maybe higher interest rates are good..

**itlw8** · 03-11-2009, 02:22 PM

don't shoot me

but in 76 when we got married we only had a Sears card. We thought long and hard before we charged the new washer and dryer . In fact we bought a used set for $50 until we saved 1/2 of the cost and then sold it and charged only 1/2 we paid it off in 3 months.

We bought a starter home in 83 for 32.000 and are still in it... ( we are paying for the addition now unfortunately)

The point is when rates were high people did not have so much debt. When rates are 5% it is easy to say it is only a few dollars I can pay it off fast.

Yes it is true I am not in a panic because I do not have tons of debt left thanks to everyone here but maybe it will help people to NOT charge in the first place??

**Greebo** · 03-11-2009, 03:06 PM

Originally Posted by itlw8

The point is when rates were high people did not have so much debt. When rates are 5% it is easy to say it is only a few dollars I can pay it off fast.

What kind of rates?

Mortgage rates?
Prime rates?
CC rates?

I don't think there's a correlation:

Household (non mortgage) debt has increased at a steadily increasing rate since 1950, while the prime rate (aka short term interest rate) has been all over the map.

**Momto2Boyz** · 03-12-2009, 09:54 AM

Dh was just talking to a group of guys at work yesterday, who all got hit with the rising interest rates on their credit cards. The majority of them are just going to pay them off this month. I think the CC's shot themselves in the foot on this one. Those who were carrying balances, just becuase they didn't want to pay it off with their savings are now going to be dipping in and paying off the cards, and they are going to lose even more customers that way!

**mommy4ever** · 03-12-2009, 10:05 AM

We got rising rates notices too, despite never having made a late payment. Whatever, we're closing them this month!

**itlw8** · 03-13-2009, 10:47 AM

Originally Posted by Greebo

What kind of rates?

Mortgage rates?
Prime rates?
CC rates?

I don't think there's a correlation:

Household (non mortgage) debt has increased at a steadily increasing rate since 1950, while the prime rate (aka short term interest rate) has been all over the map.

WEll looking at those charts it is not related I do see we bought our house at the peak of mortage rates. That reminds me why we refinanced several times.

but spending keeps going up no matter what didn't it... So We all just got greedy????

Looking at that chart explains why we are in so much trouble as a country.

**fixer** · 03-13-2009, 11:11 AM

There has been much said about the Federal reserves policy of low interest rates and the effect on the housing bubble. Lower prices promote consumption. I think Fed Chief Greenspan's policy of reducing interest rates to spur economic growth certainly lead to more borrowing. We went through a period in which money was essentially on sale. The belief was as long as inflation was kept in check, we had no problem. When the cost of money approaches zero, more will be borrowed.

**Greebo** · 03-13-2009, 12:09 PM

Fixer: Greenspan disagrees:
http://online.wsj.com/article/SB123672965066989281.html ("It wasn't my fault")

**fixer** · 03-13-2009, 12:32 PM

Originally Posted by Greebo

Fixer: Greenspan disagrees:
http://online.wsj.com/article/SB123672965066989281.html ("It wasn't my fault")

I read the article when it originally appeared. The fact he felt the need to defend his record appeared that he was concerned about his legacy. It will always come down to opinion and the school of economic you subscribe to. I think he was fooled into thinking he could stimulate the economy with cheap money without worrying about anything other than inflation.

**Nishu** · 03-18-2009, 01:14 PM

Originally Posted by Momto2Boyz

Dh was just talking to a group of guys at work yesterday, who all got hit with the rising interest rates on their credit cards. The majority of them are just going to pay them off this month. I think the CC's shot themselves in the foot on this one. Those who were carrying balances, just becuase they didn't want to pay it off with their savings are now going to be dipping in and paying off the cards, and they are going to lose even more customers that way!

According to what I've read- most of the cc's profits are made on the people that can't pay it off every month. They may be losing costumers but the high value ones wills till be there.