YOU OWE YOU SHOULD PAY!

YOU OWE YOU SHOULD PAY! I would like people to remember that obtaining a line of credit and having a credit card with a low interest rate is a privilege that one earns through careful spending and then paying the bill. It is not a right bestowed upon the citizens of the United Sates by the Constitution. On May 23, 2009, I wrote a blog called, “Credit Card Companies are not bad,” that produced a lot of animosity towards me for defending the “big bad banks.” Be prepared to get hostile again! On February 22, 2010 the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009 becomes law. It includes a number of new rules designed to protect consumers from predatory practices by banks and credit card companies, such as hidden fees and sky-high interest rates. CARD protects consumers and I am all for that. But the accountability is all on the part of the banks; what about deadbeat credit card holders? They should have accountability for their misuse of credit. You buy, you owe, you should pay! You cannot afford to make your payments; you do not buy. It is very simple. You pay no interest or fees if you pay your bill off every month. But people are not fiscally responsible and these statistics prove that:

At the end of 2008, Americans' credit card debt reached $972.73 billion, up 1.12% from 2007. That number includes both general purpose credit cards and private label credit cards that aren't owned by a bank. (Source: Nilson Report, April 2009) The average outstanding credit card debt for households that have a credit card was $10,679 at the end of 2008. One year earlier, that average was $10,637. (Source: Nilson Report, April 2009)

In the last 12 months, 15 percent of American adults, or nearly 34 million people, have been late making a credit card payment and 8 percent (18 million people) have missed a payment entirely. (Source: National Foundation for Credit Counseling, 2009 Financial Literacy Survey, April 2009)

26 percent of Americans, or more than 58 million adults, admit to not paying all of their bills on time. (Source: National Foundation for Credit Counseling, 2009 Financial Literacy Survey, April 2009) Tracy L. Coenen, CPA, MBA, CFE, CFF the author of Essentials of Corparte Fraud and Expert Fraud Investigation: A Step-by-Step Guide

, says “Credit card companies are notorious for being sneaky and exploitative. Don't let them do it to you. The only way to completely avoid these underhanded tactics is by refusing to do business with them. Let your wallet do the talking, and do everything you can to avoid predatory credit card companies.” One can avoid predatory credit card companies and their practices by simply using fiscal prudence and only charging items one can afford to pay off by the next billing cycle. Why doesn’t anybody say that? I watch all of the Judge shows on television and I am astounded by the number of cases that involve friends who co-sign for loans and open credit for a friend who has bad credit. As Judge Judy always says, “There is a reason your friend has bad credit. They did not pay their bills. Why did you think they would pay them now just because they are in your name?” One cannot expect a bank to loan (charging on a credit card is a short term loan) consumers the money to buy an item and then not expect to be promptly re-paid. If the bank is not paid, they have a right to charge interest and fees. If all consumers paid their credit card bills every month, the banks would go out of business because they would make no profit; or they would have to charge a fee to pay for their services. So I guess I should be glad that 58 million adults admit to not paying their bills on time. It means that the privilege to have a credit card personally costs me nothing.