Right on. I have a question for you, Professor. Why in holy hell is credit card interest so damn usuriously high? When interest rates have been historically low for so long? I’m no economist. But it freaking looks like collusion to me.
Kerry, the credit card companies say their interest rates are high because (1) they don't charge any interest as long as you pay the purchase balance in full by the due date, (2) they're
unsecured loans, so the card companies are taking added risk by not requiring consumers to provide collateral for the money borrowed, (3) their high processing costs from the volume of transactions, (4) their high costs of protecting (and reimbursing) cardholders from credit card fraud, and (5) as the Fed raises interest rates on all lending, they have to recoup these costs as well. But all these standard reasons given the public leave out the fact that Visa and Mastercard (which have the bulk of the credit card business) are a duopoly, which easily coordinate their interest rates and fees, keeping them higher than they'd be in a competitive credit card market. Hope this helps.
Robert Excuse #3 is a lie. Credit card companies charge vendors a transaction fee for each purcchase. I donate to a Feral Cat Spay and Neuter program and my local Animal Protection society and they ask when I donate if I will pay the processing fee which is about .2.06 percent
I agree with Lee; this egregious practice of charging merchants transaction fees is especially hard on small businesses. I always write a check to my hairdresser: he is a one-person business who shouldn’t have to pay for a service that the customer already pays for.
At least way back when I was a bank teller, businesses had to pay a fee per check deposited that came out to roughly the same as the card charge. So I pay cash, if I can, but that's not always feasible.
Really good point about small businesses, Janet. I snorted at that $100 million figure myself. What do they call the small-town mom-and-pop places that are lucky to clear $80,000 a year? Micro businesses?
Janet and. Denise, I worked for a small city in the San Francisco Bay Area. It was a bit over a square mile and a little over 20,000 pop. $100 million, not in your wildest dreams! The credit card fees at the end of the month always made me wince.
Exactly, Stephanie. Obviously, we actual small businesses must have no idea of the scale of things these days. $100 million??? By that measure, the publishing company for which I worked, with four business journals and operations in half a dozen cities, was a small business.
I hear ya! I'm a one-person design studio. I laugh when I get all the calls offering business financing and consulting on HR, etc. My dream over 15 years ago was to make enough money selling my creations to be able to quit my day job. Well....THAT never happened!
Lee points out a common practice. Several years ago non-profits added on (asked if you want to cover) the credit card processing fees as a surcharge on top of your donation. In the last few years, I’m seeing more and more small for-profit mom and pop businesses doing the same. They tell you up front. Cash or check - no fee. Credit card - added processing fee of three percent. Sometimes cash gets a ten percent discount. I smile at that offer and tell them I don’t want to know about their bookkeeping (polite for tax avoidance).
Try and hire a small contractor or handyman for a house remodel. It’s true. The under-the-table economy is a multi-hundred billion economy in the United States.
Yeah, their computers got together and complained about all the work, so their generous human overseers now charge us a fee for their computers doing the hard work.
Yes, I understand. But seriously, rates that hover near 20% are significantly higher than they were a decade or so ago. I remember rates that were in the 12-15% rate, in an era when interest rates in general were higher than the recent past. Many of your readers have responded with facile comments about simply paying off the debt monthly, or avoiding credit interest altogether. Well, certainly, in a perfect world, with perfect income. But I raised the point precisely because the most vulnerable people can’t follow these suggestions, and they are forced further into debt, paying usurious interest to institutions that are basically loan sharks.
Additionally, I think the practice indicates collaboration between credit rating agencies and issuers of credit cards. I started receiving emails from all these agencies after reporting an attempted scam a few years ago. The agencies continuously email me offers for new credit cards, which I always ignore, because carrying a combined credit limit greater than what these "gods" of credit determine for each of us can lower ones credit rating. The practice seems very unethical to me. I complained to them once, and they replied with something like understanding the annoyance, but basically their software does this automatically. Yeah, right, they set it up this way... I use credit cards in a limited manner and pay the entire balance each month, in order to keep a decent rating.
There is a way to stop those offers. I don’t remember what it was because I did it decades ago. It’s like the Do Not Call list but it’s a different one. I imagine the Consumer Financial Protection Bureau could tell you.
I made this point because everyone recently seemed to get very excited over the fact that the food industry is creating smaller packaging to sell stuff for the same price, a clearly deceptive trade practice. But a few cookies or chips less...compared to 20% credit card interest on the massive consumer debt in this country and we get...crickets? I'd like Bernie or Elizabeth or Joe to just mention it once.
Agree, Citizen Raff---the credit card companies are sneaky and ruthless. I got a card for emergency use, and then didn't have to use it. After about a year, I got a notice that they were canceling the card, because of a poor credit rating stemming from delinquent bill payment, over-extended balances, and so on. I freaked out, thinking my identity had been stolen. I called the credit reporting agency, which told me they saw nothing amiss with my credit. I called the card company, and their rep said, "Oh, no, we have nothing on you. There's nothing wrong with your credit. It's just our policy to cancel cards if they aren't used enough. You just got a standard letter." And no, they wouldn't reinstate the card, even if I promised to use it occasionally.
Consumers do have some power when it comes to which companies they support. I know it can be difficult (in the 1970s we tried to boycott Kraft but they owned so many companies around the world, the list was 35 pages long). I like the paying cash idea, and I will start doing that. Thnx.
And stop buying candy from Mars and Hersheys for the same reasons and because of the plastic wrappers. See Robert‘s video on the subject of their monopoly.
Kerry--They are high because people will pay them. Stop using the cards and the interest rates will come down. The only problem lies in how we get along without them until the time when the rates come down, if ever.
Donald, I remember my mom telling me NEVER get a credit card because it will get you in a lot of trouble!!! She was right. I did have credit cards and I did overuse them. I wound up paying and paying and paying. I was finally able to pay them off and then I cut them up. I decided that if I didn't have the cash to purchase whatever item I wanted then I wouldn't get it then. I would save up and then purchase it. We need to change our thinking on using credit cards, cell phones, and other luxury expenditures. We got along without them before they came along, maybe we should learn to get along without them again. Wouldn't that be something? Actually having conversations with people rather than burying our heads in our phones? Writing letters rather than texting? That would sure be something to see!
Peggy--My grandfather has a saying, "Take care of the pennies and the dollars will take care of themselves." Maybe its time we looked at the penny in a different light.
Peggy, for 1 whole year I saved every coin and paper I found and placed it in a jar. At the end of the year, I had $136.10. Compared to what my measly $1000.00 in savings account which earned about $10 in interest, I made out pretty well!
Nancy, I have been doing that for years! My husband leaves change in his pockets, anything in the washer or dryer, cushions, catch bowls, closets, hampers and last but not least the bottom of my purse gets sorted and saved in jars.
Last year’s take which included $125 in dollar bills came to $535.34. It’s fun to guess with the grands how much we’ve saved. Then we use it for a family dinner when everyone including nieces, nephews and their families are home all at the same time. Usually in the summer. The left over money goes back in the till for our next get together.
Doesn't that depend upon where you found the money? If you found it in on the street, you can compare it to your savings account interest. If you found it in your house, it was yours to begin with...no savings there.
There is the problem,doing the wrong thing generation after generation.Believing the wrong thing generation after generation.The delusions can never be destroyed.The opposite to that is penny wise,$foolish.
Banks operate on net interest margin,the difference between how much interest they pay out,and how much interest they collect in. Thus your CD or whatever pays 4%, the bank lends that money out at 6% .From that gross margin of 2% there is around 0.9% net profit margin after tax wages etc.The other 1.1% runs the company.
For example ( Australian numbers,so smaller population) a bank would have $800 billion lent out in mortgages.So the interest paid out would be $32 billion ( 4 X 8 = 32). The interest collected would be $48 billion ( 6 X 8 = 48 ),net interest margin $16 billion..Round the numbers so $8 billion is net profit after tax,$8 billion goes to pay wages,tax,rent,computer systems etc etc etc.Feel free to deny it,99% of people will deny that simplicity.
The multiplier effect,all those houses built,maintained,serviced ( electricity,water,sewerage etc,etc,etc ,a fortune in economic activity ,and a fortune in taxes paid because of that economic activity.
The really simple bit,if these companies are making a fortune ( they aren't ) would you not like to be a part owner of such a business.Or would you prefer to believe in delusions all of your life.
The really simple bit,as the company grows and profits increase the company becomes more valuable ( share prices increase purely on expectation that profits continue to increase as populations grow ).
Again really simple,probability.Start compounding.Compound $1,000 @ 11% for 40 years and the answer is $65,000. I am a part owner of a bank that did that,and may continue to do that. Slightly increase that to 16% and $1,000 grows to $378,000 over 40 years Continue that for 4 generations ( 100 years)
The UK version is look after the pennies and the pounds will look after themselves.
Penny wise,pound foolish.Your choice.The human race still has infinite ability for self delusion.
They see what they want to see,and they hear what they want to hear.
The business analysis has been simplified of course to explain it..
I agree! When I was a Child Pepsi and Coke were luxury items that were only made avaliable to guests or for special events( usually once a Month) ! Today I know people who Drink 3 Cans of Pop a day and is Mandatory Food Requirement no matter how much it costs or how bad it is for their health!
Brent, they are probably drinking Diet (TM) sodas or drinks. Any beverage with the word Diet like Diet Coke, Diet Pepsi, Diet Snapple, has aspartame as an artificial sweetener.
Aspartame is addictive, people addicted buy it by the case lots, they also buy crap like Twinkies by the case lots.
The reason is, that aspartame fools the endocrine system into thinking that you just took in sugar, and it signals the pancreas to o to work and pump out insulin, that depletes your glucose level and makes you hypoglycemic and thus crave sugar.. ergo Twinkies or some such crap.
As a diet drink, it is a fraud, one gains weight with Diet drinks. Aspartame is also a known carcinogen, but thanks to Donald Rumsfeld and regulatory capture, the FDA has never banned it.. Coke and Pepsi would ruin political careers.
Years ago, I noticed obese people often are accompanied with diet Cokes.
I worked at a big restaurant as a Server. If a younger person of normal weight ordered a diet drink, I tried to say something politely about how bad diet it and wouldn't they like regular. They didn't care. They were addicted. I had some serious ethical dilemmas at the job. Lol.
That is the thing about Diet (TM) drinks, with aspartame they are addictive, that is why Coca Cola pays TV and Movie producers to mention Diet Coke in their movies, and shows, sublimal propaganda.
My mother in law, was addicted to Diet Coke, and when I mentioned it's health effects, and that it was addictive, she went into denial. But finally when she found herself living on nothing but Social Security, she finally gave up Diet Coke, she must have gone through withdrawal.
Credit is a tool, and it needs to be used for its intended purposes. Only carry a balance for a purpose that has a higher expected return than the interest you have to pay by carrying that balance. It’s not a way people are used to thinking in their personal lives, but if you can get used to it, it can be helpful.
Peggy, for us, the equivalent to having enough cash to buy something is having enough on hand to pay the credit card bill in full each month. The same kind of thinking you describe also can be used in this way. In addition to the significant cash back (this year’s is over $340) on our credit card purchases, the convenience is a huge factor, as is being able to pay so many things online. That includes paying off hospital bills (using payment plans without interest charges) online.
Doing it this way also allows me to keep very detailed records on the computer that would be so much more difficult if we were using cash for everything. And the only checks I use (also printed with the computer, so they are legible 🙂) are for a few things that can’t be paid online or that charge a “service fee” for doing so.
I also haven’t been in a bank branch in quite some time.
Harry, it sounds like you are a very savvy person using credit cards. Sadly, there are so many that don't think or plan as you do and wind up with debt that consumes them.
I pay mine off every month. Still pay for the process of borrowing. One huge bank keeps stopping my credit card saying I have fraud. Want a new card? I say no and solve it myself. I hate those off shore Customer Service problem persons.
Panamanians didn't use credit cards when I left in 78, and the cost of living was stable and affordable for the most "impoverished" of campesino's. Everyone ate and had shelter.
Then CitiCorp launched a massive propaganda campaign to have credit cards, and the country has experienced inflation , and Panama is plagued with the same "diseases" the U.S. has.
When I was young, there were no credit cards. There were layaway plans and maybe the odd charge account at a small grocery store. Credit cards have made people live way beyond their means. Its a house of “cards”.
Not to mention that sheep (their wool) get carded.
Brings to mind the perfume company that made their scents from all parts of the sheep except for the coat and mammary glands, which were reserved for their shear and udder non-scents.
I feel like if we hadn't been led down this Neoliberalism pathway that so many wouldn't be living paycheck to paycheck. Often times the purse strings could have been tightened, but we aren't very used to living without. I saw how those that lived through the Great Depression knew how to pinch their pennies (yet I joked about it). Yet, I can only get angry that trickle-down economics have ruined a comfortable retirement for my parents and am not sure where it will leave me. These economic messages need to get to the masses (through the propaganda), as it would change some minds and ideologies.
Hey, Peggy, here's a thought experiment for you: Imagine you are a time traveler from our present day to the 16th century in Europe or the Americas and knowing that eras language(s). You are sailing on a merchant ship to a distant land with goods, cash and documents to be delivered upon arrival. You stand and whip out your smartphone with its own magical hotspot, lay down a spread of credit cards and demonstrate/explain their functions. You then offer to magically obtain these things for everyone.
How long would it take for these be-knighted folk to either label you as a witch or pocket your plastic cards and throw away their quill pens/parchment to have their communications be delivered instantaneously?
Nothing we have in the 21st Century would work, at least not for long 400 years ago. There is no infrastructure, to support them. A car would run so long as there is gas in the tank, then when that ran out it would be a monument, until it rusted away.
You might take pictures with a cell phone, but not download or print them, and the cell phone would be worthless when the battery ran down.
Credit cards would e an amusement, because they never saw plastic.
And you would have difficulty conversing, if English, the English of Chaucer and Shakespeare are barely readable today, and the spoken language with it's thousands of accents and brogues, would be as incomprehensible as a foreign language.
These time travel shows, and books like Connecticut Yankee in King Arthur's Court, are hilarious. Even if you could time travel back centuries, your chance of being understood and understanding, even in your own native language, are slim, you would be considered a spy, maybe an enemy, or a witch.
Ilene, only you knew what your use of magical meant, only you know it was a thought experiment and if you want to make enemies, continue to assert your pseudo superiority with phrases like lighten up.
I was planning to pay cash for a car at a dealership when an unexplained $1500 charge showed up on the pricing sheet. When I questioned that unexplained charge the salesman said it was for the interest they wouldn’t make if I paid cash. Imagine that. Paying interest on money NOT borrowed. Buyer beware!
Thanks. What’s to be expected from a used car salesman. i was dealing with him on line, but i’m guessing he was wearing white shoes, a white belt, smoking a cheap cigar and getting his kicks by ripping customers off.
The more common ploy is the value of your trade-in car just went down $1,500. The trick I use is play along with the financing song and dance, smile, say thank you, and then whip out the check book for cash buy. Just don’t sign anything yet. Salespeople work the deal through the floor sales manager, then you get handed off to financing for the paperwork even if you pay cash. Financing people are loan sharks also trying to add in after-market alarms that malfunction, additional warranties that don’t cover your car longer than the manufacturer’s warranty, and three years of free oil changes for an upfront charge (I’ve even heard of that line used on a EV!).
My dad had me sit in on the negotiation with financing when I was 14 (he knew I was good with numbers). Quite the education. I did the same with my oldest kid when she was 17.
Easy to say for me, but the best move at that point would be to say “if you want this sale, delete that absurd charge” and walk out the door if he doesn’t. Odds are you wouldn’t get to the door before he called you back. And that might have to be repeated if he only offered to reduce the absurd charge.
Did you negotiate that $1,500 Roger.? I would have. The problem with Americans is that they don't negotiate. If you pay asking price in most countries, you lose respect
My wife gets embarrassed when I dicker. A typical American.
I negotiated the price of a bun my in Vietnam, for 35 piastres, I drew a crowd and the people love it. Ever after I could get a bun my (American Sandwich) for the same price. A local tried to purchase one for the same price and the lady said no. He had to dicker.
With still stagnant or ‘just too low to catch up’ pay, coupled with bi-monthly paychecks in many companies, most people are unlikely to be able to do this. Modern day ‘Robber Barons’ have us over a barrel.
Lias--What would happen if everyone across the country stopped paying on their credit cards simultaneously. It's a crazy idea but so is paying a 30% interest rate on a credit card.
If people, universally, stopped using credit cards, there would be a depression caused by a shortage of money. I can explain why but it is lengthy and most won't read, or their eyes will glaze over.
In short form all Dollars in existence are created out of debt, public, corporate, private, and when and as the debt is paid down and finally paid off, the balance on the books (that is the money in circulation) is reduced.. double entry book keeeping.
A thought. National labor unions go on strike in order to get things changed in their favor what about the private citizens who suffer financially who don't have a voice.
Laurie--My son has been warning me of the day when currency will be a thing of the past, but for that to happen interest rates will have to find some sort of control.
Ben--It's the 30% interest rates that people are complaining about. When I was young, I wouldn't take a card that carried an interest rate that was over 10%, now that's a dream from the past.
@Donald. Lot's of talk about this, but not much action (broadly speaking). My fortune cookie says "The greatest of all mistakes it to do nothing because you think you can do only a little." If each of us pays down our credit card debt ($1.129 Trillion) by 10% we could round that number down to only $1 Trillion. Instead Americans are still increasing their debt (in aggregate).
@Donald. I know... But it's a short term solution, long term problem for them. I know lots of young people who get $20, but instead of buying groceries they buy a $9 coffee drink and an $11 burger. Culture of under 30 years old...
Right on. I have a question for you, Professor. Why in holy hell is credit card interest so damn usuriously high? When interest rates have been historically low for so long? I’m no economist. But it freaking looks like collusion to me.
Kerry, the credit card companies say their interest rates are high because (1) they don't charge any interest as long as you pay the purchase balance in full by the due date, (2) they're
unsecured loans, so the card companies are taking added risk by not requiring consumers to provide collateral for the money borrowed, (3) their high processing costs from the volume of transactions, (4) their high costs of protecting (and reimbursing) cardholders from credit card fraud, and (5) as the Fed raises interest rates on all lending, they have to recoup these costs as well. But all these standard reasons given the public leave out the fact that Visa and Mastercard (which have the bulk of the credit card business) are a duopoly, which easily coordinate their interest rates and fees, keeping them higher than they'd be in a competitive credit card market. Hope this helps.
RR
Robert Excuse #3 is a lie. Credit card companies charge vendors a transaction fee for each purcchase. I donate to a Feral Cat Spay and Neuter program and my local Animal Protection society and they ask when I donate if I will pay the processing fee which is about .2.06 percent
I agree with Lee; this egregious practice of charging merchants transaction fees is especially hard on small businesses. I always write a check to my hairdresser: he is a one-person business who shouldn’t have to pay for a service that the customer already pays for.
At least way back when I was a bank teller, businesses had to pay a fee per check deposited that came out to roughly the same as the card charge. So I pay cash, if I can, but that's not always feasible.
Really good point about small businesses, Janet. I snorted at that $100 million figure myself. What do they call the small-town mom-and-pop places that are lucky to clear $80,000 a year? Micro businesses?
Janet and. Denise, I worked for a small city in the San Francisco Bay Area. It was a bit over a square mile and a little over 20,000 pop. $100 million, not in your wildest dreams! The credit card fees at the end of the month always made me wince.
Exactly, Stephanie. Obviously, we actual small businesses must have no idea of the scale of things these days. $100 million??? By that measure, the publishing company for which I worked, with four business journals and operations in half a dozen cities, was a small business.
I call them "hobby businesses".
In some cases, sure. But if they're livelihoods, then people are serious about them. Where I live, clearing $80K is a better-than-average living.
Under $100 million is a HOBBY? Small family business is the so called backbone of our economy! You must be out of touch with reality!
I hear ya! I'm a one-person design studio. I laugh when I get all the calls offering business financing and consulting on HR, etc. My dream over 15 years ago was to make enough money selling my creations to be able to quit my day job. Well....THAT never happened!
Those of us that own a sole proprietorship and employ skilled workers have been paying for all the credit card fees for the last 50 years
Lee points out a common practice. Several years ago non-profits added on (asked if you want to cover) the credit card processing fees as a surcharge on top of your donation. In the last few years, I’m seeing more and more small for-profit mom and pop businesses doing the same. They tell you up front. Cash or check - no fee. Credit card - added processing fee of three percent. Sometimes cash gets a ten percent discount. I smile at that offer and tell them I don’t want to know about their bookkeeping (polite for tax avoidance).
Yes, Square passes on the fee to customers. The cash discounts “bookkeeping” comment is because they don’t report it on their taxes.
Try and hire a small contractor or handyman for a house remodel. It’s true. The under-the-table economy is a multi-hundred billion economy in the United States.
“ (3) their high processing costs from the volume of transactions”
What? No economies of scale?
Yeah, their computers got together and complained about all the work, so their generous human overseers now charge us a fee for their computers doing the hard work.
Yes, I understand. But seriously, rates that hover near 20% are significantly higher than they were a decade or so ago. I remember rates that were in the 12-15% rate, in an era when interest rates in general were higher than the recent past. Many of your readers have responded with facile comments about simply paying off the debt monthly, or avoiding credit interest altogether. Well, certainly, in a perfect world, with perfect income. But I raised the point precisely because the most vulnerable people can’t follow these suggestions, and they are forced further into debt, paying usurious interest to institutions that are basically loan sharks.
Additionally, I think the practice indicates collaboration between credit rating agencies and issuers of credit cards. I started receiving emails from all these agencies after reporting an attempted scam a few years ago. The agencies continuously email me offers for new credit cards, which I always ignore, because carrying a combined credit limit greater than what these "gods" of credit determine for each of us can lower ones credit rating. The practice seems very unethical to me. I complained to them once, and they replied with something like understanding the annoyance, but basically their software does this automatically. Yeah, right, they set it up this way... I use credit cards in a limited manner and pay the entire balance each month, in order to keep a decent rating.
There is a way to stop those offers. I don’t remember what it was because I did it decades ago. It’s like the Do Not Call list but it’s a different one. I imagine the Consumer Financial Protection Bureau could tell you.
Thank you! Will look into it.
I made this point because everyone recently seemed to get very excited over the fact that the food industry is creating smaller packaging to sell stuff for the same price, a clearly deceptive trade practice. But a few cookies or chips less...compared to 20% credit card interest on the massive consumer debt in this country and we get...crickets? I'd like Bernie or Elizabeth or Joe to just mention it once.
Robert “the bulk of the credit card business” is vague and leads to a subjective interpretation. https://wallethub.com/edu/cc/credit-card-companies/20409
They are lying and robbing us. They walk away with billions.
Cut mine up last year !!
Nailed it in One…
Thank You !!!
👍👍👍
American Express and Mastercard have approximately the same market share - so this is not a duopoly.
https://upgradedpoints.com/credit-cards/us-credit-card-market-share-by-network-issuer/
Agree, Citizen Raff---the credit card companies are sneaky and ruthless. I got a card for emergency use, and then didn't have to use it. After about a year, I got a notice that they were canceling the card, because of a poor credit rating stemming from delinquent bill payment, over-extended balances, and so on. I freaked out, thinking my identity had been stolen. I called the credit reporting agency, which told me they saw nothing amiss with my credit. I called the card company, and their rep said, "Oh, no, we have nothing on you. There's nothing wrong with your credit. It's just our policy to cancel cards if they aren't used enough. You just got a standard letter." And no, they wouldn't reinstate the card, even if I promised to use it occasionally.
I had the same problem with the same result. One of their classic moves.
Consumers do have some power when it comes to which companies they support. I know it can be difficult (in the 1970s we tried to boycott Kraft but they owned so many companies around the world, the list was 35 pages long). I like the paying cash idea, and I will start doing that. Thnx.
And stop buying candy from Mars and Hersheys for the same reasons and because of the plastic wrappers. See Robert‘s video on the subject of their monopoly.
I just had a hankering for a McDonald's fish sandwich, it being Friday. Glad I did! Corporate prison food, and shrunk ..
Kerry--They are high because people will pay them. Stop using the cards and the interest rates will come down. The only problem lies in how we get along without them until the time when the rates come down, if ever.
Donald, I remember my mom telling me NEVER get a credit card because it will get you in a lot of trouble!!! She was right. I did have credit cards and I did overuse them. I wound up paying and paying and paying. I was finally able to pay them off and then I cut them up. I decided that if I didn't have the cash to purchase whatever item I wanted then I wouldn't get it then. I would save up and then purchase it. We need to change our thinking on using credit cards, cell phones, and other luxury expenditures. We got along without them before they came along, maybe we should learn to get along without them again. Wouldn't that be something? Actually having conversations with people rather than burying our heads in our phones? Writing letters rather than texting? That would sure be something to see!
Peggy--My grandfather has a saying, "Take care of the pennies and the dollars will take care of themselves." Maybe its time we looked at the penny in a different light.
Absolutely!! 'Find a penny, pick it up...all the day you'll have good luck!' Find enough pennies and you will amass an awful lot of dollars!!
Peggy, for 1 whole year I saved every coin and paper I found and placed it in a jar. At the end of the year, I had $136.10. Compared to what my measly $1000.00 in savings account which earned about $10 in interest, I made out pretty well!
Nancy, I have been doing that for years! My husband leaves change in his pockets, anything in the washer or dryer, cushions, catch bowls, closets, hampers and last but not least the bottom of my purse gets sorted and saved in jars.
Last year’s take which included $125 in dollar bills came to $535.34. It’s fun to guess with the grands how much we’ve saved. Then we use it for a family dinner when everyone including nieces, nephews and their families are home all at the same time. Usually in the summer. The left over money goes back in the till for our next get together.
Way to go, Nancy!!
Doesn't that depend upon where you found the money? If you found it in on the street, you can compare it to your savings account interest. If you found it in your house, it was yours to begin with...no savings there.
Peggy--It's a shame they are only copper clad.
That's true!!
The discontinued the copper penny because there was more than 1 cents worth of copper in it.
Pick it up only if it is heads up, otherwise bad luck (LOL. just one more of those superstitions).
Peggy--Sadly, please change the has to a had.
There is the problem,doing the wrong thing generation after generation.Believing the wrong thing generation after generation.The delusions can never be destroyed.The opposite to that is penny wise,$foolish.
Banks operate on net interest margin,the difference between how much interest they pay out,and how much interest they collect in. Thus your CD or whatever pays 4%, the bank lends that money out at 6% .From that gross margin of 2% there is around 0.9% net profit margin after tax wages etc.The other 1.1% runs the company.
For example ( Australian numbers,so smaller population) a bank would have $800 billion lent out in mortgages.So the interest paid out would be $32 billion ( 4 X 8 = 32). The interest collected would be $48 billion ( 6 X 8 = 48 ),net interest margin $16 billion..Round the numbers so $8 billion is net profit after tax,$8 billion goes to pay wages,tax,rent,computer systems etc etc etc.Feel free to deny it,99% of people will deny that simplicity.
The multiplier effect,all those houses built,maintained,serviced ( electricity,water,sewerage etc,etc,etc ,a fortune in economic activity ,and a fortune in taxes paid because of that economic activity.
The really simple bit,if these companies are making a fortune ( they aren't ) would you not like to be a part owner of such a business.Or would you prefer to believe in delusions all of your life.
The really simple bit,as the company grows and profits increase the company becomes more valuable ( share prices increase purely on expectation that profits continue to increase as populations grow ).
Again really simple,probability.Start compounding.Compound $1,000 @ 11% for 40 years and the answer is $65,000. I am a part owner of a bank that did that,and may continue to do that. Slightly increase that to 16% and $1,000 grows to $378,000 over 40 years Continue that for 4 generations ( 100 years)
The UK version is look after the pennies and the pounds will look after themselves.
Penny wise,pound foolish.Your choice.The human race still has infinite ability for self delusion.
They see what they want to see,and they hear what they want to hear.
The business analysis has been simplified of course to explain it..
I agree! When I was a Child Pepsi and Coke were luxury items that were only made avaliable to guests or for special events( usually once a Month) ! Today I know people who Drink 3 Cans of Pop a day and is Mandatory Food Requirement no matter how much it costs or how bad it is for their health!
I stopped drinking soda pop because of issues with kidneys. I'm so glad I did!! Don't even have a hankering for soda anymore!!
Brent, they are probably drinking Diet (TM) sodas or drinks. Any beverage with the word Diet like Diet Coke, Diet Pepsi, Diet Snapple, has aspartame as an artificial sweetener.
Aspartame is addictive, people addicted buy it by the case lots, they also buy crap like Twinkies by the case lots.
The reason is, that aspartame fools the endocrine system into thinking that you just took in sugar, and it signals the pancreas to o to work and pump out insulin, that depletes your glucose level and makes you hypoglycemic and thus crave sugar.. ergo Twinkies or some such crap.
As a diet drink, it is a fraud, one gains weight with Diet drinks. Aspartame is also a known carcinogen, but thanks to Donald Rumsfeld and regulatory capture, the FDA has never banned it.. Coke and Pepsi would ruin political careers.
Years ago, I noticed obese people often are accompanied with diet Cokes.
I worked at a big restaurant as a Server. If a younger person of normal weight ordered a diet drink, I tried to say something politely about how bad diet it and wouldn't they like regular. They didn't care. They were addicted. I had some serious ethical dilemmas at the job. Lol.
That is the thing about Diet (TM) drinks, with aspartame they are addictive, that is why Coca Cola pays TV and Movie producers to mention Diet Coke in their movies, and shows, sublimal propaganda.
My mother in law, was addicted to Diet Coke, and when I mentioned it's health effects, and that it was addictive, she went into denial. But finally when she found herself living on nothing but Social Security, she finally gave up Diet Coke, she must have gone through withdrawal.
Credit is a tool, and it needs to be used for its intended purposes. Only carry a balance for a purpose that has a higher expected return than the interest you have to pay by carrying that balance. It’s not a way people are used to thinking in their personal lives, but if you can get used to it, it can be helpful.
Peggy, for us, the equivalent to having enough cash to buy something is having enough on hand to pay the credit card bill in full each month. The same kind of thinking you describe also can be used in this way. In addition to the significant cash back (this year’s is over $340) on our credit card purchases, the convenience is a huge factor, as is being able to pay so many things online. That includes paying off hospital bills (using payment plans without interest charges) online.
Doing it this way also allows me to keep very detailed records on the computer that would be so much more difficult if we were using cash for everything. And the only checks I use (also printed with the computer, so they are legible 🙂) are for a few things that can’t be paid online or that charge a “service fee” for doing so.
I also haven’t been in a bank branch in quite some time.
You can do the same thing with cash. It just requires more discipline...you must keep the receipts until you get home.
Harry, it sounds like you are a very savvy person using credit cards. Sadly, there are so many that don't think or plan as you do and wind up with debt that consumes them.
I pay mine off every month. Still pay for the process of borrowing. One huge bank keeps stopping my credit card saying I have fraud. Want a new card? I say no and solve it myself. I hate those off shore Customer Service problem persons.
Panamanians didn't use credit cards when I left in 78, and the cost of living was stable and affordable for the most "impoverished" of campesino's. Everyone ate and had shelter.
Then CitiCorp launched a massive propaganda campaign to have credit cards, and the country has experienced inflation , and Panama is plagued with the same "diseases" the U.S. has.
Their greed knows no bounds!!
When I was young, there were no credit cards. There were layaway plans and maybe the odd charge account at a small grocery store. Credit cards have made people live way beyond their means. Its a house of “cards”.
I love how you worded that!! It is most definitely a house of 'cards'!
Not to mention that sheep (their wool) get carded.
Brings to mind the perfume company that made their scents from all parts of the sheep except for the coat and mammary glands, which were reserved for their shear and udder non-scents.
This was so good!! Spot on, Dean!
Dean day-thank you for the laugh. It made my day!
I feel like if we hadn't been led down this Neoliberalism pathway that so many wouldn't be living paycheck to paycheck. Often times the purse strings could have been tightened, but we aren't very used to living without. I saw how those that lived through the Great Depression knew how to pinch their pennies (yet I joked about it). Yet, I can only get angry that trickle-down economics have ruined a comfortable retirement for my parents and am not sure where it will leave me. These economic messages need to get to the masses (through the propaganda), as it would change some minds and ideologies.
I never use credit cards unless forced to.i prefer paying in cash.
Right on Peggy!!!
Hey, Peggy, here's a thought experiment for you: Imagine you are a time traveler from our present day to the 16th century in Europe or the Americas and knowing that eras language(s). You are sailing on a merchant ship to a distant land with goods, cash and documents to be delivered upon arrival. You stand and whip out your smartphone with its own magical hotspot, lay down a spread of credit cards and demonstrate/explain their functions. You then offer to magically obtain these things for everyone.
How long would it take for these be-knighted folk to either label you as a witch or pocket your plastic cards and throw away their quill pens/parchment to have their communications be delivered instantaneously?
Hint: not four hundred years!
Nothing we have in the 21st Century would work, at least not for long 400 years ago. There is no infrastructure, to support them. A car would run so long as there is gas in the tank, then when that ran out it would be a monument, until it rusted away.
You might take pictures with a cell phone, but not download or print them, and the cell phone would be worthless when the battery ran down.
Credit cards would e an amusement, because they never saw plastic.
And you would have difficulty conversing, if English, the English of Chaucer and Shakespeare are barely readable today, and the spoken language with it's thousands of accents and brogues, would be as incomprehensible as a foreign language.
These time travel shows, and books like Connecticut Yankee in King Arthur's Court, are hilarious. Even if you could time travel back centuries, your chance of being understood and understanding, even in your own native language, are slim, you would be considered a spy, maybe an enemy, or a witch.
Here is an interview with Tamar Fletcher of Yorkshire, she was born inthe 19th Century, and at the turn of the 20th A person from Yorkshire and one from Surrey would have had a hard time communicating.https://www.youtube.com/watch?v=0Wq0pvMpi7w&ab_channel=WilliamBramhill
Well, Lee- I guess you read my comment literally because you missed the word 'magical'. This was just a thought experiment! Lighten up!
Ilene, only you knew what your use of magical meant, only you know it was a thought experiment and if you want to make enemies, continue to assert your pseudo superiority with phrases like lighten up.
Actually you betrayed yourself with that phrase.
I have never paid interest on my credit cards. Actually AMEX pays me 6% on groceries, hundreds e very year! AMAZON Visa also pays on purchases....
I was planning to pay cash for a car at a dealership when an unexplained $1500 charge showed up on the pricing sheet. When I questioned that unexplained charge the salesman said it was for the interest they wouldn’t make if I paid cash. Imagine that. Paying interest on money NOT borrowed. Buyer beware!
Roger-- That conduct should be reported to the trade commission. It's more than out of line it borders on being a sick bird, ill-eagle.
Thanks. What’s to be expected from a used car salesman. i was dealing with him on line, but i’m guessing he was wearing white shoes, a white belt, smoking a cheap cigar and getting his kicks by ripping customers off.
Roger--That's exactly what he had in mind for you.
Roger--You can't tax something that has already been taxed and you can't charge interest on something that never existed.
The more common ploy is the value of your trade-in car just went down $1,500. The trick I use is play along with the financing song and dance, smile, say thank you, and then whip out the check book for cash buy. Just don’t sign anything yet. Salespeople work the deal through the floor sales manager, then you get handed off to financing for the paperwork even if you pay cash. Financing people are loan sharks also trying to add in after-market alarms that malfunction, additional warranties that don’t cover your car longer than the manufacturer’s warranty, and three years of free oil changes for an upfront charge (I’ve even heard of that line used on a EV!).
My dad had me sit in on the negotiation with financing when I was 14 (he knew I was good with numbers). Quite the education. I did the same with my oldest kid when she was 17.
Easy to say for me, but the best move at that point would be to say “if you want this sale, delete that absurd charge” and walk out the door if he doesn’t. Odds are you wouldn’t get to the door before he called you back. And that might have to be repeated if he only offered to reduce the absurd charge.
Did you negotiate that $1,500 Roger.? I would have. The problem with Americans is that they don't negotiate. If you pay asking price in most countries, you lose respect
My wife gets embarrassed when I dicker. A typical American.
I negotiated the price of a bun my in Vietnam, for 35 piastres, I drew a crowd and the people love it. Ever after I could get a bun my (American Sandwich) for the same price. A local tried to purchase one for the same price and the lady said no. He had to dicker.
a “typical” American you’re not, but you are lucky enough to be married to one.
So what you are saying is that Paying the sticker price is admirable, but dickering for a better [price isn't.
I disagree, never buy a car for the asking price, but Americans have no experience and in fact are ashamed or afraid to bargain.
I even dickered for a house, and when I solid it, the buyers dickered with me.
Wow! Send a copy of that to the Consumer Financial Protection Bureau.
That’s unconscionable!!!
With still stagnant or ‘just too low to catch up’ pay, coupled with bi-monthly paychecks in many companies, most people are unlikely to be able to do this. Modern day ‘Robber Barons’ have us over a barrel.
Lias--What would happen if everyone across the country stopped paying on their credit cards simultaneously. It's a crazy idea but so is paying a 30% interest rate on a credit card.
Then the credit card companies would use that as an excuse to jack up the interest rate even more.
Jody--And who would they collect it from?
Senators Elizabeth Warren and Bernie Sanders have some ideas about that. Too much to go into here.
If people, universally, stopped using credit cards, there would be a depression caused by a shortage of money. I can explain why but it is lengthy and most won't read, or their eyes will glaze over.
In short form all Dollars in existence are created out of debt, public, corporate, private, and when and as the debt is paid down and finally paid off, the balance on the books (that is the money in circulation) is reduced.. double entry book keeeping.
Lee--I didn't say stop using them I said stop paying on them.
A thought. National labor unions go on strike in order to get things changed in their favor what about the private citizens who suffer financially who don't have a voice.
Donald ; That is why cash is going to be a thing of the past, If the corps and banks have their way.
Laurie--My son has been warning me of the day when currency will be a thing of the past, but for that to happen interest rates will have to find some sort of control.
That might be good.
Laurie--That would mean coin collectors must hurry to grab what they can before all is lost.
Then the coins would only be worth something to the numismatics! Or lunatics! (Unusable).
Laurie--They would become lost items that reflected our past.
Use them, pay off every month. If you have a balance, pay off new charges plus 10% each month. Takes two years to get to zero because of interest.
Ben--It's the 30% interest rates that people are complaining about. When I was young, I wouldn't take a card that carried an interest rate that was over 10%, now that's a dream from the past.
@Donald. Lot's of talk about this, but not much action (broadly speaking). My fortune cookie says "The greatest of all mistakes it to do nothing because you think you can do only a little." If each of us pays down our credit card debt ($1.129 Trillion) by 10% we could round that number down to only $1 Trillion. Instead Americans are still increasing their debt (in aggregate).
Ben--It is how they're bridging the gap between what they have and what they need.
@Donald. I know... But it's a short term solution, long term problem for them. I know lots of young people who get $20, but instead of buying groceries they buy a $9 coffee drink and an $11 burger. Culture of under 30 years old...