Number of Credit Cards in US Hits All-time High (axios.com) 76
The number of credit cards in America hit an all-time high of 520 million in the third quarter of this year, per the New York Fed's household debt and credit report, released Tuesday. From a report: There was a precipitous plunge of more than 100 million credit cards between 2008 and 2010, but we've now more than made up for that decline. Buy now, pay later companies like Affirm aren't included in this tally -- they're still too small to merit their own line in the report. Household debt now totals more than $15 trillion, of which $800 billion is in credit cards, and another $1.4 trillion is in auto loans. "Issuance to borrowers of all scores returned to, or even surpassed, pre-pandemic levels," wrote Fed researchers on the Liberty Street Economics blog.
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Isn't this kinda like saying "The number of toilets hit an all time high". I mean with increased population comes increased use of the basics. Credit cards have become a basic necessity of our increasingly virtual society.
Necessity because savings is such an old-fashion idea. Plus the 1.4 trillion is in auto loans. EVs aren't cheap you know.
Re: Well of course it has, move along (Score:4, Informative)
An increase in credit card usage doesn't necessarily mean a reduction in savings. For those of us who both save money AND use credit cards for basically every transaction, credit cards are actually quite profitable as we don't pay any interest, but we still get the cash back rewards, free extended warranty, free car rental insurance, etc.
Re: Well of course it has, move along (Score:4, Insightful)
Not to mention that the credit bureaus do everything they can to scare us into wanting to maintain our credit scores. They punish carrying a balance, but they also punish having credit cards but not using them.
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I think people tend to overthink credit scores. Want a credit score high enough to get the best rates for any consumer loan (mortgages, auto, personal lines of credit, etc.)? Pretty simple:
1) No derogatory marks (late payments, accounts in default)
2) At least a couple different kinds of credit (Examples: postpaid utility bills, a credit card, student loan, mortgage, car loan)
3) Keep your balances low relative to your credit line at the end of the month (don't keep an $1,800 balance on a card with a $2,000 l
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All that sounds like a bunch of hogwash. The biggest factors in your credit score are your income to debt ratio, no late/missed payments and revolving accounts active.
When my wife and I had more then 10k CC debt across numerous cards, we both had really awesome credit scores. Once we paid everything off and not really using those cards, our scores dropped a bit.
Best advice I can give someone for credit is to get a credit card asap and use it and then pay some of it off but carry a balance. Yes, you'll pay s
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All that sounds like a bunch of hogwash. The biggest factors in your credit score are your income to debt ratio, no late/missed payments and revolving accounts active.
According to the credit bureaus, they don't use your income to compute your credit score, so they shouldn't be using income to debt ratio. Of course, maybe that's just for the US and you're in another country, so it could be different.
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The credit bureaus don't do anything to scare us into that. It's everyone else who uses a credit score to determine something about you. Your bank, lender, auto insurance, etc. The credit bureaus only create the score. If you want to play the game, get a credit card, use it, pay it off each month and you'll be above 800 in no time, oh and never carry a balance more than 25% of the available credit. It's quite simple and easy. I've been above 750 almost my entire "credit life". Credit card usage can b
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The credit bureaus don't do anything to scare us into that. It's everyone else who uses a credit score to determine something about you.
I see that you've either never seen or have forgotten the freecreditreport.com commercials. Experian was behind those. They were very much trying to scare people into wanting to maintain your credit score. Also to run credit checks on significant others, etc. All while deceitfully trying to trick consumers into thinking that the site they were promoting was for the free credit report mandated by law.
The credit bureaus are definitely not some sort of innocent bystanders.
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They usually don't punish carrying a balance, so long as the balance isn't close to your limit and you're making on-time payments on it. Interest on that balance is one of the ways they make their money, and a history of making payments demonstrates that to them you're less of a risk.
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To be specific, they punish any significant long-term usage of revolving credit. Either in aggregate, or on a single card. Exactly how they use all this to create a score is kept a mystery though. So we can discuss this, but we don't really know the details for sure.
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Yup, I was about to say the same thing.
I use mine, get cash back and all the other protections that grants, especially for online purchases.
In meatspace, I must admit, I
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"In meatspace, I must admit, I do tend to still use cash...especially when buying alcohol, etc...."
Your dealer still accepts no cards?
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That's kind of a strange way to term things.
Down here they sell all forms of alcohol at the grocery store, the 7-11 type stores....etc.
It's pretty easy to find and buy.
I've quit smoking cigarettes, which they generally sell at these same places....but when. I did, I'd usually use cash as that even if they aren't doing so now, I figure soon enough insurance companies will be quite interested in "sin tax" items you consume when they try to figure how much to bill you for insurance.
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Alcohol dealer?
That's kind of a strange way to term things.
Down here they sell all forms of alcohol at the grocery store, the 7-11 type stores....etc.
It's pretty easy to find and buy.
Post-prohibition laws vary wildly from state to state. Where I live, grocery stores can sell beer, but not wine. Meanwhlie, liquor stores can *only* sell liquor, only certain proofs, and there are other bizarre restrictions - one I go to can sell Bud Light Seltzer, but not White Claw, because legally one is a "clear beer", and the other...isn't. I forget what's what, but the difference in what it technically is determines what they can and can't sell. Finally, those different margarita or mojito mixes? They
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All that sounds like Colorado. Was really surprised about there backwards liquor laws. I assumed the beer companies in the state bribed the politicians to ban wine and spirits from grocery stores so that beer had less competition.
Of course, the liquor store was right next to the grocery store, so IDK how that solved anything for anyone.
California has pretty good liquor laws. You can buy nearly any alcohol type from a grocery store or a liquor store. Any day of the week but just not between 2am - 5am. Seems
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You do, of course, realize that all of these "free" benefits of credit cards come at the cost of higher prices. Credit card companies have done a good job of hiding these costs and convincing you that you are getting something for "free".
In Europe, OTOH, use of debit cards is much more prevalent. Debit cards don't skim 3% to 5% off the top of each transaction and that keeps costs low for retailers.
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Well yes, but if others are using them I have the cost either way. Where I live its illegal for a credit card company to stop a retailer directly passing on the cost to the customer, so if a retailer charges more for using a credit card then I don't use it.
I do think the credit card charging more than a cent is insane, what more processing goes into a transaction of $1,000,000 than $1? But that is the world we live in.
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I agree that the merchant fees are out of hand, but there actually is more risk to the creditors for a larger transaction. The amount of bad debt from credit cards is also insane, though a lot of that is caused by exorbitant interest rates.
Re: Well of course it has, move along (Score:2)
Savings is an old fashioned idea that went out the window with the living minimum wage. Also, people see corporations continually bailed out because they have no savings, and rightfully assume that they are at least as deserving.
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Yep, that pesky minimum wage that only 1-2% of workers are at is the reason why something like 40% of high earners live paycheck-to-paycheck. While there is correlation between income and savings (those numbers go up to 70% below the median income) there is obviously other things going on here.
https://www.bls.gov/opub/repor... [bls.gov].
https://www.prnewswire.com/new... [prnewswire.com]
Your last part rings more true. We have trained people to be at least as bad as the worst case they can find and think its justified. So the idea that
Re: Well of course it has, move along (Score:2)
Wages are always informed by minimum wage. Even if no one doing your job is making it, it remains relevant. Some wages are explicitly multiples of it.
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I think its a mentality of never being happy with what you have, businesses, and government are more than happy to encourage it. Do up your house, buy the bigger TV, better phone, take that holiday, it all makes them money. Trying to fill the void with stuff, the problem is that it doesn't work, well apart from in the very short term, so you just go out and by more stuff, rinse and repeat.
Most people in non 3rd world countries have it great, very little chance of dying of starvation, a place to live, educa
It's because of the chips in the cards (Score:2)
Since they added microprocessors and communication devices to credit cards the cards have now become sentient and are applying for their own credit cards. It turns out it's easy to get a credit card when you already have a credit histories like all credit cards do. And it turns out these cards are by design rather singlemindedly obsessive about the whole credit card thing. Maybe it's like raising a family or more sinisterly they gain power when other credit cards have to work for them. No one is sure wh
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Considering are system is designed with inflation built in, our money is constantly losing it's value. With interest rates still terribly low, you can't just sit on your money and let it grow like you could 40 years ago.
Unfortunately, I don't ever see interest rates going up all that much because if we do raise them, the federal government will have to pay a higher interest rate on the ~30 trillion we owe. It's almost like the government wants to kill itself off or something.
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Weird that people think credit cards are a necessity. I have not yet seen a need for one in 44 years of life. At worst I've had to float a utility bill for a few weeks until I could pay it but have never even considered trying to get a credit card. I guess hearing horror stories from stupid people letting them get out of hand just permanently out me off the idea entirely.
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In other "Water is wet" news...
I don't know if this could be any more useless of a fact. The number of credit cards doesn't really mean much. That's like telling my mother to buy something because it only takes one check. The concept of value behind the cards isn't really expressed with the number of credit cards.
I guess this means something because people are signing up for credit cards, but that means people are being a bit more risky with their finances which is good for the banking industry, right?
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I'm sure China is going to teach us all about...debt, and the consequences.
Re: Well of course it has, move along (Score:2)
If China crashes our economy then theirs crashes too. They are dependent on our commerce.
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If the number of credit cards increases above the eligible population number, it means people have _more than_ one credit card. It might suggest one of them is already maxed out, so higher "month to month" debt.
I'm in Europe and I am perfectly happy with a debit card - yet, one of my colleagues kept a loaded credit card (paid in full each month) as a kind of a zero-rate credit. I've also used of people having multiple maxed credit cards and juggling their credit from month to month.
Re: Well of course it has, move along (Score:2)
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I'll let a small balance ride each month because your score doesn't go up unless you're paying a little interest
Are you sure about that, where did you get your information from about the algorithm used to calculate credit score? I would really like to know what it is. Although I am probably in a different country I have never done that and its many years since I borrowed anything, and my credit score is quite high.
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From Europe too. I used to "be happy" with just a debit card. However, now I have three credit cards (Two Mastercards + VISA) that I pay in full each month.
Reasons for getting a credit card:
- As long as you have the money, you get to make the rules. I have sometimes had someone sell me stuff that wasn't as promised. With credit card, it's much easier to just tell, after a few go-arounds that "I'll ask for chargeback and then you can start talking with VISA/MC, I don't care anymore"
- With travel arrangements
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I have a few credit cards. Some I've had just over a long time, one with extremely high limits if needed.
But lately I use 2 of them, each has different cash back for different items. I use my Costco one for gas (4%) and Costco purchas
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I've ten-plus credit cards. I don't have an exact number because I'm not sure whether to count store credit cards, or credit lines with paypal and that sort of thing. There's a $0 balance on most of them. A few have a negative balance that I need to spend at some point (the problem with always paying them off early is that sometimes you order something and the price changes later, like grocery delivery where there's an initial price, then they lower it because there were items not in stock). I am temporaril
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"One of them even got me a shorter entry line at an amusement park and less time standing in the hot sun with hundreds of people was definitely worth it"
We went a while ago to Legoland in Germany, and the silver ticket (90% less time on queues) for the kid (at 60 Euro extra I think) was totally worth it.
Re: Well of course it has, move along (Score:3)
The total number of active credit cards as basically useless unless you're a merchant. A more meaningful measurement is total consumer debt.
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"I guess this means something because people are signing up for credit cards, but that means people are being a bit more risky with their finances which is good for the banking industry, right? That means people are spending money?"
Every card owes 1540$ on average according to their numbers.
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The real question is people keeping credit on their credit card, or are they paying them off each month.
I rarely ever keep a balance that goes over the next month, I treat it like a debit card, however it doesn't go into insane Overdraft mode, where on Pay Day the Bank decided it didn't fully place my Paycheck into my balance yet.
However a lot of people have credit card dept, where they probably shouldn't.
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It's mostly the US, though. Credit card use in other countries is very low, compared. In The Netherlands, it's virtually non-existant.
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I think it is also a factor that we are more use to using a credit card, than dealing with cash, Back 30 years ago, one would only use a credit card for big purchases, such as getting a new appliance, 25 years ago, it was used for order over $20.00 such as Gas and Groceries, 20 years ago, we were Ok with products from a store, however a restaurant, and other services we used cash. 15 years ago Cash was for Vending Machines and small shops, 10 years ago, we used cash for fast food orders, 5 years ago Cash
Re:This is on a tech site (Score:4, Funny)
Because?
We owe Cowboy Neal a lot of money. Something about protection.
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Sounds about right (Score:2)
I got 2 of them myself. In the past I had 3. I don't have any debt, and pay my full amount each month. But different cards offer different rewards and in some cases it's worth it. If my phone was able to pick the best card automatically for every transaction, I would probably have more.
Also I like to have a backup in case one card is defective, especially when traveling.
However I think it should be illegal for credit cards to forbid merchants from charging an extra fee when paying credit. This way, a lot of
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I am not entirely sure how the economics of that works out. In theory it is not obvious to me that processing a credit card consumes more resources than a debit card. True, the credit card company charges a fee explicitly, whereas a debit card does not. On the other hand, a big retailer like Amazon or Walmart only pays like 1.35% i
Re:Sounds about right (Score:4, Informative)
In theory it is not obvious to me that processing a credit card consumes more resources than a debit card.
Credit card merchant fees are typically higher than debit card merchant fees, so using a debit card is usually cheaper than using a credit card.
That said, it really won't affect most merchants. Merchants have already adjusted product pricing to account for the fees they have to pay, so all customers are paying the card fees even if they are paying in cash.
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I'd be surprised if the bank/credit card company was losing that much money on every purchase I make through Amazon or Walmart.
From what I understand, fees charged to merchant are not fixed and depend on which card is being used. And the merchant can't set a limit or refuse some cards (at least within a same brand/network). So a 2% cash-back card probably cost more to the merchant compared to that 0.5% cash-back card.
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However I think it should be illegal for credit cards to forbid merchants from charging an extra fee when paying credit.
Nothing wrong with adding a "convenience charge" though . . . I see it all the time.
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I don't know where you see that, but in the USA and Canada, it's not allowed per the contract with the credit cards networks. I'm not saying it doesn't exists, but we do not see it "all the time". Maybe once a year or so, usually in an obscure mom and pop store.
There's been 3 major changes (Score:1)
First, fraud prevention has gotten a lot better. I just got an email because somebody tried to use my kid's card. They blocked it before the charge went through and the kid will get a new card. This was all completely automated. There's a ton of other automations in place to catch and block fraud, making cards much more profitable.
Second, they've gotten very good at detecting high risk accounts. E.g. they watch your spending patterns and can tell when you've lost your job o
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"And third and most significant, bankrupcy law was changed to make it virtually impossible to discharge debt under $100k. You can set up slower payment plans, but it's a crap shoot how much you'll have to pay each month depending on the judge's mood and political leanings. Worst case in parts of the South they'll find you in contempt of court and put you in jail until you or your family pays. Debtors prisons basically. "
That is 100% made-up garbage.
My father just went through a bankruptcy (Score:2)
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And third and most significant, bankrupcy law was changed to make it virtually impossible to discharge debt under $100k. You can set up slower payment plans, but it's a crap shoot how much you'll have to pay each month depending on the judge's mood and political leanings.
You've clearly never actually defaulted on a credit card.
First, you'll get lots of past due letters and debt collector calls. Then they send letters threatening to sue. If you're lucky, you might live somewhere where the statute of limitations runs out before they get around to actually suing you. If they're on the ball and do actually sue you, the first court date is just an arbitration hearing where an inept lawyer hired by the credit card company tries to intimidate you into settling (or the credit ca
Awfully Short on Details (Score:3)
While I think most debt spending people do is an example of poor fiscal management (outside of homes, cars, and anything one pays off before interest is charged of course) this article is awfully short on details. Most of the numbers they throw out lack any kind of comparative metric (like, what was this number 5 years ago?) leaving the reader with no idea if they are looking at a high number or low number. The only thing they give you any kind of comparative data on is "number of credit cards" which seems like a pretty garbage metric to determine anything. An infinitely more useful metric would be seeing how the actual debt carried on cards has changed over time https://www.lendingtree.com/cr... [lendingtree.com] . It's high right now, but it's certainly been higher. .
The worst on this is their $1.4 trillion number given in auto loans. Is that low or high? When I first read it I actually thought it didnt sound too worrying at all. Turns out that number has been growing at a rate far higher than inflation for quite some time https://www.finder.com/car-loa... [finder.com] so that is in fact worrying but you would never have any idea of that by reading this garbage article.
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Oops, ignore the car loan section as I misread a table in the linked to article and I don't care to take the time to correct myself.
Also, US population at all time high (Score:2)
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The total amount of money owed on credit cards actually nosedived, at least as of a year ago: https://wolfstreet.com/2021/02... [wolfstreet.com]
So, an increase in the total number of cards, but with smaller balances, definitely indicates a shift in how credit cards are used.
What did you expect? (Score:3)
Cost of capital is at an all time low. Interest rates on credit cards border on usury. So there is a HUGE profit margin around encouraging consumers to ignore common sense and go into debt (and stay there). So given the enormous amount of marketing dollars spent to drive that behavior, why is there any surprise that card usage and often, additional debt, is ubiquitous?
Per household (Score:5, Informative)
There are about 120,000,000 households in the US. So that means that the average household has around 4-1/2 credit cards. Credit card debt is currently $800 billion, which makes for about $7k per household. BIg numbers, but actually smaller than I expected.
That said, $7k in credit card debt, charged as usurious rates - there's a lot of money to be saved by running a tight budget for a while, and paying that back.
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I think the problem is averages are hiding tons of details - because the standard deviation woul
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I personally have three credit cards, and I strongly believe that is the minimum sensible amount to have. You need one VISA and one Mastercard from different providers in your wallet/purse and one other card kept safe at home.
The reason for the two in your wallet/purse is to provide you with redundancy while out and about. Maybe you have an incident like 2018 when Mastercard went down in Europe. No problem whip out your VISA card. Maybe your bank has an IT problem leaving a card unusable. Again no problem j
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Oh and I forgot to say the reason for only using the debit card for withdrawing cash from an ATM is that with a debit card being cloned your current account could get drained and a whole bunch of direct debits could fail. So for example your mortgage/rent might not be paid while you sort out the mess.
With a credit card you pay after the fact. So if the bill lands on my doormat with a large fraudulent transaction, I can simply ring up and report and they will take the excess amount off the bill while the fra
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Well we have legions of people insisting they shouldn't be responsible for agreements/commitments they made regarding, for example, college loans.
I can't see it as unlikely that we're going to have a campaign to 'forgive' credit card debt because it's somehow racist/sexist/transphobic/whatever.
So what? (Score:2)
what's the number per capita of legal age?
Credit cards are not the problem... (Score:2)
it's how you use the cards that is the problem. Unfortunately, most people use a credit card to pay for something that will immediately lose value and not pay it off in full at the end of the month. For example, splurging on that giant TV set and carrying the balance forever. To start with, the TV set is going to go down in value very quickly. Same thing applies to cars and furniture and appliances. Carrying the balance on a credit card and paying high rates of interest on it only compounds the problem. So
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it's how you use the cards that is the problem.
Credit cards are the problem. They are extracting hundreds of billions of dollars from everyone in exchange for very little value in return.
Unfortunately, most people use a credit card to pay for something that will immediately lose value and not pay it off in full at the end of the month. For example, splurging on that giant TV set and carrying the balance forever. To start with, the TV set is going to go down in value very quickly. Same thing applies to cars and furniture and appliances. Carrying the balance on a credit card and paying high rates of interest on it only compounds the problem. So the best thing to do, if you can, is pay for it in full at the end of the month.
What do credit cards and pay day loans not have in common?
The strategy I use is threefold. First, I never use cards that carry an annual fee. I see it as money down the drain although some of the cards carry benefits that might be worthwhile for you. Second, I always use cards that provide cash back. Points and air miles are always subject to rule changes and other slight of hand that devalue the miles or points.
When I get the cash back (2% on the card I use) I have them deposit it in my 401K account. That way I get an additional tax deduction and the proceeds grow tax deferred for many years. Best of all it is money given to me by the credit card company for purchases I would have made anyway.
I know right. As long as you reap superficial benefits and don't have to pay more for them what's not to love?
One of the big benefits of credit cards that is often overlooked is fraud protection. I have had numerous instances where fraudulent charges have appeared on my bill.
This is avoidable, unnecessary and unique to the nature of credit cards. Simply put credit card numbers are inherently insecure fraud magnets. Modern payment systems are push rather than pull systems
the pOint (Score:2)
i tink the pOint is that peepO r nOt earning enOugh i dunnO if banx give a sweet dam they cOuld dO sOmeting 2 make peepO mOre valuabO if they r truly greedy after all peepO r the fundamentO sOurce Of wealth
Credit Reporting Agencies (Score:2)
Credit Reporting Agencies have made closing old/unused/crappy credit cards detrimental to your credit score. Which means people are less likely to close credit cards when switching to newer(better) ones.
crash looming... (Score:2)
... but isn't it always, these days?
The complexity of "buck passing" has become so incredibly hard to track, but ultimately, someone ends up carrying those empty bags - always the poorest.
The global economy operates on futures - on IOU's - to grease the wheels of an unsustainable circle of consumerism.
Can't afford to buy all this cool consumer stuff on offer? - hell, that's a problem right, how is the economy going to work if folk can't afford to buy stuff?
Tell you what, let's offset that, just lend them mo
Strange, been getting rid of mine (Score:2)
Debt is a prison, and credit cards doubly so.
Credit cards are evil and should be avoided (Score:2)
Not only is there no justification for the fees and not only do poor people get ripped off on interest merchants are routinely treated like shit and made to absorb lions share of liability while card companies "hold all the cards" and only absorb profit.
I've personally seen a business have hundreds of thousands of dollars in settled captured transactions withheld from them for months due to an arbitrary filter condition that was not even in their contract and they couldn't do shit about it.
Yet the public (M
American banking is broken (Score:2)
Why else would you chose to use the more expensive credit card over a banking card?