Credit Card Application WTF
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@PJH said:
Ironically, my "low interest rate" CC has been upping its interest rate (used to be 22%, it is somewhere near 33% this month) while my single most expensive CC slashed its rate from 54% to 28%. So now, my "expensive" credit card is now the cheapest one of the lot.@DWalker59 said:
but now some of my cards are raising my interest rates,
Over here most of the CC companies are raising interest rates.Something to do with the credit crunch I believe.
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@danixdefcon5 said:
Ironically, my "low interest rate" CC has been upping its interest rate (used to be 22%, it is somewhere near 33% this month) while my single most expensive CC slashed its rate from 54% to 28%. So now, my "expensive" credit card is now the cheapest one of the lot.
Jesus Christ!! I hope you never use those things! Are those "normal" rates in Mexico City?
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@amischiefr said:
Or if he does, I hope he doesn't carry any balances over month to month. (Presuming normal CC behaviour where you don't get charged interest if you pay the full amount off every month.)@danixdefcon5 said:
[credit card with rates of] 54% to 28%.
Jesus Christ!! I hope you never use those things! Are those "normal" rates in Mexico City?
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@amischiefr said:
Guess why Mexican banks aren't feeling the heat. Average interest rates for credit cards are 43%. The "cheapest" consumer credit used to be housing (9%) or some special loans (25%); but most credit cards rip us off. In fact, they usually give you the monthly interest rate, hoping you don't multiply 3% * 12 months. And I've seen at least two credit cards at 5%/month (that's right, 60%!).@danixdefcon5 said:
Ironically, my "low interest rate" CC has been upping its interest rate (used to be 22%, it is somewhere near 33% this month) while my single most expensive CC slashed its rate from 54% to 28%. So now, my "expensive" credit card is now the cheapest one of the lot.
Jesus Christ!! I hope you never use those things! Are those "normal" rates in Mexico City?
I'm sticking to my 28% card.
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@cdosrun said:
You're in luck, actually, at least if you live in the USA- The US Government is forcing banks to give a certain number of loans to people with bad or insufficent credit to protect their chaters.
Wasn't giving loans to people with bad credit what got us in this whole mess to begin with?
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@danixdefcon5 said:
@amischiefr said:
Guess why Mexican banks aren't feeling the heat. Average interest rates for credit cards are 43%. The "cheapest" consumer credit used to be housing (9%) or some special loans (25%); but most credit cards rip us off. In fact, they usually give you the monthly interest rate, hoping you don't multiply 3% * 12 months. And I've seen at least two credit cards at 5%/month (that's right, 60%!).@danixdefcon5 said:
Ironically, my "low interest rate" CC has been upping its interest rate (used to be 22%, it is somewhere near 33% this month) while my single most expensive CC slashed its rate from 54% to 28%. So now, my "expensive" credit card is now the cheapest one of the lot.
Jesus Christ!! I hope you never use those things! Are those "normal" rates in Mexico City?
I'm sticking to my 28% card.
Man, and I thought they were bad in the states. I don't use them now, but if they were that bad around here, I would punch people just for suggesting I get one.
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@PJH said:
You are right about the law, but wrong about the SOL: at least some card companies offer guarantees over and above your basic consumer rights, and although they're not legally binding, who knows, they might be as good as their word. According to http://news.bbc.co.uk/1/hi/programmes/working_lunch/7593369.stm, two-thirds of all debit cards in the UK are VISA and hence covered by VISA's "Visa Debit Chargeback" scheme.@campkev said:
Things have changed recently. They offer the same protection as credit cards now
In the US maybe, but certainly not in the UK: Credit cards offer far more protection than Debit cards. For example if the company you've bought from has gone bust, and you haven't had your goods, in the case of a credit card, the CC company refunds you the money (Section 75.) Buy on an debit card and you're basically SOL.
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@campkev said:
Things have changed recently. They offer the same protection as credit cards now
That is debatable, but one thing debit cards definitely do not offer is cash flow management.
Using a debit card is equivalent to paying cash. The money comes out of your account right now. Paying for something on credit - assuming you pay off the balance in full - gives you a few weeks of lead time.
This is not insignificant when making major purchases. If I'm buying $10,000 worth of furniture or appliances, I could be earning a good $1000 by the end of the month if it's well-invested. Pay cash and that opportunity is lost.
Remember the time value of money. I can understand the people who choose not to have credit cards because they know they can't properly track and limit their spending; however, some people are apparently just anti-credit and that's nonsense.
I almost never use my debit card. I don't even really keep any cash in my account - just enough to cover the automatic withdrawals plus a few hundred for cash purchases (food) and small emergencies. The rest goes on credit, which after a few weeks is paid for with my line of credit, which after another few weeks is finally paid for in cash. That is on average a 6-week interest-free loan. Why would you not take advantage of that opportunity if you know how to keep it all organized?
In my experience (and this is just my experience), consumers fall into 3 major categories: Those who are ignorant of money (deep in debt, use too much credit), those who are afraid of money (shun credit, but still don't save or invest much), and those who manage their money (use debt as part of a larger savings strategy). Most people seem to go through all of those stages as a natural progression.
There is one time I do make moderate-to-heavy use of my debit card and that is when I am travelling. I never know for sure if a credit card is going to be accepted, but debit cards almost always work in the ATMs, so I make use of them in order to always have a small-but-practical amount of cash on me. Also you tend to get dinged more heavily on exchange rates when using credit cards.
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@Aaron said:
That is debatable, but one thing debit cards definitely do not offer is cash flow management.
Using a debit card is equivalent to paying cash. The money comes out of your account right now. Paying for something on credit - assuming you pay off the balance in full - gives you a few weeks of lead time.
This is not insignificant when making major purchases. If I'm buying $10,000 worth of furniture or appliances, I could be earning a good $1000 by the end of the month if it's well-invested. Pay cash and that opportunity is lost.
Hogwash, nobody earns 10% return (or anything close to that) in a month on a regular and reliable basis. I stopped reading at that point because you lost all credibility in talking about money.
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@DaveK said:
You are right about the law, but wrong about the SOL: at least some card companies offer guarantees over and above your basic consumer rights, and although they're not legally binding, who knows, they might be as good as their word. According to http://news.bbc.co.uk/1/hi/programmes/working_lunch/7593369.stm, two-thirds of all debit cards in the UK are VISA and hence covered by VISA's "Visa Debit Chargeback" scheme
Something offered by Visa, and not 'enshrined by law' - they can (and do) refuse to pay out - something they cannot do under '75.If you pay by Visa, instead of by CC, you are still SOL, and at the whim of the the provider (in this case Visa.)
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@Aaron said:
Most people seem to go through all of those stages as a natural progression.
I'd like to call you up on the use of the word ''most' in that statement.
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@MrsPost said:
If you have a debit card through your bank you generally have a credit card too. Look at the little logo in the corner. It isn't there just for decoration.
Uhhh, no. You have a debit card that works with the credit card network system (stripe and signature) in addition to the debit card system (Chip and PIN in Europe, stripe and PIN in the US). It's not a credit card because you cannot make purchases exceeding the balance in your bank account, which is debited as soon as the charge is posted. A true credit card has an independant limit (though it may be "collaterally based" on your transaction account balance) which are resolved on an independant billing cycle.I'm being bitten by this bug right now since although I have a Visa card linked to a transaction account that's been in good standing for over a decade and a half, according to TransUnion there is not enough information in my credit history to even issue their report, at all, and I've been told by Novus that I am ineligible for any card with them, even the student card, because I have no revolving accounts (read: credit cards) in my credit history, only transaction and fixed asset accounts. Just because my card is a Visa card doesn't make it a credit card, no matter how I wish it were so.
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@danixdefcon5 said:
Ironically, my "low interest rate" CC has been upping its interest rate (used to be 22%, it is somewhere near 33% this month) while my single most expensive CC slashed its rate from 54% to 28%. So now, my "expensive" credit card is now the cheapest one of the lot.
Everything everyone has been saying about Mexican banks being stupid is clearly false, as they have figured out how to get people to accept credit cards with a rate like 54%.
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@belgariontheking said:
@danixdefcon5 said:
Ironically, my "low interest rate" CC has been upping its interest rate (used to be 22%, it is somewhere near 33% this month) while my single most expensive CC slashed its rate from 54% to 28%. So now, my "expensive" credit card is now the cheapest one of the lot.
Everything everyone has been saying about Mexican banks being stupid is clearly false, as they have figured out how to get people to accept credit cards with a rate like 54%.QFT!
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@belgariontheking said:
@danixdefcon5 said:
Ironically, my "low interest rate" CC has been upping its interest rate (used to be 22%, it is somewhere near 33% this month) while my single most expensive CC slashed its rate from 54% to 28%. So now, my "expensive" credit card is now the cheapest one of the lot.
Everything everyone has been saying about Mexican banks being stupid is clearly false, as they have figured out how to get people to accept credit cards with a rate like 54%.They must have rates that high: it's simple economics. Let's say I'm a Mexican bank and in the morning I lend you some flour tortillas, a can of beans, a sombrero, a burro and a stucco wall with a shady side just perfect for escaping the mid-day sun during siesta. By the end of the day, my tortillas and beans will be eaten, my sombrero will be all sweaty, my burro will be restless from being tied up all day while your lazy ass does nothing and my wall will no longer have a shady portion suitable for napping. Without such usurious interest rates, the Mexican economy as we know it would sleepily stagger to a halt; and not just overnight or for a few hours in the middle of every afternoon or on weekends or when it's a nice day outside and you've had a bit too much tequila at lunch or on one of the dozens of recognized Catholic holidays. As a key generator in the Global Economy, the loss of productivity caused by a shutdown of the Mexican economy would resonate throughout the worlds of construction, gardening and low-skilled services.
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@danixdefcon5 said:
In fact, they usually give you the monthly interest rate, hoping you don't multiply 3% * 12 months. And I've seen at least two credit cards at 5%/month (that's right, 60%!).
3% in a month is 42.5% in a year.
5% in month is 80% in a year.
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@alegr said:
3% in a month is 42.5% in a year.
5% in month is 80% in a year.
Are you talking about apy or the interest rate?
Since most accounts are compounded monthly(at least in the U.S.) 3% per month is the same thing as 36% per year and 5% per month is the same thing as 60% per year, so danixdefcon5 is correct. Your numbers would refer to the APY's, which would come out to roughly 42.6% and 80% respectively.
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@campkev said:
They look to be APR/APYs: http://www.stoozing.com/mon2yr.htm@alegr said:
3% in a month is 42.5% in a year.
5% in month is 80% in a year.
Are you talking about apy or the interest rate?
@campkev said:
Since most accounts are compounded monthly(at least in the U.S.) 3% per month is the same thing as 36% per year and 5% per month is the same thing as 60% per yea
If you're compounding monthly (as you would on a credit card for instance,) then a simple 'times 12' calculation is most certainly not what is required, since in subsequent months, you're not only working out a percentage of the principle, but also of previous months' interest that's been added on.
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@PJH said:
@campkev said:
They look to be APR/APYs: http://www.stoozing.com/mon2yr.htm@alegr said:
3% in a month is 42.5% in a year.
5% in month is 80% in a year.
Are you talking about apy or the interest rate?
@campkev said:
Since most accounts are compounded monthly(at least in the U.S.) 3% per month is the same thing as 36% per year and 5% per month is the same thing as 60% per yea
If you're compounding monthly (as you would on a credit card for instance,) then a simple 'times 12' calculation is most certainly not what is required, since in subsequent months, you're not only working out a percentage of the principle, but also of previous months' interest that's been added on.
Let me clarify what I meant. 3% per month is the same as 36% per year <b>compounded monthly</b> which works out to roughly 42.6% APY. So if someone in Mexico is talking about their interest rate being 3% per month, then to get the equivalent of how we normally state it in the U.S. you would simply multiply the percentage by 12.
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@morbiuswilters said:
They must have rates that high: it's simple economics. Let's say I'm a Mexican bank and in the morning I lend you some flour tortillas, a can of beans, a sombrero, a burro and a stucco wall with a shady side just perfect for escaping the mid-day sun during siesta. By the end of the day, my tortillas and beans will be eaten, my sombrero will be all sweaty, my burro will be restless from being tied up all day while your lazy ass does nothing and my wall will no longer have a shady portion suitable for napping. Without such usurious interest rates, the Mexican economy as we know it would sleepily stagger to a halt; and not just overnight or for a few hours in the middle of every afternoon or on weekends or when it's a nice day outside and you've had a bit too much tequila at lunch or on one of the dozens of recognized Catholic holidays. As a key generator in the Global Economy, the loss of productivity caused by a shutdown of the Mexican economy would resonate throughout the worlds of construction, gardening and low-skilled services.
Good to have you back.
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@campkev said:
Let me clarify what I meant. 3% per month is the same as 36% per year <b>compounded monthly</b> which works out to roughly 42.6% APY. So if someone in Mexico is talking about their interest rate being 3% per month, then to get the equivalent of how we normally state it in the U.S. you would simply multiply the percentage by 12.
Ah right. In .co.uk, it is the APR/APY that must be stated - ostensibly in order to make comparisons between cards clearer (the APR includes any charges like annual fees as well as the effects fo compounding.)
This has some interesting effects on the APRs of shorter (<1 year) loans, e.g. pay-day loans.
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@PJH said:
@campkev said:
Let me clarify what I meant. 3% per month is the same as 36% per year <b>compounded monthly</b> which works out to roughly 42.6% APY. So if someone in Mexico is talking about their interest rate being 3% per month, then to get the equivalent of how we normally state it in the U.S. you would simply multiply the percentage by 12.
Ah right. In .co.uk, it is the APR/APY that must be stated - ostensibly in order to make comparisons between cards clearer (the APR includes any charges like annual fees as well as the effects fo compounding.)
This has some interesting effects on the APRs of shorter (<1 year) loans, e.g. pay-day loans.
I wish they would make the scumbags...I mean payday lenders...I mean scumbags...do that here. If people knew what kind of interest rate they were actually paying, maybe so many people wouldn't use that crap. Then again, I'm probably being to optimistic.
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@campkev said:
The APY/APR must be stated over here as well, including the calculation date. However, many banks are still giving some shoddy info like "CAT de 29% a 58%"... without specifying an interest rate to APY/APR equivalence. By the way, statements do show both the monthly compounded interest and the full interest rate, but when soliciting credit cards, they'll only show the decieving "3% monthly" number and some "30% to 70%" APY/APR (called CAT, Costo Anual Total or Total Yearly [Credit] Cost).@PJH said:
@campkev said:
Let me clarify what I meant. 3% per month is the same as 36% per year <b>compounded monthly</b> which works out to roughly 42.6% APY. So if someone in Mexico is talking about their interest rate being 3% per month, then to get the equivalent of how we normally state it in the U.S. you would simply multiply the percentage by 12.
Ah right. In .co.uk, it is the APR/APY that must be stated - ostensibly in order to make comparisons between cards clearer (the APR includes any charges like annual fees as well as the effects fo compounding.)
This has some interesting effects on the APRs of shorter (<1 year) loans, e.g. pay-day loans.
I wish they would make the scumbags...I mean payday lenders...I mean scumbags...do that here. If people knew what kind of interest rate they were actually paying, maybe so many people wouldn't use that crap. Then again, I'm probably being to optimistic.
Up to last month, my 54% credit card was only used as a "use it now, pay it tomorrow" so it didn't have enough time to generate interest. Spending with that one helps my credit score, and paying it in full avoids the extortionate interest rate they had on the damn thing.
Interesting fact: if you thing 54% is expensive, you should see the loan sharks that are so common over here: some state APRs of 150%... and people still use them.
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@danixdefcon5 said:
Interesting fact: if you thing 54% is expensive, you should see the loan sharks that are so common over here: some state APRs of 150%... and people still use them.
150%? pshaw. Pay-day loans charge as much as $17.50 for every $100 borrowed. Sometimes for as little as a week. Care to figure out that interest rate?
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@campkev said:
150%? pshaw. Pay-day loans charge as much as $17.50 for every $100 borrowed. Sometimes for as little as a week. Care to figure out that interest rate?
We in Ohio just voted to put a cap on the interest rate they could charge. They used to charge like 300%, but now they cap it at 28%. Although it doesn't seem to be doing much good because the lenders can just tack on more service charges that aren't interest.Also, for the record, I didn't bother to calculate the interest rate on your example transaction.
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@belgariontheking said:
Also, for the record, I didn't bother to calculate the interest rate on your example transaction.
910% interest? I'm in the wrong business.
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@belgariontheking said:
@campkev said:
150%? pshaw. Pay-day loans charge as much as $17.50 for every $100 borrowed. Sometimes for as little as a week. Care to figure out that interest rate?
We in Ohio just voted to put a cap on the interest rate they could charge. They used to charge like 300%, but now they cap it at 28%. Although it doesn't seem to be doing much good because the lenders can just tack on more service charges that aren't interest.Also, for the record, I didn't bother to calculate the interest rate on your example transaction.
Which is just another example of why government intervention into free markets is foolish. Pay-day loan places simply found a way around the arbitrary interest rate caps after your state spent millions pointlessly trying to stop them. Perhaps you should instead be asking why these places manage to flourish in the first place. They provide a much-needed service that their customers will continue to seek out no matter how the government tries to restrict it: very high-risk, unsecured loans to people with terrible credit. Of course, this means they have to charge high interest rates to offset the losses from people defaulting on the loans. If the government tries to outlaw them completely, they will just drive them back under ground where it is even more risky and difficult for consumers to obtain the loans. These kinds of loans have been around forever and will continue to exist so long as people are free to make their own financial arrangements.
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@morbiuswilters said:
@belgariontheking said:
@campkev said:
150%? pshaw. Pay-day loans charge as much as $17.50 for every $100 borrowed. Sometimes for as little as a week. Care to figure out that interest rate?
We in Ohio just voted to put a cap on the interest rate they could charge. They used to charge like 300%, but now they cap it at 28%. Although it doesn't seem to be doing much good because the lenders can just tack on more service charges that aren't interest.Also, for the record, I didn't bother to calculate the interest rate on your example transaction.
Which is just another example of why government intervention into free markets is foolish. Pay-day loan places simply found a way around the arbitrary interest rate caps after your state spent millions pointlessly trying to stop them. Perhaps you should instead be asking why these places manage to flourish in the first place. They provide a much-needed service that their customers will continue to seek out no matter how the government tries to restrict it: very high-risk, unsecured loans to people with terrible credit. Of course, this means they have to charge high interest rates to offset the losses from people defaulting on the loans. If the government tries to outlaw them completely, they will just drive them back under ground where it is even more risky and difficult for consumers to obtain the loans. These kinds of loans have been around forever and will continue to exist so long as people are free to make their own financial arrangements.
I never said they should be outlawed, just that running one makes you a scumbag. I guess I'm kind of libertarian minded in that if somebody wants to be a scumbag and somebody else is dumb enough to do business with them, then they should be free to do so. And while their service may be much-utilized, it is not much needed. It does nothing to help people and only makes their bad situation worse.
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@campkev said:
I never said they should be outlawed, just that running one makes you a scumbag.
I rather appreciate payday loan places, because it dramatically reduces the number of people who ask me to loan them $50 for some plausible reason that isn't bullshit.
Instead, I get people asking for $50 with stupid reasons, and I say "no". Or I get people asking for $50 with bullshit reasons, and I suggest they get a payday loan.
See? Everyone's happy.
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@belgariontheking said:
Which is where APR (in .uk at least) comes in - those charges must be included in it. (But then again, there's been no attempt, yet, here to try and cap these numbers - there's been a few rumblings from members of the public who happen to be famous, but nothing legislative.)just voted to put a cap on the interest rate they could charge. They used to charge like 300%, but now they cap it at 28%. Although it doesn't seem to be doing much good because the lenders can just tack on more service charges that aren't interest.
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@morbiuswilters said:
Which is just another example of why government intervention into free markets is foolish. Pay-day loan places simply found a way around the arbitrary interest rate caps after your state spent millions pointlessly trying to stop them. Perhaps you should instead be asking why these places manage to flourish in the first place. They provide a much-needed service that their customers will continue to seek out no matter how the government tries to restrict it: very high-risk, unsecured loans to people with terrible credit. Of course, this means they have to charge high interest rates to offset the losses from people defaulting on the loans. If the government tries to outlaw them completely, they will just drive them back under ground where it is even more risky and difficult for consumers to obtain the loans. These kinds of loans have been around forever and will continue to exist so long as people are free to make their own financial arrangements.
Agree fully, and I want to point out that I know I'm in the ghetto when I see one of those places. I know I'm DEEP in the ghetto when I see two right next to each other. Then I turn around, draw my machete and chop my way out as if I'm in the jungle. Some people call it a flashback to my Vietnam days, I call it being high on PCP.
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@morbiuswilters said:
Agreed. These are the guys who give credit to people in the "take loan and run" category. There is little to no guarantee that the loan money will ever come back; so they set their interest rates at a point where even if, say, 70% of their loans turn bad, they'll still be able to make a profit.Which is just another example of why government intervention into free markets is foolish. Pay-day loan places simply found a way around the arbitrary interest rate caps after your state spent millions pointlessly trying to stop them. Perhaps you should instead be asking why these places manage to flourish in the first place. They provide a much-needed service that their customers will continue to seek out no matter how the government tries to restrict it: very high-risk, unsecured loans to people with terrible credit. Of course, this means they have to charge high interest rates to offset the losses from people defaulting on the loans. If the government tries to outlaw them completely, they will just drive them back under ground where it is even more risky and difficult for consumers to obtain the loans. These kinds of loans have been around forever and will continue to exist so long as people are free to make their own financial arrangements.
Basically, the paying ones are subsidizing the defaulting debtors; usually those who pay on time will get "discount" interest rates. And of course, if most clients actually pay, you're looking at a huge profit machine!
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@campkev said:
@dtech said:
@campkev said:
TRWTF is that you have a credit card at all. Cut it up and cancel the account. I got out of the credit card game three years ago and life has been much better ever since.
Isn't a credit card about the only way in the US you can pay electronically in stores? In Holland only a small percentage of the people have credit card because we have our own debit card system (called "PIN") which is accepted everywhere and is issued standardly by banks on all of it's cards of which you get one as soon as you turn 12.
No, I use a debit card with a PIN for almost all of my purchases. Unless I'm buying something large (over a couple of hundred dollars), then I bring cash.
You do realize that you could just pay off the credit card every month and it will be exactly the same as your debit card except your cash flow will be more flexible if you need it. Also, debit cards are more dangerous than credit cards. If someone steals your debit card and uses it to pay for a new kitchen then you loose out. With credit cards you call the credit card company and tell them about the fradulent charges and you are out nothing but a little bit of effort.
Also, keeping $10,000 in your leveraged brokerage account could be the difference between having to sell $40,000 worth of securities and then buying it back later when you replace the $10,000 from another source, or keeping the securities and then using the $10,000 from another source to pay the credit card bill. Not everyone's finances are as simple as paychecks in in 2 weeks. People active in trading securities are very concerned about cash flow and ensuring that they have the necissary cash at all times to cover trades and prevent margin calls.
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@tster said:
You do realize that you could just pay off the credit card every month and it will be exactly the same as your debit card except your cash flow will be more flexible if you need it.
No it won't. Studies have shown that people, even those who pay their credit cards off every month, spend less when they use debit cards than when they use credit cards. They spend even less when they use cash. The average transaction at McDonalds went up by 50% when they started taking credit/debit cards.
@tster said:
Also, debit cards are more dangerous than credit cards. If someone steals your debit card and uses it to pay for a new kitchen then you loose out. With credit cards you call the credit card company and tell them about the fradulent charges and you are out nothing but a little bit of effort.
Most debit cards now carry the same protection.
@tster said:
Also, keeping $10,000 in your leveraged brokerage account could be the difference between having to sell $40,000 worth of securities and then buying it back later when you replace the $10,000 from another source, or keeping the securities and then using the $10,000 from another source to pay the credit card bill. Not everyone's finances are as simple as paychecks in in 2 weeks. People active in trading securities are very concerned about cash flow and ensuring that they have the necissary cash at all times to cover trades and prevent margin calls.
Here's an idea, if you need $10,000 in your leveraged brokerage account, don't go buy $10,000 worth of furniture. Or wait a couple of weeks and get the money from wherever you were going to get it to pay the credit card bill.
Look, are there some people who have the self control, the financial knowledge and some unusual circumstances that make having a credit card a good idea? Sure, at least in theory. I've never actually met anybody who met all three criteria. However, for the vast, vast majority, a credit card is, at best, no better than a debit card, and at worst, an extremely bad idea.
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@PJH said:
When I said you are not SOL, you should not have taken that to mean I thought you were in the exact same position as if you had a CC: that does not follow, as it is a false dilemma that the only two possibilities are "fully protected" and "SOL".@DaveK said:
You are right about the law, but wrong about the SOL: at least some card companies offer guarantees over and above your basic consumer rights, and although they're not legally binding, who knows, they might be as good as their word. According to http://news.bbc.co.uk/1/hi/programmes/working_lunch/7593369.stm, two-thirds of all debit cards in the UK are VISA and hence covered by VISA's "Visa Debit Chargeback" scheme
Something offered by Visa, and not 'enshrined by law' - they can (and do) refuse to pay out - something they cannot do under '75.If you pay by Visa, instead of by CC, you are still SOL, and at the whim of the the provider (in this case Visa.)
My understanding of "SOL" is that it means there is nothing you can do, and not that it means there is something that you can do, but it isn't guaranteed a 100% chance of success. Hence even being "at the whim of the provider" means you are not SOL yet, and will not be until and unless they decline you.
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@DaveK said:
When I said you are not SOL, you should not have taken that to mean I thought you were in the exact same position as if you had a CC: that does not follow, as it is a false dilemma that the only two possibilities are "fully protected" and "SOL".
In .uk, that is the two possibilities. You are either covered by your card, or you're at the whim of whoever's administrating the accounts of the dead company you've bought goods off.
@DaveK said:
My understanding of "SOL" is that it means there is nothing you can do, and not that it means there is something that you can do, but it isn't guaranteed a 100% chance of success. Hence even being "at the whim of the provider" means you are not SOL yet, and will not be until and unless they decline you.
Um. CC being forced to pay you, or other company that has the option to pay you (over the other creditors.)
In theory you're entirely correct.
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@campkev said:
@tster said:
You do realize that you could just pay off the credit card every month and it will be exactly the same as your debit card except your cash flow will be more flexible if you need it.
No it won't. Studies have shown that people, even those who pay their credit cards off every month, spend less when they use debit cards than when they use credit cards. They spend even less when they use cash. The average transaction at McDonalds went up by 50% when they started taking credit/debit cards.
I am not arguing about people's behavior. However, you have made a statement along the lines of "Credit Cards are bad because high interest rates cost you a lot of money." However, if you pay off the entire bill every month you pay 0% interest, so it is just like a debit card in that sense.
@campkev said:
Here's an idea, if you need $10,000 in your leveraged brokerage account, don't go buy $10,000 worth of furniture. Or wait a couple of weeks and get the money from wherever you were going to get it to pay the credit card bill.
Look, are there some people who have the self control, the financial knowledge and some unusual circumstances that make having a credit card a good idea? Sure, at least in theory. I've never actually met anybody who met all three criteria. However, for the vast, vast majority, a credit card is, at best, no better than a debit card, and at worst, an extremely bad idea.
OK, I just used the example given earlier in the thread, I'm sorry you didn't like it. Why not consider an emergency purchase (you cut off your finger and have a $5,000 medical bill, your engine explodes and you need to buy a new Johnson Rod, your house catches on fire and you need the cash to live in a hotel for a week before your insurance company can get you some money). I have assets that could cover all of these things, but I don't keep them in cash in a savings account. So It would take 3 days and I would be forced to sell equities (which will have tax consequences).
And my main point was that a credit card is an effect tool to control cash flow. If you don't see the importance of cash flow and how good this is then you probably are not going to be persuaded by any argument I can make because your finances are just not complex enough for it to matter to you.
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@PJH said:
You can't count, can you? That's three right there: "fully protected", "at the whim of the card company", and "SOL". Also, you can't read: you aren't at the whim of the administrators of the dead company, you are at the whim of the debit card company. So that's four possibilities: "fully protected", "at the whim of the card company", "an unsecured creditor in the case where the remaining assets of the firm are sufficient to make payments to unsecured creditors", and finally "SOL".@DaveK said:
When I said you are not SOL, you should not have taken that to mean I thought you were in the exact same position as if you had a CC: that does not follow, as it is a false dilemma that the only two possibilities are "fully protected" and "SOL".
In .uk, that is the two possibilities. You are either covered by your card, or you're at the whim of whoever's administrating the accounts of the dead company you've bought goods off.
@PJH said:
@DaveK said:
What, exactly, about $INCOHERENT_SENTENCE_FRAGMENT?My understanding of "SOL" is that it means there is nothing you can do, and not that it means there is something that you can do, but it isn't guaranteed a 100% chance of success. Hence even being "at the whim of the provider" means you are not SOL yet, and will not be until and unless they decline you.
Um. CC being forced to pay you, or other company that has the option to pay you (over the other creditors.)
@PJH said:
In theory you're entirely correct.
No, in language and grammar I am entirely correct. You just don't know what SOL means. It means out of options. Let's just remember what I'm responding to, shall we?@the original post to which all this is a response said:
For example if the company you've bought from has gone bust, and you haven't had your goods, in the case of a credit card, the CC company refunds you the money (Section 75.) Buy on an debit card and you're basically SOL.
My response is "You are not SOL. You still have at least two options open to you: attempt to recover the money from the CC company under their voluntary scheme, or attempt to recover money from the liquidators as an unsecured creditor"
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@tster said:
I am not arguing about people's behavior. However, you have made a statement along the lines of "Credit Cards are bad because high interest rates cost you a lot of money." However, if you pay off the entire bill every month you pay 0% interest, so it is just like a debit card in that sense.
That was one of the arguments I made as to why credit cards are bad. In theory, you are right, they are just like credit cards. In theory I can be a millionaire in 10 years with a $1000 dollar investment if I get a 100% return every year. In reality, neither of these are true. Why? Because of the human behavior that you don't want to talk about.@tster said:
If you don't see the importance of cash flow and how good this is then you probably are not going to be persuaded by any argument I can make because your finances are just not complex enough for it to matter to you.
Ah, right. You are complex and sophisticated while I am simple. Well, I hope you won't be offended if I take the advice of another simpleton over yours. "Stay away from credit cards." - Warren Buffet
Medical bills don't have to be paid by the end of the month. As for the car and the hotel, I would take the money out of my savings account. If you aren't at a level that you can keep a few grand in the bank for situations like that and not really miss it, then you probably aren't going to be persuaded by any argument I can make because your financial situation is just not healthy enough.
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@campkev said:
In theory, you are right, they are just like credit cards. In theory I can be a millionaire in 10 years with a $1000 dollar investment if I get a 100% return every year. In reality, neither of these are true. Why? Because of the human behavior that you don't want to talk about.
What the fuck? Your first point is dealing with controllable human behavior ("should I buy that new TV?"). The second point is not dealling with a behavior that the individual controls ("which stock prices rise and fall?"). What are you trying to say? That it's as hard to pay off a credit card every month as it is to make 100% return every year?
@campkev said:
Medical bills don't have to be paid by the end of the month.
Fine, ignore that example. You keep dwelling on bad examples. The fact is, sometimes you have the need for large amounts of cash.
@campkev said:
As for the car and the hotel, I would take the money out of my savings account. If you aren't at a level that you can keep a few grand in the bank for situations like that and not really miss it, then you probably aren't going to be persuaded by any argument I can make because your financial situation is just not healthy enough.
I could keep enough money in the bank to do that, but I choose not to. Last August my car broke down and I needed a new one. So I sold some shares and wrote a check for it. Not a problem since I could get a ride from a friend. But most people don't have $10,000 they can have access to in a week. I guess in this case they could get a loan for the car, but I've never been one to take on debt unless I need to.
Ironically a month after I bought the car, there was a fire in my apartment and I have to stay in a Comfort Inn for a couple weeks (turns out I didn't have insurance either). I didn't know what my total expenses were going to be for that month so I put everything on my credit card. At the end of the month I sold some more stocks to pay off the $4000 in moving expenses and temporary housing and repurchasing things that were destroyed. If I didn't have a credit card I would have had to guess how much I was going to spend and sell stocks beforehand. If I was wrong I would end up paying unneeded commission fees.
I don't care how healthy your financial situation is, if you aren't a millionare, you shouldn't just leave $14,000 in the bank, or you are really not putting your money to work.
BTW, I'm only 22, so it's not like I have tons of money to invest. To me, that $14,000 constituted a good part of my non-retirement savings.
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@tster said:
... but I've never been one to take on debt unless I need to.
*facepalm
@tster said:
Ironically a month after I bought the car, there was a fire in my apartment and I have to stay in a Comfort Inn for a couple weeks (turns out I didn't have insurance either).
<pedantry> That's not ironic, that's a coincidence</pendantry>
Like I said, I'll stick with Warren Buffet. You do your sophisticated investing, paying commissions and being forced to sell stock, possibly (these days, make that probably) at a bad time to sell stock, every time you have an emergency.
Oh, and us simple people tend not to ignore things like insurance.
And by "new car", I hope you meant "new to me" and not actually new.
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@campkev said:
<pedantry> That's not ironic, that's a coincidence</pendantry>
Good point. And yes, I would never buy an actual new car. I bought a 2000 model.
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@tster said:
@campkev said:
<pedantry> That's not ironic, that's a coincidence</pendantry>
Good point. And yes, I would never buy an actual new car. I bought a 2000 model.
Wadayaknow, we do have some common ground.
