Jeremy J asked:
Ok so I have seen questions about how people can get out of over 50,000 dollars of credit card debt. My question is:
Ok so I have seen questions about how people can get out of over 50,000 dollars of credit card debt. My question is:
How in the world can you get that much credit to begin with? Do they have like dozens of cards? Or was their credit rating really good so it allowed them that much credit, and one day they just went crazy.
http://1mortgagecalculator.info
Women can’t get enough shoes.
because they dont know how much debt a credit card can put people in they just think about shopping and some people have like 10 credit cards
its an addiction!
If you don’t have alot of credit card debt, good for you, you’re now the minority. Most people think of credit as money that isn’t real for 29 days of the month and only realize that they have to pay it back when they get the bill.
The debt can increase if a person is making minimum payments and the interest keeps piling on, and in the meantime they continue using the card. Then the credit card company raises their limit in an attempt to get more interest off the balance. Then, if people are late or go over their limit, the fines and charges start mounting up and it becomes worse if the person gets behind on making payments. It just snowballs out of control.
I know this because a friend of mine (yes, it was really a friend and not me) had a cc balance that was in collections. The credit card co. charged him $50 a month or so in interest; the interest rate was high because he was delinquent. Since he ignored it, the interest charges eventually caused his balance to go over the credit limit, and so they charged around $50 a month for that. Then as the balance grows so do the charges. He did pay it off eventually (it was only a couple thousand) but it is easy to see how a person can eventually be $50K in the hole.
My husband and I got into over 100,000 in credit card debt when we were young and in college. Since we had good auto credit and a few small cards they started sending us offers for 10,000 limits or more. We used our credit cards for tuition, rent, books etc. We basically used them as income. We also didn’t have insurance as students so we used them for healthcare after we were in an accident together. Then we used them to pay for our wedding and voila. $100,000 in about 5 years.
Then one day the minimim payments got too much when I got laid off. You never realize just how far it has gotten until you can’t pay for whatever reason.
First they get into a debt of like $5000, then they receive more credit card approvals in the mail. They use them to buy more and more stuff. Still, more credit card approvals come in the mail. The reason is that the credit bureau’s can freely give out your personal information, unless you say otherwise. Many of these credit cards have high interest and annuals too. It’s so easy for teenagers and old people, who don’t know what they’re doing, to get their hands on credit cards. I think that there should be a law it which the credit card companies have to make absolute sure that the person will be able to pay off the credit cards and current debt. If they don’t, and nothing changed (like the persons job), then they should take it as a bad investment. Isn’t that how the credit card companies are supposed to be making their money, interest.
yes, they have lots of credit cards. they get lots of lines available and the card companies are willing to give them generous “open to buys” or high dollar limits for spending.
they are poor money managers. they want what they want right now and that’s called “instant gratification” a poor money manager spends what they don’t have, and also spends more than they make. to be wealthy, you have to make more money than you spend.
they probably didn’t go crazy in one day. it’s a gradual hole they dig. (with interest rates, it’s a much harder hole to dig yourself out of)
i can answer this from personal experience. with credit it allows you to buy what you dont have the money for, but you convince yourself i will just make this purchase and pay for it. then you do it again and again and again. then you start to buy gas on the card and food. next thing you know you owe 50k and a large chunk of your monthly payments is interest. i owed 30k, but unless you are equating the interest into your monthly payments it will take a long time to pay.
Yes, although I dont owe that much, its
exactly what happens, I moved to the us
about 10 yrs. ago no credit at all, but
I started building my credit until almost
perfect 790 credit score and they start
giving you credit increases something
that goes like this, Dear Mrs. We are
increasing your credit line due to your
preferred status bla,bla,bla and suddenly
from owing 3000 I blink and now I owe
amost 10k, Its so overwhelming to think
that I owe so much by myself because
I dont own anything yet, my home has a
mortgage still so I did what I needed to do
cut up all my cards, just use what i truly
need and save,save,save. I went into
debt validation trying to cut down my
credit cards with creditors. I hope they can
save me. So my advice to you is only
have 1 credit card for emergencies, THAT
IS ALL.
Let’s see in my family:
1) The person whose financial ego was so shaky that he responded to every (free) credit card offer he got just to see if they’d give him the card! (I saw a letter from one company that very politely told him to stick with the cards he already had.)
2) The person who psyched himself into thinking that all he really owed was the minimum amount on the bill *this* month. He would block out the fact that the same mimimum would be on next month’s bill! He also could block out the end of year total for how much he was paying in finance charges alone.
3) The person who lost her income and used the cards to maintain her lifestyle. ZERO reality check. We’re not talking food from the grocery store–we’re talking continuing to go to expensive restaurants, high priced clothing and vacations to Hawaii. Even after several years of deficit spending, her solution was to try and refinance her money pit house and get cash out of it. She’d absolutely reject the suggestion that she sell and move to a cheaper neighborhood…and then ask if you could loan her money.
4) The rest of us. We’d screw up one time in our lives, see the hole before it got too deep, climbed our way out and vowed never to do it again. While not all of us pays our bills each month, most have a within 6 months rule for big purchases and within 12 months for emergencies.
They tend to do it over time. If you manage your debt well, banks will continue to raise your limit and others will continue to offer you more credit cards (which you’ll apply for, since you can’t live off of what you’re making and your debt keeps increasing).
There is also an issue on how “credit card” debt is sometimes calculated. My HELOC (home-equity line of credit), which I used to pay off my 2nd mortgage and mortgage on an investment property (much better rate and no escrow requirements), looks like a credit card on my report.
This makes it look like I carry credit card debt in the 10s of thousands (when in reality I carry no credit card debt and it’s part of my mortgage that they’re looking at).
So I’d take the statistics with a grain of salt…