The Curse of Good Credit
Good credit is a good thing isn't it? I'm not so sure.
We've never made a lot of money, yet we have been offered a lot of credit. Foolishly we have taken advantage of many of those offers. Somehow we've managed to keep up with payments through the ups and downs of our income. Now here we are with a modest income, loads of debt, and somehow, an excellent credit rating.
We should be happy about that, shouldn't we?
Our good credit feels more like a curse.
What good has our good credit done us? It allowed us to buy a house which seemed like a good investment at the time, without a down payment. It did serve us well while we lived there, but our situation, not to mention the housing market, has changed. That good investment is a burden on our finances and time.
With our good credit we have purchased cars, fixed cars, taken vacations, purchased groceries in tight times, paid for unexpected expenses, gone out to eat way too often, and overall lived well beyond our means for the majority of the last thirteen years. Now we pay $100's of dollars in interest to our creditors every month. Money I'd much rather see go to our savings account Yeah, good credit is a wonderful thing.
Though we are neck high in debt, though our income qualifies us for some social services, though I have no desire to borrow any money, creditors are still trying to woo us. Credit offers come almost daily in the mail. Credit limit increases, initiated by the credit card company are a normal thing. The latest credit card limit increase put our credit limit at 70% of our annual income; on one credit card! I'm scared to add up all the available credit we have. It must be triple our annual income. Something isn't right here.
I have no intention of taking advantage of their temptations. Though at this point I really don't care much about my credit rating, I have no intention of losing that rating either. We will continue to pay our bills on time, and therefore continue to have a good credit rating.
In the past we have fallen to the lure of instant gratification. We are paying a pretty price for it now, and have learned our lesson. The curse of our good credit, the temptation to use that credit is no longer there. It is just ridiculous that a family in our situation can be offered such an excessive amount of credit. I thought the nation was in a credit crunch?
9 comments:
I kid you not, I could have written that post. My husband and I have SO learned our lesson. Never again. Debt is so bad. I am proud to say that we won't have ANY debt at this time next year. Although we're still saving, it's hard to save when you have debt weighing you down. But we can see the light at the end of the tunnel. But what a painful lesson to learn. One thing good came out of this: My husband is happy he married a deep-down frugal woman. He's enjoying the Challenge.
One good thing from First USA Visa. About 10 years ago they made me so mad with a random rate increase that I finally got serious and we paid all cards off.
Since then we have bought a house, added 5 children and made it through some hard times without using those blasted cards.
It doesn't take hardly anything to max out a card. Like you said, it can even be $30 or $40 at a time. A few years down the road and it feels like a noose around your neck.
I wish you nothing but good luck in getting those pieces of plastic out of your life. You will be happier for it.
Youre really really right! The thing that concerns both my husband and myself is how a lot of folks keep on going with the cycle, and how it seems ALL the creditors just keep pushing and pushing for folks to take on a huge percentage of debt. Is it just me, or in the past 10 years has our banking system seemed a little DESPERATE to URGE people to get into so much debt? And to bail out big business when it runs amok because of all the risk involved, yet no incentives go to the folks who DO make their payments and don't foreclose?? All I keep hearing is spend spend spend. SO different than those WW2 days you hear about when folks had to ration, grow a victory garden, and save save save.
Uhoh...this is a rant ;-)
It is crazy how backwards the system is, but I guess that is how we get suckered into debt. I got more credit card offers when I was in college and completely broke then we do now. It just doesn't make any sense to me!
Anonym.
Glad to do know I'm not the only one.
Arden,
Sometimes it seems like we will never be rid of them. We make progress, but it is painfully slow
Robbyn,
Rant away I'm right there with you. I guess the incentive is supposed to be our good credit rating, but frankly I could care less about mine. If I didn't have a firm sense of responsibility for my actions it would be very easy to go down the bankruptcy road.
Amy,
I don't get a lot of new offers, but a lot of offers from banks we have worked with. I think it is crazy that they offer college students so much credit, as if student loans aren't already there laying a trap. Something to educate our children about!
Congratulations,Stephanie, on recognizing the danger of credit and working to reduce it. I hope you get to the point where you can reduce those credit card limits. They are a liability if you ever need a loan from a reputable financial institution.
Way to go kid! Credit used wisely is not a bad thing but most of aren't wise in using it. Ironically, in our case, we have found that sometimes credit cards give you the best rate. In 2007 we averaged just over 4% interest including balance transfer fees and interestingly enough we now have most of our credit card interest fixed for the life of the loan (unless our credit rating drops or we miss payments). Sometime ago I was solicited by a credit "counseling service" who suggested I stop making payment on the credit cards and then they would be able to negotiate sith card companies and settle for about 50%.
If I were to max out the limits on our existing cards, I could borrow about $250,000. And of course, maybe get additional from all the new offers that come in constantly. If the credit card "counseling service" can settle for 50%, that should leave me setting in a pretty good situation. Of course, my credit would be ruined, but so what?
Is there anything wrong with this picture?
And as long as our society is what it is..credit based and the "I want it now" mentality, we'll continue to have financial messes like we have now.
I guess it's no wonder...look at our own government..even they are deeply in debt and just keep adding to it with no end in sight...sigh...
the better your credit is the more debt you accumulate. They love people that carry a balance and pay min. payments. I am a credit counsellor and know all too well their tactics.
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