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"Credit card companies only make money when you can not pay all on what you charge."

Not true, credit card companies make money everytime you use the card through the merchant processing fee. Just because a card company raises your limit does not mean that a person has to go and spend up to that limit. You have to beat them at their own game.

I agree.

I found this exchange interesting and informative. Nice points on both sides.

All I want to say and I may have said it before:

"The marketing of the concept of credit is some of the most successful marketing in history. In less than 50 years, financial institutions have managed to convince consumers in America that they cannot live without credit."

Think about what credit has done to the prices of the things we purchase. The prices of homes and cars have skyrocketed from the 1970's because credit allows you to buy something you could not afford to pay cash for.

ABSOLUTELY!! I am all about the 'spirited debate'. Arguing is a waste of time.

What I am learning though is that a lot of people are taking Dave Ramsey too much to heart and are paying the price. I use his roll over idea of money to pay off the balance (zero percent) I have on one business card for all of our technology. Without the FICO from Nirvana (that is SO FUNNY) I could have not purchased the computers and software my team needed. I have been able to do it all at zero percent, and after the car go paid off..I am using that money towards the computer debt as well so I will have paid off 15000 in less than 2 years.

However... after reading so many posts and stories on the board...I am feeling 'compelled' shall we say to write the Divas' Guide to FICO Nirvana and Zero Debt With Emergency Funds Available As Well....

I am a firm believer that real credit (not paying off the cards each month type of credit) should only be used when there is no other choice or the numbers dictate that using credit is the best choice...

OK....you will see the first draft.

The prices of homes and cars have skyrocketed from the 1970's because credit allows you to buy something you could not afford to pay cash for.

Really? I thought it was pretty much market driven -- sellers want more money, buyers are willing pay it, and prices escalate.

The western U.S. grew rapidly in the late 1800's and early 1900's. In 1910, the average household income in the U.S. was about $546 a year. That was also a record year for home mortgages, nationwide. The average price of a new home was $2,900, the going interest rate was around 5.5 percent, and 46 percent of Americans had a mortgage on the house they were living in. A new Model T Coupe was priced at around $1,050, and the gas to put in it was 25 cents a gallon -- about $5 in today's terms. (Source: U.S. Census Bureau) Borrowing money to make major purchases is nothing new.

Well, I guess I don't perceive that banks or their practices were quite as much of a driving force in all this as you do. (No problem -- not the first time we didn't see things exactly the same way!)

In my view, consumers demand financial products, and banks provide them. Are the terms of some of those financial products lousy? Yes! Did a banker ever put a gun to a borrower's head and force him to take a loan? No. It's not unlike a guy who walks into a Vegas casino and bets his whole paycheck on one roulette number. There's only a 1 in 38 chance that he's going to win, but he does it anyway. Some of those mortgages that people took out had even less of a chance of working out well, but people went for them. Is it a bank's (or casino's) fault that some people make bad decisions?

As you probably know (being in Texas), this state doesn't have nearly the foreclosure problem as some parts of the country -- in part because lenders here weren't allowed to write some of the mortgages they did elsewhere. Texas doesn't allow casinos, either. Maybe those famous "Eyes" are trying to take care of the people who can't or won't take care of themselves.

(By the way, I'm not even remotely suggesting that the member who started this thread was a gambler, made bad decisions, or can't take care of himself. I recognize that there was an untimely job loss and a family illness that seriously impacted him, and I continue to hope and pray that he finds a solution soon.)

I concur that there's some great marketing . . . but then it's an easy sell. Credit cards ARE more convenient than cash -- for me as a shopper and as a merchant. It's a lot like cell phones -- look what's happened in the 20 years since the FCC allowed enough bandwidth to make those feasible. I don't see the players in either industry (credit cards or cell phones) marketing the basic concept of having the product or service as much as having their product or service. I think the inherent value of each sold people on the basic concept fairly quickly.

First and foremost, I want to say that I am humbled by all the expressed thoughts and prayers. They are appreciated more than I can say...

This thread has taken an unusual turn. The concepts of how we are drawn into credit problems, (currently and historically) are raising even more questions. The biggest question seems to be, "Just how is debt being sold to us?" Why do we feel compelled to go into debt?

We use the terms "Credit" and "Creditworthiness" as if it is something to achieve. It is like a life goal to get a great "Credit Score." I like Ramsey's definition of credit score. He calls it a "I love debt score." In order to get this great "Credit Score", we must have a history of going into debt. (The earlier and more often, the better.) In a way, something is wrong with that. The person that has not needed a loan until now, can't get it. And the person that finances every purchase they make, can always get more.

I have always looked at a loan as a life saver. (The round emergency flotation device, not the candy.) The person that can swim comfortably, dose not need one. The person that is tired and near drowning, needs it desperately. If we must make a decision of who to throw the life saver to by the credit score model, we throw the life saver to the one that is comfortably swimming, and NOT to the one about to drown. Does that make sense?

Does anyone remember the movie "War Games?" In it, a large leaning computer was put in charge of when and if to fire our nuclear weapons. It is a scary thought to think that our lives hinged on how this computer ran the numbers. (It scared me more to think that the government was in charge of the numbers, but that is a different story.) We now laugh at the idea of our destiny being decided by a computer program. But we will gladly have our financial futures judged by a mathematical algorithm of FICO. How did we get sold that?

How did all these people get into bad loans? I am fairly sure that no gun was used. I do feel that banks and mortgage houses took advantage of the greed and ignorance of people wanting houses. Real Estate ads all over the place told of "EZ" terms and "We will work with you to get your loan." Lets face facts that owning a home can be better than renting, not much selling had to be done there. The selling had to be done on the rediculous terms of the loan. Banks sold people on the idea the "Adjustable" rate could go down, and of course it did not. My stepdaughter is now in foreclosure because her rate "adjusted."

Ideas are sold, just like products are sold. We have been sold on the idea that going into debt is a good thing. So many people have bought into the idea that it seems perfectly natural to have a wallet full of credit cards and two jobs to pay for it all. Somewhere we have to stop buying the idea that lots of debt is good. At least we should slow down on the purchases.

Where would our lives be if the only loan we needed as consumers was for our home. Imagine if we stopped borrowing money for our cars, computers, TV's, airline tickets, and coffee from Starbucks. It blows my mind that you can buy a soda from a vending machine with a "Credit Card."

For the record, I don't gamble. (I don't drink, don't smoke, and have not had cable tv for almost a year now.) I have tried to live a fairly simple life. Not monastically simple, but simple enough...

Thanks for all the posts...
Tim...