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Filthy (but calculable) Lucre

(BTW:  Thank you all for the condolences on Bob's Dad.  He died at the beginning of April, just after we moved, so I didn't really mention it much.  We had his ashes in a beautiful box on the piano until this last weekend, when we were able to get all the family together and have the funeral service.  I'll pass the messages along, thank you.)

I just noticed something rather clever on our Amex bill; there's a bit at the top under what we owe, that tells us that if we decide to pay over time (this is possible with some items on the bill, like travel expenses), we will pay more in interest, and then tells us exactly how much more interest we will be paying if we stop buying anything more and only make minimum payments on what we already owe.  To the dollar amount - that's rather good.

One of the things that gets people into so much trouble with credit is the fact that it's really quite difficult to add up all the hidden costs of an 6% or so loan, which is basically what a credit card is.  I got into trouble on mine in college, when interest rates were 13-16%, and I've been extremely wary of credit card debt ever since, but my ex-husband was terrible with money, and I ended up paying off two credit cards when we split, even though most of the debt on them wasn't mine, since they were in my name, too.  In a way, it was okay, since I actually paid them off, and was able to build credit in my name while doing it, but it's horribly easy to spend and spend, and it's easier than ever.

So, when I saw this little box I was rather intrigued, and wanted to know - does every credit card do this now?  I don't have any cards other than my Amex and my debit, and we don't carry any debt, so I don't know what cards are required to do now.  I know there were a number of laws put in place after the credit crisis that prevented banks from racking up fees with shady practices (deducting the largest check first, to throw the account off balance, then charge an overdraft fee each small check was one I heard of), but I'm not as up on what was done with credit card companies.  I do know that I get an offer for a Visa Black Card every month, and every month I shred it, because a) I don't have a job and b) I'm only saying yes when Amex offers me their Black Card.*

But I know it's still way too easy to go into debt - there's an ad right now for the Visa debit card that has a woman saying she puts her entire paycheck on direct deposit into her Visa account - meaning she doesn't put anything into savings, and she's paying a fee for the privilege.  I can't think of a more horrible idea.  But it's so easy - everywhere takes credit cards now, and you can literally go weeks without handling cash.  McDonald's takes credit, and you don't even have to sign for it.  In fact. most cards now will not require signature authorization for any charge under $20.  You don't even have a second of looking at the bill and going "should I have paid cash?".**

I buy my groceries with a card - and that's fine, but it's much easier to throw treats in the cart when I don't have to count out the cold hard cash from my wallet.  I buy gas - and let's not even talk about my traditional $100 trips to Target (when I had a job) for random things that I can't even remember.***  Anyway, it's too easy.  And the thing that keeps us straight is having to pay it off every month, using the Amex as a funky kind of debit card.  This way, our money stays in the interest-bearing account (the pitiful 1.5% interest-bearing account, damn you Wall Street!!) until bill time, and we make the princely sum of sixty-five cents off it in the mean time.

We're doing okay, especially for two people who aren't currently regularly employed.  But if we didn't have the money to pay off our food bill, we'd be in trouble very quickly.  And in these evil, soul-destroying times that certain people (who smugly still have oodles of money) like to call "belt-tightening", and the rest of us call "trying to keep our heads above relentless floodwaters", it's very very easy for the credit card companies to own our lives before we realize it.  Which is why it's oddly heartening to see my credit card bill say "Whoa!  Maybe you want to think about how you spend!!", and I was curious whether other credit cards offered the same information, and whether it was required by law (I suppose I could look it up, but LJFriendGoogle is much more fun than the real thing).

In truth, I got myself in pretty deep (for a penniless art student) debt when I was in college - I managed to rack up almost a thousand pounds of debt (pounds sterling, smart asses; I went to college in England) when I was at Cambridge, and it was a bank overdraft (credit cards weren't as ubiquitous in the late 1980s).  I got it paid off, but it made me twitchy to have my card declined and then eaten by the machine, and the letters and phone calls were not fun, either.  I compounded my twitchiness getting married to my ex, who had racked up a considerable (much, much more than me) debt before I married him, and then I got sick, and the medical bills bankrupted us.  We only managed to buy a house because I got an inheritance at the right time, and though we managed to keep our heads above water after that, it was an eternal struggle.  When Bob and I got together, neither of us was making much money, but we lucked out into a cheap place to live, and we got my and his loans/debts paid off after a year or two.  Keeping as little debt as possible has been a constant monetary goal of ours, and by judicious work, and luck, and being willing to do without certain things at different times, we've managed to build ourselves a good life.

But luck played a definite part; timing, too.  There are others out there who aren't as lucky, and though they're good people, the credit card companies have them by the short and curlies.  So, seeing it laid out in no uncertain manner that if I do not pay off my bill in full, that I'll be paying an extra couple of hundred dollars over time in interest is a good thing, I think.  It certainly makes the random things I circle in the catalogs we receive seem less vital to my comfort. 

I know how lucky I am, especially in these financially brutalizing times.  Certainly the documentary Maxed Out: Hard Times, Easy Credit and the Era of Predatory Lenders shows how easy it is to end up in crushing debt that you never thought was possible (I recommend this film), and how quickly debt can spiral out of control, even if you fully intend to be responsible, and don't immediately go hog-wild with your credit card.  It's too easy to look at people in mountains of debt and think they're just stupid, especially if one has no debt oneself, but it's not that simple.  Yes, I've known people who were too free and irresponsible with their credit - I was one of them in college (oh, used book stall at the weekly market!  How I spent and spent on you!).  But I've known many more whose cost of living has simply outstripped their income, even at the bare bones edge of survival.  How many people have lost their jobs?  How many can't get another one, even one far below their previous income level?  It sucks.

And if the companies that suck our wallets dry with interest payments and offers of ever-more expensive (but "prestigious"!) cards are being forced to let us know how much money they're going to take from us, well, I think that's only fair.

Now, Amex - where's that Black Card invitation?  I'm waiting...

*Yeah, like that will ever happen.
**Not that I ever do, because I need the points.
***Tights, mostly.  And mascara.  Gotta have the mascara.


Comments

( 9 brains — Leave a chunk of brain! )
ursule
Sep. 1st, 2011 03:22 am (UTC)
Yeah, the little box is legally mandated. My cards do this, too.
attack_laurel
Sep. 1st, 2011 05:20 pm (UTC)
Fascinating, thank you. :)
duchesspadr
Sep. 8th, 2011 03:36 pm (UTC)
I just noticed it on my statements. It's nifty.
eleanor_deyeson
Sep. 1st, 2011 03:34 am (UTC)
Yes, all the cards have to do it now. Showing both how long it will take to pay it off, and how much your total cost would be.
helblonde
Sep. 1st, 2011 03:57 am (UTC)
Yes, it's a legal requirement. I'm sure they're a good tool for some, but I find them annoying. I also dislike the eleventy pages of "special offers" which all bear my account number and therefore need shredding. I'm so hard please ;) I just want a bill that's a bill.

Like you, I've gone through the masive college CC debt to solvency route. It's what lets me stay home with our kids right now.
the_thread_lady
Sep. 1st, 2011 04:28 am (UTC)
My Chase card has that information, it must be required. I can't imagine banks being that altruistic.

R and I have also been "lucky" in regards to vehicles and our house. But, we both worked hard to put ourselves in a position that when we wanted something, or needed to replace an item, we had the funds to do so. Either that or we saved our money until we could afford it.

It is not always as fun in the short run, but always more comfortable in the long.

standgale
Sep. 1st, 2011 04:41 am (UTC)
If it wasn't for the farmer's market (and other places where there are stalls) where most places can't economically afford to pay for an eftpos service, I'd have barely handled cold hard cash for any purchase over $2 since I was about 12, 16 years ago, because almost everyone everywhere has eftpos.
Which I hear is not necessarily the case in other countries (I am in NZ) but I can't really imagine that...

I think here we have 3 types of credit card users - those who just use them to buy stuff online, etc; those who need them to buy things they literally have no money on hand for; those who buy everything on the credit card to get reward points and then pay it off each month. I don't think people use the credit card as a "normal" method of spending money, so aren't going to get into accidental debt so easily because using a credit card is a deliberate choice rather than a default one (even if that deliberate choice is the only "choice")
attack_laurel
Sep. 1st, 2011 05:23 pm (UTC)
Yeah, I should have mentioned I was talking about the US, but I figure everyone who regularly reads me knows where I live by now. :)

It's really amazing how close we've come to the society that was a sci-fi futuristic thing when I was a kid (though I'm still waiting for my personal flying car, darn it). I remember reading an Anne McCaffrey short story where the characters "buy" things using credit counters on their wrists and thinking how weird that seemed.
naath
Sep. 1st, 2011 08:49 am (UTC)
I use cash to pay for lunch, because the guy with the sandwich van doesn't take cards; and for my share of meals-out-with-friends (because it is enormously irritating to get them to split a large bill 20 ways and take a card payment from each of 20 people). But most of my life goes on my debit card (maybe I could get free stuff if I used a credit card instead, and paid it off every month, but the thing is I don't really trust myself to keep track). I'm in the fortunate position that if I need to borrow money I can borrow it easily at much lower rates of interest than a credit card would give me, so, yeah, paying credit card interest is not something I plan to do.

Although my current account pays 0% interest anyway. Hell, my *savings* account pays a paltry 3%.
( 9 brains — Leave a chunk of brain! )

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