TractorByNet.com - View Single Post

2manyrocks · 01-15-2009, 08:16 PM

Merchant cards are limited to the merchant issuing the card so they are not as flexible a source of borrowing as a card that you can use about anywhere. Plus the merchants may not have as high a credit standard for issuing them as say, an American Express card.

Having several cards with large limits could be a source of possible concern because the person does have the ability to borrow against them all. It is a potential credit risk. It is not necessarily good either in the sense that if a person has the capacity to pay back $100,000 of credit and $30,000 is already available in the form of credit cards, to me this means this leaves $70,000 of credit that could be used for a house or other long term purposes.

People who have loans that are contractually tied to specific indexes may see their rates dropping because of the general decline in rates. You'd have to read your credit card terms, but they apparently reserve the right to increase your rate if you miss a payment. So even if rates are generally dropping, you could get into a posture with a credit card company jumping your rate just because they can --and you not being able to get out from under it unless you can pay it off.

Excessive credit card debt usually is the straw that pushes people into bankruptcy. They get in a posture where the outstanding balance keeps growing and they have no way of paying enough on it to get out from under it.

01-15-2009, 08:16 PM	#20 (permalink)
2manyrocks Veteran Member Join Date: Jul 2007 Posts: 1,516	Re: Interest Rates/Refinance Merchant cards are limited to the merchant issuing the card so they are not as flexible a source of borrowing as a card that you can use about anywhere. Plus the merchants may not have as high a credit standard for issuing them as say, an American Express card. Having several cards with large limits could be a source of possible concern because the person does have the ability to borrow against them all. It is a potential credit risk. It is not necessarily good either in the sense that if a person has the capacity to pay back $100,000 of credit and $30,000 is already available in the form of credit cards, to me this means this leaves $70,000 of credit that could be used for a house or other long term purposes. People who have loans that are contractually tied to specific indexes may see their rates dropping because of the general decline in rates. You'd have to read your credit card terms, but they apparently reserve the right to increase your rate if you miss a payment. So even if rates are generally dropping, you could get into a posture with a credit card company jumping your rate just because they can --and you not being able to get out from under it unless you can pay it off. Excessive credit card debt usually is the straw that pushes people into bankruptcy. They get in a posture where the outstanding balance keeps growing and they have no way of paying enough on it to get out from under it.