My son getting credit card advertisements in the mail

[TV and credit cards]

Credit cards are a trap. Perhaps the real test if someone is "poor" is that their debt increases faster than their assets...

They don't have to be a trap. It's how you use them that decides if they are a trap or not.

You assume everyone has your level of financial literacy. They do not. I counseled people in the navy who have gotten themselves into some of the dumbest shit. There's no point in admonishing them for what I seen as idiotic transactions. It was all I could do not to shake my head back and forth. These people were required to come to me for budget counseling in order to get funds from Navy Relief. It was all I could do to get the truth out of them. They are sincerely embarrassed at some of the things they've done.

Consumer protections need to be in place, even the ones we might consider unnecessary.

In my opinion the biggest mistake the average person makes is basing everything off their monthly income and monthly payments. Thirty-some dollars a month on a few thousands of dollars of credit card debt? Totally affordable. This could all change if the law mandated minimum monthly payments of 10%. I think credit card issuers typical require 1-3%.

Put a dollar sign in front of numbers and people lose their ability to do simple arithmetic.

 

[Elixir]

Philosophically I'm in the same place, having always been debt-averse. I use credit cards for almost everything, but they're tied to a single account that I keep flush, so they're paid off in full every month. I don't pay their interest fees, but happily collect the 6% discount on groceries and 3% on gas offered by my AMEX card, and have a Visa that has great discounts on other stuff. So there's good reason to use them. All vehicles, home - everything is paid off in full, I have zero debt and my main worry is the same as yours: will I outlive my investments? On one hand, the older I get the less likely I'll run out of money. But then, the older I get the less the money is worth. The saving grace is that I live a very simple lifestyle - little to no eating in restaurants, very little travel... main expenses are related to animals and lately, home heating.
Que sera, sera.

Exactly. The last debt was retired long ago, credit cards are for the convenience and the rewards. Who gives 6% on groceries??

My Amex card. Also 3% on gas … but almost any card can get you 1-2% cash back.
It adds up.

 

[Jimmy Higgins]

Credit cards are a trap. Perhaps the real test if someone is "poor" is that their debt increases faster than their assets...

They don't have to be a trap. It's how you use them that decides if they are a trap or not.

Unless you are poor... or don't spend money well... or don't understand the math... or it slowly gets out of control. There are multiple reasons why credit cards can be rather crappy. And credit card companies don't give a darn how much stress their product can put a household under.

 

[rousseau]

Credit cards are a trap. Perhaps the real test if someone is "poor" is that their debt increases faster than their assets...

They don't have to be a trap. It's how you use them that decides if they are a trap or not.

You assume everyone has your level of financial literacy. They do not. I counseled people in the navy who have gotten themselves into some of the dumbest shit. There's no point in admonishing them for what I seen as idiotic transactions. It was all I could do not to shake my head back and forth. These people were required to come to me for budget counseling in order to get funds from Navy Relief. It was all I could do to get the truth out of them. They are sincerely embarrassed at some of the things they've done.

Consumer protections need to be in place, even the ones we might consider unnecessary.

In my opinion the biggest mistake the average person makes is basing everything off their monthly income and monthly payments. Thirty-some dollars a month on a few thousands of dollars of credit card debt? Totally affordable. This could all change if the law mandated minimum monthly payments of 10%. I think credit card issuers typical require 1-3%.

Put a dollar sign in front of numbers and people lose their ability to do simple arithmetic.

Yea, more broadly there is definitely a problem with corporations being collectively way more sophisticated than people can mentally handle. I don't think many even understand that if someone is trying to sell you something the default is that they're trying to swindle you on some level.

We've moved into this weird, quiescent equilibrium where the cheating is normalized and mostly invisible to the naked eye.

I don't necessarily blame corporations, but consumer protections are most definitely needed.

 

[T.G.G. Moogly]

Credit cards are a blessing and a curse. A blessing for the financially literate and responsible because of their convenience, but a curse for the mathematically challenged and irresponsible. Just pay that bill every month is all.

Someone mentioned Social Security. Being nearly 70 we both receive payments that are earned and appreciated. We could get by without but it amounts to a nice bit of slush money to spend however.

Credit cards won't get you into debt unless you're just not real smart. But that 14 year old is gonna need to rent a car one day or get a room.

 

[Loren Pechtel]

Credit cards are a trap. Perhaps the real test if someone is "poor" is that their debt increases faster than their assets...

They don't have to be a trap. It's how you use them that decides if they are a trap or not.

You assume everyone has your level of financial literacy. They do not. I counseled people in the navy who have gotten themselves into some of the dumbest shit. There's no point in admonishing them for what I seen as idiotic transactions. It was all I could do not to shake my head back and forth. These people were required to come to me for budget counseling in order to get funds from Navy Relief. It was all I could do to get the truth out of them. They are sincerely embarrassed at some of the things they've done.

Consumer protections need to be in place, even the ones we might consider unnecessary.

In my opinion the biggest mistake the average person makes is basing everything off their monthly income and monthly payments. Thirty-some dollars a month on a few thousands of dollars of credit card debt? Totally affordable. This could all change if the law mandated minimum monthly payments of 10%. I think credit card issuers typical require 1-3%.

Put a dollar sign in front of numbers and people lose their ability to do simple arithmetic.

A lot of them know they're paying a lot more in the long run, it's just that I-want-it-now! dominates their motivations. Income = outflow is how they think life should work, then they're horrified when they are blindsided by expenses that were sure to happen sooner or later. I don't believe there's a lot that can be done about it other than perhaps in some way tying credit limit to net worth.

 

[Don2 (Don1 Revised)]

My wife gets them, too, and she's been dead for over five years. My MIL also gets them, and she's been dead over 20 years, since 2000. Anything for a buck, I guess.

When my mother was alive, she was very ill, some of the problems mental and some not. She kept buying things on credit from one company. This is because they'd send her letters that made her feel special. "Look, I got a letter from the President of the company. Peter [or whatever his name was she said] said I was specially chosen to get this offer." Then, next it was "all I have to do is pay the minimum payment each month." So she bought some things, then more things. The minimum kept going up and suddenly she couldn't afford it.