Banks

[Flyer_PE]

By the way, when my house needed to have the roof replaced, I didn't have a lot of cash because I was young and still starting out. But I did have a decent income. I was looking at getting a home improvement loan at 8% or so, but I got an offer in the mail from my CC company for 4.99% rate until the balance was paid off. So I borrowed $6000 on this offer. Was that a stupid thing to do? The alternatives would be to save up the cash and hope my roof didn't rot out in the mean time, or pay the higher rate for a home improvement loan.

I've done the same thing except the CC company was offering 0% interest for a fixed period. I paid them off before the time period expired. The thing to do though, is make sure you have a backup plan in case the credit card company pulls a fast one. In my case, I had other money available at below 5% that I fully intended to use if the card company tried to give me the business. As a rule, I view CC companies just one notch above a loan shark.

 

[roadwreck]

...but I find it hard to argue it is "stupid," "dolt-ish," or "living outside your means" to have a $12k car loan.

i would say it's living outside your means if you have a $12k car loan. If you can't save up the money to buy a car, IMO you shouldn't be buying that car. Find a cheaper one you can afford. I reject the notion that "everybody has to have a car payment".

 

[Chucktown PE]

By the way, when my house needed to have the roof replaced, I didn't have a lot of cash because I was young and still starting out. But I did have a decent income. I was looking at getting a home improvement loan at 8% or so, but I got an offer in the mail from my CC company for 4.99% rate until the balance was paid off. So I borrowed $6000 on this offer. Was that a stupid thing to do? The alternatives would be to save up the cash and hope my roof didn't rot out in the mean time, or pay the higher rate for a home improvement loan.

Sounds like the evil credit card company provided you a needed service and it seems like it was win-win. It seems like they should be able to make a small profit for such a service. In poor old Lee Frizzell's case, they didn't violate his contract, and it was obviously a good thing for him or he would have paid off the balance.

 

[mudpuppy]

Really? It looks like there is quite a bit of competition to me.http://www.indexcreditcards.com/creditcardlist.html

If you look carefully, most of those cards are issued by a handful of mega-banks.

i would say it's living outside your means if you have a $12k car loan. If you can't save up the money to buy a car, IMO you shouldn't be buying that car. Find a cheaper one you can afford. I reject the notion that "everybody has to have a car payment".

How do you save up money for a car when you need a car to get a job to go to work to save up money for a car?

I bought my last car on a loan because I felt it was a good deal, and I didn't have the cash lying around, but plenty of income to cover the payment.

Sounds like the evil credit card company provided you a needed service and it seems like it was win-win. It seems like they should be able to make a small profit for such a service. In poor old Lee Frizzell's case, they didn't violate his contract, and it was obviously a good thing for him or he would have paid off the balance.

My statement was aimed at benbo's claim that it is always stupid to borrow money. But I have to say you never cease to amaze me. They didn't violate his contract, but they sure as hell violated the intent of his contract, by using a dirty trick. But no matter, Business is God. As long as they made money on the deal it is ok. Do you have a shrine to Gordon Gekko in your basement?

 

[FLBuff PE]

"Greed, for lack of a better word, is good." - Gordon Gekko

 

[Chucktown PE]

My statement was aimed at benbo's claim that it is always stupid to borrow money. But I have to say you never cease to amaze me. They didn't violate his contract, but they sure as hell violated the intent of his contract, by using a dirty trick. But no matter, Business is God. As long as they made money on the deal it is ok. Do you have a shrine to Gordon Gekko in your basement?

I don't think business is god. But I know for a fact that credit card companies put terms in their contract like this such that they can make a profit. Interest rates are very low today and you can probably get a credit card with a rate of 8% to 10%. But what happens in 3 years when rates go sky high (which will happen when the porkulus begins "working" in the economy)? The company has to change the rate or charge fees or poor old Lee Frizzell can use something called the carry trade and borrow the max on his credit card at 3.99% and stick that money in a savings account where poor old Lee Frizzell can get a 6% interest rate. I see this as the company trying to protect their money. You see it as profiteering. I don't think profit is the end all be all and I don't think all profits are moral, but I don't see anything wrong with charging people fees who are holding your money. And I don't have a basement anymore. The groundwater table is too high in the coastal plain.

 

[frazil]

I agree with what you're saying mudpuppy. I think there may have been many dumb people living beyond their means in all this, but there are also a lot of honest people being swindled by these mega-corporations (acting all corporationy).

When we bought our house I read as much as I could about estimating what we can afford and risky loans so I could avoid them. We went with a mortgage broker that several of our friends had recommended. I thought we had done our homework.

When we got to the closing the interest rate was 0.25% higher than what we were told. We called the broker from the closing table and he admitted that that was not the rate we agreed on. He faxed the new papers to the lawyers and we signed. When we got the first bill it was at the higher rate. Also we had a second loan (in lieu of ppi since we did not put down 20%), and found out at the closing that it was a balloon loan. Never once during the entire process did the words "balloon" come out of his mouth, which I would have noticed because it was one of the risky loans I didn't want.

I don't think I'm a "dolt" or "stupid", but I was clearly taken advantage of by this broker. I have no doubt that this happened over and over again all over the country. This whole mess did not come about because the American people are stupid and just want to spend spend spend. There are definite financial incentives for the banks to cut ethical corners.

 

[MGX]

I hear We the People just bought Citibank. Awesome.

 

[Flyer_PE]

^Just a 40% share. But we aren't nationalizing the banks. Pay no attention to that man behind the curtain.....

 

[benbo]

My statement was aimed at benbo's claim that it is always stupid to borrow money.

I know I'm old but I guess my eyes are getting worse. I've searched and searched and can't find the place where I said it was always stupid to borrow money. Maybe you could point that out to me, because I don't believe that.

I do believe it is stupid to carry out any financial transaction that you don't understand, and that you are not willing to accept the contractual terms for. And I'm not saying that anybody that does it is "stupid". I'm saying that it is a stupid thing to do, and I've done stupid things myself. I learn from them, but I don't expect to be protected from everybody who is trying to trick me.

 

[benbo]

When we got to the closing the interest rate was 0.25% higher than what we were told. We called the broker from the closing table and he admitted that that was not the rate we agreed on. He faxed the new papers to the lawyers and we signed.

Was this your lawyer? Because if it was me, and this was my lawyer, I would have a lot bigger problem with my lawyer than with the broker.

 

[benbo]

How do you save up money for a car when you need a car to get a job to go to work to save up money for a car?

First, there's nothing wrong with getting a loan you can afford, and since when do you need a $12K car to get to work? My first car cost around $500. My current cars are only worth around $3000.

But it is possible to buy a transpo car without a loan. Immigrants come to this country without and car, a credit history, and somehow get jobs and save up for cars.

I hitchhiked to work in college, or took buses.

 

[mudpuppy]

But I still don't know why the world needs to accomodate everyobdy's stupid activities.

I know I'm old but I guess my eyes are getting worse. I've searched and searched and can't find the place where I said it was always stupid to borrow money. Maybe you could point that out to me, because I don't believe that.

Ok, I must have mis-interpreted what you were saying. My apologies. I think all the bad news and hype has gotten to me and I've gone a little overboard here. But I'm all better now, I promise!

 

[benbo]

Ok, I must have mis-interpreted what you were saying. My apologies. I think all the bad news and hype has gotten to me and I've gone a little overboard here. But I'm all better now, I promise!

Truthfully I do agree a lot of these bankers and credit card companies are scummy and are asking for it in a lot of cases.

I've been tricked myself by auto dealers and believe me I didn't like it. I just don't know what you can do about it, especially after the fact.

And as far as any particular case, I'm not commenting on any particular case.

I was watching Suze Orman and some woman was on there who got a credit card in college and she didn't know she had to pay it back. I don't mean she didn't know she had to pay it back on time, she thought it was free money. Givng a card to a person like that is sort of beyond the pale.

 

[FairhopeEE]

My advice for Mr. Frizzell:

1. Pay off the balance ASAP.

2. Never do business with Chase again.

3. Consider getting the hell out of MI.

Not long ago, Citibank increased the APR on my cc from 9.9% to 31.99% despite the fact that I was never late with a payment, had a balance of only about $700, and always paid more than the minimum. I didn't argue, I simply wrote them a check for the entire balance and, against the advice of most so-called experts, closed the account a few weeks later. I told the person on the phone exactly why I was doing it and that they had forever lost me as a customer.

I feel like calling them up now and asking how those kinds of business practices have worked out for them

 

[DVINNY]

You can rent a car with a debit card. I've been able to use a debit card for everything ie plane tickets, car rentals etc except borrowing money.

ME too, and after reading this thread today, I'm wondering if I should.

Debit cards offer identical protection to credit cards.

I have been assuming this as well.

I have a separate checking account that I only keep $1,500 - 2k in and it is what I use for things like that, but I also assumed I was protected as with a CC.

I need to check into it.

I don't even have a credit card in my wallet to use if I needed to.

I agree with what you're saying mudpuppy. I think there may have been many dumb people living beyond their means in all this, but there are also a lot of honest people being swindled by these mega-corporations (acting all corporationy).
When we bought our house I read as much as I could about estimating what we can afford and risky loans so I could avoid them. We went with a mortgage broker that several of our friends had recommended. I thought we had done our homework.

When we got to the closing the interest rate was 0.25% higher than what we were told. We called the broker from the closing table and he admitted that that was not the rate we agreed on. He faxed the new papers to the lawyers and we signed. When we got the first bill it was at the higher rate. Also we had a second loan (in lieu of ppi since we did not put down 20%), and found out at the closing that it was a balloon loan. Never once during the entire process did the words "balloon" come out of his mouth, which I would have noticed because it was one of the risky loans I didn't want.

I don't think I'm a "dolt" or "stupid", but I was clearly taken advantage of by this broker. I have no doubt that this happened over and over again all over the country. This whole mess did not come about because the American people are stupid and just want to spend spend spend. There are definite financial incentives for the banks to cut ethical corners.

I agree with benbo, ^^^ I may have had to beat down the lawyer and the banker on that one.

 

[Capt Worley PE]

i would say it's living outside your means if you have a $12k car loan. If you can't save up the money to buy a car, IMO you shouldn't be buying that car. Find a cheaper one you can afford. I reject the notion that "everybody has to have a car payment".

True. We paid cash for our last two cars; used American sedans are quite a bargain.

 

[MGX]

I've not had a car payment in 7 years and many of my friends don't either. I like two types of cars, big and/or cheap.

 

[PE-ness]

I hate banks, too.

There's this one bank I go to, where it seems all I ever do is make deposits, but have yet to get anything out of it.

 

[RIP - VTEnviro]

Do you use the driveup window? Or do prefer go to all the way inside to make your deposit?