Is a "Line of Credit" a good or bad idea?

[Bud_Fox]

I was at the bank the other day and one of the employees suggested I sign up for a "Line of Credit". I'm not sure if I should or not?

Are they a good idea or a bad idea? I already have a credit card.

I read that you only pay interest on the amount you borrow and that you can pay back just the interest month by month.

Does it hurt your credit rating when you only back back the interest?

Thanks

 

[Francisco d'Anconia]

You should check with your bank on that interest only thing. Paying back the interest only can be a bad thing with credit cards because the rate can fluctuate under normal circumstances. Although, having available credit isn't necessarily bad depending on your income; moreso your perceived ability to pay it back if you use it.

 

[meitenesrigas]

Personal debt is evil. The American economy is in big trouble because of it. Just wait...Subprime crisis now and later this year it will be a credit card crisis. This the reason why a huge percentage of my wealth is in Gold and Commodities. Definitely not in American dollars or even Euros.

BTW, tell those idiot bank employees to go f--- themselves. Seriously, they were the same scoundrels that helped to create the whole mortgage crisis in America. It is so scary how gullible the public is.

 

[RedPill]

The phraseology coined by the debt industry is brilliant in that society has adopted it.

You don't own a house when you buy a house, you own it when you've fully paid for it.

Likewise, it's not a line of credit, it's a line of debt.

Debt as capital is one thing, but unless you're using it for building a business entity which produces projectable inflow, there's no valid fiscal reason to borrow beyond what you have.

If the fine folks at Capital One were being real with you they'd amend their tag lines to read:

Live richly. Be poorly.​

What's not in your wallet?​

 

[Francisco d'Anconia]

..BTW, tell those idiot bank employees to go f--- themselves. Seriously, they were the same scoundrels that helped to create the whole mortgage crisis in America. It is so scary how gullible the public is.

Don't blame the finance industry. They didn't force those gullible people to buy the wrong type of mortgages. "Let the buyer beware."

 

[Nighthawk]

I am getting out of debt tomorrow, after running up a credit card and bank loan a few years ago. Don't get in debt, it sucks.

 

[comic_relief]

I am getting out of debt tomorrow, after running up a credit card and bank loan a few years ago. Don't get in debt, it sucks.

This is the epitome of my belief (my family taught it to me).

Plus, I hate having phone calls every week saying, "When are you going to pay us the money that you owe?" Brother had that problem.

comic_relief

 

[Francisco d'Anconia]

I think the trick is to only buying what you can afford. It makes things a lot easier.

 

[STR8UP]

You don't own a house when you buy a house, you own it when you've fully paid for it.

Actually you NEVER own real estate. Try stiffing Uncle Sam on your propertiy taxes and you'll see

 

[Francisco d'Anconia]

Actually you NEVER own real estate. Try stiffing Uncle Sam on your propertiy taxes and you'll see

Call it the cost of ownership...

 

[STR8UP]

It's my theory that you can't actually own something that someone else can take away from you legally. The government has MUCH more control over your property than the bank does, and the bank only has interest as long as there's a note.

That isn't necessarily a BAD thing, it just means that there is a difference between ownership and CONTROL. And most of the time it doesn't actually matter if you own it or not, if you can control it and benefit from it that's all that matters.

 

[Francisco d'Anconia]

It's my theory that you can't actually own something that someone else can take away from you legally. The government has MUCH more control over your property than the bank does, and the bank only has interest as long as there's a note.

That isn't necessarily a BAD thing, it just means that there is a difference between ownership and CONTROL. And most of the time it doesn't actually matter if you own it or not, if you can control it and benefit from it that's all that matters.

Yeah, but what are the chances of eminent domain happening to a person? The benefits of buying real estate definitely outweighs the chance of that happening.

 

[Bonhomme]

A line of credit is only as good or bad as its purpose. Could be good to have as a "safety valve" against an unexpected expense, such as an auto breakdown, or to use for business purposes. But few people use credit wisely, so take a look at your patterns of behavior before going there.

 

[BigAL]

Check for the index, margin and caps. the index is what the cost of money is being compared to such as 11th dist. cost of funds, LIBOR, prime, etc... the margin is the rate you get as opposed to what the index is paying...and the caps are how high your interest rate can be raised or adjusted...best for you is to find a good reputable mortgage broker to find the right product for your particular needs...and, STAY AWAY FROM BANKS!!! there are disclosure laws the the banks are exempt from and you need that information to make an informed decision.

 

[Gaucho]

This the reason why a huge percentage of my wealth is in Gold and Commodities.

What do you mean exactly? What other commodities?

Actually, gold is very high at the moment and I dont think there is much more room for short-term price growth.

Do you own stocks that produce gold, or gold futures?

I hope your not one of the ignorant sosuave no ideas, who say go out and actually buy gold from your local jewlery store