LA Times article about how more and more young people (under the age of 25) are filing for bankruptcy. This is due in part to outrageous student loans. But the biggest concern is about credit cards.
Sure, it may sound like fun to get your first plastic, but speaking from my own experience, bills suck. And now, 80% of American college freshman have credit cards. If you've seen a typical day on a college campus, this will not surprise you. I swear I have to fight those credit card guys off with a stick.
The article talks about how debt has affected these people. Many filed for Chapter 7 bankrupcty. Some didn't...
Anyway, after reading this article, i'm very inclined to be sling'n the Card a li'l less frequently. I'll use my debit, though, since that's how i pay for my groceries.
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Posts: 12677 | From: Los Angeles, CA ... somewhere off the 10 | Registered: Jul 2000
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I use my credit cards but only for little things so that I know I'll be able to pay them off. Unfortunately I feel the need to build up a credit rating otherwise I wouldn't use them at all. I've never paid a bit of interest though because I pay it off before that comes. I do think it's ridiculous that if you live within your means (ie. have no credit rating) a bank will not loan you money. Oh well, here's to judicious shopping with the credit card, paid off at the end of the month.
Posts: 303 | From: Toronto, Ontario, Canada | Registered: Aug 2000
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In 1994, I clipped every credit card I had and paid off the balances on them, which was no mean feat and left me broke for years, but it is the best thing I ever did.
Thankfully, I never overextended myself to the degree that a lot of people do and didn't have to ever consider filing bankruptcy, and I did have the comfort of knowing I'd used them when I did to pay for things like college expenses and business expenses. However, doing so (clipping them, and cancelling accounts, even though they were paid off), and having dealt with years of late payments, totally screwed my credit. Honestly -- to send the message home -- even though my partner and I's past credit histories were minor in comparison to the mess that some people make, between old student loans and old credit messes, we may never be able to buy a home. We're pretty accepting of that possibility.
If you can avoid it, avoid them like the plague, folks. You can still build up a good credit rating even if you have only ONE card that you use once a year and pay off immediately. Just file that card away somewhere where you won't touch it, use it the minimum amount to keep it active, and pay it on time, pronto.
If you need an easy card for convenience, use a debit card. They were and still are a really great idea. If that isn't enough, get a card you cannot carry more than a monthly balance on and are required to pay monthly, and do your sage best not to spend more money than you'll make within the next month.
The credit card system is insidious: they WANT you to get large balances and pay late, because it's how they make the big bucks. Don't get suckered.
I also have a credit card so that I can get good credit. I'm not impressed with the whole system, but it's how it is. I got a credit card to benefit the Center for Marine Conservation, and so far, I've paid off all my bills on time. It is nice to have for emergencies too... I know that for example, if my parents were in a serious car accident or something, I could walk across the street to the airport and buy tickets for the next flight home on credit. My parents' only stipulation on my credit card was that it have a high enough credit line for me to do that ('cause my dad had to borrow money from everyone he knew to catch a ride across the state when his mom died...).
I've finally discovered the joys of shopping (within the past few months), however, and am watching myself with some concern.
Debit or checking cards are nice from a financial planning sort of aspect, but they carry some particular security risks... not the least of which is, unless they've fixed it, if a checking card/number is stolen and you phone in a report, the only thing they can do is freeze the account. Which means YOU don't have access to it either, when rent is due, for example. It's always good to have back-ups... a savings account, actual cash tucked away somewhere discrete... Of course, this is difficult at our age, when we really don't have that much $ in the first place.
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