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One thing that's unclear for the article: does this include debt that never incurs any interest? I typically have an outstanding balance in the 3-4 figures on
by throwawaykeno 10y ago
One thing that's unclear for the article: does this include debt that never incurs any interest?
I typically have an outstanding balance in the 3-4 figures on my credit card because I pay for rent, gas, and airline tickets with credit. However, it gets paid off every month. I guess that's technically debt, but it's not problematic or anything...
I feel like the majority of credit card debt is the type of "debt" that I incur every month.
- markhall 10y agoI would venture to guess that 'your type of debt' [like mine] is actually the minority. Most Americans actually carry a balance, hence why the card companies continue to push/prey as they do.
- losteric 10y agoCompared to the average American, your credit card usage is incredibly unusual. The average home carries around $15,000 in credit card debt alone. I find this to be extremely worrying... especially considering the average college graduate starts working with $25,000 in student loans.
- shanecleveland 10y agoI wondered the same thing. My balance is typically <$1000, but I've never had an interest-accruing balance.
- empath75 10y agoIt's pretty great having a few grand in cash to throw around every month, but man do you live in a bubble if you think 'most' people do that.
- throwawaykeno 10y agoI make less than 30k/year, so I'm not exactly rolling in it. Although I'm highly unusual because my very realistic earning potential is 3x what I currently make (STEM grad student). Still, putting only rent on a CC = 1k+/mo where I live.
- rco8786 10y ago> I feel like the majority of credit card debt is the type of "debt" that I incur every month. This is doubtful. The average U.S. household carries about $15k in credit card debt.
- harryh 10y agoHow do you pay your rent on a credit card? I'd imagine you do that to get rewards of some kind?
- exhilaration 10y agoThere's a few services that will act as intermediaries for you like https://www.plastiq.com/ https://www.plastiq.com/ which charges 2.5%. I learned about these services on Slickdeals in a discussion on how to quickly rack up credit card reward points. A Google search turns up this list http://www.doctorofcredit.com/complete-list-of-options-for-paying-your-rent-with-a-debit-or-credit-card/ http://www.doctorofcredit.com/complete-list-of-options-for-p... (I'm not affiliated with the author).
- harryh 10y agoYa, I've seen these. It seems like the fee would likely be more than the value of the reward making it a losing proposition? Just wondering if the OP found a better way.
- throwawaykeno 10y agoThe land lord I use allows paying with plastic. There is a ~2% fee. It's better than a wash financially, but just barely. But it's net win for me even when it's a wash because I don't have to worry about mailing a check every month. FWIW in months when I buy expensive plane tickets or make reimbursed purchases I skip paying rent with the CC.
- snuxoll 10y agoI haven't mailed a rent check in quite some time, my old property management company used paylease to accept online rent payments ($2 fee to pay with ACH, but at least I didn't have to mail a check). My current rental I just pay the property owner directly through Wells Fargo SurePay to her Chase account, works great and no fees for either of us (which makes for a happy me not having to mail a check, and a happy property owner who doesn't have to lose a cent of her rent just to accept payment). I do not miss mailing checks in, and I do not wish to ever do it again.
- abarringer 10y agoYour feelings are way off. Most credit card debt is not paid off every month. Not by a very very long shot. Average credit card debt per U.S. adult, excluding zero-balance cards and store cards: $5,232.43 Average debt per credit card that usually carries a balance: $7,494.44 Average number of cards held by cardholders - bankcards: 2.24 Average debt per credit card that doesn't usually carry a balance: $1,128.44 http://www.creditcards.com/credit-card-news/credit-card-industry-facts-personal-debt-statistics-1276.php http://www.creditcards.com/credit-card-news/credit-card-indu...
- throwawaykeno 10y ago> Average credit card debt per U.S. adult, excluding zero-balance cards and store cards: $5,232.43 That is amazing and terrifying.
- xhrpost 10y agoMedian is $2,300 which brings this into perspective a bit more. http://www.valuepenguin.com/average-credit-card-debt http://www.valuepenguin.com/average-credit-card-debt
- conception 10y agoThanks for this. Was about to go nuts about how useless an average is on this sort of thing.
- nostrebored 10y agoWell the median is an average so... And honestly both averages should be presented together, paints a terrifying picture
- theandrewbailey 10y agoMedian is the middle value of all values in a sequence. Average is the sum of all numbers in a sequence, divided by the count of values. Take [0,2,100]: average is 34, but median is 2.
- rm_-rf_slash 10y agoThere was an eerily prescient 2006 documentary about consumer credit called "Maxed Out," which featured a scene where someone recalled going to a conference of bank and credit card executives, and one of the CC CEOs plainly stated: "The bulk of our profits come from people making minimum payments for the rest of their lives." As for "pay-in-full" folks like you and me, credit card companies could care less. Whenever we pay with plastic, they get processing fees.
- deleted 10y ago[deleted]
- lifeformed 10y agoHow do CC companies make money off of minimum payments? Don't they lose money by lending more than what's paid back?
- rm_-rf_slash 10y agoAt first, yes, they lose money, but over time the interest charges outpace the original balance by far. And people are still bound by credit limits.
- cylinder 10y agoLenders just want debt service, not principal paid back. Loans are an asset on a bank's balance sheet.
- ArkyBeagle 10y agoAre they really even lenders anymore? I'll refrain from colorful characterizations of what they might be. Real lenders throughout human history want a nice predictable retirement of the debt so they can use reserve multipliers.
- itchyouch 10y agoYou ever see the new disclosures on a credit card? It usually says something like: On your $1000 balance, paying only the minimum will take 7.5 years to pay off the balance and you will pay a total of $3500. Pay $35/mo and will pay off your balance in 3 years and pay a total of $1500.
- gtheodor 10y agoFrom the article: "Even American Express Co., which historically has focused on customers who pay their bills off every month, is now concentrating on lending money to consumers who keep a balance. Outstanding balances reached nearly $952 billion in the first quarter, ..." This seems to imply that, by "keep a balance," they mean not paying your bill off every month.
- josefresco 10y agoI do this too, and many Americans probably start with the same tactic or strategy. The problem arises... when problems arise. You start carrying a balance to cover short term issues, which can turn into long-term issues which are made worse by your new high interest credit card debt.
- madelinecameron 10y agoCan confirm. $300 monitor spiraled into $2,500 of debt by the end of college (The downfall was precipitated by that month-long gov't shutdown which I was told not to worry about, "it might be a day or two, if that"... and then I wasn't paid for two months because I was a contractor)
- morgante 10y agoActually, my anecdotal experience is that there are firmly too camps. Some people pay off their full balance every month without fail and would never consider carrying a balance. Others have never paid their full balance. They see the "minimum payment" and think it's a great deal.
- dionidium 10y agoHow do you pay rent with credit?
- urda 10y agoConsidering it is 2016, many Landlords have some form of payment processor they can use to accept credit card payments. Love it, as it's how I get a ton of miles / points for money I'm already spending anyway.
- itchyouch 10y agoWith the additional 2-3% that is charged, it comes out to about very similar to purchasing the points directly. Like Amex SPG costs $157 for 5000 points. If I pay my $1500 rent via my Amex but with an additional $50 premium, after 3 months, I have 4500 points for $150, versus being able to purchase 5k points for $157. If I spend $525, I can get 20k points. So it's better for this particular card to put aside the extra fees paid in rent then purchase the points in bulk at discount than earning the points directly. Ideally, there's a landlord that doesn't assess an extra 2-3%, then it would totally be worth charging rent on a card.
- chinathrow 10y agoWouldn't you (or any other reader here) prefer a system/world/setup where merchants wouldn't charge an extra 2-3% and not have those rewards? I have been thinking a lot lately on how the credit card rewards/payback and fee split works - I dislike it.
- SeoxyS 10y agoThe key is using the right card with the right processor. There are certain cards that earn multiples with certain processors. Personally, I use a card that gives me 3 points per dollar and pay 2.5% in fees… so I'm "purchasing" points for 0.8c per point. Those points are worth 1.5c+ per point, at the very least. In fact, I just used 75k of them for a first class ticket to Asia. At a "purchase cost" of $600—so I'd call that a sweet deal.
- 10y ago
- crescentfresh 10y agoAs I applied for a mortgage, this question came up - as it pertains to "how much debt do you have?" - and the answer was that I only have as much debt as the minimum payment I must make each month. I told them I always pay in full, they said then you only have $10 in monthly debt ($10 being my minimum payment amount).