US Credit Card Debt Hits $1 Trillion - Analyst says YAY! CONSUMER CONFIDENCE!

originally posted by: schuyler
It's a completely misleading statistic. I put $1K on my credit card this month. It's counted as debt. At the end of the month I'll pay it in full, like I always do. No more debt. No interest paid. It could have been a debit card, but I don't want that number in the wild. With a credit card, it doesn't matter because it's guaranteed by the Big Bad Bank. Din't be so simplistic when you rad these numbers. There's more to it than that.

I understand that people do that. I do the same, an pay the bill off every month; but maybe you're the one being simplistic; or, at least, Pollyanna. The article also points out that:

[quote
According to the personal finance website, US consumers added $92.2 billion to US credit card debt in 2017, the highest one-year increase since 2007.

... and ...

According to credit reporting agencies, the average credit score for Americans in 2017 is 675, four points below the 2007 figure.

Doesn't sound like people buying bread and milk and gasoline for convenience, to me.

a reply to: Lumenari

I'm glad for you, and that's the way to do it, if you wish. Maybe I'm cynical, but from where I sit, I just don't see most of the people around me being that responsible.

originally posted by: incoserv

A first in global capitalism, US citizen consumer credit card debt has now topped $1 trillion. ... A senior analyst at the personal finance website put a positive spin on the eye-opening statistic, suggesting that the rapid rise of debt was simply a result of economic confidence by Americans.

From Sputnik News

So, topping one-trillion dollars in consumer credit card debt means things are is in great shape and Americans have confidence in the economy?

Am I weird? I mean, I only go into credit card debt when I am in a pinch. I don't sit and think, Hey, I have confidence in the way the US economy is headed. I think I'll go out and buy something I can't afford!

I use a credit card for two reasons:
1. for convenience, to purchase something that I can definitely pay off by the end of my billing cycle.
2. if I am in a life-or-death bind and it's my only option.

We are credit card debt free. I guess idiots like me mess up the curve, so I wonder what the debt level of people who carry debt really is.

Seriously, does anybody believe that increased consumer credit card debt actually signifies better times?

((See the Franz quote in my sig line below.)

:

A lot of people carry really high levels of debt, my coworker has over $100,000 in credit card debt.

originally posted by: Edumakated
Never underestimate the stupidity of the American consumer. 90% of people have no idea how to manage money and live within their budget. We are in a debt based society.

Not only is credit card debt topping $1 trillion, but you also have a bubble in car loans with terms being extended out to 84 months.

I may have mentioned this in previous posts, but it's about time to get myself a "new"car. I'm not in the market for anything fancy, I was looking to spend about $15,000 on a used car. I went to the dealership and gave them a price. They worked that out on a 96 month lease to something like $170/month. I said I wanted a shorter term, whatever would get that to $400. So they took that to mean I would pay $400/month, and then came back at me with a $400/month 96 month payment car, totally ignoring my initial budget.

At the end I had to walk away. If I can't find a dealer that will simply sell me the car upfront without a payment I'll just go without a car I suppose.

Meanwhile, I look at my coworkers neighbor. $200k house (very high for this area), just bought a $55,000 car. Was working for $9.50/hour until he got fired.

I really don't get it.

People buying things they don't need, with money they don't have, to impress people they don't like. Truly ignorant.

I have a single credit card, which currently has a zero balance. The only time it gets used is when I can make a purchase with zero interest. It gets paid off that month or the next.

My household has 2 car notes that total $7,500 between them. One will be paid off at the end of this month, the other by the end of July. We also have a paid off "toy" vehicle.

The only other debt my household has is a sensible mortgage that's about 20% of gross income.

I've been completely debt free several times in my adult life, and it feels great. I'll be debt free except for a mortgage halfway through this year. My 10 year plan includes paying off the mortgage so I can be 45yo and completely debt free.

Using more credit isn't "confidence", it's slavery.

originally posted by: incoserv
a reply to: Lumenari

I'm glad for you, and that's the way to do it, if you wish. Maybe I'm cynical, but from where I sit, I just don't see most of the people around me being that responsible.

I do agree with your general premise that the news is, in fact, horrible.

Just pointing out that credit is, like anything else, a tool. One that is much abused...

originally posted by: cynicalheathen
People buying things they don't need, with money they don't have, to impress people they don't like. Truly ignorant. ... I've been completely debt free several times in my adult life, and it feels great. I'll be debt free except for a mortgage halfway through this year. My 10 year plan includes paying off the mortgage so I can be 45yo and completely debt free. ... Using more credit isn't "confidence", it's slavery.

Yes, it's ignorant. And self-destructive.

Good on you. We've largely been debt-free all of our life, as well. We drive second-hand cars. We buy affordable clothes. We keep few toys and pay for the ones we have. Only house we ever owned, I built and it's paid for.

And, your last statement is my point, exactly; by and large, this is not about consumer confidence.

I have a part to play in this trillion dollar estimate.

We live simply enough, not a lot of want or need even though we are technically below the poverty threshold.

I have two major cards and my monthly fee is reasonable.

Having the backup in case of emergencies is nice.

I don't understand the card hate.

Maybe I just view money more as a tool than an end to a means.

Dunno.

The problem is once you get in debt it is almost impossible to get out unless you can increase your income. Take 40,000 in debt for the typical card of 18% and you can only pay 700 per month. It will take you over 10 years to pay it off.

originally posted by: GENERAL EYES
I have a part to play in this trillion dollar estimate.

We live simply enough, not a lot of want or need even though we are technically below the poverty threshold.

I have two major cards and my monthly fee is reasonable.

Having the backup in case of emergencies is nice.

I don't understand the card hate.

Maybe I just view money more as a tool than an end to a means.

Dunno.

Partly what Xtrozero said.

The cards certainly can be useful. I have used them on rare occasion to get me out of a pinch, or when it was just more convenient and I knew I could pay it off immediately or nearly immediately. Yes, they are a tool. But a tool is to be used when a job needs to be done. If one does not know how to properly use a tool, it can even be dangerous.

I'd not call it credit card hate. Here's an analogy:

I love a cold beer or two at a pub. I can responsibly have a couple with a friend at a pub or restaurant and make my way home, either driving if I know I'm not impaired in any way, or in a cab or a with my DD (also known as my wife).

When some sot drinks too much, gets into his car, takes off drunk and kills somebody, that pisses me off. I don't think that the beer is the problem, I don't even think that the brewery is the problem; just like I don't think that money or credit cards are the problem.

The problem, as I see it, rests in the drinker who drank with no self-control and the pub who sold the sot too much booze, knowing that it meant profit for them with no consideration as to what effects their abetting the sot might have. These are like the consumer who misuses easy credit and the financial institutions and credit card companies that dole out the easy credit to people who shouldn't have it, trapping them in debt for their own profit. The first responsibility falls on the drunk and the debtor, but the pub and the credit card company also carry some moral - if not legal - responsibility.

Even tough we have been careful with credit, I intentionally keep my two credit cards to a limit well under $10,000. I just had an offer from one of my banks to raise one of my cards from a limit of $7,500. No thanks!

It's, mostly, a matter of responsible use. I have not statistics to support my supposition, but experience tells me that probably, most credit card debt is for crap, generated, as cynicalheathen said, by:

originally posted by: cynicalheathen
People buying things they don't need, with money they don't have, to impress people they don't like. Truly ignorant.

Part of what irritates me, though, is, also that many the asshat quoted in the article is saying that increased credit card debt is the result of increased consumer confidence. I am certain that this is not the reality. It sucks that Americans are pushed to the point that many have to go into debt just to live. I this is because they just don't know how to manage money and live within their means (as it the case for many), the shame on them. But for some, it really is a matter of hard economics.

:

a reply to: GENERAL EYES

Credit can be used responsibly. I don't deny that. However, personal observation has shown me that it generally isn't. Most people I know on a personal level don't consider the overall cost, just "how much down, and how much a month."

I know just as many people who have declared bankruptcy or defaulted on a loan as I do those who haven't. I have a good friend who was making six figures of household income, but due to debt service, was functionally broke. He had a lot of nice toys, and paid interest on all of them.

As far as using a card for "emergencies", that's playing with fire. It's much better to save up a liquid emergency fund of 3-6 months of expenses. What's better: paying money you already have and eating rice and beans for a while, or paying interest on money you don't have? What if the "emergency" continues and you can't pay the card off?

I have been very thankful to have pre-planned for emergencies, and it was a load off my mind to think "Oh, I've got the funds for this." and then just swipe a debit card or withdraw funds from the ATM. Then it's a simple matter of paying the fund back before any large leisure expenses. The peace of mind is great.

originally posted by: incoserv

A first in global capitalism, US citizen consumer credit card debt has now topped $1 trillion. ... A senior analyst at the personal finance website put a positive spin on the eye-opening statistic, suggesting that the rapid rise of debt was simply a result of economic confidence by Americans.

From Sputnik News

So, topping one-trillion dollars in consumer credit card debt means things are is in great shape and Americans have confidence in the economy?

Am I weird? I mean, I only go into credit card debt when I am in a pinch. I don't sit and think, Hey, I have confidence in the way the US economy is headed. I think I'll go out and buy something I can't afford!

I use a credit card for two reasons:
1. for convenience, to purchase something that I can definitely pay off by the end of my billing cycle.
2. if I am in a life-or-death bind and it's my only option.

We are credit card debt free. I guess idiots like me mess up the curve, so I wonder what the debt level of people who carry debt really is.

Seriously, does anybody believe that increased consumer credit card debt actually signifies better times?

((See the Franz quote in my sig line below.)

:

I'm like you; don't like having credit card debt and only carry it over a month if I have no other choice and even then I stop eating first.

But as a sign of "consumer confidence" I can see the case for it. You don't need to be good with money management to know if your job is secure for the next 12 months or if your company is going through it's 3rd round of layoffs. And when you know your job is secure your more willing to spend on that credit card than you are when your waiting for the ax "any day now".

It's the same coralation economists find in birth rates and economic confidence. You don't get pregnant (or at least stay pregnant) when your worried about your job and your place in the economy.

Sure some times you have an accident and get pregnant when you don't intend .... and yes some times the car breaks down when your already strapped for cash. But those are individual circumstances... There would be a lot of other indicators if every one was in the same boat at the same time.... since we don't get have tent cities in central park; I'm thinking this boom in debt is from people taking vacations that they can't afford because their confident they'll make it up with their job security.

But than again the same thing happened 10 years ago and people found out that life wasn't as secure as they thought. But you couldn't say they weren't confident back then, their confidence was just wrong. ... it could be wrong again now.

originally posted by: cynicalheathen
a reply to: GENERAL EYES

Credit can be used responsibly. I don't deny that. However, personal observation has shown me that it generally isn't. Most people I know on a personal level don't consider the overall cost, just "how much down, and how much a month."
...
As far as using a card for "emergencies", that's playing with fire. It's much better to save up a liquid emergency fund of 3-6 months of expenses. What's better: paying money you already have and eating rice and beans for a while, or paying interest on money you don't have? What if the "emergency" continues and you can't pay the card off?

Absolutely, on both counts.

My son got credit card offers in the mail right out of high school. I warned him, I begged him, I cajoled him. "I know what I'm doing. It's the American way," he said. Now, over 10 years later, he's regretting it and still paying off debt. He is paying it off, but I don't know how much of what he pays is going to interest. It breaks my heart.

I try to convince him to put any extra money he has on paying down the debt, but he says he wants to have that liquid fund "just in case." I'm not sure which is best, to pay off the debt and hope you don't need the liquid fund, but use credit again if you do, or to hold on to the cash and pay the credit off slowly. I lean toward paying off the credit because of interest and then trying to build up a liquid fund later. If he does need the credit for an emergency soon, he's no worse off than if he was to begin with.

And, yes, the wisdom of using the credit card for emergencies is dubious, at best. Sometimes, it's all a person has, though.

a reply to: SkeptiSchism

Almost like a grand scheme,US Dollar collapses the government ends up owning your assets because you can't pay taxes,how many lost their homes in 33,this will be the forced socialism they will start,along with debtors prison's for those who did spend frivilously,sure doesn't sound good,the wild pigs have taken the free handout

a reply to: Edumakated

Never underestimate the stupidity of the American consumer. 90% of people have no idea how to manage money and live within their budget. We are in a debt based society.

Yep that's me. I dont live beyond my means though just paycheck to paycheck it seems. Plan on correcting that though. I have a used truck with 323k miles on it, I used Cadillac CTS thats almost paid off.

My wife is the financial genius or at least the financial adult in our relationship though. I make twice as much as she does and she has twice as much money lol

"US Credit Card Debt Hits $1 Trillion - Analyst says YAY! CONSUMER CONFIDENCE!"

That or everybody is broke!

a reply to: incoserv

Seriously, does anybody believe that increased consumer credit card debt actually signifies better times?

It seems to me that massive debts actually do signify better times . .. but only for the sharks (finance industry). They're not referring to the consumer's financial situation when they say 'better times', because how can it be a good thing to owe more money?

More/bigger debts is wonderful news if, like the shark-infested finance industry, not only does success depend on it, but it's the only reason they exist. More debt is fantastic for these types of people and industry. Their gains are someone else's losses, namely consumers.

The greedy finance industry isn't satisfied with taking your salary as you earn it anymore, it wants every penny you'll earn in your lifetime before you earn it. You won't even get to sniff it as it bypasses your calloused hands that earned it and straight to the circling sharks. Then they'll lend you a bit of it back to get you thru until the next payday feeding frenzy. It never ends.

I don't have any loans, credit cards or any of that crap. What's it all for anyway? You borrow money to buy stuff you can't afford and don't need, massive houses, holiday homes, gas-guzzler motors, jewellery, etc, and now you're too knackered to enjoy them because you HAVE TO keep working harder to pay for it all or they'll just come and take it all back and kick you naked and shivering on the streets. It won't matter how long and hard you've worked up to that point neither, they won't leave you with any of it and will eat you alive to get their additional pounds of flesh, whatever it takes, fair or unfair.

This 'buy now/pay later' lark is a predator's prey-trap. I learned years ago, the hard way, that we're all just shark food. They'll never get me in that situation again. Ever.

My grandmother racked up $90,000 in one year in cash advances going to the casino.

originally posted by: tinner07
Yep that's me. I dont live beyond my means though just paycheck to paycheck it seems. Plan on correcting that though. I have a used truck with 323k miles on it, I used Cadillac CTS thats almost paid off.

Paycheck to paychek is beyond your means. You should be living far enough below your means that you can make the following budget:

Saving - 30%
Housing - 18% (if you own, this should include 3 mortgage payments per month)
Utilities - 8%
Food - 15%
Tranportation - 8% (gas, insurance, maintenance, and car payment)
Insurance - 15%
Other - 6%

In addition you should be sitting on two years living expenses in available credit, one years expenses in semi liquid assets, and another 6 months expenses in cash.

Less than that is living well beyond your means.

originally posted by: Oldtimer2
a reply to: SkeptiSchism

Almost like a grand scheme,US Dollar collapses the government ends up owning your assets because you can't pay taxes,how many lost their homes in 33,this will be the forced socialism they will start,along with debtors prison's for those who did spend frivilously,sure doesn't sound good,the wild pigs have taken the free handout

I am afraid that that is exactly part of the plan.