Tuesday, April 21, 2009

Credit Card Debt - Ugh!

Credit card companies hate me. I never ever carry a balance on my credit card - I always pay it in full every month. Needless to say, I always ignore the minimum payment printed on my monthly statements. I probably piss off the credit card companies even more because I tend to pay my balance ahead of time. They certainly won't make any money off of me from interest payments, that's for sure.

To me, carrying a balance on a credit card makes no sense. After all, if you can't afford it, you probably shouldn't be buying it. I am appalled by the number of people who carry a balance on their credit cards month-to-month. Unfortunately, that is the capitalist way. Spend spend spend, even if you can't really afford it. I know so many people who drive fancy cars which they can't afford, or who own houses that are way outside their means. And then they wonder why they're living paycheck to paycheck. And of course we get suckered into fancy purchases with low interest rates and payment plans. Hell, you can even finance furniture and electronics! WTF???

That being said, debt IS a necessary evil at times. After all, most of us can't pay for a house or a car right off the bat. And, unfortunately, university is becoming prohibitively expensive even in Canada, with many students needing to take out loans just to be able to get some higher education. All that aside, however, I just think that think that people should be smarter about their debt and be more careful with their money so that in the event of an economic downturn, they don't end up in the pooper.


Meandering Michael said...

Today, I saw an ad for a car dealership offering "free job loss credit protection". Methinks that if you're at risk of losing your job, you should postpone the purchase of that new Toyato - or you should read the fine print very, VERY carefully.

Don't feel too bad about using the credit card company's services without ever paying for insurance. I do the same. They get a hefty annual fee out of me, but they also take the monthly purchases that are made on their cards (including yours) and sell them to speculators. They're very good at packaging things so they don't lose.

Mr. Shiny and New said...

Credit card debt wouldn't be so bad if it weren't so expensive. But people use their cards to buy something today that they can only afford a month from now, after the paycheque comes in. Then the cycle starts, because the exorbitant interest applies from the date of the purchase, and for the total amount on the bill. Throw in compounding and that bill gets high pretty fast.

I once accidentally took a cash advance from a credit card instead of withdrawing from my bank (damn CIBC website, treats the credit card like a regular account)... that mistake cost me $20, even though I put the money back that same day. Sigh.