'Bad' credit cards

I have often extolled the virtue of 0% credit cards as a means to get rid of debt and am nearing the point when I can finally be rid of my credit card balance. However, 0% cards are getting harder to come by and are near-impossible for those with a bad credit record. Those with a bad credit record are of course the very people that need a break when it comes to trying to pay off their creditors. So what are the deals that are available for those without a perfect credit record?
Varying from 7.9% up to just under 20% (still very competitive), there are a number of options available in the bad credit credit cards category on BadCreditOffers.com, expert providers for credit cards for bad credit along with other services including home loans for bad credit and bad credit loans.
The site has handy links taking you straight to application forms ensuring that in some cases, a loan or credit card can be secured in minutes. I am just a few payments away from clearing my own credit balance and hope to post about it in about two months time. Getting debt-free is a double positive, not only does it mean you are no longer beholden to a bank, it also frees up money that you have been using to pay off loans leaving you with more disposable income. My personal intention is to ensure that most of my 'disposable' income ends up not being disposed of...

Is Government Intervention to be welcomed?

Let's be quite straight here, the Western Economy is built on a free market which is supposed to rise and fall based on supply and demand and the many other factors that may effect a free market. Intervention is a dirty word and goes completely against the philosophy of a free market, whether it be intervention from influential capitalists or from Government, this type of activity is not conducive to a free market and can only have a disastrous effect.

During the current credit crunch, both the US and UK Governments have sought to put policies in place to shore up the economy to fight the relentless tide that is a natural 'market low' resulting from the over-inflating of the market caused by the sub-prime mortgage problems.

When you build a dam to stop an inevitable tide, what happens? When the tide eventually breaks through the problem is far worse than if you had allowed gradual ingress and fought the problem where it would have naturally occurred.

So why do politicians try to intervene? Simply because they are on a four or five year term and they don't want the credit crunch to happen on their term of office. If they can stave it off until after the next election it maybe somebody else's problem - this is the worst side-effect of our ailing democratic system.

So what about Northern Rock, Fannie Mae and Freddy Mac? Trying to keep these institutions afloat is going to cost taxpayers a fortune, and for what? So that politicians can say they did something...but the truth is that if these financial institutions need to go to the wall as dictated by the free market, then that is exactly what should happen and the credit crunch would be over that much faster. Shoring up these crippled companies only prolongs the agony for the rest of us. I don't want to seem unsympathetic, but these companies basically bought bad debts thinking they were good debts. Instead of being bailed out by the taxpayer, they should now face up to their mistakes otherwise where does this intervention stop??

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Is this the new Great Depression?
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The Multiplier

Credit cards - where did it all go wrong?

For some time, it has been becoming evident that since the advent of freely available credit, the pendulum has been gradually swinging over to the point where we are basically spending more than we earn. This is illustrated by a number of TV programs that deal with personal debt (Pioneered by Alvin Hall a number of years ago). Naturally, the TV programs dealt with the worse case scenarios but the dangers of spending more than you earn applies to everyone and is a trap that anyone can fall into.
Credit cards have enabled us to spend money that we don't have and put off paying for these purchases almost indefinitely whilst building up massive interest costs without even noticing. In the short term this can provide a massive boost to the economy, but only by 'borrowing' future expenditure.

Let's take a 'micro- economic' example to illustrate what happens on a much larger scale:
You want a new HDTV which will cost $5000, you have $200 in your bank account and a credit card in your pocket. In the days before credit cards, you would have needed to arrange an overdraft or loan with your bank. You don't really want to have to justify purchasing the latest TV to your bank manager so you see sense and start saving up for it....
In the days of freely available credit, you just take the plastic card out of your pocket and the new TV is yours... The money that pays for the TV will be be earned over the next year or so, you have 'borrowed' future earnings to pay for a current purchase. However, having this easy means of credit can cause you to spend the next twenty years 'pocket money' in a year and then want to do exactly the same thing again - this is the trap, and we have no-one to blame but ourselves. In macro-economic terms, the knock-on effect of you spending your future income now generates short-term wealth all around you - the salesman gets his bonus, the retailer makes profit and spends elsewhere generating a knock-on effect time and time again (For those who have studied economics, this is the 'multiplier' effect and is a major contributor to our Western economy) - some of this knock-on effect could even end up back in your own pocket...
If you can't already see where this apparently ideal solution to not saving up for stuff is flawed, then let me spell it out: You can only spend your future income when you curb your future spending to account for it.

Related posts:
the decline of my debt
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