No. of Recommendations: 97
One of the prevalent themes I see from various posters is the idea that interest and penalties are unfair. I'd like to address that theme.

When you buy an ice cream cone, you give the cashier money (let's say, $1.50) and they give you an ice cream cone.

The $1.50 that you paid is not what it cost the ice cream store to make the cone. Let's say it cost them $.50 to make the cone, including ingredients, salaries, store rent and other operating costs all factored in incrementally. The difference between the $1.50 and the $.50 covers both their expenses and their profit margin.

Folks, that what interest is. You are buying money at a premium when you borrow it. The interest is what pays for the credit card companies rent, employees salaries, operating costs, accounting systems, etc. Not only is interest fair, but it is an inherent part of the money lending business. Since the dawn of time.

But the penalties are unfair, some say.

Well, not really. When you pay the credit card company late, they still have to pay their rent, operating expenses and employees. In many cases they have to borrow money in order to do this. It is absolutely fair that they pass this cost onto you. With respect to money, timing is everything. Late payments have a hard cost associated with them and the credit card companies have every right to charge the consumer for them. Just like if you break something in a store, you pay for it.

As much as I can sympathize with people who have made financial mistakes, I am sick to death of the constant bemoaning of interest and penalty fees. That is the natural cost of money lending businesses. Credit card companies are not evil. They are businesses. You don't walk into an ice cream store and demand free ice cream, do you? Why on earth would anyone have the expectation of free money?

And, here's the best part. If you can't afford the interest or the penalties, you have a wonderful option. Don't borrow the D***n money. That's right. Pay cash. Or don't buy the item that you can't afford.

To be clear, this is not directed at those who are paying their debts as agreed, or even trying to. I don't have a problem with people in debt, provided that the person in debt understands that they were half of the debt equation. As well, sometimes people get sick, laid off. Life happens, and I understand that.

But, if you're going to buy a bunch of stuff that you like and then turn around and blame the credit card companies for fleecing you when you can't afford to pay for that stuff, you will get no sympathy from me. Sell the stuff and live up to your obligations. Or don't, and file bankruptcy. But whatever you do, don't vilify the creditors. It's not their fault you can't pay them.

Just ask yourself - why do you think you're entitled to free money?

And for the folks who will point at me with "High horse" comments, know that I have debt. That I am diligently paying. Consumer debt. Stupid debt. But it's mine, and I'm paying it. I don't blame Bank One for my too-expensive couch interest.


Comments welcome.

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