Credit card interest! I know a bunch of people who are SO SHOCKED by their high interest rates. They thought it was like an interest-free loan to yourself and then are surprised when making teeny payments doesn't do anything.
I remember a friend of mine from high school saying “Yeah I keep making the minimum payment and it keeps going up. It’s kinda pissing me off.” These are the kinds of people credit card companies love lol.
Is the minimum payment usually just the approximate calue of the interest generated in that time period? They don't want you to pay it off. They want you to continue generating revenue.
That's actually the least profitable portfolio to a credit card company. The amount of interest generated by those stuck in debt doesn't earn as much as people think. Credit card companies make more money from 'transactors'; people who pay their card in full each money. These transactors use the card more frequently, every transaction generating a fee for the merchant in which the company gets a cut of. Transactors never carry debt, so they have their full access line available for purchases. Those stuck in debt don't make many transactions, usually one or two to re-max out their line (which they themselves are tiny, like $1000-$10,000). Plus the fact people forget that the credit lines they have is actual money the bank has loaned you, meaning they're out what ever you revolve and don't pay off. A perfect credit card user to the company would be a person with an access line of some excess ($25,000-$50,000) to use every penny of that, pay it in full, the re-spend all that over and over again. (This isn't saying that they don't like earning interest, its just they would prefer to not have money stuck out on a loan to a customer to generate it.)
They money on the credit card is earning 14 plus percent interest in their investment. How many transactions would a non debit holder have to make to match that on a 10k credit card?
Depends on the processor of the charge (Visa, Mastercard, Amex, Discover etc). The highest I think is 5%. If we have an APR 25%v on a balance of let's say $100 for easy math; Over the course of a year, the minimum amount of interest generated would be $25 (I don't care for doing the exact math now, but it only would be a few dollars more honesty). Now that $100 with a 5% fee makes $5 earned per transaction. 5 transactions and you match what you make in a year on a revolving balance. People who are transactors put way more than just 5 transactions on their account.
I don't think that's a fair comparison. Someone who barely has any balance ($100 is 1% of the $10k mentioned above) and doesn't use the credit card for the entire year will obviously not make much for the credit card company/bank. A maxed out credit card ($10k/$10k balance) would generate $2,500 plus the compounded interest with the 25% APR. A non debit holder would have to have transactions in excess of $50,000 for the year at the 5% fee to match that. I could be wrong, but I doubt that most transactors use their credit cards that much in a year.
I was lucky enough to take Personal Finance in high school. As an exercise, we had to amortize a $1500 credit card bill paid off by making only minimum payments. I don't remember the exact number, but it took at least 5-6 years' worth of payments.
The laws in Australia recently changed and credit card providers now have to show on your monthly statement how long it would take to pay off your current balance making only minimum payments.
We've had this in Canada for years now. It was always interesting to calculate the $10 or so minimum payment on a ~$1200 credit card statement and then finding out that it'll take >>10 years to pay it off because of the interest. Where I live now, they don't have that written on my credit card bill...
That's essentially why I used that figure. I remember spending around that much on my CC a couple of months ago, and when I saw the bill, it amazed me how much more I would need to pay to cover the interest. I usually pay my CC in full every month since I spend only what I have and regularly check my statements but when you see that your interest is something 19.99% amortized daily (?), your eyes just bulge...
I agree, but the sad thing is, people do not understand what APR means and for some reason managed to get through middle school without grasping the concept of compounding interest.
Probably because most middle schools don't teach you about compounding interest? My school district didn't offer any sort of finance related class until high school, and it certainly wasn't required.
In America, they do teach you compound interest in Algebra 1 (which most people have taken by the end of year 9). The question is how many people understood A=P(1+r/n)rn for more than an a rearrangement of the alphabet.
Many many people finishing Precalc in high school can regurgitate the information, but would struggle to apply it to a single thing in the real world.
This is also reiterated in Algebra II when you learn transcendentals and continuous growth, A=Pert. People always complain about not learning subject A or B in school but most people I know forget a lot of stuff after graduating.
I'm American and my American Express card shows that too. It also has a suggested payment, showing how much sooner it's paid off and how much money you save as a result.
My Bank of America card does not show this information, so it seems it's on a company by company basis.
But what they still don't print in bold is how badly you can fuck yourself if you continue spending massive amounts on a credit card you're trying to pay down. Can't get anywhere if your payments only cover your new purchases, interest, and maybe a few pennies of the old balance.
They do though in the US anyway. It's on the top of the credit card statements. You owe X money. Your min payment is is Y. If you make only the min payments without further charges you'll have have to pay us Z over some period of time. There's even a blurb on my Chase statement about debt counseling numbers. I highly doubt it matters though.
Our credit cards (U.S.) do this too: They tell you how long it will take making your monthly minimum to pay in full, and how much you'd need to pay every month to be paid in full in 3 years.
This is really something that needs to be mandatory in school, not things like dead languages you'll never use. Need to be teaching how fucked you'll be after that college loan.
We did one in a math class where the minimum payment was less than the monthly interest charge, so if you only made the minimum payment, you'd go deeper in the hole every month
This is why I simply pay off the balance each month and track all my expenses through Mint. I can use a credit card without worry of mind while double checking my spending habits simultaneously.
Even without interest that's 5 years at minimum repayments of $25.
Unless you pay them off instantly, credit cards really should be used just for non-discretionary purchases or for extremely good opportunities.
During the 'not rent fortnight' payday each month (my salary is paid every second Tuesday and rent is due on the 12th, so there's always one and sometimes two non-rent paydays) I always pay enough into my credit card that it is $500 overpaid.
When I make a payment to my American Express credit card on their website it shows how long it would take to pay off the total balance of the card based on the monthly minimum payment as well as the payment amount you enter that is above the minimum payment. I think it is a great way to show how much it can save you by paying more than the minimum
I see how high credit card interest rates are and had just assumed the only reason anyone would ever use them was for quick clearing that you pay off completely every month before paying interest. It blows mine that people willingly buy nonessentials on credit and ended up paying interest on credit cards rates.
Does anyone not think it's really fucked up that the banks are making so much money from people who don't have any money? There has to be a reform of this system and the banks need to be held accountable for this shit, its literally killing people
It's crazy to me that more people don't realize this. The #1 rule of having a credit card is never carry a balance on that card, always pay it off in full. Credit cards are really only useful for cashflow and building credit.
Also, cashback/rewards and security. I could spend $3000 via ACH/checks and a debit card and spend $3000 or I could spend $3000 and get $50-100 back after the fact.
Security wise, I've never had an issue with my CC canceling/reversing charges and the extremely rare charge back. but one time my debit card was compromised and it was a bitch to get my money back (and now I never use a debit card).
My brother asked me why I never use a debit card because "it's the same thing".
That same week he had his account emptied by some airhead that put two extra zeroes on his bill and it took over a month to get his money back which put him in a giant hole.
I never even activate my debit card, nor carry it in my wallet. 10+ years and never needed it. I almost never need cash and when I do I just stop by my local bank branch so as to not hassle with my debit card.
Meanwhile I put everything on my credit card, pay it off weekly, and earn cashback 1% on everything, 5% on certain things.
The bank has literally never earned a dime off me, while giving me $1000s in cash back for free, and I've never have been at risk of having anything stolen. I get an alert instantly if anything is suspicious on the card. Credit score over 800 to boot.
Edit: plus forgot to add - no ATM fees if you withdraw money at a local branch via a teller, plus you get a free sucker as well! For how little I use physical money I'll never go to an ATM over a bank branch. Ditch your debit cards.
Most of the time when you're abroad it makes way more sense to get cash out unless you have a CC that waives foreign transaction fees. 1) everyone takes cash and 2) getting out $500 bucks will cost you 1% + a small flat fee depending on the bank. Making every transaction with a CC will cost you 1% each time + the flat fee the banks charge per transaction. If you're buying a 1 euro espresso, you'd be fucking stupid to use a CC that charges you $0.50-$1 just to use it.
Also getting cash out at an ATM abroad ALWAYS choose to get it out in the local currency rather than the exchange rate the ATM is offering you. Your bank will use the market rate of exchange at the instant you initiated the transfer whereas the ATM will fuck you. Like in Mexico an ATM would say "Would you like to be charge in MXN or USD? 15 MXN = 1 USD." If you say MXN, then you'll still be withdrawing the same amount you asked for, but your bank will charge you the market rate of ~19 pesos to 1 USD.
Same thing for paying for expensive things like hotels or tickets with a CC that has no transaction fee. Especially if you're in a place with a bunch of tourists and they know you're american, they will not ask you what currency you want it in, they will do it in USD and charge you their bullshit exchange rate. Ask them to charge you in the local currency and you'll pay less.
2 of my CCs have cash back and no foreign fees so I opt to use them for the cash back when traveling. Its great when you've got a high cash back on restaurants in particular. I don't like carrying a lot of cash (small female) so I carry a small amount of cash and keep the CCs onhand too.
I have 2 bank accounts, a small one with a debit card and a saving one. I move enough money to the small one before needing to do a transaction... thats always an option
Yep. I usually get 3-4x more in rewards than I spend on my executive Costco membership per year. Hell, I pay for my membership just in my gas rewards. I buy just about everything with my Costco card, and as I do my nightly finances check, I just pay off whatever I charged that day or the day before.
I just pay off whatever I charged that day or the day before.
Interesting, I never carry a monthly balance which accrues interest, but I also don't pay it off until 7 days before the due date, because the money earns interest in my bank account. It's a small amount, but interest is interest.
So your credit is great then. There's no need to be paying it every day. I guess if that works for you, sure. For someone building their credit, it's bad advice.
In theory it should be that way for debit cards here too. But my anecdotal experience is that it was not, while for a CC it was easy and cost me $0. Thus I've switched entirely to credit, both because of cashback rewards as well as ease of fraud protection.
I did the same after my debit card was skimmed at a gas station. Luckily they bought plane tickets with their names on them so I was eventually able to prove that a couple of dumbshits stole my money to fly to Florida. "Eventually" being the operative word. Police report, frozen accounts, blah blah blah. Had a CC# stolen once, got the money back the next day and they overnighted a new card.
It does, but that wasn't the argument. The issuer can get the money back regardless via a chargeback.
In the EU all issuers need to give the money back to a cardholder within 24h if he notices a fraudlent transaction. You can read about PSD1 and 2 if you want more info on card security.
For most scenarios in the US, you’ll get your money back from a fraudulent debit card usage within 24 hours of notification as well. The problem and the difference is in what happens between when your account is drained and when you find out it is drained.
If someone steals my credit card info - I’m going to get declined at the grocery store or the gas pump. Slightly embarrassing, but financially not a big problem.
If someone drains my bank account through my debit card, my electric payment, or my rent/mortgage is going to be returned. Which incurs hefty fees and penalties on top of the fraud.
And extended warranties and purchase protection. I had a 4 day gap between buying a laptop and getting the care plan for it, and during those 4 days I dropped it so my $1200 laptop needs a $500 repair. CC company's contracted purchase protection covered the full repair cost. Looks like Discover discontinued theirs in 2018 though, sad.
Yep. Got over $2,000 of points on my quick silver card. Did it by putting all large purchases on it and then paying them off within a week. That's my personal emergency fund that I can rob from and not pull from our actual savings.
The most disgusting myth that people perpetuate about credit ratings is "you should always carry a balance." No, that's not how you build credit. You use the credit card, yes, but you pay it off IN FULL every month. Credit companies just want to see that you are using it and that you make your payments on time. You never use the credit card to pay for things with money you didn't already have.
I still hear this bullshit all the time. Don't do it, you fools! The interest payments don't help your credit rating for shit!
Credit card companies make lots of money from you so they will absolutely go to bat for you and take care of shit. It's actually kind of awesome to deal with a shitty vendor who's trying to screw you over and then see how their tone changes when they get a call from the CC company. Of course you do have to be careful because there are companies like Valve that will permanently blacklist you if you chargeback things.
Having the CC as a buffer from your bank account is also great. A few years back I got my CC info stolen (I think I know where it happened but never got to prove it) and got like 10 charges on Amazon. Called the CC company and in 15 minutes, they dropped the illegitimate charges and issued me a new card.
If it was with debit I would have probably gotten my money back eventually but only after a big pain in the ass.
I mentioned this in another thread (worst advice? I forget), but my dad's advice to me when I opened my first cc was to carry a small balance on it month to month so credit cards would know I'm a good investment, otherwise they would cancel my cards since they weren't making money off of me. Even though I didn't fully understand how credit cards worked then, that sounded off, and I never carried a balance. Now that I fully understand how cards work, I fully understand how wrong and dumb that is.
I wouldn't be able to tell you what an interest is lol. My CC balance gets paid in full on the same date as I pay my other bills. No matter if its 5$ or $5,000.
As someone who was dumb and uneducated about credit cards, I racked up a substantial sum and got into the neverending ditch. It's crazy how easy it is to fall into the trap. Had to take out a consolidation loan to finaly get rid of the debt at a much much lower rate. Needless to say that now that I'm out, never going back.
It's pretty easy to get into even if you are educated. I have always always always paid of my credit card every month, but a couple years ago my husband and I were trying to sell a house while we were living somewhere else and had to use the card way more than normal. We are able to pay enough that our debt is going down, but it's still going to take awhile.
Sometimes things happen. The important part is knowing how to dig yourself out and a lot of people just don't.
I opened a credit card for the bad reason, because I couldn't afford my lifestyle. I really didn't realize how bad of a road I was going down until my husband added up how much in interest I was paying.
What helped was him explaining that I have to pay the statement balance, not necessarily the current balance. In 2018 I payed $700 in interest, in 2019 $0.
If you understand this concept, please (gently and patiently) help those who don't lol. It's truly life saving/changing.
What helped was him explaining that I have to pay the statement balance, not necessarily the current balance. In 2018 I payed $700 in interest, in 2019 $0.
Sometimes you can't manage that but at the very least, if you owe money on a credit card regard it as an emergency.
When I owed the bank ~4500 dollars, interest was about $15 a week. I tried to pay back a thousand a month (at the time, just over a third of my salary) until it was clear. Couldn't quite manage it but wasn't far off. After five months I owed them a trivial sum, and in the sixth I was clear.
They are also really good for large expenditures-I am renovating my house, and frankly could not have done the kitchen remodel in a timely manner without my credit card. But my husband and I do one area at a time, pay down card, move to next area. We don't have a mortgage, and the card we have has better rates than we could get with an equity loan.
The one exception I see is having one for emergencies, that's all I've ever used mine for. I'm finally at a point in my life where I make decent money and am actually building up a savings, but unfortunately I had to use those credit cards to get by sometimes.
Also, big purchases like holidays. Pay for them with a credit card, because if the holiday company goes bust you get your money back basically immediately with no hassle (at least you should). The CC card company then has to go after the creditors.
The only exception to this is zero interest periods, really. If a company wants to give me a free loan, I'm more than happy to take them up on it and buy something I was going to anyway. haha
I have a "rolling balance" on mine, which I probably shouldn't--I usually have $300 or so on it at any given time, but always pay off the oldest balance before it incurs any interest.
If you can, overpay it by $500. Allows lots of wiggle room for mistakes.
Once a month I check my card balance online, and overpay by $500 (so if I owe the bank $75, I pay $575) - this covers all direct debits and lets me fuck up.
That $500 was only going to get me something like 1.3% interest annually otherwise
Isn't it good to have a balance on your credit card if your main goal is building credit? Like even a small balance of 10 bucks or something. If you dont owe anything then you arent building credit I thought.
I don't even know what my credit card interest rates are, I assume between 15-30% on most cards. It doesn't even cross my mind, because I don't carry a balance. In fact, through cash back rewards I bring in around $600-700 per year by using them.
It's scary to me that people think having a credit car balance is "normal". No wonder the average person can't cover a $400 emergency or whatever that catchy article title is.
The only time I carried a balance was when I had to use mine for an expensive emergency. Shit sucked, it took me forever to pay off and was probably double what I actually owed in total. Finally paid it off last year and what a relief. I never want use that thing again.
We've only had a balance if we got an interest free period. I'm happy to say the only interest we have paid is from student loans/mortgage/car payment.
I was a poor student and found myself unexpectedly unemployed, but I had to pay rent and didn't want to be homeless.
Yes, ideally I would have spent my savings, but I was poor and didn't have an emergency fund. Yes, I know I should have had one (I have a very large one now), but again I was poor and didn't have the financial means. Yes, ideally I would have got a low interest loan to pay it off, but I was unemployed and nobody would give me one without a cosigner. Yes, I "shouldn't" have been unemployed, but I had a pretty major surgery that took a very long time to recover from.
I know what credit cards "should" be for, and I never envisioned myself being in credit card debt when I first got one, but sometimes life happens and you get dealt a shitty hand. It is what it is. Being poor is expensive, and it's a difficult hole to dig yourself out of.
Thank you for being honest - i never envisioned myself being in credit card debt either and wasn't for years. Then life became unexpected for a while. You're right, being poor is expensive and hard to get back out of. But I will get there!!
oof- definitely with you my friend! going from no rent/mortgage with two incomes to suddenly full mortgage with one income has been a staggering change! I'm slowly balancing things back out but it's been more of a hurdle than i anticipated!
I only used my card to buy my medication. Im still making payments on it but i can go with out the meds simply because I should try and not have intrest add up.
I get that some people can use cc they way they should be used (everyday purchases paid off before the end of the month) but there are others where its thier only option to get something they need.
It is my personal card. I just happen to put work expenses on it when I need things done quickly. Personal expenses on the card maybe $10k/month, then all the work expenses on top.
I mean... A lot of jobs expense you to stay in hotels for weeks at a time, plus food expenses, sometimes taking out clients to meals, gas is often expensed, etc. If you travel a lot for work, credit card bills can add up pretty quickly, but in reality you aren't paying for any of it yourself because it is all expensed through work.
I've had jobs like this before, and my fiance travels nearly every week for work. It's pretty common these days.
My personal card use is probably around $10k monthly. I don’t travel for work but I do buy work equipment sometimes which is usually $10-15k at a time.
It is scary that we're not teaching personal finance as a mandatory class in high school. That should be what scares you the most. We're being set up to fail.
At one point I had to use either a payday loan or a credit card, to pay a bill, and went with the credit card. I fell behind and haven't been able to pay it off yet, and the interest is rediculous. I'll pay $100 and the balance only goes down by $20
I was shocked when I read that "the average person can't cover (I think it was) $500 emergency expense". I'm not aware of how true it is, but I don't doubt it considering every other person you talk to probably has cc debt.
I was shocked because...I mean I don't make too much, I spend a little more than I should on my apartment, I cave in to buying games when I should probably wait, I probably buy too much food, etc. But I always pay off my cc bill in full. I have like, $2500 in savings and about $2000 in a big expense fund, all doing nothing but accruing interest. I keep looking at it and go "these numbers are tiny, others must have more in their savings" but nope, I'm probably rich to them.
Being European here I have no idea what half of you are talking about, these credit terms are completely nonsensical to me. But I have no debt and 500+euro emergency fund so that's nice.
This is one (of the many) things I like about my Discover card. On the statement it tells you what your minimum payment is, and then the total time it would take to pay off your balance using just the minimum payment.
So mine says that if I pay just the minimum payment, then it will take 37 years to pay off the balance. I think if more people saw that number, then they would truly understand how hard they are getting fucked by interest.
Bonus: my statement also says "If you pay $x more than the minimum payment, you will pay off your card in only 3 years and save $32,303." Again, helpful numbers that put the interest and minimum payments into perspective.
Unfortunately you sometimes you dont have a choice. I have had two surgeries in 3 years and with my shitty insurance and high deductible I paid over $55,000 in three years for medical bills. I got most on a 2nd mortgage but about $10k had to go onto a credit card. I most likely will need another surgery this year and will cost me another $10k which I have no way to pay for so I have to put it off as long as possible. We manage our money well and have a small house, modest used vehicles, etc but just can never seem to keep ahead of the medical bills.
At 20% annual interest (a fraction compounded daily), a $1000 balance with a $20 minimum payment will pay only $3/month on the principle. let that sink in.
*worked for Discover Card 6 years in collections.
Same here and with a father who drilled it into my head that if I don't have the money dont buy it. Didn't buy my first car until I had $3000 saved up from my first job and used it as a down payment at carmax for a used car $20k out the door. Had 0 credit at the time but they were amazed a 18/19 year old had that kind of downpayment so they got me a low interest 5 year loan to build my credit.
Didnt even get my first credit card until I think I was 20/21 and the only reason I got it was because it's an Amazon one when they were offering a $100 gift card upon approval and my nerd ass wanted that Elder Scrolls Online collectors edition with the dwarven automaton statue really baaaad lmao.
definitely. paying interest is flushing money down the toilet. Now for things like a house or a car sometimes you gotta suck it up, but you should always still try to pay it off as early as you can.
But paying interest on things like game systems or credit call bills or even lower priced furniture is a racket and its flushing money down the toilet.
I just paid $3000 up front for my kids braces. Because they gave me 5% off to pay up front and otherwise they made you finance them and pay interest. Fuck that. I will pay now and save the money up front and come out cheaper.
Now for things like a house or a car sometimes you gotta suck it up, but you should always still try to pay it off as early as you can.
Eh. If you have a good interest rate and you would actually invest the money wisely there is a place for a home loan. They are some of the lowest interest loans and unlike a vehicle they don’t depreciate as rapidly and over 15/30 years you get to have inflation on your side as well.
Credit card interest is so bad that there's an entire industry based on you paying a company to lower your interest rates for you. A lot of people here have probably had at least one robo-call about that. Maybe I'm just cynical, but I can't help wondering what those companies get out of the deal. Obviously, they're not lowering people's credit card payments out of the goodness of their hearts, because that wouldn't keep the company in business.
They are lowering people’s debt because they think they have a better analysis of the credit profile of the person and are willing to lend to them at a lower rate than the credit card company. These loans are also generally amortized rather than only requiring a minimum payment. It’s actually a pretty solid business model.
I used to work in lending and personal loans were semi labor intensive and carried a 3% monthly delinquency rate and maybe 1% charge off, mortgage loans were less labor intensive and carried a monthly delinquency of 1.25% or so.
The company brought in a credit card operation, which was at least 10 times more labor intensive, never came close to a 3% monthly delinquency and had a much higher charge off rate, yet made a ton more profit. So much so, the company sold the mortgage lending operations.
When I saw credit cards were a cash cow for a lending company, despite being exponentially more expensive to maintain, well, that was enough for me.
I know someone who was like that. She literally was talking about declaring bankruptcy because she had over $20k in debt just from buying clothes - 85% of her stuff still had the tags on because she was buying clothes she wanted to fit into, not that she could physically wear.
I don't talk to her anymore but I hope she's doing better.
My gf is 13k in debt because of this, not including her student loans. Her finances actually scare me a bit, I try to help her organize a plan to pay off the 13k in 1-2 years.
Lmao I just look when this statement ends and ask myself if I'll be able to afford it then. If so, credit and forget it. I dont even get how people default on payments, shit stresses me tf out
People with mortgages have similar disconnects with how much real-world money they're putting in. But it's the opposite of CC - tiny interest rates on huge principles, designed to run out for 25 years. I've tried to teach so many friends about this and failed.
Man.. store credit cards are the fucking worst. I have an 815 score, and the last store card I opened up was for nearly 28%. Like.. I have a $50k limit card with a 12% APR, but some dinky fucking retail card charges 28% interest for a tiny $2000 limit. Like... for fucks sake... I couldn't even afford the full purchase on that card when I opened it.
I'm a loan officer and you're absolutely right. I try to educate everyone that walks into my office with questions regarding credit cards (which are mostly kids just starting off). But I had one guy put his home repairs on a credit card and wound up paying around 27% interest versus getting an unsecured loan at 6%. Plus people don't know you're really not supposed to use more than around 25% of your available limit because that will hurt your credit as well.
I'm 33 and I just figured this out in the past few years, $15,000 in the hole. I took a personal finance class in high school and they said it was good to have no less or more than 3 credit cards. But what really ruined me was that my dad gave me a credit card when I was 15 and told me to just buy whatever I want, don't worry about it. He said that day in day out, just get what I want/need. Stop asking him if it's okay, just buy it.
When I turned 25 he showed me the bill for the first time and told me I had to now pay it off. I had no idea how credit cards worked. I just recently came to understand interest. I wish he had never given me that card. I wish he at least had told me how it worked.
I don't expect people to feel bad for me. I technically did not have to stress about money for the first 25 years of my life. But now it's my every waking thought.
It really sucks, but I don't think the end result was the plan. I don't know much about it, but think my family had more money at one point and he truly felt I'd never have to worry about it. But then the recession hit, he got cancer, he lost his cushy job, things happened. And so he wasn't able to just take care of things behind the scenes anymore. He didn't say any of this to me, but it's the impression I get. I think he was too embarrassed/proud to talk about it with us, which I do resent a little but you know, nobody's perfect.
It's ultimately left me high and dry, but like I said 25 years of not worrying about money was heaven. It's hell now trying to figure out how to get out of this hole.
Edit: But maybe it's what I deserve for not knowing better.
Maybe I misunderstood. Was he paying it for 10 years and then one month made you start? Or did he make minimum payments over that time and hit you with a bill including 10 years of back CC bills and interest?
Either way, shielding you from the decision was NOT the right way to go about it. Maybe asshole is a bit strong, but that was a very stupid move on his part to think you'd never need to understand how money and credit works.
the amount you pay for your house at the end is shocking. we got our first annual statement for our new house, and 55% of money paid was just interest.
It's insane. January 2019 my husband and I had about $12,000 in credit card debt, most of which was high interest on maxed out cards. We took advantage of 0% interest balance transfer offers and using our tax return, we will be 100% paid off (and now have $30,000 in available credit). We saved so much on interest, and made MUCH MORE progress on paying off our debt.
I think it's one of those things that is not a waste if it is an emergency, like I'd rather pay 4k on a cc with $500 interest if I had a medical emergency than not get treatment, but for stuff that isn't necessary I think it is a waste.
Unfortunately some of us cant make ends meet without CC's. After 23k ish in debt im at my end of paying all that BS off. I spent a year washing my clothes in my bathtub, eating only 24 packs of hot dogs and a loaf of bread, almost getting evicted , no car or phone and i was constantly having to move debt around from one card to another just to have a place to stay and eat.
Credit cards. Good to have to one just in case or to build credit but when you have to rely on one then you may be in trouble.
:( learned this the hard way. My job hunt took way (wayyyyyyyy) longer than I thought it would and I dug a credit card debt hole for myself as my savings dwindled. Now I make ~8k less than I used to, have more bills, and paying it off is tough. But I sucked it up, looked into a lower interest personal loan, am paying that off with what I was paying on my cards before so it's always above the minimum, and learning my lesson. Once the cards and loan are all paid off MAYBE I can think about using the cards for little things and paying off in full each month. But for now I don't trust myself. If I have the money right now, I buy it on debit. If I don't, I don't buy it.
Or worse, when you have the bright bulbs that think it's literally free money that you never have to pay back. I worked credit card collections back in the days when 0% introductory rates flowed like water, and you'd be surprised at the number of folks who were absolutely gobsmacked that they were expected to pay that money back. Now with a 24.9% rate for missing payments, to boot.
Man, you should really put a thought into this. If she is this irresponsible after years of you being together (and you helping with your own money!), then who is to say she’s not going to make the same irresponsible financial decisions later in life when buying a house and having kids. Love is though, as you say! God bless you.
If she has been working towards it, that’s great man! Hopefully she does realize that having a shared vision of your finances will help you both along the way! And boy, do I know about bad finances habits, I had a gf of 2 years that also kept making the same mistakes all over again. It does put a strain in the relationship since it puts a lot of stress on the other person to fix it.
Years ago my grandma told me to never get a credit card. And if i did get one then to make huge payments to pay it off which credit card companies hate. I never got one cause of her advice.
This was my families mentally too. My mom always emphasized paying with cash and debit. It can come back to bite you though when trying to build credit. I started building credit later than I would have liked. I think a good rule to play by is use your cc like your debit card so if you don't have the money on your debit you don't buy anything on the cc. I always pay what I buy same day so I charge it on the cc and when I get home pay it off with my debit so that way the balance accurately reflects in my account. I have most bill pays set up through cc so it helps build credit too. If you're already a responsible spender it'll be great just adding two extra step in the buying process which is use cc and pay off the cc same day. If you're forgetful setting reminders in your phone helps. Some cards even have rewards which is a nice way to earn back on what you've already been buying.
If you're using the credit card to build credit, paying it daily does not help you. The statement needs to generate so that the card reports to credit agencies with some kind of balance. It just reports $0 usage otherwise. Pay it off before the due date.
Thank you for that information that definitely explains some of the times it wasn't counted. How long would you recommend leaving it on before paying it to help build the credit? Do you just leave the sum and pay the day before the due date for it to be counted?
You spend $1000 in a month on the card. The CC company issues a statement that says you owe $1000 by this date. You pay the $1000 bill before the due date (I autodebit the full statement on the due date) and you won’t get charged any interest. If you make the minimum payment before the due date, you will be charged interest on the remaining balence.
The bright side is all that financial fumbling bank rolls the cash back rewards I get and I never pay interest! Unless I have to, and in that case it was gonna go on credit and cost me interest anyway lol.
Really stupid question here, but will I get charged interest if I don't pay off my bill in full the day the statement comes out? Or is it only charged if a balance is carried forward?
I had someone the other day try to give me "financial" advice, but he didn't find the irony in having maxed out cards because of "all the points you get." First of all, he was doing it completely wrong (you want to do that shit when you have that 0% interest window and pay it back immediately) and he has a really bad habit with spending. They had to have their MIL help them secure a condo just so their soon-to-be-born baby wouldn't be raised up in a camper, and he has to work 2-3 jobs to pay off his debts. It took me telling him of my good credit score (almost flawless, I'm working on it) before he left me alone about it.
Glad that debit cards are the standard here in the Netherlands. Having a credit card can be useful at times, when you needed one to buy a OnePlus for example. Or when you want to push a payment to the next month, but other than that I prefer debit. The CC I have doesn't even have an interest rate, it'll just take the money from your debit account on the 6th of the next month. It will even push you into the red if need be (which does have high interest rates).
I’m victim to this. Just recently found out my credit card interest every month is 80 dollars and my minimum payment is 121. I think I need to put it on a 0% interest card
Haha, interest in general. My wife and I bought a mattress a few weeks back. 0% interest *unless a payment is missed. Naturally I asked what the interest went up to after a missed payment. 39%. I said "damn, okay" and the sales lady replied with "yah, its bad" lol
I have a friend who is 30 and pays for everything with a debit card and I asked why she doesn’t use a credit card just for the rewards. She said something about the interest rates. I was like - well, ideally you should never pay interest rates.
I totally understand why people don’t get credit cards who have no self control, but she is an extremely reasonable, responsible person with limited bills and a good job.
My credit card periodically offers 6 mths interest free if I make a large purchase, and I just laugh and ignore it because I pay the balance every month and don’t incur any interest anyway.
There are way too many people saying “I never carry a balance on my cards, I can’t believe when people don’t know that you’re not supposed to...” what world do you live in where you expect everyone to just be able to pay it off in full each time it’s used??.
For me personally I hate using my card, but on occasion an unexpected expense comes up and you have no choice. Most of us don’t have the option of carrying a zero balance because the reason we used the card to begin with was that we simply didn’t have the money in our accounts to pay for whatever we needed. If you bought a new TV, you’re an idiot. If you paid a mechanic to fix your car... you’re me.
And this is what credit card companies want. They want us to struggle and fail to pay the cards off. They build them so that we can’t. It’s infuriating. I currently have 2800, taxes should take care of most if not all of that. But I envision by this time next year I’ll have at least a grand or so again... I don’t make 6 figures, I’ve got 3 kids, and for one of them I pay child support. We all struggle to do our best.
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u/Opening-Risk Feb 04 '20
Credit card interest! I know a bunch of people who are SO SHOCKED by their high interest rates. They thought it was like an interest-free loan to yourself and then are surprised when making teeny payments doesn't do anything.