OT - Bank of America

[Hustlin' Hank]

You are correct in what you are saying. Like other posters have said, the trick is to pay off the CC every month so that you don't pay interest. In reality, a CC can be an asset if used correctly and claim the rewards by paying it off.

Many years ago I looked closely at the amorization schedule for my home loan. If I kept the house and only made the monthly payment, I was paying almost $300,000.00 for a $100,000.00 home. I thought to myself "what a waste of money". Altho I couldn't pay it off, I could pay a little more onthe principle and pay it off earlier. I did that and after about 5 years, I almost had it paid off. I sold the house and took the equity and built a smaller house with more land and it was totally paid for.

Young people HAVE to pay interest on a loan to get a home. As bad as it sucks, it is the only way for some to acquire any savings (equity). It beats renting for sure. But, any interest you don't pay is like having that money go into YOUR pocket.

If people would take a close look at the amorization schedule and realize they are wasting many dollars on interest that is coming out of their pockets, I'd think most would come to their senses. At least the smart ones.

Hank

[Caesar Romano]

On Fri, 25 Sep 2009 02:24:53 -0700 (PDT), "Hustlin' Hank" wrote Re Re: OT - Bank of America:

Consider also that some CCs allow you to create limited one-time-use CC numbers with a limited $-amount to use when shopping on-line:

A feature I use often.

[Stormin Mormon]

Ideally, credit cards are paid in full every month. And the loan is paid off early. That takes a lot of discipline, and self control. Something the American public is slow to learn.

Interest is what keeps the credit card companies paid. That, and also fees and penalties.

[Kurt Ullman]

I keep waiting for one my lesser used back up cards to tell me they are going to charge fees. So far, they haven't.

[Dimitrios Paskoudniakis]

You are missing an easy opportunity to have a credit card company give you hundreds of dollars of free money each year.

I have an AmEx Blue Cash card, which gives me a 5% rebate on groceries, gas, and prescription drugs, and 1.25% on everything else. I pay in full each month, get a free grace period, don't write any checks, don't have to carry around cash, and once per year I get a credit on my account of many many hundreds of dollars. I have a VISA that gives a 1% rebate when a merchant doesn't accept AmEx, and I get that rebate credit the next month.

I always pay in full each month.

The credit card company is paying me to use their card.

Of course others use cards in this manner that give other types of rewards (ie airline miles). My father's card is through the same bank as his mortgage, so his card rebate goes right toward extra principal payment on his mortgage.

I can't imagine why anyone who is creditworthy would not take advantage of this opportunity rather than do what you are doing.

[stan]

Hank I totally agree. A kindred spirit I think.

And it's exactly what my son is doing; paying of his home mortgage as quick as possible, even though the interest rate is low, hoping the equity in will increase (depends on the economy and the location).

Now a widower, and for the record I have three children ranging from

47+ to 30.

One seems to have fallen near the parent tree and is well aware of 'cost of money' is thrifty and doesn't mind using and fixing and secondhand as long as it does the job.

Another can't seem to control finances at all; despite help!

A third works hard, earns well has no children, is smart about 'bargains' etc and 'manages' to live within budget.

Same parents, same procreation process, no hanky panky in the family so they all came from the same tree!

Must be different genes?

Here in Canada we have what seem to be be better regulation of financial institutions, and have not had to bail out any of the banks. So it's not instutional problems but individuals who need to be smarter.

Improvements are needed in in regulating what are loosely called 'Financial or investment advisers', they are required, if above board , to be registered but there are thirteen different provinces and territories each with it's regulations. But there still are the Bernie Madeoffs here.

My adviser for example has to register in at least three areas (at a cost in each) in order to operate legally and if one of his clients moves to another province etc. he has either to register himself in that territory or hand off the client to another adviser.

[LouB]

Good advice.

[stan]

BTW Home loans/mortgages.

$100,000. at 6% for various time periods. Monthly payments.

20 years $716 mo total repay 172,000; Interest =3D 72,000 or 1.72 times original cost 25 years $644 mo repay 193,000; interest =3D 93,000 1.93 times cost 30 years $600 mo repay 216,000; interest =3D 116,000 2.16 times cost 40 years $550 mo repay 264,000; interest =3D 164,000 2.64 times cost

Just a thought.

So we built our own some 40 years ago and the most ever owed was $12,000, which we disposed of asap. despite a then low salary. So no mortgage!

You can scale this up or down. For example $50,000 as above would be exactly half of the 100,000 numbers . Also for slight difference in interest rate, say 5% instead of 6, you can ratio it a bit and not be too far out, for mental calculation. e.g. 5/6 x 600 per month =3D $500. i.e. somewhere between $500 and $600 per month. Then then calculate it properly using an on-line progarmme such as <

>

Good luck; and aside from credit cards, after all it&#39;s OUR money we are paying for housing and home repairs.

[Master Betty]

I&#39;ve heard the cash back argument but I do almost all my major shopping at Costco where we already get 2% back and they don&#39;t take credit.

I always use my debit card and the bank offers some consumer protection with ours.

I think credit cards can work well for those who use them wisely. Unfortunately, the banks appear to be playing the odds.

[Phisherman]

Charge only the amount you can pay IN FULL each month, and no more. If you stop using credit your credit score decreases. If you stop using the card cancel the account. You are in control, not the bank. DiscoverCard has a cash-back program and you don&#39;t need a fancy bank for that one.

[joevan]

No joke, I got a check made out to me for 3 cents american from a stock company. I saved it. Too much trouble to try to cash or deposit.

[LouB]

If you are a Costco member you can get a FREE Amex card. And the executive card only costs $50 more and is guaranteed to pay for itself.

Lou

[Master Betty]

We&#39;ve been exec members for many years now. We&#39;ve been members since 1994. I do miss the old days when they sent the money back in a check.

I was reading some comments on Costco and people were saying "It&#39;s worth it for the food court". We get ALL of our major purchases. I bought and sold four houses through them. Now that&#39;s a deal! It WAS almost like stealing. (I say "was" because the market isn&#39;t what it used to be.) I think we did 2 of my wife&#39;s cars through Costco too.

Re: Credit Cards: I just don&#39;t like messing with the "no credit card " philosophy in my family, but if it becomes a "Gotta do it Hi." thing, I&#39;ll reconsider it then. Right now, I don&#39;t encourage any debits....if you know what I mean. It&#39;s worked really well for us. I paid cash for 7 days in Rome in November through Costco... You just have to love that place.

[LouB]

Yup!!

[N8N]

That&#39;s what I&#39;m doing. I still got rate increases on three different credit cards.

Only real impact on me is now instead of thinking that if there&#39;s something that I really want that I might be willing to carry a balance for a month or two, now it&#39;s simply not an option. I&#39;m sure others feel like I do as well. This can only have a depressing effect on the economy. Something I would be willing to pay 8% interest on, I might not be willing to pay 18%.

nate

[Caesar Romano]

On Fri, 25 Sep 2009 13:43:15 -0700 (PDT), N8N wrote Re Re: OT - Bank of America:

Some others might feel as you do, but not many.

This is America. Most Americans are into conspicuous consumption and want to leave to bill to the grandchildren. It&#39;s supposed to be one of our countless rights.

The Chinese will educate us.

[Dimitrios Paskoudniakis]

BTW Home loans/mortgages.

$100,000. at 6% for various time periods. Monthly payments.

20 years $716 mo total repay 172,000; Interest = 72,000 or 1.72 times original cost 25 years $644 mo repay 193,000; interest = 93,000 1.93 times cost 30 years $600 mo repay 216,000; interest = 116,000 2.16 times cost 40 years $550 mo repay 264,000; interest = 164,000 2.64 times cost

Just a thought.

So we built our own some 40 years ago and the most ever owed was $12,000, which we disposed of asap. despite a then low salary. So no mortgage!

You can scale this up or down. For example $50,000 as above would be exactly half of the 100,000 numbers . Also for slight difference in interest rate, say 5% instead of 6, you can ratio it a bit and not be too far out, for mental calculation. e.g. 5/6 x 600 per month = $500. i.e. somewhere between $500 and $600 per month. Then then calculate it properly using an on-line progarmme such as <

>

Good luck; and aside from credit cards, after all it&#39;s OUR money we are paying for housing and home repairs.

__________________________________

I don&#39;t know about Canada, but in the USA you deduct the mortgage interest paid each year from your income when determining income tax.

I live in the state of Maryland, and pay 25% USA income tax, and 8% Maryland/local income tax, so about 33% of the mortgage interest (25%+8%) is how much my income taxes are reduced. For example, if someone in Maryland pays $12,000 in the first year of their mortgage in interest and are in the

25% USA bracket, their US tax bill is reduced by $3,000 (25%) and their Maryland tax bill is reduced by $960 (8%). So where you are adding the $12,000 interest in your calculation, you need to subtract about 1/3 of that due to reduced taxes. So you need to multiply all of your above ratios by 2/3.

If you invest the saved taxes in a long-term investment that grows on average 10% per year, and the mortgage interest is 5%, you are better off investing that money rather than paying down the mortgage. Your ratios also aren&#39;t yet factoring this in.

But you know all this.

[h]

WTF is "Costco"?

[Stormin Mormon]

Probably close also to BJ&#39;s Wholesale club.

[LouB]

Wow I thought the whole world knew. 500+ warehouse stores. IMHO quality is often better than Sam&#39;s club.