addiction to credit cards!

[bcguy]

I have for the longest time wonders why curtain people become addicted to the use of credit cards? My wife is one of them. Before we met, she had 20k in credit card debt and really, did not want to get sealed with her. I SHOULD have brought it up with the bishop but she threatened to D me!

Now, I am really trying to understand the phycology of the credit card. Why are people obsessed using it. Why do people become oblivious to the fact they are in debt, make minimal payment or, not enough to have it payed off at the end of the month and it does not phase them?

Our situation has not improved that much. Economy has shed workers and I am still looking for work. Thankfully, I am bringing in some money from being a mobile mechanic but not enough at times.

Anyway, I am getting off subject. Wife likes to use the cards. Why do people do it? Why, like my wife, are thay afriad to get help? Her biggest weakenesses, NOT being in control and Embaresment. Her true colors are Blue domminate. She Loves dogs and music. Do curtain personality types become addicted to the buying power of credit cards?

[pam]

I'm sure you must mean certain people and not curtain people. Curtains are as in drapes.

Sorry, didn't want there to be any misunderstandings.

[Gwen]

Her biggest weakenesses, NOT being in control and Embaresment.

not knowing anything more about your wife than what you have written here i would say this is your answer. when you can go out and buy anything without restriction that gives a false since of control or power over your life.

what is embarrassment? it's allowing other ppl to define you, being worried about what they think. when you boil it down enough it goes right back to lack of control of the situation. how does one become embarrassed? by not having what those defining them deem of value. how do you get things the world deems valuable? you buy it. if you can't afford it? credit.

[Wingnut]

It's an addiction, much like alchoholism or pornography.

[Moksha]

Does anyone know of a good ice cream eaters support group? I need help.

There are so very many addictions in my life. Can count five of them with one hand. How about you?

[bmy-]

yack, I pay cash for everything. I mean sure, I'll need to take a loan out for a house, etc. Go with the paper

[Wingnut]

You'll need to build some credit before you can get approved for a loan for a house. Unfortunately, credit cards are a double edged sword -- darned if you have them, darned if you don't.

[Vort]

I don't know why people do that. I suppose it comes down to an endorphin rush that some people feel when buying things on credit, coupled with a willful ignorance of the reality of the debt incurred. (I say "willful" because anyone legally capable of using a credit card understands, at least intellectually, that they h ave to pay for what they buy.)

What do to about it? If your wife recognizes the problem and is willing to acknowledge it, the best thing to do is for her to give up her credit cards permanently (or at least for a few years, long enough to establish some good habits and develop self-discipline). She should ask you to put her on a budget and give her an allowance in cash, then she should only ever use that cash for buying things.

Good luck with this.

[Dravin]

You'll need to build some credit before you can get approved for a loan for a house. Unfortunately, credit cards are a double edged sword -- darned if you have them, darned if you don't.

I'm not overly hep on these kind of things, but my understanding is that paying back school loans or always paying your rent on time can build credit. I suppose a school loan is still debt and suffers from some of the same drawbacks though. You are right though, credit cards can be useful for establishing good credit, I've had more than one person suggest I use one instead of a debit card and just make sure to not spend more than you have an pay it off at the end of the month. Of course if you have that kind of self control you most likely won't be finding yourself in massive credit card debt.

[Vort]

I'm not overly hep on these kind of things, but my understanding is that paying back school loans or always paying your rent on time can build credit. I suppose a school loan is still debt and suffers from some of the same drawbacks though. You are right though, credit cards can be useful for establishing good credit, I've had more than one person suggest I use one instead of a debit card and just make sure to not spend more than you have an pay it off at the end of the month. Of course if you have that kind of self control you most likely won't be finding yourself in massive credit card debt.

Having and responsibly using credit cards is the fastest and most effective way to build up your credit short of paying on a home mortgage -- which you are not likely to get without a good credit history. But I agree, if you can't avoid credit card debt, you should avoid credit cards. It can be tough to go through life with no credit history, but no history is better than bad history. Plus your life is much less unpleasant.

[beefche]

I'm not overly hep on these kind of things, but my understanding is that paying back school loans or always paying your rent on time can build credit. I suppose a school loan is still debt and suffers from some of the same drawbacks though. You are right though, credit cards can be useful for establishing good credit, I've had more than one person suggest I use one instead of a debit card and just make sure to not spend more than you have an pay it off at the end of the month. Of course if you have that kind of self control you most likely won't be finding yourself in massive credit card debt.

I was just teaching my 21 y/o niece at Thanksgiving about responsible use of credit cards. She only uses cash now and didn't really understand the need for a credit card. In today's society you really need to have at least one for things such as rental cars, hotels, and as Wingy said to establish credit. For someone who is disciplined with cash, it is likely that person will be disciplined with a credit card.

To the OP, I have a friend who's husband is a lot like your wife. They finally decided on having separate bank accounts. They each are responsible for various bills (i.e. she pays the electricity and gas, he pays the phone and cable, etc). Then each has their own credit cards and deals with them separately. It works for them--she's is responsible with credit while he maxes out his cards whenever possible.

[Hitower]

I used to be really bad with credit cards. Always applying for new ones, and most of them got racked up pretty quickly and stuff I really didn't need.

Well, a bankruptcy later, I have learned my lesson!!! I pay cash for everything except my gas, which is put on the 1 credit card I have, and that card gets paid off just about every month

[pam]

I too, have found myself in the credit card disaster in the past. I used to have several and it got to a point where they were all pretty much maxed. Now I have none except one gas card. I rarely use it and when I do it's paid off that month. I own no other credit cards. Having a Visa check card allows me many of the same privileges as renting a car, booking a hotel room, etc that a credit card would. Only thing is, I'm paying as I go instead of accumulating the debt.

Having been unemployed for almost 3 months now has shown me how important being out of debt and not being shackled to those payments are. The only bills I have are the monthly utility, cable, cell phone bills that all of us have.

[Vort]

I have always been a responsible user of credit. Even at our biggest financial strain, when I was out of a job for many months and we had tremendous pressures, we never missed a credit card payment. I have had my oldest credit card (Chase) for, what, fifteen or twenty years. It has been through three banks on two buyouts. I have never missed a payment, never been late with a payment. I have had tens of thousands of dollars through the years that I have put on that card and paid off.

Two weeks ago, I got a notice that they were jacking my interest rate up to 22.24%!!! I called to ask about it. Bottom line, reading through the nonsense: They don't feel they are making enough money off of me, so they want me to close out my line of credit. It's just their way of saying, "Thanks for twenty years of faithful use! Now go away."

It's all about the Benjamins, baby.

[pam]

I have heard of that happening to many people. Jacking up the interest rates on cards for those that have been faithful in paying them off.

[Just_A_Guy]

You know, Vort, I was about to write a long post about how the sub-prime borrowers were subsidizing the low rates paid by reliable borrowers, and then I remembered something:

Credit card companies don't just make their money off interest charges. They take a cut of every credit card transaction you make--they just take it from the merchant (I won't accept credit cards from my law practice because they want something like $75 per month outright, plus seven or eight percent of every transaction made).

And yet these companies still manage to find themselves in financial trouble. How is that possible?

[Wingnut]

I pay cash for everything except my gas, which is put on the 1 credit card I have, and that card gets paid off just about every month

That's actually a really good way to have a credit card and build credit. Only use it for one specific thing (gas) and only use it once or twice a month, and then pay it off every month. Actually, if you carry a small (like $20) balance on it for a few months at a time, that can help, too -- surprisingly.

I have heard of that happening to many people. Jacking up the interest rates on cards for those that have been faithful in paying them off.

My best friend just told me last night that she canceled her American Express card because it got jacked up from 12% to 17% for no reason. My opinion is that the credit card companies aren't making as much money during the recession because people are canceling their cards and/or filing for bankruptcy, so they're starting to unjustifiably overcharge their remaining customers.

[bcguy]

wingnut, I figured that could be the case of making up for the loss the bank would incure from this recession.

Bottom line everyone is stay a head of the same. Save your money for a year after getting back on your feet. Do not spend but be thrifty. Several times, I have saved 9k in a year but also, worked my tail off :) Best thing also, buy into a investment that is sound during a recession so it will be your PRIMARY income when you loose your job.

Pretend that a recession is always around the corner and prepare for it. Save at least two years of rent/mortgage and living expenses during the good times, so you can live on it during the bad times.

And please, have a retirement account! nothing worse then retiring broke and no body wants to hire you simply because "your to old".

Perhaps I should invent a electric credit card chopper! It would have a electronic display on it and you put in debt owed, interest rate the payments you make into the card, and it will tell you when it will be paid off! would be a fun device that will give you relief once it crunches a credit card :) would be a cool novelty to give to kids for Christmas or adults.

Edited December 3, 2009 by bcguy

[Vort]

nothing worse then retiring broke and no body wants to hire you simply because "your to old".

Well, there's liver flukes. And thermonuclear war. And when you get a popcorn husk stuck between your back teeth, and it really hurts but you can't get it out, and you don't have any floss, so you try using paper, but the paper gets soggy and rips, and your gum starts bleeding but you still can't get the stupid popcorn husk out.

But other than that, you may be right.

[pam]

Credit card companies don't just make their money off interest charges. They take a cut of every credit card transaction you make--they just take it from the merchant (I won't accept credit cards from my law practice because they want something like $75 per month outright, plus seven or eight percent of every transaction made).

Having been in a business in the past that takes credit cards, I would see on a daily basis the amount of money charged to us as a business for the charges on previous days sales. They would average anywhere from $200-$400 on any given day. This is just ONE business and not a very busy one at that. So, you look at how many businesses around the country and how much they generate in those fees; I agree, how do they find themselves in trouble?

[Maxel]

I have always been a responsible user of credit. Even at our biggest financial strain, when I was out of a job for many months and we had tremendous pressures, we never missed a credit card payment. I have had my oldest credit card (Chase) for, what, fifteen or twenty years. It has been through three banks on two buyouts. I have never missed a payment, never been late with a payment. I have had tens of thousands of dollars through the years that I have put on that card and paid off.

Two weeks ago, I got a notice that they were jacking my interest rate up to 22.24%!!! I called to ask about it. Bottom line, reading through the nonsense: They don't feel they are making enough money off of me, so they want me to close out my line of credit. It's just their way of saying, "Thanks for twenty years of faithful use! Now go away."

It's all about the Benjamins, baby.

This is the same story of a wonderful gentleman I knew in Colorado. Basically, he was too responsible a customer- they couldn't charge him late fees, and they were losing money because he took advantage of the rewards program.

[Maxel]

You know, Vort, I was about to write a long post about how the sub-prime borrowers were subsidizing the low rates paid by reliable borrowers, and then I remembered something:

Credit card companies don't just make their money off interest charges. They take a cut of every credit card transaction you make--they just take it from the merchant (I won't accept credit cards from my law practice because they want something like $75 per month outright, plus seven or eight percent of every transaction made).

And yet these companies still manage to find themselves in financial trouble. How is that possible?

I'm not Vort, but one reason occured to me:

It seems that credit card debt is one of the last things people usually pay off. I'd imagine that the amount of irresponsible credit card holders (those with debt) far outnumber responsible holders. Therefore, much of the company's assets would be in IOU's, not money or property. I doubt the charges to the store make up for the price of goods purchased.

If I just 'explained' a basic law of economics, just pat my head and send me on my way. I'll be over on the merry-go-round...