- cross-posted to:
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- cross-posted to:
- [email protected]
Americans’ credit card debt levels have just notched a new, but undesirable, milestone: For the first time ever, they’ve surpassed $1 trillion, according to data released Tuesday by the Federal Reserve Bank of New York.
Man, you’d think after the Great Depression and the recession of the last naughties we’d have figured out that credit is a disease and we should stop participating in it so often.
it’s more a necessary of modern day life, with an economy designed around squeezing every penny out of people, there’s nothing left over for savings, there’s nothing left over for that weird sound your car started making, or even just a moment of happiness from a new TV purchase or a holiday or whatever.
It’s really disingenuous to blame it on the personal responsibility aspect.
That’s fair - I more mean as an establishment, but I guess I do have some victim bias in the back of my mind. I guess we’ve locked into a vicious cycle where it started back out where credit wasn’t bad, so creditors started charging more and the cycle continued until credit is almost necessary, but is a strangle because the snake wasn’t seen until it was already constricting us.
I will blame the consumer culture of the US (and the banking industry and media that promotes it; I can’t speak to other countries). They have made always having a balance on one’s credit cards the norm. I’m teaching my kids that credit cards are short term loans with usurous interest rates, that you should never borrow more than you can pay back within the month, and that you should never carry a balance. I had to teach a friend in his 30s that you shouldn’t carry a balance - he thought he needed one in order to maintain or improve his credit score. I’m sure he didn’t make up that misinformation- someone in SM surely promoted that idea. ETA: Fixed a typo that changed the meaning of a sentence.
It’s not the consumers’ fault that between staggeringly high rent, staggeringly low wages, and massive inflation, there isn’t space to save for your car suddenly developing a fault.
As I told the other person, blaming personal responsibility here is silly given the last decade.
I admittedly haven’t looked at the article, but they are likely measuring based of a fixed snapshot in time, which tells you zero about the actual debt.
Example: at any given point in the month I have 5 figures of CC debt, but I always pay every card in full each month (I never carry a balance) and have enough money to zero everything out if something happens. Because of this it looks like I have high debt load when I really don’t. I do this because it simplifies payments, allows me to collect rewards, keeps my bank account/debit card out of mainstream use (which helps prevent my account info from getting stolen/misused) and allows cash to stay in my accounts just a bit longer earning that sweet 5% interest.
That being said, not everyone does that and many folks are likely in over their head.
Debt to income ratio is key. However, I believe that parameter would be more difficult to estimate.
Where are you getting 5% interest?!?
Ally is at 4.25% straight up saving account Vanguard Treasury Money Market VUXSS is at 5.15% right now.
There are a few online only banks that are above 5% also.
Fidelity has a number of funds around 5%. A fidelity brokerage account auto invests in SPAXX, which is 4.96%. SPRXX is 5.02%. These accounts are insured, and the cash is completely liquid, a debit card tied to this account works normally, for example.
When you already have a bunch of money you get higher rewards and pay lower interest so your money flows through their balance sheets.
You don’t pay amy interest if you pay in full within 30 days of the statement date.