The Money Café



 Credit Card Debt

Credit on The Money Café

Financial Advice on Credit Card Debt

You can't put your VISA bill on your American express card.
— P. J. O'Rourke

Dictionary Definition of Credit — used to denote transactions involving the transfer of money or other property on promise of repayment, usually at a fixed future date.

The one who gives the credit thereby becomes a creditor, and the one who receives it, a debtor.

The principal function of credit is to transfer property from those who own it to those who wish to use it.

With credit, property that would otherwise lie idle is used, thus enabling a country to employ its resources more fully.

Definition of Credit According to Charles Dickens — Credit is a system whereby a person who can't pay gets another person who can't pay to guarantee he can pay.

Seven Types of Credit on The Money Café

  1. Consumer or Personal Credit — advances made to individuals to enable them to meet expenses or to purchase goods or service for personal consumption.
  2. Bank credit — deposits, loans, and discounts of depository institutions.
  3. Real-Estate credit — loans secured by land and/or buildings.
  4. Commercial Credit — credit that merchants extend to one another to finance production and distribution of goods.
  5. Investment Credit — used by corporations to finance plant and equipment usually via bonds, long-term notes, and other debt instruments.
  6. Public or Government Credit — bond issues of federal, provincial, and municipal governments.
  7. International Credit — extended to certain governments by the national banks of foreign countries, international banking institutions, or by other governments.

Credit Counselling: The Best Things Ever Said about Credit and Credit Card Debt

The only reason a great many American families don't own an elephant is that they have never been offered an elephant for a dollar down and easy weekly payments.
Mad magazine

Money is a poor man's credit card.
— Marshall McLuhan (1911-80), Canadian communications theorist. Quoted in: Maclean's (Toronto, June 1971).

A person who can't pay gets another person who can't pay to guarantee that he can pay. Like a person with two wooden legs getting another person with two wooden legs to guarantee that he has got two natural legs. It don't make either of them able to do a walking-match.
— Charles Dickens

Alas! how deeply painful is all payment!
— Lord Byron (1788-1824), English poet. Don Juan, cto. 10, st. 79.

Creditor. One of a tribe of savages dwelling beyond the Financial Straits and dreaded for their desolating incursions.
— Ambrose Bierce (1842-1914), U.S. author. The Devil's Dictionary

O Gold! I still prefer thee unto paper,
Which makes bank credit like a bark of vapour.
— Lord Byron

As to the rout that is made about people who are ruined by extravagance, it is no matter to the nation that some individuals suffer. When so much general productive exertion is the consequence of luxury, the nation does not care though there are debtors in gaol; nay, they would not care though their creditors were there too.
— Samuel Johnson

Credit . . . is the only enduring testimonial to man's confidence in man.
— James Blish

Credit Cards Lead to an Ugly Goose Egg Instead of a Nice Nest Egg

There's nothing quite so powerful as credit to ensure that you get a ugly goose egg instead of a nice nest egg in your retirement portfolio. Especially if your brain has a spending mind of its own, the best thing is to stay away from credit cards and pay-now-and-get-into-trouble-later plans. Otherwise, the whole game of credit will eventually snowball.

Before you know it, there will be a financial avalanche that you will want to blame on mystical forces beyond your control. When you run out of credit, there will be no place to run to, no place to hide. You will need someone to bail you out big time. And unless you have a wealthy, benevolent relative, that someone is going to be you.

Who recalls when folks got along without something if it costs too much?
— Kin Hubbard

Oddly enough, during the biggest boom time the U.S. has ever experienced, more people than ever have serious money problems due to credit. A record number of over 2-million personal bankruptcies were reported for the year previous to the one in which this book was written. One in every 55 families went bankrupt that year. Although unexpected events, such as divorce, unemployment, and illness, contribute to money problems, lifestyle financed by debt is normally the main cause.

In an attempt to keep up with relatives, friends, and coworkers most of whom are members of the bastard rich  people start borrowing money and using credit cards to support a lifestyle they can't afford. In the process of joining the bastard rich, they end up with a pile of debt that ends up ruining their lives.

Use credit cards only for convenience, never for credit.
— H. Jackson Brown, Jr.

It's not hard to become one of the bastard rich when one has five or six credit cards. In fact, the average American has five cards and the average Canadian has three. However, there is no end to the number one can get. Walter Cavanagh, a financial planner living in Santa Clara, CA, collects credit cards just like some people collect stamps and coins. At last count, according to the Guinness Book of Records, Cavanagh has 1,397 cards with a total limit of $1.65-million.

The surest way to ruin a man who doesn't know how to handle money is to give him some.
— George Bernard Shaw

People in debt with four or five cards should perish the thought of getting a few more to tide them over until things get better. Roy W. Walters warned, "If you're already in a hole, it's no use to continue digging." Yet, credit often becomes a way for people to avoid their financial messes. Most people who use their credit cards recklessly seem to have lost touch with financial reality. Moreover, their condition seems to worsen with time. The more cards they have, the more oblivious to prices they become, and the more things they buy that they don't need and can't afford.

Money may not make a person happy, but it keeps his creditors in a better frame of mind.
— Author Unknown

The magic of credit cards can even create a temporary illusion of
wealth to some of the financially deranged. Every credit card is a
temptation to go further into debt. To a person with an weak identity, nothing will make her clothes go out of style quicker than acquiring a new credit card with a big limit. As they get further and further in debt, some people actually use the cash advances from one credit card to make payments on another. Of course, this is not a sign of great talent, but one of financial stupidity.

In our time, the curse is monetary illiteracy, just as inability to read plain print was the curse of earlier centuries.
— Ezra Pound

As a Zen-Rich individual on the way to creating more wealth than your doctor, the best thing you can do is avoid credit and pay for everything by cash, with the possible exceptions of homes and cars. For sure, only a small percentage of people do this. However, paying cash for everything is one way of showing that you are truly free from being influenced by what most people in society are doing.

This is not to say that as a Zen-Rich individual you shouldn't have a credit card or two. Use your credit cards for convenience only and be absolutely sure that you can pay the bills at the end of the month. Whenever there is something you want, but don't have the money in your bank account to pay for it, it's best to wait. Some luxurious living is good for your prosperity consciousness and ability to build wealth for the future. However, if it's financed by credit and you let it go too far, you will pay for it by having to live on a meagre level down the road.

In the event that you can't use credit cards wisely  and most people can't  it's best that you get rid of them immediately. The worst thing you can do for yourself  and the best thing you can do for the credit card companies  is to greedily use your credit cards and look at the limits as required spending amounts. When you approach your limit, the credit card companies will immediately designate you as one of their favorite suckers (okay, "customers" if you can't handle the truth).

No man's credit is as good as his money.
— Ed Howe

Then they will increase your limit hoping you become even a bigger sucker. The more debt you have, and the longer it takes to pay off, the richer the credit card companies become off the interest you pay, and the less money you have for yourself.

An alternative lifestyle may seem appealing and much superior to the one you have now. However, whenever it is financed by credit, it certainly won't be for long. Sooner or later, it will occur to you that the party can't go on forever. At this point, you will lose self-respectfor having allowed yourself to get into serious debt.

Furthermore, credit misuse can have other serious implications. Racking up more debts than they are able to handle leads to severe stress for most people. This can result in anxiety, various illnesses, and absenteeism from work. People in financial trouble are known to smoke too much, have substance abuse problems, use too many prescription drugs, and blame loved ones for their shortcomings.

Beautiful credit! The foundation of modern society. Who shall say that this is not the golden age of mutual trust, of unlimited reliance upon human promises? That is a peculiar condition of society which enables a whole nation to instantly recognize point and meaning in the familiar newspaper anecdote, which puts into the mouth of a distinguished speculator in lands and mines this remark: "I wasn't worth a cent two years ago, and now I owe two millions of dollars."
— Mark Twain

Truth be known, we don't need credit cards to be prosperous in this day and age. There was little credit available in our forefathers' time, and they certainly had no credit cards. Yet, they got by just fine. Personally, although I use credit cards for convenience and to collect airmiles, I choose to earn my dollars before I spend them.

This way, I don't delude myself about what I own and what I don't own. When I purchase a car, I know that I own it completely because I don't owe a cent on it. Of course, I also save the exorbitant interest charges that accompany all credit purchases. Earning my money before I spend it helps me save thousands of dollars in credit charges which, in turn, brings me closer to financial independence.

Blest paper-credit! last and best supply!
That lends corruption lighter wings to fly!
— Alexander Pope

There is another reason why Zen-Rich wisdom advocates that you earn your money before you spend it. Buying something on credit makes it appear easy; however, like everything else in life, you won't appreciate something that comes too easy. Buying something on credit is tantamount to getting something without earning it. Getting something without effort results in little appreciation for it from the moment you bring it into your world.

On the other hand, making sacrifices along the way adds to the satisfaction of acquiring an object that is deemed to be worth something. You have to admit that the value of a possession is much higher when you have had to work long and hard for it, and at the same time, wait to get it.

THE MONEY CAFÉ COPYRIGHT © 2015 by Ernie J. Zelinski
All Rights Reserved




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