banks

I chuckle when I hear people talking about how much their bank or credit card cares about them. They might care but they certainly don’t want you to do something stupid like get out of debt.

There is no profit your bank can make off of you when you are not in debt. And the system is designed to not benefit people that live debt free lives. Think about these points:

• Credit Report and Credit Score - Your credit report is less attractive when you don’t have debt. Unless there is current information being reported about how well you handle using credit, there is not much to say about you. If you don’t have current lines of credit you are using your credit score can go down, slowly but surely.
• Banks - Your bank loves you less when you just sit around with a checking account. Your bank is not an institution for you to use to be smart and wise about your personal finances. Banks today are not much more financial products dealerships. They exist to sell you products and services where the larger profit margins are.
• Lenders - Not sure if you’ve ever had the opportunity to notice but many lenders are guilty of increasing the credit limits of people that should not have them. The higher the limits, the deeper the indebtedness to the bank. If the bank can max you out, you’re not going anywhere and will sit there and churn profits over to the bank.

  Lenders will also sell new high priced loan products to people over their head and rush to extend credit again to bankruptcy filers the day after the bankruptcy discharge. That doesn’t seem to be common sense but if you’ve just filed a Chapter 7 bankruptcy you won’t be able to do that again for many years. This time if you get in over your head, you’re stuck.

• Loan Brokers - This group is not interested in your personal financial status, except for you to be able to qualify for the loan. What they care about more is generating loans to generate fees.
• Banking Fees - Your bank wants you to miss due dates and overdraw your account. These non-interest fees account for about 27% of banking revenue and it’s easy money. The bank will authorize your card to exceed your limit and then charge you $35 for doing so. If they really cared about your personal finance health they’d just reject the transaction flat out.
• Credit Counselors - Charitable credit counselors don’t want to see you get out of debt with a debt management plan as much as they hope your just make the monthly payment. Credit counseling groups know that people will be lucky to make it payment 20 out of 60 but in the mean time the credit counseling group will have made the collection fees they charge your creditors for getting payments from you.

  If credit counselors really cared about you getting out of debt they would fight to put together a negotiated plan that fit your circumstances. They don’t. Instead they look down the creditor supplied list that tell the credit counselor what your payment should be and if you can’t make that, then bankruptcy.

• Bankruptcy - The creditor attitude in most cases is “go ahead and file bankruptcy.” The clerk on the end of the phone really doesn’t care what you d. You’re creating work for them and besides, it’s not the clerks money that is owed. The clerk is punching a clock and getting paid to do a job. Besides, the amount of debt that is written off each year in bankruptcy is a tiny drop in the bucket.

So Who Really Wants You to Get Out of Debt

Actually, if you aren’t all that worried to get out of debt, nobody else really wants you t except your kids and those people that love you for who you are and not what you have.

For years banks have lied and hidden the reality of debit cards from you. What I’m about to tell you is going to sound counter-intuitive from everything you’ve been taught and believe. Here it is. Don’t use a debit card. It’s not smart financial management.

By now you’re probably thinking that I’ve lost my mind but before you judge me, do some homework. What you will find is that when using a debit card a thief has easier access to steal your money, there is a greater chance of you having your bank account drained, you have a much higher chance of incurring bank fees and overdraft charges due to point of sale mistakes, and extra money in your account can be placed off limits for days while a merchant releases or processes an authorization for a transaction.

Now, if getting smart about debit cards by reading this site doesn’t make you think, then explain away why the federal consumer protection laws are significantly different between credit and debit cards? A credit card gives you much more consumer protection and safety but the banks never tell you that. Nor does your bank tell you that they make far more on debit card transaction fees than on a credit card transaction.

People say they don’t want to use a credit card because they want to avoid debt. Well just pay the bill off in full each month or come home from shopping and send a payment off to the card. It’s the same result, you are using a financial transaction tool to make the purchase without any residual debt.

When a crook gets your credit card information you don’t have just a few days to spot the problem, the money does not come out of your checking account, you won’t incur overdraft fees from P.O.S. mistake, you’ll have many more legal protections and the credit card company staff will help you fight your battle.

Don’t laugh this off or call me crazy. Research this for yourself and see what you think.