Big Bad Debt

I want to talk about credit card debt. Why? Well, I recently received a "Preferred Invitation" from Discover. Having had a Discover card since 1999, it has become my preferred credit card. It is accepted just about everywhere (except many golf courses around here), their security team is pretty much "Johnny on the spot", and there's that 1% rebate.

But the "Preferred Invitation" turned out to be a personal loan offer. I do not have a need for a personal loan. In the blurb, there was much talk about "paying off debt." That is something I do not have either but it got me to thinking... apparently, I am odd in that I have not racked up a lot of credit card debt. I never have. I had no credit card at all until around 1978 when it became difficult to rent a car without one. On a visit to my parent's house in 1978, I found I could not simply leave my return trip ticket as collateral and had to call my mother to use her credit card for security. Upon my return home, I took advantage of one of those American Express offers to apply for their card. Why Amex? Because, at the time, you were expected to pay the entire debt accrued for that month. This, I thought, would force me to be judicious in my use of the card and induce me to pay off any charges each month. And it did.

But this "Special Invitation" got me to wondering about others who, like my mother and sister at one time, paid only a portion of the accrued amount... sometimes only the minimum required... each month. I had an advantage: I started out paying off credit card charges each month, establishing that habit early. Most of my fellow Americans, it seems, did not and this has led to a lot of personal debt for the average citizen. I see a number of ads for equity loans and refinancing of mortgages (and even these reverse mortgages) which talk about paying personal debt down as a reason for such things.

Is there really a need for these loans? Do you find that you carry a balance on one or more credit cards? Have you considered paying them off but don't know how? I would call that a "debt cycle" and it is something my mother got into. She once told me she didn't worry about her balance because every time she apprached her credit limit, the credit card people raised it. I think she was being facetious because I took over my parents' finances around 1998 and never saw any balances that were too large to handle.

I urge people to pay the credit card in full each month, even if that means tightening your belt for a few months or more. You will be happier in the long run. And, when you retire, you will be extremely happy you did.