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When Your Friends Decide Your Credit Score

When my kids turned 16, they got three things: a driver’s license, a (used) car, and a credit card. They needed the license to drive, needed the car so that I didn’t have to let them drive mine, and the credit card was pure convenience. By using the card, they could buy gas without getting money from me, make small purchases we’d discussed ahead of time, have a method of payment in case of an emergency, and one more thing: They could start building credit. If you don’t have a credit history, your FICO score starts out quite low, which […]

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The Equifax Hack Is The Most Disastrous Data Breach In History Because Now Hackers Have The Credit Information Of 143 Million Americans

Talk about a nightmare.  It is being reported that criminals were able to hack into Equifax and make off with the credit information of 143 million Americans.  We are talking about names, Social Security numbers, dates of birth, home addresses and even driver’s license numbers.  If this data breach was an earthquake, we would be talking about a magnitude-10.0 on the identity theft scale.  We have never seen anything like this before, and to say that this will be “disastrous” for the credit industry would be a massive understatement. What really disturbed me about this story is that this hack […]

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Credit Card Nation: Why The Facebook Killer And The U.S. Congress Have A Great Deal In Common

Most Americans have seemingly convinced themselves that as a society we will never pay a great price for going into so much debt and that we will never pay a great price for the horrendous crimes against humanity that we are committing on a daily basis.  If you don’t understand what I am talking about, just keep reading the rest of this article.  Just as there are consequences for our actions individually, so there are also consequences for our actions as a society.  And although our national day of reckoning has been put off for quite some time, when it […]

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Tis The Season For Credit Card Debt: This Christmas Americans Will Spend An Average Of 422 Dollars Per Child

For many Americans, the quality of Christmas is determined by the quality of the presents.  This is especially true for our children, and some of them literally spend months anticipating their haul on Christmas morning.  I know that when I was growing up Christmas was all about the presents.  Yes, adults would give lip service to the other elements of Christmas, but all of the other holiday activities could have faded away and it still would have been Christmas as long as presents were under that tree on the morning of December 25th.  Perhaps things are different in your family, […]

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Credit Card Companies Specifically Target Less Educated And Less Sophisticated Americans

The big credit card companies don’t make much money off of those that pay their bills on time, and so they often specifically target less educated and less sophisticated consumers that don’t really understand the dangers of credit card debt.  The goal is to find people that will carry credit card balances from month to month, because that is where the real money can be made.  The average U.S. household that carries balances from month to month has approximately $ 15,310 in credit card debt right now.  At an average interest rate of about 15 percent, the profits pile up […]

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Another Tax Credit, at Taxpayers’ Expense

This year, tax day arrives soon after Tesla Motors unveiled the affordable Model 3. Well, maybe affordable isn’t the right word. With a base price of $ 35,000, it’s more expensive than the entry level Mercedes, but it’s also less than half the cost of the vaunted Tesla Model S, which starts at $ 76,000. The reason I bring up Tesla near tax day is because every U.S. Tesla buyer can claim a $ 7,500 tax credit, which will cut the cost of the new Model 3 by more than 20%. That’s a deal, but it might not be around by […]

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Credit Card Debt In The United States Is Approaching A Trillion Dollars

For the first time ever, total credit card debt in the United States is approaching a trillion dollars.  Instead of learning painful lessons from the last recession, Americans continue to make the same horrendous financial mistakes over and over again.  In fact, U.S. consumers accumulated more new credit card debt during the 4th quarter of 2015 than they did during the years of 2009, 2010 and 2011 combined.  That is absolutely insanity, because other than payday loans, credit card debt is just about the worst kind of debt that consumers could possibly go into.  Extremely high rates of interest, combined […]

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A countercyclical credit bubble?

Over at VoxEU, Philippe Bachetta and Ouarda Merrouche have a surprising take on “countercyclical” lending. They show that lending by US and European banks in US dollars to European non-financial corporates massively increased from 2007-2009, and that this helped to soften the effect of the European credit crunch on employment: Over the period 2004 to 2009, we find that foreign credit denominated in dollar to non-financial corporates is countercyclical – it increased sharply (relative to domestic credit) in response to the sudden tightening of credit policies at domestic banks (Figure 1) Here is their Figure 1 chart showing the growth […]

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