why even use them then? Do you like being tracked on every purchase? Why not just carry a few huns instead?

Three reasons, for me anyway:

1) On line purchases (probably half of what I spend)

2) Car/equipment rentals.   Can't do that with cash.

3) Emergency purchases on a trip.

And if you're carrying $2500 in cash and you lose it, you lose it.   Cards (debit or credit), you don't lose a thing.   Banks don't treat debit and credit cards differently when reimbursing you for a loss - it's all funny money anyway.

Come to think of it, cash is funny money too, but as long as we all believe it's worth something, then it is ....

Lannis
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Offline Cool Runnings

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Re: Have you noticed your credit card interest rates...........
« Reply #69 on: August 29, 2016, 09:10:18 AM »
The tracking thing cracks me up! Sure, use cash if you worry about that. Don't carry a cell phone if you don't like being tracked..

The convenience of a CREDIT card is safety in the purchase. If my wallet is lost or stolen, only a small amount of cash is lost-if any.

However, a debit card, not so much. Avoid using those for purchases.

Correct, no shill-phone either, worried about the boogieman eh. How often does one get their wallet stolen or lost? Also, those small venders luv when you use your CC on a cup of coffee.

Offline Lannis

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Re: Have you noticed your credit card interest rates...........
« Reply #70 on: August 29, 2016, 11:08:35 AM »
Best rule of thumb for ANY credit card / credit card rates.............. ...just PAY THEM OFF each month - then you have 0% interest!! :shocked:

"Debt is the modern form of slavery..." :cool:

JJC

There's an 18th century quote that goes like that.

"Gold is the money of kings, silver the money of gentlemen, debt is the money of slaves".

Lannis
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Re: Have you noticed your credit card interest rates...........
« Reply #71 on: August 29, 2016, 11:11:47 AM »
Want to beat the system?  Over pay your account and carry a positive balance.  Since saving accounts do not pay any interest to brag about and what is paid is taxable income and credit card interest is not deductible for most people.

When I had over draft protection on my debit card, I would pay the bank back within a day or less and add a couple of extra dollars onto the payment.  The bank would send me a statement monthly for a $0.29 balance and then after 3 months, mail a refund check.  If you are not regular user of your credit card and plan on using it, go on line to your bank, make a payment to the credit card account in the amount you expect to spend while on vacation or car rental or airplane tickets or where ever.  Then you will not be charged any interest for the using the credit card. 

Offline Lannis

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Re: Have you noticed your credit card interest rates...........
« Reply #72 on: August 29, 2016, 11:24:06 AM »
Want to beat the system?  Over pay your account and carry a positive balance.  Since saving accounts do not pay any interest to brag about and what is paid is taxable income and credit card interest is not deductible for most people.

When I had over draft protection on my debit card, I would pay the bank back within a day or less and add a couple of extra dollars onto the payment.  The bank would send me a statement monthly for a $0.29 balance and then after 3 months, mail a refund check.  If you are not regular user of your credit card and plan on using it, go on line to your bank, make a payment to the credit card account in the amount you expect to spend while on vacation or car rental or airplane tickets or where ever.  Then you will not be charged any interest for the using the credit card.

Our bank card hates for you to do that, and tries to make it difficult.   If you have a zero or positive balance, you can't pay ahead.   But if you have a $200 balance, you can pay $400 and treat the card as an interest-free savings account, which is what the bank does with your cash balance anyhow ....

Lannis
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Offline normzone

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Re: Have you noticed your credit card interest rates...........
« Reply #73 on: August 29, 2016, 12:00:43 PM »
If my wallet is lost or stolen, only a small amount of cash is lost-if any.

However, a debit card, not so much. Avoid using those for purchases.

Oddly enough, my new ATM card just arrived, and in the page accompanying it there were brags about the same level of protection that only credit cards used to have, so something is driving the market in that direction.
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Offline Aaron D.

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Re: Have you noticed your credit card interest rates...........
« Reply #74 on: August 29, 2016, 03:16:20 PM »
Well, Norm, they mnay say that, but with a credit card the bank works to protect THEIR money. With a debit card, they are protecting YOUR money.

In a chargeback on a credit card it is generally the acquiring bank that is exposed, and they will pass it to the merchant if possible.

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Re: Have you noticed your credit card interest rates...........
« Reply #75 on: August 29, 2016, 03:24:08 PM »
  To me it seems that people who constantly discuss money actually have none....Without being disrespectful, some of you ,based on the things you say and what you purchase, are in deep debt...That's ok, it's good for the merchants...

Offline Cool Runnings

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Re: Have you noticed your credit card interest rates...........
« Reply #76 on: August 29, 2016, 03:35:08 PM »
  To me it seems that people who constantly discuss money actually have none....Without being disrespectful, some of you ,based on the things you say and what you purchase, are in deep debt...That's ok, it's good for the merchants...

Money, it's A gas.......

« Last Edit: August 29, 2016, 03:35:28 PM by Cool Runnings »

Offline Lannis

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Re: Have you noticed your credit card interest rates...........
« Reply #77 on: August 29, 2016, 03:40:22 PM »
 
To me it seems that people who constantly discuss money actually have none....Without being disrespectful, some of you ,based on the things you say and what you purchase, are in deep debt...That's ok, it's good for the merchants...


So (upon reading your impression) I went back and read every post on this thread.   Only ONE person (CoolRunnings) currently says he's running a $3500 line of credit (not a credit card, probably a 3% equity or unsecured personal line).   Not unreasonable in an era of low to zero interest.

Every other person that posted said that they are NOT running a balance on their credit card, that they pay it off every day, every week, or every month, and don't pay a cent of interest; many have said they are taking advantage of the "cash back" feature of their card and getting back 1% of the 2.5% interest that the MERCHANT pays the CC company.

Sure, the "world at large" is running in debt, buying stuff they can't afford, defaulting on their payments and letting the other interest-payers cover their cheating .... but it doesn't sound like this WG bunch is doing anything like that.   All I've heard here is good ideas of how to take advantage of the convenience of a card, and letting other people pay the cost ... ?

When it comes to retirement planning, investing, or using credit wisely, it's a big advantage having a bunch of tightwad nickel-squeezing old toots to get advice from ...

Lannis
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Offline Cool Runnings

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Re: Have you noticed your credit card interest rates...........
« Reply #78 on: August 29, 2016, 03:53:38 PM »
So (upon reading your impression) I went back and read every post on this thread.   Only ONE person (CoolRunnings) currently says he's running a $3500 line of credit (not a credit card, probably a 3% equity or unsecured personal line).   Not unreasonable in an era of low to zero interest.

Every other person that posted said that they are NOT running a balance on their credit card, that they pay it off every day, every week, or every month, and don't pay a cent of interest; many have said they are taking advantage of the "cash back" feature of their card and getting back 1% of the 2.5% interest that the MERCHANT pays the CC company.

Sure, the "world at large" is running in debt, buying stuff they can't afford, defaulting on their payments and letting the other interest-payers cover their cheating .... but it doesn't sound like this WG bunch is doing anything like that.   All I've heard here is good ideas of how to take advantage of the convenience of a card, and letting other people pay the cost ... ?

When it comes to retirement planning, investing, or using credit wisely, it's a big advantage having a bunch of tightwad nickel-squeezing old toots to get advice from ...

Lannis

The ones with high CC debt ain't sayin' so. Human nature, only say good things regarding ones self.

The Average Credit Card Debt in America is $3,779

https://www.credit.com/debt/average-credit-card-debt/


TransUnion's estimate of average card debt per borrower, at $5,234


To define the average American's credit card debt, CreditCards.com turned to impeccable sources -- and came up with a multitude of credible numbers.



•$1,098, per card that doesn't carry a balance.
•$1,648, per account, U.S. adults with a credit report and Social Security number.
•$3,600, per person, resident U.S. adults.
•$5,234, per cardholder, excluding unused cards, store cards.
•$5,596, per U.S. adult with credit card.
•$5,700, per household with credit card debt.
•$7,743, per card that usually carries a balance.

For an in-depth look at all types of credit card debt, see "Credit card debt statistics"
 

When it comes to credit card debt, that average Joe is one elusive fellow.

All of the numbers above are from impeccable sources defining "average credit card debt" for Americans. As you can see, the numbers vary greatly, so depending on how debt is measured, we're either doing pretty well when it comes to managing our credit cards, or horribly.

"You think these things are simple, but they're more subtle and complex than you imagine," said Ezra Becker, vice president of research and consulting at TransUnion's financial services unit. His firm came up with the $5,234 number, which includes actual amounts spent and reported to the giant credit bureau, but excludes unused cards and store cards. 

The hunt for average
 The complications stem from different ways of defining credit cards, different ways of counting the card-carrying population, and the different ways people use their cards. Finding the typical balance is like the parable of the blind men identifying an elephant from the shape of its parts -- each observation is part of a larger truth.

The Federal Reserve, which runs the national banking system, is a natural place to start looking for the average credit card balance. The Fed's monthly G.19 Consumer Credit report -- drawn from banks' lending reports -- shows revolving debt of $880 billion in July 2014. Divided by the U.S. Census Bureau's estimate of the U.S. adult population in 2013 of about 242.5 million people, that comes to just over $3,600 each.

However, the revolving debt category includes bank loans and finance company loans other than credit cards, and many people over 18 do not have a credit card. Adjusting for the fraction of adults who do not have a card, the per person balance is about $5,121.

The Federal Reserve Bank of New York tries for a more precise look at credit card debt by excluding other types of revolving debt. The average credit card balance in the U.S. was $1,648 per account in the second quarter of 2014.


http://www.creditcards.com/credit-card-news/average-credit_card_debt-1276.php
« Last Edit: August 29, 2016, 03:54:29 PM by Cool Runnings »

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Re: Have you noticed your credit card interest rates...........
« Reply #79 on: August 29, 2016, 04:16:05 PM »
 By saying some are carrying high dept is based on their new cars ,trucks and several new bikes,a fine house in good neighbor hood and perhaps kids in college...Not just what they say about credit card balances....

Offline Lannis

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Re: Have you noticed your credit card interest rates...........
« Reply #80 on: August 29, 2016, 04:23:50 PM »

The ones with high CC debt ain't sayin' so. Human nature, only say good things regarding ones self.


And from RER ....  "Without being disrespectful, some of you ,based on the things you say and what you purchase, are in deep debt...That's ok, it's good for the merchants..."

I do understand human nature, but I'd also stake a month's pension check that the guys who have posted on this list (including me, and I KNOW my situation) who say they carry no credit card balance actually carry no credit card balance.

Do other guys on the list who have NOT posted carry credit card balances?   I'm sure they do, but they are wisely not discussing that, as they've realized it's not a good financial decision.

Do the guys who have posted saying they have no credit card balances have OTHER debt, on houses, cars, businesses, motorcycles?   I'm sure they do; but ....

.... the point of this thread was the massive, silly interest rates on credit cards.   I think everyone agrees that's a bad idea, even though many (as indicated by the statistics) do it.   Carrying a 2.9% mortgage at the moment is NOT a bad idea, but I don't think most of us had that in mind when discussing it ....

Overall, after reading 8 years and 500,000 posts worth of material on this list, I think that most people here are handling their finances pretty well, from what they say.   Lots of good advice, as you'd expect from someone who runs a Guzzi ....

Lannis
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Offline Randown

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Re: Have you noticed your credit card interest rates...........
« Reply #81 on: August 29, 2016, 05:40:41 PM »
Quote
Neither a borrower nor a lender be . Do not forget , stay out of debt . Think twice and take this good advise from me , guard that old solvency .

^^^ Not totally applicable anymore.

People can become trapped, credit gets misused not unlike alcohol or gambling - it is interesting it doesn't seem to draw the vitriol that talking about alcohol does.

Yet, if there was no one taking out loans you & I would have NO money. EVERY dollar came into existence from someone else's debt.

This is why you'll hear credit is the lifeblood of our (debt based) economy. No credit, no money.

Example:
You deposit $100,000 in a bank savings account.
Bank keeps $10,000 in reserve.
Banks are allowed to create 10X the balance in new money to be lent out.

Did you get that? The banks create $900,000 out of thin air (10 x $90,000 = $900,00) & they get to charge interest on it.

It's a weird system, most are unaware of what credit & money is. This quote is often attributed to Henry Ford...

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."

Fractional reserve lending explained in one minute: https://www.youtube.com/watch?v=-09ap6zIB6I


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Orange Guzzi

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Re: Have you noticed your credit card interest rates...........
« Reply #82 on: August 29, 2016, 05:51:00 PM »
Last week when the local internet went down, the whole local world stopped. 

I tell everyone to put some good hard cash back for an emergency.  Not just some change, but several thousand dollars.  Reach in your pocket and see how far you can go.  If not far, you will be one of the first ones in the government assistance line.  My plan, be the money changer when the time comes. 

Penderic

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Re: Have you noticed your credit card interest rates...........
« Reply #83 on: August 29, 2016, 05:56:49 PM »
We planted a couple of these money trees but I think we got bananas instead. Darn.


 :wink:



Yes, we have no bananas.
« Last Edit: August 29, 2016, 06:34:33 PM by Penderic »

Offline Lannis

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Re: Have you noticed your credit card interest rates...........
« Reply #84 on: August 29, 2016, 06:08:06 PM »
Last week when the local internet went down, the whole local world stopped. 

I tell everyone to put some good hard cash back for an emergency.  Not just some change, but several thousand dollars.  Reach in your pocket and see how far you can go.  If not far, you will be one of the first ones in the government assistance line.  My plan, be the money changer when the time comes.

Not a bad idea, but when you say "hard cash" do you literally mean "hard cash" or do you mean the funny green paper stuff we trade back and forth?

Depending on the type of emergency, I think the smart guy will have dropped back to that soft sort of metal that's been good for 10,000 years, regardless of local conditions.

But maybe it won't get that bad.

Lannis
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Re: Have you noticed your credit card interest rates...........
« Reply #85 on: August 29, 2016, 06:15:56 PM »
Do the guys who have posted saying they have no credit card balances have OTHER debt, on houses, cars, businesses, motorcycles?   I'm sure they do; but ....


Lannis

 No but, debt is debt... And yes I know the tread is about CC debt............... ......... :wink:

Offline Randown

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Re: Have you noticed your credit card interest rates...........
« Reply #86 on: August 29, 2016, 07:12:48 PM »
Mr. Down , I give you exhibit A . The Penn Square Bank , Oklahoma City Oklahoma .

 Dusty


That story serves to illustrate how institutions are inter-linked & dependent upon one another with the potential to behave like domino's if pushed too far. That and a propensity to push too far.

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Offline Lannis

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Re: Have you noticed your credit card interest rates...........
« Reply #87 on: August 29, 2016, 07:14:29 PM »
No but, debt is debt... And yes I know the tread is about CC debt............... ......... :wink:

Well, just to be a little picky, and maybe telling you something you already know ....

... but debts are not necessarily equal.   If I borrow $50,000 on 84 payments at 4% interest to buy a Dodge Ram 3500 Crew Cab Dually pickup truck with all the gadgets so I can drive it to the store and show it off to my boys and go hunting in it ... that isn't the same as borrowing $50,000 to help buy a used Peterbilt so that I can haul loads and produce income and pay the truck off and still have an asset that is worth something and is still making me money.

Or if I open a car repair garage and borrow $90,000 to buy a full set of Snap-On tools and cabinets, and I use those tools to make money, and $15 of my $90 shop rate is paying off those tools, then in 3 years I will have paid off those tools, made a living, and I still have the tools!   If I hadn't borrowed the money, I couldn't have made a living during that time.   But if I borrowed $90,000 for a Winnebago, and drive it around the country getting 6 MPG and paying $60 a night to park up, in a few years it's worth almost nothing; "enjoyment-wise" it might have been worth it, but I have no money at the end, unlike the Snap-On set.

Same for a house.   Borrowing money in order to be able to make MORE money is how the world works.   Borrowing money for junk you don't need and can't make the payments on is the bane of the financially dim .....

Lannis
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Offline Scud

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Re: Have you noticed your credit card interest rates...........
« Reply #88 on: August 29, 2016, 08:34:20 PM »
Neither a borrower nor a lender be,
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.

Hamlet Act 1, scene 3, 75–77
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Offline LowRyter

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Re: Have you noticed your credit card interest rates...........
« Reply #89 on: August 30, 2016, 12:22:10 AM »
Well, just to be a little picky, and maybe telling you something you already know ....

... but debts are not necessarily equal.   If I borrow $50,000 on 84 payments at 4% interest to buy a Dodge Ram 3500 Crew Cab Dually pickup truck with all the gadgets so I can drive it to the store and show it off to my boys and go hunting in it ... that isn't the same as borrowing $50,000 to help buy a used Peterbilt so that I can haul loads and produce income and pay the truck off and still have an asset that is worth something and is still making me money.

Or if I open a car repair garage and borrow $90,000 to buy a full set of Snap-On tools and cabinets, and I use those tools to make money, and $15 of my $90 shop rate is paying off those tools, then in 3 years I will have paid off those tools, made a living, and I still have the tools!   If I hadn't borrowed the money, I couldn't have made a living during that time.   But if I borrowed $90,000 for a Winnebago, and drive it around the country getting 6 MPG and paying $60 a night to park up, in a few years it's worth almost nothing; "enjoyment-wise" it might have been worth it, but I have no money at the end, unlike the Snap-On set.

Same for a house.   Borrowing money in order to be able to make MORE money is how the world works.   Borrowing money for junk you don't need and can't make the payments on is the bane of the financially dim .....

Lannis

yes, but if consumers didn't go into debt and purchase Dodge pickup trucks that mechanic wouldn't have customers and would have never taken a loan to buy Snap-On tools in the first place.  Worse yet, the car company would have fewer customers ...well you can see where that's going?

Yes, it does take producers but there would be no producers without customers buying services and products. 

Moral: credit can be useful tool to grow the economy and benefits both producers and customers.  And the economy won't function unless there is balance of both types of credit.
John L 
When life gets you down remember it's one down and the rest are up.  (1-N-23456)

 

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