End of Credit Card Rewards? [The Credit Card Competition Act]

[Rothman]

and then digging themselves a further hole by having to pay 19.99% interest on those purchases

That's a bargain these days. I've seen a recent story reporting over 30% interest for a credit card balance.

If you are paying any interest on a credit card you are using it wrong.

^This.

If you have to pay interest, don't get a card.

[triplemultiplex]

Must be pretty fucking nice to have the luxury of paying off your CC every month.

[jeffandnicole]

Must be pretty fucking nice to have the luxury of paying off your CC every month.

Millions do it.  I used to carry a balance, and got into some decent debt.  When I refied my house around 2011 to take advantage of lower rates, I added to the loan enough money to pay off my CC debt, and said never again.  12 years since; I've never carried a balance on a CC.

[ZLoth]

Must be pretty fucking nice to have the luxury of paying off your CC every month.

Millions do it.  I used to carry a balance, and got into some decent debt.  When I refied my house around 2011 to take advantage of lower rates, I added to the loan enough money to pay off my CC debt, and said never again.  12 years since; I've never carried a balance on a CC.

Been there, done that, no T-shirt.

[Rothman]

Must be pretty fucking nice to have the luxury of paying off your CC every month.

I carried CC debt for a short while early on after college.  Having it sucks.

Rice and beans, beans and rice or whatever Dave Ramsey says...

[vdeane]

Must be pretty fucking nice to have the luxury of paying off your CC every month.

It's not hard.  Just don't spend more than you would if you were using cash for everything.

[mgk920]

Must be pretty fucking nice to have the luxury of paying off your CC every month.

It's not hard.  Just don't spend more than you would if you were using cash for everything.

I never carry a balance, either.  Don't spend what you don't have, you'll be amazed at the cash savings.  I mainly use the CC for a couple of minor recurring bills and as a secure way to transmitting money (ie, with one-time online purchases).

Mike

[Scott5114]

Must be pretty fucking nice to have the luxury of paying off your CC every month.

It's not hard.  Just don't spend more than you would if you were using cash for everything.

That's sort of like saying "Flying is easy, just don't touch the ground as much as you are now".

It would be a lot easier if everyone in America didn't have their hand out begging to be paid more money than you have for fucking everything.

[gonealookin]

Must be pretty fucking nice to have the luxury of paying off your CC every month.

It's not hard.  Just don't spend more than you would if you were using cash for everything.

That's sort of like saying "Flying is easy, just don't touch the ground as much as you are now".

It would be a lot easier if everyone in America didn't have their hand out begging to be paid more money than you have for fucking everything.

The prescription of "it's all about spending discipline, just live within your means" tends to be easiest for single people.  Yes, it should be easy for anyone to resist commercial pressure to upgrade from the iPhone 47 to the iPhone 48, but there are other tougher pressures to spend.  Children in particular can be expensive as hell.

Even being single, I had the issue of a mother who married, divorced, married, divorced, never saved anything and then thought I was her retirement financial plan.  Fortunately for me she raised me to be able to say No to people pressuring me to do drugs, give them money, whatever.  Of course I was "ungrateful", "should act like I care" and the consequence of it was that she and I had a very distant relationship for the final 20 years of her life.

[kphoger]

The prescription of "it's all about spending discipline, just live within your means" tends to be easiest for single people.  Yes, it should be easy for anyone to resist commercial pressure to upgrade from the iPhone 47 to the iPhone 48, but there are other tougher pressures to spend.  Children in particular can be expensive as hell.

Also...  Never have a major mechanical failuire on your car.  Never get laid off.  Never require a long hospital stay.  Etc.

[Scott5114]

Yep. I more or less live within my means to the extent possible (i.e. I barely spend money on anything fun), and I can make paying cash for all of my usual expenses work. But when we suddenly need a new tire or something, that goes on credit. Since all of the income is immediately going out the door to the usual expenses, there's really not anything I can magically pull out of my ass to pay off the credit card. So throwing fifty bucks at it here and there has to do.

[Rothman]

The income side of the equation is where conservative spending advice breaks down.  Ends up with someone sputtering, "Then you just need a better job!"

[vdeane]

To be fair, I was thinking less about people who wouldn't be able to afford all they need to without credit, and more about the people who seem not to notice how much they spend if they're not physically handing out cash.  Granted, I'm so aware of how bad credit card interest and fees are that I probably wouldn't think "use credit to pay for it" if I was ever short on cash in the first place.  Heck, I even continued paying my student loans when I was unemployed because I knew that taking a forbearance would only make things worse (since interest keeps accumulating and the payoff date doesn't change, which means my payments would have gone up significantly if I had).

[ZLoth]

Let me start off by saying I'm a technician, not a financial advisor. Having been in debt in order to achieve my degree, I have lost track of the number of weekend shifts and holiday shifts that I've worked to get rid of that debt, not to mention an extended stint at overnight shift with pay differential. I would have been out of debt sooner had I not also did some long-term savings as well such as funding a 401(k)... in other words, items that have or would help me in the future (aka "Pay Yourself First"). But, it also meant that I have to make things last, including nudging some technology along to make it last, although it helped that I paid extra when I built the systems to make it last longer.

At a macro level, I understand the "pay cash for everything" idea as a concept because you feel every dollar pass through your hand. In practice, not so much and it isn't realistic to send cash through the mail (that's why we have checks) plus standing in how many lines to pay the various bills. I prefer that all of my bills are charged to my credit card. While it doesn't have the best interest rate, it doesn't matter as I pay it off every month. However, it also has rewards that I can actually which paid for some improvements around my home, including a new washer/dryer and microwave oven. You need to have a good credit score if you decide to finance a home or automobile.

When it comes down to debt, it's important to realize that not all debt is bad.... just most of it. If you itemize your Federal taxes, then the mortgage interest and property taxes (up to $10,000) is tax deductible. Also, if you were able to take advantage of the low mortgage interest rates especially during 2019-2021, then it is probably a bad idea to try and pay off that mortgage early when you can invest that extra payment into investments and get a better return. I did pay extra at the beginning of my refinance when the escrow was refunded from my original mortgage, and it went straight in as a principal payment into my refinance. And, I do pay to the next highest $100. 

As for the credit card debt, here is my advice. See if it sounds familiar:

• Shop around for the lowest interest rate.
• Contact your current credit card provider and make them match or exceed that lowest interest rate.
• Go through your expenses and ask yourself if you really need the service, or is it a nice to have. For streaming services, ask if it's necessary, or can you substitute one of the free-but-advertiser supported service like PlutoTV, FreeVee, or Tubi
• For the existing services such as mobile phone, contact their cancellation department and see if you can get a better rate on the service. Mobile numbers are portable from provider to provider.
• Investigate and take advantage of existing benefits that your employer may already offer, whether it be education reimbursement or prepaid legal services. I just used that to update my trust for myself and the will for my mother. This also applies to services that may already be bundled such as streaming plans with your internet provider or mobile provider, or notary and passport photo services with your auto club plan.
• Make sure you have an emergency fund that exceeds at least your highest deductible. Unfortunately in Texas, that is your homeowners deductible which is either 1, 1½, or 2% of your home value.
• For non-essential or "nice to have items", use a free service such as CamelCamelCamel for Amazon to be alerted of a low price. For video games that are going for $60-$70 at release (and tend to be patched), I wait until the price drops to $15 for a title that I want.

[Scott5114]

One trick that I do is that I have two credit cards, a higher interest one with rewards and a lower interest one through my credit union without. So occasionally I will run a charge on the rewards account, use the rewards cash to pay down the balance, and then transfer the balance over to the lower-interest card.

[Scott5114]

As for the credit card debt, here is my advice. See if it sounds familiar:
[...]

And what do you recommend if there's still debt after all of that? Perhaps because your wife's employer pays 33% of market rate, but they're the only ones that will hire her in the godforsaken city you live in?

At a certain point you cannot cancel any more services. I keep trying to cancel the cell phone plan (we have Internet at home) but for some reason my wife won't let me.

Pretty cute thinking you can just will an emergency fund into existence when you're dealing with that...

[HighwayStar]

The prescription of "it's all about spending discipline, just live within your means" tends to be easiest for single people.  Yes, it should be easy for anyone to resist commercial pressure to upgrade from the iPhone 47 to the iPhone 48, but there are other tougher pressures to spend.  Children in particular can be expensive as hell.

Also...  Never have a major mechanical failuire on your car.  Never get laid off.  Never require a long hospital stay.  Etc.

A credit card is still a poor way to finance any of those things unless it has a low intro rate or something like that. Emergencies like that are better funded through other types of credit.

[Rothman]

Yeah, although I think Dave Ramsey and similar advice is still flawed and weak on the side of how exactly to increase income, I do think there's merit to the idea of prioritizing one's financial actions.

For instance, not worrying about retirement at all until one is able to save up a month's worth of expenses.  In my experience, the pittance I threw into retirement when I still had debt was idiotic in hindsight, especially with the financial flexibility that comes once one is out of debt that isn't a mortgage or car (and even moreso once you can get out of thise debts).  "Why wasn't I smarter about money sooner?"

Of course, for people whose income doesn't even cover their basic expenses, choices are limited and severe (e.g., you own more house than you can afford?  Sell it...).

Still, working on saving something of an emergency fund, getting needed insurance, eliminating debt and THEN considering home ownership, retirement and education savings for kids and whatnot is a pretty sound linear chain of priorities, with of course that first step being one of the hardest.

Kristing Wiig's sputtering Suze Orman does come to mind...

[Scott5114]

The prescription of "it's all about spending discipline, just live within your means" tends to be easiest for single people.  Yes, it should be easy for anyone to resist commercial pressure to upgrade from the iPhone 47 to the iPhone 48, but there are other tougher pressures to spend.  Children in particular can be expensive as hell.

Also...  Never have a major mechanical failuire on your car.  Never get laid off.  Never require a long hospital stay.  Etc.

A credit card is still a poor way to finance any of those things unless it has a low intro rate or something like that. Emergencies like that are better funded through other types of credit.

Like what?

I wouldn't imagine it's all that easy to get approved for new lines of credit when you've been laid off. ("And what is your expected monthly income? $0? I see.") And I also don't imagine it's all that good an idea when you depend on your car to get to work to have to wait for the bank's Bow Tie Wearing department to pass your application upstairs to the Hastily Applying Rubber Stamps department, so they can send it over to the Cocaine Snorting department, and from there to the Pinstripes Department...

Still, working on saving something of an emergency fund, getting needed insurance, eliminating debt and THEN considering home ownership, retirement and education savings for kids and whatnot is a pretty sound linear chain of priorities, with of course that first step being one of the hardest.

True, but if we could choose the order that things happen in, I think we'd all choose to be millionaires first and then have the expenses start up. In my life, I was doing fine financially, decided to get a house, and then the Bullshit started. Wife got forced into a lower paying job, I had to change mine for the sake of my own sanity, and then...congratulations, credit card debt!

[Rothman]

Still, working on saving something of an emergency fund, getting needed insurance, eliminating debt and THEN considering home ownership, retirement and education savings for kids and whatnot is a pretty sound linear chain of priorities, with of course that first step being one of the hardest.

True, but if we could choose the order that things happen in, I think we'd all choose to be millionaires first and then have the expenses start up. In my life, I was doing fine financially, decided to get a house, and then the Bullshit started. Wife got forced into a lower paying job, I had to change mine for the sake of my own sanity, and then...congratulations, credit card debt!

Did you have to sell your house?

[Scott5114]

No, thankfully. I don't have enough credit card debt to justify doing that (it's only roughly 5% of the equity in the house).

[Rothman]

No, thankfully. I don't have enough credit card debt to justify doing that (it's only roughly 5% of the equity in the house).

Well, what are you complaining about, then?  You've got your house, you've got food on the table, you've accepted the level of credit card debt you've got.  Everything's coming up Oklahoma Scott!

[ZLoth]

As for the credit card debt, here is my advice. See if it sounds familiar:
[...]

And what do you recommend if there's still debt after all of that? Perhaps because your wife's employer pays 33% of market rate, but they're the only ones that will hire her in the godforsaken city you live in?

Welcome to difficult choices. It's called life. And, unfortunately, there are too many people with the same sad story. It makes me want to punch any person who says "Young people have it so good nowadays." No, they don't. Chances are, these are the same people who state "Nobody wants to work anymore." No, sir, not at the wages you are offering that barely cover the rent. Perhaps take on a second job? 

Life is full of hard decisions, some of them not desired. Five years ago next month, when the department I was in was eliminated in favor of another location, I had a choice: Either job relocate to the new location or find a new position in Sacramento. If you want to job relocate you have to be in Dallas by the following January. I chose Dallas because the career opportunities were better in Dallas than they were in California, and a job relocation would allow me to easily purchase a home.

[Scott5114]

And that's why we're going to relocate to Las Vegas. Much better career opportunities there for her. Cost of living is higher, but with the wage increase it should balance out, so on balance we'll be in about the same place but with far more options.

The tricky part has been figuring out where the money to fix up the house for sale and actually do the move will come from.

[Rothman]

I'm reminded of Indecent Proposal, for some reason.