I also think that a lot depends on the cost of borrowing. A 4-6% car loan means that you buy on credit at a reasonable cost. A home mortgage at 6% deductible in a 30% bracket costs 4%, and you'd have to pay rent otherwise. Maybe it will appreciate, maybe not. However, borrowing a large amount at 18-22% means that you may never get out from under. That's why many of us finance cars knowing they'll depreciate, but keep the credit cards paid up monthly. (Let's not get into the buying vs. leasing argument here. Both are ways to finance a depreciating asset.)

 

A very good point. The cost of money is and should be a significant factor.

I agree, there is no good reason to "borrow" money from a credit card company. The cost is way too high. In addition, and a lesser known fact, is that once you owe money to a credit card company past the initial 30 day interest free period, all charges accrue interest. In other words, if you pay your bill in full, your next charges do not accrue interest unless you don't pay the next bill in full when due. If, however, you are paying less than the full amount, all of your future charges accrue interest from the day of the charge. It is very costly to carry a credit card balance. And, this interest can be compounding at rates in the excess of 22%.

 

Yes, the CC companies are thieves. Don't use your credit cards to borrow!!!!

Good to bring that point up, Rob, about *any* new charges immediatly getting slammed! Also, it's worth noting that vendors are being charged a percentage on every purchase. We, the consumers, don't see that, but it surely affects the businesses. Frankly speaking, I think it's extortion (hence my "thieves" comment) and should not be legal.

 

Rob, that's the first I have heard of that. Thanks. Not that it matters because I don't believe in paying any CC interest, but I will pass it along to my kids. What a racket CC's have become. They didn't seem such a bad thing at 4-5% when we were young but when they rocketed to into the double digits and never returned we considered them thieves as well.

 

[QUOTE=Chazmo,Aug 20 2004, 09:37 AM] Yes, the CC companies are thieves.

 

I received this insert with my monthly Household Bank Mastercard bill. I suppose that they are becoming concerned with the state of credit card debt too. It seems to me that this is an attempt to shield themselves from the potential suits arising from credit card debt.


I am especially impressed with, and suprised by the lines

"Do pay your bill on time, every month"
"Do pay more than your minimum payment"
"Don't buy it if you can't afford it"

Strange to hear this from a credit card company that is glad to charge 22% on balances. I suppose they can use this to say, "We warned you".

 

kinda like Phillip Morris running psa's to help people stop smoking.

 

Very much so, Charlie. Very much.

 

Hey chazmo,
swing by and see

actually we got our house in '99 right before the knee in pricing took off.
and yes I have a hard time understanding who can pony up 7 figures for a house. never mind an entire nieghborhood of the same. the good news is one neighborhood like that and you fund a school.

back to housing cycles.
any area will reflect the industry health.
houston mid 80's killed by the crash in energy.
new england, late 80's early '90s was killed by a technology shift.
from the 70s to that time minicomputers dominated the market.
digital equipment, pr1me computer, data general, wang all resided within
a 20 mile radius. When the PC's came to market dominance, they all nosed over at the same time, dumping around a quarter million upper income people into the market. when you fold in the ripple factor, IE money they are not spending in the grocery, causing grocer job losses etc. it gets ugly quickly.
Some left the area, some went off and strugled and created the networking industry that dominated the area from '97 to '02
fortunately we weren't hurt as badly this time when the telecoms crashed but I can't figure out why. maybe biotech helped soften the downside.


but back to debt.
it is a tool and any tool can be dangerous in the hands of an idiot.


and talking about the credit companies. we mailed a payment to a credit card company. It had been a busy month so it had a fairly high balance, enough so we wouldn't want an extra check floating around out there for that amount. check gets lost in the mail. so after late fees and stop payment charges on the original check, we're out over $50 because the post office lost the d@mn check
we had to argue with credit card company for 15 minutes so they wouldn't charge us another returned check fee if the original check finally shows up.

oh well. it's online billpay from now on.

 

I have mostly been doing this...direct from my checking account You must be aware that different banks require a different time lapse before crediting your account....sometimes hours/ sometimes days.

It's listed in the 'fine print' of the website I got caught once or twice with a resulting 'late fee' but got CS to waive it for a 'first time offender'