Awesome. In a related story, there's a bill that passed the House and may get through the Senate that says that credit cards can't arbitrarily, retroactively change your interest rates. This is why I pay cash for everything.

ah297900 wrote:

Awesome. In a related story, there's a bill that passed the House and may get through the Senate that says that credit cards can't arbitrarily, retroactively change your interest rates. This is why I pay cash for everything.

Why would you do that?  Pay the bill in full every time and they pay you to use the card.  A lot of them will let you set things up so they take the money straight from your checking account every month.  I love automagic stuff.  Not buying things you don't have the money for is the same whether using the card or cash.

ah297900 wrote:

Relax, I put the occasional big purchase on the card, just to keep the credit rating up. I just find that cash helps me keep track of the little money that I have.

My understanding of how it works buying things with plastic doesn't help your rating as much as having had the card for a long time with a lot of the limit unused.  Also you don't want to have too much in open lines of credit.

Last edited by hedgewizard (2008-09-24 23:31:27)

that's not really a problem if you stay debt free

George Orr wrote:

I'm generally of the opinion that the more invisible I am, the better; but I have seen to it that I have a credit history, so I don't look like someone using an alias.

Ok, 'George', if that's your real name. Why is it so hard to wait until you have the money to pay for it? Honestly, I'm curious. Once the student loan vultures got through with me, I never borrowed again - yeah, because I couldn't - but I haven't lived to regret it.

I needed a car.  I couldn't write a check for a car (though I'm saving up to do just that with the next car).  I could handle monthly payments, but not the whole sum at once.  In order to get the car company to agree to let me make monthly payments, I had to convince a finance company that I was good for the money.  In order to convince the finance company, I had to have a credit history.

It's a nice advantage to have.  Not many people out there could write a check for a house, now could they?  We're buying a house and it made a big difference to the mortgage rate--the pair of us having a good credit rating instead of just one of us.

Having a line of credit doesn't mean you have to live in the red.  It doesn't automatically make you a shopaholic debt-addict.  A grownup with a handful of brain cells has sense enough to stay out of that kind of trouble.

P.S.  George Orr is my real name, I swear.

Last edited by George Orr (2008-09-25 12:15:12)

hedgewizard wrote:

You couldn't write a check for A car or THE car you wanted?

No, just a decent car.  (I'm no status whore, believe me.  I don't see the point in making transient impressions on total strangers for whom I probably wouldn't have any respect if I got to know them.)  I didn't have enough cash on hand at the time for ANY car; but I had a good job and I was good for the money...The snag comes when you have to convince strangers of that fact in order to get them to advance you.  If you don't have some history for them to look up they don't wanna know ya.

Making a large enough down payment makes up for a great deal of credit history in getting a home loan.  More people could write a check for a house if they lived in one long enough.  Moving up market every few years, home improvement loans, HELOCs and taking out 30+ year loans makes it hard.

All of what you say is quite true...But house-wise, a large down payment AND a good-looking credit profile drives those mortgage payments down even further, and every little bit helps, especially when you're looking at 30 years of payments.

We're not prestige junkies and have never lived beyond our means; but I certainly know the kind of people you're describing.  They are thought by some to be the backbone of our economy.  I read recently that the "average" American is about $3K in debt.  This appalls me, mostly because it means that somebody out there is carrying our share of that.

We're basically selfish people.  We like to live well.  We like to have nice things and go on fun vacations.  That's what we spend our money on.  The thought of going into debt for things we want is repellent to both of us, because we've both lived poor.  When we make a large purchase on credit, we go into "temporary" debt and make the hugest payments we can manage until the debt is gone.  We see credit as a useful thing--not as a way of life.  Neither of us understands the mindset of people who live on credit and pile up debts they have no hope of paying off.

My folks, and my in-laws, got into trouble with debt in the past, and we both learned an indelible lesson from witnessing that in our youth.