Sallie Mae Credit Cards Poor Decision

[mysonx3]

@mysonx like I said to each his own, but thats my stance, everyone manages their finances differently. I'm with Ramsey on this one, like he said the 'cash back' dosent warrant their use 1% or 2% cash back is too little especially since you are charged a fee every time you swipe. All that cash back and free miles is just good marketing that encourage people to use the cards and make momey for the bank. Do the math, its not worth it. Think sbout it why will the bank give you free money and spend all that money advertising it? All that 'rewards' stuff mask their true intentions.

Well for one the goverment shouldn't let these institutions give credit cards to people who are earning less than a certain amount per year as it can lead to financial ruin.

The governemnt should also forbid giving or allowing credit cards to be given to anyone who isn't gainfully employed for at least 3 years unless they have the security deposit to cover the amount on the card....it might seem restrictive, but it'll work...anyone else can use a debit for their plastic needs. I mean really a debit card is really good, you dont need to walk with cash and you dont spend what you dont have.

It seems a lot of the problem is that people who cant pay off credit cards are using them, a guy making 20 or 30k a year or a broke college student with a credit card is a disaster waiting to happen.

This needs to be fixed now, cause its out of control.

But I'm not being charged every time I swipe. I haven't paid a dime to a credit card company, ever. Occasionally a store will charge an extra fee for an electronic payment, but those apply to debit cards as well as credit cards. So the cash back I'm making is pure profit. Why do the banks do it? Because the majority of people will end up paying interest.

I think most Americans just don't see it as the government's place to stop people from making bad decisions.

And I also want to say, while I'm "arguing" with you, I appreciate your "to each his own" attitude.

[armstrongsubero]

@mysonx3 If that makes you sleep at night then cool. You of course use 'the power of credit cards' right? I mean that $43.4 Billion those companies made just appeared from nowhere. Its just like Dave said people always tell him (mocking voice) 'Dave Ramsey dosent know the power of credit cards' haha we all know what he says to these people :-)

Yeah I guess you're right, no one wants governement intervention until a disaster happens, as someone looking from the outside I'm waiting to see where it all ends.

Of course thats the attitude to have, I really don't argue with people over money cause everyone's financial situation is different though there are a few principles I think works for most people.

Well cool, a lot has been answered for me...I just know though 1 or 2 years down the road people will be complaining about these Sallie Mae cards on business insider or something...with some guy racking up 1 million in debt from loans and credit cards to finish a degree in something he can never hope to get a job paying it off.

Well I guess people want to enjoy the 4 years of their life and spend the rest of their life regretting it...

[mysonx3]

You make it sound like I'm being nickel-and-dimed and not realizing that the cost is outweighing the rewards, but I seriously have not paid a dime to the credit card companies except to pay off the charges on it. That $43.4 billion sure hasn't come out of my pocket.

[Merlin]

I'm with Ramsey on this one, like he said the 'cash back' dosent warrant their use 1% or 2% cash back is too little especially since you are charged a fee every time you swipe. All that cash back and free miles is just good marketing that encourage people to use the cards and make momey for the bank.

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Reading I just saw in 2017 Visa and MasterCard made 43.4 billion in swipe fees...

While there is some truth to that, it only really applies in limited circumstances, or if you are not paying off your balance each month.

The way it works is that at the transaction level, there is a gateway fee of somewhere between 3 and 25 cents per transaction. On top of that, there is a bank fee that is based on the total amount charged to the card. In most cases, both of those fees are absorbed by the merchant (not the consumer) as a cost of doing business, but some merchants get around this by charging a higher price (or adding an additional fee) for people who buy with credit cards as a means of recouping those costs. TESU, for example, transfers this fee back to the student when they use a credit card instead of a bank draft, etc. In some states this practice is illegal, but not everywhere.

In any case, for most consumers here in the U.S., if you use a credit card that doesn't charge a daily rate for interest, and you avoid buying extra things that you don't actually need (i.e., you'd pay cash for them if you had to), you can actually make a tiny bit of money back by using a credit card with a cashback program as long as you pay off your credit card balance in full before the end of the cycle.

Between the wife and I, we generate like $1,500-$2,000 USD per year in cashback credit. We also linked the cashback for our credit cards to Amazon.com so the cashback balance can actually be used as its own payment option. To me, that is a pretty convenient option since we buy like 90% of our stuff on Amazon anyway.

[videogamesrock]

So I’m going to say no, the government should not dictate the banks lending practices. The bank is actually the one who determines that and is far better at calculating risk.

Let’s look at a charge off for example. A bank charges an interest rate which calculates default. It’s already priced in. A young person then stops paying a credit card, it goes into chargoff status, the persons credit is ruined for 3-7 years which self-regulates getting more credit and learned a lesson. They then settle for a fraction of the debt to close out the account.

The consequence and benefit of the chargeoff would be a sufficient learning gained by mistakes. Remember we learn most by making mistakes not having government protect us from those mistakes.

More regulation just means more costs passed on to responsible borrowers.

K-12 PFL teaching can help young people learn about borrowing.

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[armstrongsubero]

@videogamesrock it all sounds good, but the reality is Americans are drowning in student loans and credit card debt. The system is failing and you all are defending it.

You guys may be the exception, but generally people aren't as respnsible as you all. Every day I read the articles and hear the calls, people are irresponsible and defending their irresponsible actions.

It's okay though, now I know why the problem will never be fixed, it's just sad to see from where I'm standing.

Keep doing what you guys are doing.....

[videogamesrock]

@videogamesrock it all sounds good, but the reality is Americans are drowning in student loans and credit card debt. The system is failing and you all are defending it.

You guys may be the exception, but generally people aren't as respnsible as you all. Every day I read the articles and hear the calls, people are irresponsible and defending their irresponsible actions.

It's okay though, now I know why the problem will never be fixed, it's just sad to see from where I'm standing.

Keep doing what you guys are doing.....

I agree some people are irresponsible. But this shouldn’t come at the cost of responsible borrowers of government adding a bunch of hurdles to try to over come because of others. Bankruptcy is another option. A safe and easy way to get out of debt if someone has over extended themselves. Student loans should be part of bankruptcy and the era of easy student lending will come to an end when Sallie Mae starts to become an unprofitable venture.

Once lenders start losing money they change their lending behavior in predictable ways.


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[mysonx3]

@armstrongsubero You're making the assumption that stupid decisions having consequences is a problem. Government can not and should not save people from themselves.

[bjcheung77]

@armstrongsubero You're making the assumption that stupid decisions having consequences is a problem. Government can not and should not save people from themselves.

This pretty much sums it right up. It's the person borrowing or using the credit card, they need to discipline themselves and learn how to "spend" properly. They're using a credit system of lending, they need to know to limit themselves the amount and to pay it back before the interest pile up.

[cookderosa]

Early in my marriage my husband and I had credit cards we paid off every month until we didn't. Extra diapers, a transmission goes out, work shoes.... life happens. And when life is happening you don't always have the ability to pay your cards off, or if you do, you may "just this once" choose to make the minimum monthly payment. What's not to love about paying $25 instead of $925?

I think it's easy to act high and mighty, or above the possibility of it happens to you (and I don't mean you specifically, I mean the general you) but the fact remains that credit card debt happens, and it can strangle most people in a way that prevents them from ever becoming wealthy. Paying interest to someone is like paying rent on your money - and we decided to stop doing that. We cut up our credit cards in 2015 and became debt free except our house in 2017. The only thing I can tell you is that we've never been more financially stable and confident. We fund our emergencies with cash now, AND if I can add, have 3 kids in college that we are cash-flowing. While I never say never, we don't intend to borrow ever again, that includes our mortgage - but young people almost always have to take a mortgage, we're in our 40's so once this house is paid for, we'll be celebrating big time.

Edit to add, you can get a mortgage with a zero credit score (buy it by having a nice down payment) but if you have a BAD credit score, you're going to have a hard time.