They’re just livin’ the american dream.
I’ve been whimpering ever since I read the OP last night. How hard is it to understand that when you borrow money, you have to pay it back, often with interest? I got that concept when I was a little kid.
At least she hasn’t spotted that she can ‘make’ more money if she:
- maxes out one credit card
- gets another one and uses that to pay the interest off the first one :eek:
For a while, my credit limit over my combined cards was more than I made in a year. I don’t even want to think about how bad that could have been had I been an idiot about it.
I think they’ve since tightened up the rules a bit. I have mixed feelings about that, since I like having a large credit cushion just in case.
I really like the requirement in the CARD act to include a little table on each statement showing how much total interest paying off the balance will cost if the borrower pays the minimum payment vs some larger monthly payment. I’m sure lots of people still don’t read it but at least it’s there and is very illustrative.
It took me a little while to understand this, too, and a little longer to internalize it fully. But when I say “a little while” i learned it in my 20s. This is partly because of predatory credit card companies who go after college students specifically like me, students who never had any money and still didn’t, and the credit card is suddenly like a windfall.
But it needs to be treated as cash in hand. If you have the money to pay off that TV pretty quick, it’s good to use the credit card to defer it in two payments, perhaps, or even just as a sort of “placeholder”. If not, there’s no buying the TV.
Then again I am currently incurring student loan debt. But hopefully that is an investment in my future! : crosses fingers :
No particular conspiracy needed. From our parents’ generation - probably grandparents for most on here, I was a late child of postwar parents - when money was handled carefully and debt managed even more carefully when it wasn’t avoided entirely - to the last twenty years, the very notion of income, wealth, money and debt has been bent to “the value of a dollar is what that dollar will bring.”
People who think like the OP’s wife are legion. $10k in credit is an asset, not a liability; it is things that can be acquired, not a negative cost against wealth.
Such customers are, however, referred to as “deadbeats.”
The consumer credit industry is like any casino: they can carry the small percentage of players who keep winning on a small scale (those who use their cards but pay off the balances) because there are many more who lose and lose and lose (by carrying balances and paying other punitive fees)… and they take their house percentage (merchant fees, right around 1% of everything) no matter what.
What they don’t have is anyone who ever wins on more than that nickel-and-dime level. They never pay out jackpots or big wins, just keep raking it in, year after year.
Student loan lenders can be just as sneaky. I got an ad once from my actual lender promising to help me save money on my student loans. I checked into it naively thinking there was a chance I could refinance for an even lower interest rate, possibly by making higher payments, which I could easily afford. No, of course the offer was to lower my monthly payments, extend the length of my loan and wind up paying much more money.
Ok, I wasn’t really naive. I knew that’s what it was before reading the details, but I wanted to check out the details anyway to enjoy some recreational anger at the lender.
Personally I think financial institutions should be treated like tobacco companies. They should be barred from using language like “save money” in an ad that merely reduces the monthly payment. And the 50% of the ad should be bold red letters that say “THIS WILL ONLY COST YOU MORE MONEY, NOT SAVE ANY”.
I know people making extended or graduated or income based payments on student loans because it’s the only way they can stay current. It’s not evil. But it should be done knowing full well it’s going to cost you more money in the long run, not advertised as a way to save money.
Exactly. There’s always someone in threads like this who doesn’t understand interchange and chortles about putting one over on the credit card company, but the bottom line is that they can always just cancel your card if they are not making money on you.
My wife talked me into helping one of her friends purchase a new car. I met her at the dealership and looked at the car she wanted and what she was trading in.
Using my smartphone and a couple of websites I came up with what she should pay for the car, what she should take for her trade-in, and what kind of interest rate banks are offering so she knew what the dealer should have to match or beat.
I got her all set with the sales guy and he agreed to all my numbers. I left them to finish all the paperwork stuff.
She came by later and said how after I left they made her an even better deal and how her monthly payments are even lower.
I went over the paperwork and sure enough, they jacked up the numbers in their favor and bumped her from a 4-year loan to a 6-year.
I offered to go back with her to get ‘my deal’ but she was so elated that her monthly payment went down that she declined my offer.
The regulations haven’t gone that far yet, but I do appreciate the prominent, simple to read table that is now included in credit card bills that tells you the total you will be paying if you only pay the minimum. If someone bothers to actually read it, it should provide a good wakeup call.
I built up a balance several years ago, but since I paid it off, I am strictly paid in full each month, and never charge anything for which I don’t already have the money. Checking that “you could be paying” line helps keep me on track.
And that’s it in a nutshell. Even people who should know better, who should have learned better by now, and are told better at every turn think of nothing but the monthly payments. Their $15k car that’s going to set them back $50k in principal and interest “only cost them” $200 a month.
How about those commercial that pop up occasionally that offer a computer for “only” $30 a month or something similar - and the computer ends up costing several times as much as it would if they bought it at Target or Best Buy? And is the equipment compatible with current systems? Exploitation is what it is.
There are also a lot of people who don’t comprehend that when you write a check, you have to have the money in the bank to back it up. :rolleyes:
Show her this video from Steve Martin and SNL.
As a matter of fact, you can even ask them to lower it. I did that with one card before I got it all paid off and got rid of it. My current card asked me what I wanted for a limit and I set it quite low.
This wins the thread.
And that’s exactly why the first thing the salesman will ask you is what kind of monthly payment you are looking at, not what price range or anything you can afford.
The car one really gets me. When I went shopping for my car last year, one of the reasons I ended up with Mohawk Honda was that they a) charged me $700 less than all the other dealers (It’s a Honda Fit, $700 is a lot for its price) and b) didn’t mess around with monthly payments or anything. I paid the whole thing, essentially in cash, and walked away without a car payment.
But the other dealers all were like “Oh, we can get you in this better car, for only X dollars more,” and I kept thinking, NO! I like the Fit, it drives nicely, look how cute it is, it has a hatchback, and best of all, it’ll be paid off free and clear!