Interesting article, although I do not believe that the figures cited necessarily demonstrate TMFOtter's point. The increase in credit card transactions may result from two sources: an increase in consumer debt or a substitution of one method of payment (credit card) for another (check, cash). The article assumes that the increase in transactions equates to an increase in debt but provides no evidence to suggest that this statement is true. For myself, my credit card transactions have increased to a huge degree over the last year or two because I am paying for items in a different way...my level of debt has shrunk to nearly zero even though the cash flow through the cards has drastically increased.Now, do I think my experience is illustrative of a broad trend? Frankly, no. But it IS possible....
I agree with all of georgepurcell's points except the last, as I think it does illustrate a broader trend. I use a particular credit card as much as possible, down to all my groceries and gas and books and prescriptions, to get the cash rebate (which I calculated is roughly equivalent to the value of other cards' frequent flyer miles). I pay in full every month, and get a nice check every December (if you can't pay in full, this approach would be a mistake). And it is very convenient as a tool, as I hate to carry cash or checkbooks. I know others who do the same. When you take out this kind of purchasing as well as the corporate cards mentioned in the article (a good point), the impact of all the debt is less than it seems, although I am surprised a bit--I'd have thought debt would have been decreasing over the last year.
Correct me if I'm wrong - and maybe Otter can clarify this - but credit card debt is not counted as real debt until you owe interest on it. Therefore, using a credit card as a tool for payment does not increase the national credit card debt until later in the month, after the "float" when you decide not to pay in full and leave a balance, which is the true "credit card debt".It would be terribly misleading to include as "credit card debt" all the purchases we make using the credit card as a payment tool rather than a financing tool. Once the "float" period has expired, it's a different thing.
because I am paying for items in a different way...Debit cards that deduct money directly from your checking account and work like a Visa have, in my opinion, "increased" the number of credit card transactions but not consumer debt. A true measure of debt would have to filter out these transactions.ab
You're right that the figures cited were not related to the real point- the amount of debt carried from month-to-month on those cards. And I am like you in that I buy almost everything on credit card, due mainly to a free loan and the cool rebates/cash back they give you. But I personally think that it is likely Bill Mann's point is right. I know many people of college level intelligence who are retards when it comes to debt. For example, thinking you are entitled to a brand new car when you graduate when you have no job lined up. Or simply charging everything from washers and dryers, sofas, a phat entertainment system, a car that is more expensive than you can afford...there are many, many people who have terrible spending habits that will not haunt them when the economy is as good as it is. But it will not always be that way.Anyway, the rule I live by is that if you have to carry an item on your credit card, you can't afford it. Except of course for essential items. Also, I don't think debt is acceptable on cars either. And if you do get a car loan (which usually means you are buying too nice a car), the max amortization should be 4 years on a new one and 3 years on a used. Just my opinions.
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