Americans deep in credit card debt

[Underpants?]

Deji, I really don't know how you can draw comparisons. This isn't the first housing bubble to break in the US (though I'm sure most of the posters here were too young to remember the last one)... there are safeguards in place, how far we fall is just a matter of how well the securities and insurance companies are backed.

there's no telling... your guess is as good as mine, a term: "2-tiered society," has been thrown about too much lately

[R00k]

Depending on which 'safeguards' you're talking about, you might want to double-check and make sure they're still in place, and also that they're still being enforced.

I think you'll find that recently the financial institutions have outpaced even their abilities to accurately calculate their own risk. A lot of the consequences of what they have been doing have been passed up and down the line, and growing with every exchange. I don't think there is anyone who has a full understanding of all the ways this could affect our economy yet.

And you're right that Deji's analogy isn't completely accurate: for a while now, the global economy's performance is hugely dependent on the US economy. An economic problem with the magnitude that analysts are suggesting here could cause large waves around the world (even more than it already is, obviously), and the fact that the US economy has lost much of its ability to create tangible and valuable goods, replacing that with mostly services, is going to have a real effect on our ability to help ourselves out of an economic downturn.

We've been living bubble-to-bubble for a while now, and unfortunately it can't continue forever (the same way that public corporations can't vastly increase shareholder value every year forever). It's quite depressing to think about -- the most depressing part being our government's willingness to pay for every expense with borrowed money, and refusing to recognize that it cannot continue that way indefinitely.

Our government has been acting like a teenager with a credit card for a long time now - the parallels between their economic policy and that of the poor families who are about to lose their houses are striking. The main difference between the two, is that huge financial institutions aren't paying one poor family member a lot of money to convince the rest of the family that everything is okay, and that the best solution is more borrowing and more of the same. Even if the bottom falls out and the worst case scenario comes true, our national policy makers (at least the ones who are allied with Bush) are still going to come out with a whole lot more money than most of their constituents. They aren't in the same situation that everyone else is, so their behavior can't be expected to reflect the values and motivations of the rest of the country.

[Underpants?]

I won't pretend to know more than I do but printing more currency seems to be viable solution

seriously though, when it comes to safeguards, most of it is preventative and reactionary, for example--the FBI focusing in on Country Wide, the Fed calling for strict regulation of other mortgage giants such as Fannie Mae and Freddie Mac

[Dr_Watson]

those turrorists knew exactly what they were doing.

where the fuck did that come from?

[tnf]

I agree with Underpants?

[Doombrain]

I agree with Underpants?

lol

[Deji]

I won't pretend to know more than I do but printing more currency seems to be viable solution

Yes, print more dollars, make the US currency seem much less trustworthy, soon 1 canadian dollar will buy 2 american dollars and noone will want to buy your bonds, which is the main way the US finances it's debt requirements.

The whole US economy is founded on the principle that you make the rest of the world buy your debt and then you devalue that debt by printing more dollars. This can't go on forever, you know. I especially shudder at what might happen when oil can be purchased in other currencies besides the USD, which is the main reason why the rest of the world really needs US currency.

[werldhed]

Sorry to bump the thread, but this is a simple n00b question that doesn't warrant a new topic:

Going to be applying for a mortgage soon. I've got a couple months of my car loan left, and can pay it all off now if I want, although that would set me back a bit for making any other purchases in the near future. I've never missed a payment on the loan, so it's not really hurting my credit as it is.

How much will it help my credit if I pay off the car loan before trying to get the home loan? Is it worth shelling out the money to pay it off, or will it not have much effect? Am I better off leaving that money in the bank?

[plained]

paying it off wont do much .

making the payments on time, thats very important.

doen get a traditional morgage , get a home equidy line of credit!

[Underpants?]

Sorry to bump the thread, but this is a simple n00b question that doesn't warrant a new topic:

Going to be applying for a mortgage soon. I've got a couple months of my car loan left, and can pay it all off now if I want, although that would set me back a bit for making any other purchases in the near future. I've never missed a payment on the loan, so it's not really hurting my credit as it is.

How much will it help my credit if I pay off the car loan before trying to get the home loan? Is it worth shelling out the money to pay it off, or will it not have much effect? Am I better off leaving that money in the bank?

I would do it; paying off any debt whatsoever is like a gold star of sorts. However, the trick is getting the lender to report within your needed timeframe. Some lenders are diligent and will submit within 30 days, others can take up to 90.

[Dark Metal]

I have a charge card I pre-auth all my bills to and charge whatever I can to. Gets me some Airmiles type credits... As I said it's a charge card and can't carry a balance on it, but it's for my regular expenses anyway. At least I get rewards for the money I spend.

That being said, I do have credit cards, at the usual rates. I don't often carry a balance but the APR is on my MC for example 19.9%. I watched a news piece on CBC a while back and decided to call and ask for a lower rate. I told them I was a good long standing client, and that I constantly get offers for cards with fixed lower rates, and asked if they'd do the same. She put me on hold for 2 minutes and came back and told me that they're lowering it to 9.9%. Everyone should give this a try.

[Grudge]

I still think it's dumb to pay all your stuff with a credit card, paying interest to the bank, instead of paying all your stuff with money you already earned and keep in the bank, earning interest from the bank instead.

[Sevensins]

Most of them waive the interest when you pay off the amount within the grace period.

[Dark Metal]

You see, you don't pay interest unless you don't pay the entire amount every month. If you carry a balance you pay interest, if you pay the balance every month, you pay no interest, and have all your money in the bank until you pay the bill. So you can think it's dumb all you want, but that just tells me that you don't understand.

[Grudge]

If you already have the money in the bank, why not pay with them directly?

The credit card companies still have to make money in some way, don't they?

[Dark Metal]

Yes, they charge the retailers a percentage per transaction, and if I take the money from the bank, I get nothing for it, if I charge it I get points, so there's no benefit to using the money I already have. It doesn't create debt, or accrue interest because it gets paid in full every month and I get points to fly away somewhere.

[Grudge]

So basically, it's a win-win situation, and no one really pays for it?

lol

[Fender]

No. The credit card company loses on him.

[Sevensins]

Money in the bank doesn't build your valuable credit score. The CC companies "bank" on you buying beyond your means; which is a good bet considering the title of this thread. However, those that subvert this and pay within the grace period have the benefit of building credit on the back of the CC company. Whether you take the money out of your bank account the day you buy the object or a few weeks later (within the grace period) to pay the CC balance is moot; except one way you build credit.

[Dark Metal]

No. The credit card company loses on him.

They still make money on me. They're not paying out benefits to clients without making profit on it first. So if AmEx charges retailers 3.5% they might pay out half of that to me as a benefit.

[Grudge]

Money in the bank doesn't build your valuable credit score.

You do realize that this "credit score" system is created by the ones who benefit from it, don't you?

And no, you don't benefit from it.

And no, we don't have this kind of system over here.

[Sevensins]

Yes, I realize that the credit score situation is bullshit and I hate it. However, it plays a role in many businesses these days and when you don't meet there standards you pay. So you either take it on the chin until it changes or play along until you have the wealth to not care. I don't see it changing anytime soon.

If this doesn't effect you then why are you even in this thread...

[Grudge]

lol USA etc.

[Sevensins]

No doubt. I know very little about Sweden, so...

However, I found this on wikipedia and thought it to be funny given our current state here:

A bursting real estate bubble caused by inadequate controls on lending combined with an international recession and a policy switch from anti-unemployment policies to anti-inflationary policies resulted in a fiscal crisis in the early 1990s.[29] The response of the government was to cut spending and institute a multitude of reforms to improve Sweden's competitiveness, among them reducing the welfare state and privatizing public services and goods.

[shadd_]

has it been mentioned many banks have their own internal credit ranking system? it's easier to get money from a bank than somewhere that relies solely on FICO scores.

a history with your bank, some savings and a good check writing history will get you a loan/mortgage.