No. of Recommendations: 0
In the article, "The Threat of Bad Consumer Debt", as many others have pointed out, credit card use is incorrectly used to make statements about building up debt. The article doesn't really present any data that shows that debt is actually rising.

There is a real push on to get people to use credit cards instead of cash. The data prsented in the article demonstrates that the system is having more success at getting people to use their credit cards more. I used to use cash for almost all of my day to day puchases. Now I use my credit card whenever I can.

Why do that? Well it costs me money to go to an ATM and get cash. It costs me up to 3% of whatever cash I get, and this is the only way I can get cash!!! Well, I can write a check for a few dollars over my bill at a few merchants and get a small amount of change back. But I have no local bank account to take cash out of. I have to use an ATM to get cash (or get a cash advance at a bank - same thing). If I use my credit card, there are built in kick backs so that my costs are reduced by about 0.75 % (everything costs the same whether I use my credit card or cash). That means I can reduce my cash expenditures by 3.75 % every time I use my credit card instead of cash. If I buy on the internet, I can add 8 % sales tax savings on top of that.

Do I build up any debt? No!!! Like everyone else has said, we pay it off as it occurrs.

But what an incentive to stop using cash and make maximum use of the credit card! The data in the article indicates that most people have figured this out and are making maximum use of their credit cards. That's what our current financial system rewards us to do. We get more for less.

I don't know where you would get debt data, but the article seems to be poorly researched in general. Too few facts to back up the point that the author is trying to make.
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.