U.S. banks to make $38 billion from overdraft fees: report | U.S. | Reuters (http://www.reuters.com/article/newsOne/idUSTRE5790YM20090810)

:yikes: That's over a hundred bucks per person in the U.S. - probably close to $200 per person that actually uses banks.

I have a buddy who was a VP of a small regional bank in Tennessee. He lived a very unassuming, modest life despite his job. We were talking about money and investments and the general financial acumen of average Joe and he asked me how much a bounced check fee was at my bank, where I replied that I thought it was $25. He said his bank charged $5 and they had enough bounced checks every month to pay the payroll for every employee.

I was shocked.

Why is this surprising?

How many people do you think even know their balance? How many people do you think actually reconcile their accounts each month? How many people do you think even know how to reconcile an account absent accounting software? How many people do you think actually know the difference between a debit and a credit?

We are a nation filled with people who do not know basic, fundamental things. Basic finance. Basic nutrition. Basic governmental knowledge. Basic science.

But we do know how we feel. :lol:

Why is this surprising?

We are a nation filled with people who do not know basic, fundamental things. Basic finance. Basic nutrition. Basic governmental knowledge. Basic science. Basic birth control.



I thought hard about this, and I cannot ever recall bouncing a check. I've had overdraft protection on my accounts since I was a teenager, and have never had to use it. It would be a personal embarrassment to me to do that.

It IS amazing that there is enough of it to pay salaries.

I thought hard about this, and I cannot ever recall bouncing a check. I've had overdraft protection on my accounts since I was a teenager, and have never had to use it. It would be a personal embarrassment to me to do that.

I know how to reconcile accounts by hand. I reconcile my accounts every month. I know debit and credit in relation to asset and liability accounts. And I still bounce checks once in awhile. I just don't keep enough cash in there and I push it too close once in awhile or just flat out forget. My bank charges $38 per and I know I bounced three checks this year. I forgot to deposit my paycheck. :stupid:

So, I have no problem seeing people who don't have a clue bouncing checks all the time.

Dr. Elizabeth Warren of consumer credit protection and education fame tells a story of briefing a group of bankers on proposed increasing importance of credit reports prior to loans/cards/etc being granted to the consumer.

Many of the regular bank loan officers and staff in attendance were thrilled in that they too saw if the requirements were tightened up they would spend less time chasing after delinquents and assessing penalties, fee's, etc . . .

She said the head of the bank stood up and the room fell quiet. He stated something to the effect that he could care less if we ever paid back the principal because the money is to be made in the interest, fee's and penalties.

Agreeing to buy on credit, or bounce checks, is agreeing to pay more than is being asked. On what level does this make sense?

Why is this surprising?

How many people do you think even know their balance? How many people do you think actually reconcile their accounts each month? How many people do you think even know how to reconcile an account absent accounting software? How many people do you think actually know the difference between a debit and a credit?

We are a nation filled with people who do not know basic, fundamental things. Basic finance. Basic nutrition. Basic governmental knowledge. Basic science.

But we do know how we feel. :lol:

Seven out of ten live paycheck to paycheck (as in miss one and it is disaster), have $10K of credit card debt, and an average of 8 - 10 open consumer loans. Seven out of ten "have to be" at work instead of "want to be" at work. Seven out of ten are spending money they do not have for things they cannot afford. Seven out of ten think being able to afford the item is being able to afford the payment.

Seven out of ten do not have a budget because they already know the answer.

I pity them to a degree but in reality they cause my personal finances to suffer so the pity fades to a different emotion all together.

It really does not have to be this way. Id'ing the problem is easy. Getting the person to fix the problem is the hard part.

Agreeing to buy on credit, or bounce checks, is agreeing to pay more than is being asked. On what level does this make sense?

Investment. If ProfMoneyWise decides to borrow money at 6% to buy a home he hopes will appreciate more than 6% a year, then, he is making money when he sells.

Or, If PMW decides the interest is worth buying property or a home he really enjoys for it's own sake over renting then there is value there.

If PMW decides to borrow money to start a business that is planned to return more than the cost of the money, then, that is a good decision.

If PMW decides to buy a $4,000 TV and borrow the money instead of saving and then buying, then that boils down to 'wants' the value of having it now.

Money always has some value. Sometimes that value is negative.

:buddies:

. Seven out of ten think being able to afford the item is being able to afford the payment.


I bought a $40,000 tractor 6 years ago that I needed. I could not afford the $40,000. I could afford the $700 a month.

I could have kept fixing the tractor I had but reliability was a critical issue for my business. I could have bought used at some level yet still had, to some extent, the same issues.

Buying new fit my budget, brought the guarantee of service for the first three years at which point a tractor should be good to go longer term and fit into my longer term plans of having it serve for 2-25 years.

It all depends.

Investment. If ProfMoneyWise decides to borrow money at 6% to buy a home he hopes will appreciate more than 6% a year, then, he is making money when he sells.

Or, If PMW decides the interest is worth buying property or a home he really enjoys for it's own sake over renting then there is value there.

If PMW decides to borrow money to start a business that is planned to return more than the cost of the money, then, that is a good decision.

If PMW decides to buy a $4,000 TV and borrow the money instead of saving and then buying, then that boils down to 'wants' the value of having it now.

Money always has some value. Sometimes that value is negative.

:buddies:

Good discussion points. I have opted to never borrow money again for anything. If I do not have the money then I do not buy it.

A home loan I will entertain for folks but I have stringent "buying" criteria that I recommend there as well and have posted this criteria prior. I do however, point out that it does cost money to live in the home well in addition to the payment itself.

I do not advocate buying a home in hopes of making money. I advocate buying a home to live in it, and if one makes money someday . . . good for them.

It would have to be a slam dunk return for me to borrow money on a business. Just the way I see things.

And don't get me started on that TV :<)))) And going the route you describe that TV is not a $4K TV.

I have a phobia about paying interest - the only thing I have a loan on is my house, and I pay extra on the principle each month so I can get it knocked out sooner. I don't even carry a balance on my ONE credit card.

Can't even remember the last time I bounced a check. So it's good to know I'm not one of the seven out of ten.

I bought a $40,000 tractor 6 years ago that I needed. I could not afford the $40,000. I could afford the $700 a month.

I could have kept fixing the tractor I had but reliability was a critical issue for my business. I could have bought used at some level yet still had, to some extent, the same issues.

Buying new fit my budget, brought the guarantee of service for the first three years at which point a tractor should be good to go longer term and fit into my longer term plans of having it serve for 2-25 years.

It all depends.

Yes, it all depends.

If we had discussed way back when I would have said in your case you would have known the tractor would have needed to be replaced and I would have recommended you had a separate fund set aside that you continued to make a tractor payment to so that when the time came you had the money to pay for the new tractor in full.

Paid for tractors, like paid for cars, just seem to run better.

Yes, it all depends.

If we had discussed way back when I would have said in your case you would have known the tractor would have needed to be replaced and I would have recommended you had a separate fund set aside that you continued to make a tractor payment to so that when the time came you had the money to pay for the new tractor in full.

Paid for tractors, like paid for cars, just seem to run better.

That is definitely wiser.

Unless I could have earned more with that money than what I saved on financing the tractor. :buddies:

That is definitely wiser.

Unless I could have earned more with that money than what I saved on financing the tractor. :buddies:

Remember to factor in "risk." That and the taxes on the earned money are sometimes disregared.

Debt-free investing allows singles and doubles to equal others homeruns and the debt-free investor does not need to hit homeruns to prosper.

You know what I never understood? Store credit cards, like a J C Penney's or Target, or whoever issues their own credit cards that you can only use at their store. What is the point of this? Why wouldn't you just use your Visa or MC for those purchases?

You know what I never understood? Store credit cards, like a J C Penney's or Target, or whoever issues their own credit cards that you can only use at their store. What is the point of this? Why wouldn't you just use your Visa or MC for those purchases?

Special deals only if you use your store credit card.

You know what I never understood? Store credit cards, like a J C Penney's or Target, or whoever issues their own credit cards that you can only use at their store. What is the point of this? Why wouldn't you just use your Visa or MC for those purchases?


It's a scam. They suck you in w/a 10% discount, then charge you the maximum allowable interest. As long as people buy into it, they'll keepn doing it.

Special deals only if you use your store credit card.

The best deal I was ever offered from them was like 10% savings or something. So if I buy $50 worth of stuff, I get to save a whole $5 if I get their credit card to muck up my credit report.

You know what I never understood? Store credit cards, like a J C Penney's or Target, or whoever issues their own credit cards that you can only use at their store. What is the point of this? Why wouldn't you just use your Visa or MC for those purchases?

They are then the "bank." They do not have to pay the fee to Visa or MC. All fee's, interest, etc, stay in-house.

Oddly enough, J.C. Penney's real name was James Cash Penney. Also of note is he was one of the last to get onboard with allowing credit to be used to begin with. Now JC Penney, Sears, and a few others are just money-stores that happen to have a bunch of stuff sitting in the store to sell. The bulk of their profits come from the money side of the operation as well.

Think about it. It does not take any effort at all to assess a late fee.

Special deals only if you use your store credit card.

Because whatever you save by using the card, they get back in interest.

They are then the "bank." They do not have to pay the fee to Visa or MC. All fee's, interest, etc, stay in-house.

I understand why the store would want to offer their own credit card - I just can't figure out why any consumer would get one.

I understand why the store would want to offer their own credit card - I just can't figure out why any consumer would get one.

Because it hurts to spend cash. And it is even harder to spend cash that one does not have.

Because it hurts to spend cash. And it is even harder to spend cash that one does not have.

Which is why tax withholding should be eliminated. Yesterday.

Remember to factor in "risk." That and the taxes on the earned money are sometimes disregared.


Like what? You buy a house with borrowed money. It appreciates. Simple.

What could go wrong?

It's a scam. They suck you in w/a 10% discount, then charge you the maximum allowable interest. As long as people buy into it, they'll keepn doing it.

I got an American Eagle card one time while shopping with the girls. It was 25% off and told them to go to town.

$500 later I'd saved $125 off of what we were gonna spend anyway. Paid the bill when it came and called and cancelled the card.

Debt-free investing allows singles and doubles to equal others homeruns and the debt-free investor does not need to hit homeruns to prosper.

Again, that is the wise-er way to go about it. :buddies:

Good analogy, too.

I got an American Eagle card one time while shopping with the girls. It was 25% off and told them to go to town.

$500 later I'd saved $125 off of what we were gonna spend anyway. Paid the bill when it came and called and cancelled the card.


We did that at Hechts when they had a store closing once. We had every intention of spending a lot of money, getting the discount, paying in full, then cancelling the card. Then we couldn't find a phone number to call and cancel. So, we don't do that anymore. :lol:

We did that at Hechts when they had a store closing once. We had every intention of spending a lot of money, getting the discount, paying in full, then cancelling the card. Then we couldn't find a phone number to call and cancel. So, we don't do that anymore. :lol:

Even then, you just cut it up and never use it again.

Even then, you just cut it up and never use it again.

But it's still on your credit report and can goof you up.

But it's still on your credit report and can goof you up.

It can goof you up a little IF your credit is shady to begin with. One or two is no big deal, especially if it's a low limit on the card. If you have numerous VISA's and store cards, then it starts looking bad. Even then, paying your bills on time is more important.

Remember Cotton 'won' the Southwest Airline in flight contest for most credit cards, ever? :lol: She has something like 36 and her credit is better than Bill Gates.

:lol:

Like what? You buy a house with borrowed money. It appreciates. Simple.

What could go wrong?

Like one guy I know who used borrowed money to buy stock. Worked for awhile then something went wrong. Still not sure on that one, I'll have to think about it a bit.

As I recall though he had a pretty sophisticaled tone on him when he explained it all to me at the time.

I felt so unworthy. But I'm used to the feeling so I just did things my old boring way.

Like one guy I know who used borrowed money to buy stock. Worked for awhile then something went wrong. Still not sure on that one, I'll have to think about it a bit.

That's for people whose idea of relaxing is building bombs, smoking and drinking. At the same time. :jameo:

But it's still on your credit report and can goof you up.

I seem to remember reading, maybe even here, that there is a "right" way and a "wrong" way to cancel credit cards. Just canceling a credit card can still have a negative impact on your rating, but I don't really recall why...

Here:Seems that cancelling an OLD credit card is bad...
Affects of Canceling Credit Cards on Your Credit Score (http://cashmoneylife.com/2008/06/17/think-twice-before-cancelling-credit-cards/)

Canceling Credit Cards Affects Credit Score | ThinkGlink (http://www.thinkglink.com/article/2005/04/29/canceling-credit-cards-affects-credit-score)
First, part of your credit score is based on how long you've had credit accounts opened. So, a credit card with a zero balance that has been opened for 20 years will help your credit score more than a credit card account that has only been opened 6 months, 2 years, 5 years, or even 10 years.

The longer you're able to manage a particular credit account -- and that means make at least the minimum payment on time -- the better.

I seem to remember reading, maybe even here, that there is a "right" way and a "wrong" way to cancel credit cards. Just canceling a credit card can still have a negative impact on your rating, but I don't really recall why...

FICO Score Composition:

Payment History – 35%
Total Amounts Owed – 30%
Length of Credit History – 15%
New Credit – 10%
Type of Credit in Use – 10%

FICO is a "how am I at borrowing and paying" score. You close your accounts you eventually end up with a zero FICO score. A clean credit report but a zero FICO.

Millionaires who do not borrow money have zero FICO scores.

I know which camp I want to be in. Zero FICO, Clean Credit.

If I find a place will not do business with me because I do not have a FICO score I will call the local newspaper . . . and still take my business elsewhere.

If I have an applicant for employment who has clean credit but zero FICO and that applicant is competing with someone who has a high FICO. Hmmmmmmm, I like debt-free employees. They "want" to be at work not "have" to be at work.

The great FICO score has become way to much of a focus. No where in the score is being financially prepared and fully funded factored into the equation.

The great FICO score has become way to much of a focus. No where in the score is being financially prepared and fully funded factored into the equation.

Absolutely. Found that out when my insurance went up because I didn't have a car loan history. Being fiscally responsible has no meaning.

The best deal I was ever offered from them was like 10% savings or something. So if I buy $50 worth of stuff, I get to save a whole $5 if I get their credit card to muck up my credit report.

Sears does discounts and other things. They do a bunch of 0 payments, 0% interest on appliances and big ticket items quite often. I got a stove, patio set, a mower and a 50 inch TV on my Sears card 0 payments, 0 interest for 12 months. I enter it in Quicken to pay off the month before it comes due to be sure because interest on these deals is typically retroactive.

I waited for GM to do 0% on vehicles and bought my truck when it came out, I also got a $2K mattress for 0/0 for 15 months.

I just wait around until they do these free money deals and do them. I leave the money in my savings until they are due then pay it off with my Visa, cop the points, then transfer the money onto the VISa the next day.

Because whatever you save by using the card, they get back in interest.

If you carry the balance yes because they typically charge 23% interest.

But it's still on your credit report and can goof you up.

They now claim having multiple revolving credit accounts is a good thing for your FICO.

If they are interested in some good financial reform they should make the big 3 disclose whay mystical friggin formula they use to determine FICO. the way it is now it is just a hodge podge of opinions and methods. One year the rule is to close everything you do not use, the next year it is the opposite.

They now claim having multiple revolving credit accounts is a good thing for your FICO.

If they are interested in some good financial reform they should make the big 3 disclose whay mystical friggin formula they use to determine FICO. the way it is now it is just a hodge podge of opinions and methods. One year the rule is to close everything you do not use, the next year it is the opposite.

FICO Score Composition:

Payment History – 35%
Total Amounts Owed – 30%
Length of Credit History – 15%
New Credit – 10%
Type of Credit in Use – 10%

FICO is the Fair Issac Corporation and the Big 3 use this model for their FICO scores. The formula has stayed pretty steady. As for the rules and the like they stay pretty steady as well. It seems to be the opinions about the rules (and how to apply them) are what are all over the map.

Choosing to not participate in any of this is an option some have chosen. The result is a bit higher insurance rates but all in all it beats being jerked around by lending institutions, credit card companies, etc.. Hard to jack around the payment date, interest rate, billing cycle, etc, if you don't play along at all.

How Your FICO® Credit Score is Calculated - myFICO.com (http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx)

FICO Score Composition:

Payment History – 35%
Total Amounts Owed – 30%
Length of Credit History – 15%
New Credit – 10%
Type of Credit in Use – 10%

FICO is the Fair Issac Corporation and the Big 3 use this model for their FICO scores. The formula has stayed pretty steady. As for the rules and the like they stay pretty steady as well. It seems to be the opinions about the rules (and how to apply them) are what are all over the map.

Choosing to not participate in any of this is an option some have chosen. The result is a bit higher insurance rates but all in all it beats being jerked around by lending institutions, credit card companies, etc.. Hard to jack around the payment date, interest rate, billing cycle, etc, if you don't play along at all.

I don't get how you figure you are being "jerked around" by credit organizations. You apply, they not knowing you from Adam check your FICO which is a snapshot based on a statistical formula to predict if you are a worthy risk or not. Once they conclude your risk they approve or disapprove. :shrug:

I have never had any "jerkig around". Payment dates are payment dates, interest rates are the published rates, take it or leave it.

If you elect to purposely not participate in the credit business and have a 0 FICO then that is your choice. You will have a harder time renting, buying, getting insurance, renting a video, and even gaining employment in some instances.

FICO Score Composition:

Payment History – 35%
Total Amounts Owed – 30%
Length of Credit History – 15%
New Credit – 10%
Type of Credit in Use – 10%

FICO is the Fair Issac Corporation and the Big 3 use this model for their FICO scores. The formula has stayed pretty steady. As for the rules and the like they stay pretty steady as well. It seems to be the opinions about the rules (and how to apply them) are what are all over the map.

Choosing to not participate in any of this is an option some have chosen. The result is a bit higher insurance rates but all in all it beats being jerked around by lending institutions, credit card companies, etc.. Hard to jack around the payment date, interest rate, billing cycle, etc, if you don't play along at all.
I know this. I want DETAILS. I want to see the formula, put my info in it and see how one thing affect the other.

I don't get how you figure you are being "jerked around" by credit organizations. You apply, they not knowing you from Adam check your FICO which is a snapshot based on a statistical formula to predict if you are a worthy risk or not. Once they conclude your risk they approve or disapprove. :shrug:

I have never had any "jerkig around". Payment dates are payment dates, interest rates are the published rates, take it or leave it.

If you elect to purposely not participate in the credit business and have a 0 FICO then that is your choice. You will have a harder time renting, buying, getting insurance, renting a video, and even gaining employment in some instances.

I rent, buy, have insurance, rent video's, am employed. I buy airline tickets, rent hotel rooms, cars and do everything anyone else does with a debit card. If I am making a purchase of any significance I use the "credit" side of the debit card and the policies and protections that come with a credit card are enacted. Never had a problem to date but if I do I will be the first to report it here.

I understand the assignment of interest rates. The higher the risk the higher the rate. Of late many are finding out they have become supposed risks as their rates have been increased considerably.

The jerking around I mention is the lenders have been purposely moving payment dates around with no notice. This results in missed payments (and associated fees). The companies have also been increasing the minimum payment amounts and interest rates. Even on accounts in good standing.

Appears to me your way works for you. I was just pointing out there is another way entirely and quite frankly there are some that need to go the no-debt/no-risk way as the other way is obviously to much for some to handle responsibly.

I know this. I want DETAILS. I want to see the formula, put my info in it and see how one thing affect the other.

Ah hah! Wondered what part of your question I was missing.

FICO Score Composition:

Payment History – 35%
Total Amounts Owed – 30%
Length of Credit History – 15%
New Credit – 10%
Type of Credit in Use – 10%

FICO is a "how am I at borrowing and paying" score. You close your accounts you eventually end up with a zero FICO score. A clean credit report but a zero FICO.

Millionaires who do not borrow money have zero FICO scores.

I know which camp I want to be in. Zero FICO, Clean Credit.

If I find a place will not do business with me because I do not have a FICO score I will call the local newspaper . . . and still take my business elsewhere.

If I have an applicant for employment who has clean credit but zero FICO and that applicant is competing with someone who has a high FICO. Hmmmmmmm, I like debt-free employees. They "want" to be at work not "have" to be at work.

The great FICO score has become way to much of a focus. No where in the score is being financially prepared and fully funded factored into the equation.

A lot of employers now look at that credit score, it's almost impossible to get a security clearance without a good score.

I use my credit card for everything, from filling up the gas tank to groceries to my SMECO bill. I get points for everything I buy, which I can spend on all sorts of goodies. I also pay my balance in full each month.

So I get free stuff from my credit card company, and you guys who rack up interest charges and late fees are essentially paying for it.

Thanks! :cheers:

A lot of employers now look at that credit score, it's almost impossible to get a security clearance without a good score.

Correct. Much debate about this very thing in many circles at present. Those with zero scores are stating same prior to submission of the application to explain up front they choose not to owe money to anyone but have a clean credit history.

Those whose scores are going downward as they are ridding themselves of debt are advised to do the same thing.

This applies to job applicants as well. Some companies are using the score as a discriminator. It is wise for applicants who owe no one to make this point known at application time.

What is ironic is financial problems have been at the root motivator of many who ultimately commit treason against the U.S.. Selling of information to get out of financial predicaments caused by spending money one does not have.

Yet the score that tracks this sort of thing is being viewed as a good thing.

The times they are a changing . . .

So I get free stuff from my credit card company, and you guys who rack up interest charges and late fees are essentially paying for it.



I have this cool sea miles card that will earn me FREE cruises. :whistle: