Bank of America Presents: Visa with the Vig!

[Spec]

Max rate, in Canada, is 28.8%. Well it used to be when I was a loans officer. Not sure what it is now though.

Anyhow, the logic for the finance company is as follows.

You are supposed to be responsible with your floating credit. If you over spend, than its your problem. If you have difficulty paying up, they will notice and increase your interest so that they make the maximum amount of money vefore you declare bankrupcy and they have to write off your account.

I know, its illogical, but thats how they think.

Spec.

[Flubber]

Originally posted by Japher
5% is good, but it's not tax deductible and I don't see any reason to pay anyone anything for spending my money.

Since when is a loan to earn investment income NOT tax deductible. I know I am in Canada and the tax rules may differ. Are you saying in the US, if I borrow money to invest I don't get a tax deduction for the interest even though the interest expense is clearly linked to the income??

Wild.

Originally posted by Japher


School Loan and HELOC are the only two types of loans that are even close to justifiable. Even the HELOC doesn't make sense if you go along the pay to play principle. School Loan, however, are your only hope sometimes to get an earnings potential.

I don't understand your position. I could have half a million bucks in investments but when I go to buy my next car, if they offer me 1.9% financing, why the heck would I not borrow? The total interest I would pay on a 20,000 car is a pittance. My investments make more . . . heck a government bond pays more.

So you would have me sell my fixed income investments that earn greater interest just to have the honor of paying cash.

That makes no sense whatsoever.

[Patroklos]

and have a good down payment you CAN get a mortgage.

Of course I can get a loan, as recent events has shown anyone can get a loan. But what type of loan?

I would rather not live in a hovel with an interest rate that changes on a whim, thank you very much!

[VetLegion]

As long as you know what you are doing, credit cards are a great invention

1. You can carry them abroad, unlike cash
2. They are widely accepted online
3. There are situations when you need some quick debt without waiting for the bank to approve it

In here (Croatia) we have laws against usury which prevent money being loaned at above some percent, perhaps 25%.

I estimate that the annual interest rate on my credit card is about 15% (it is nominally 12%, but there are charges and membership which effectively raise that).

I use the card mostly to buy stuff online (Amazon, etc.) and I usually use it as a charge card (meaning, if I pay by 20th each month I pay no interest).

At the moment I even have a positive amount on the card, as I got refunded for something on eBay

[Jon Miller]

credit cards enable me to keep track of what I spend

of course, tthey also enable me to go into debt, which I haven't always had a chioce about, but have amde it easier for me when I did ahve a choice

JM

[One_more_turn]

A credit card will give you a lot more power over merchants.

My dad once got ripped off by a multi-level marketing scheme, but his Mastercard was able to get all his money back.

I have used the same feature a few times too when several merchants failed to deliver the goods to me.

Had we paid cash in the above circumstances, we would have been toast.

[Dauphin]

Originally posted by Flubber


Since when is a loan to earn investment income NOT tax deductible. I know I am in Canada and the tax rules may differ. Are you saying in the US, if I borrow money to invest I don't get a tax deduction for the interest even though the interest expense is clearly linked to the income??

Wild.

Of course, you could just buy the margin to get around that issue.


Also. generally investments pay out less than the interest you pay - dividend yields tend to be lower than interest rates. So you will be reducing your net income by taking out an investment with a loan. So you will in be reducing your tax due to lower income if loan interest is tax deductable, but yet your asset base is growing.

[Rufus T. Firefly]

Originally posted by Tim_Augustus


Don't know what you're whinging about then. My mastercard charges interest at 16+% off the bat - I could pay an annual fee ($60) and get 55 day interest free periods on purchases, but no sweet single-digit rates... And I believe if you don't pay in that 55 days you get slugged the full interest

I'm not whinging; I'm just honestly shocked that the 32% provision is legal.

And I'm not proud of my credit card use, but we're almost out of the significant debt we accrued a few years back, when we were working on the local economy in Turkey and the lira collapsed. By the time we leave Singapore, we should be on a pay-as-you-go basis.

[Tim_Augustus]

Originally posted by Rufus T. Firefly


I'm not whinging; I'm just honestly shocked that the 32% provision is legal.

It is pretty scary - but then there's many places where short-term or 'payday advance' loans are quite legal, and charge ridiculous rates such as 20% per week!

And I'm not proud of my credit card use, but we're almost out of the significant debt we accrued a few years back, when we were working on the local economy in Turkey and the lira collapsed. By the time we leave Singapore, we should be on a pay-as-you-go basis.

Credit cards are useful though - although currently I have to admit to having a bit more credit card debt than I would like

[Flubber]

Originally posted by Tim_Augustus


It is pretty scary - but then there's many places where short-term or 'payday advance' loans are quite legal, and charge ridiculous rates such as 20% per week!

Most of those places though try to dress some of those charges as "administration charges" since 20% a week of actual interest would violate usury laws in most jurisdictions.

I have heard stuff like a 50-$75 fee to cash a small cheque. I know there was a court claim against this type of practice but I never heard what became of it

[Patroklos]

credit cards enable me to keep track of what I spend

Check card

I have two credit cards, one left over from my credit building days and one for emergencies. Both with a balance of zero.

[Tuberski]

Originally posted by Lorizael


From experience, I can tell you that having no credit when trying to take out a car loan is a ****ing *****.



Because I don't want to buy another car that will also be on the verge of death? Also, because $1000 in my savings account (and a variable amount in my checking account) is the least money I ever want to have. I want a buffer for emergencies. I don't want to save up and then blow all my savings on a car, leaving me with nothing for the unexpected things in life.

We keep a fairly large amount in savings, when I needed a new car, we secured the loan with a portion of our savings.

That portion is unavailable for use, but still gains interest. My interest rate is 3%. Every payment I make on the loan releases the same amount from the portion frozen.

So, basically, I gave myself a loan which helps the credit rating, pay low interest- to myself, and have the title to the car- collateral, if needed.

ACK!

[Dauphin]

I use a credit card loads. I pay no interest as I pay off each month, I get cashback of 1% at the end of the year based on the card I chose, and by law have insurance on any goods I buy with it (PH can tell you more about the consumer credit act 1974 if you like).

What's not to like about using credit cards properly - when they are more beneficial to you than cash or debit cards?