Poll: Are current credit card charges debt?

[Mulligan]

Also one could argue if I walk into a store and pick up an item, I'm in debt until I put it back or pay for it, no matter how.



Yes, credit card charges are technically debt, but as I'm one of those who pay off cards each month and actually get some money back, I would never say I'm in debt just from that. Too much splitting angel hairs or whatever...

You reminded me... I need to lower my debt to asset ratio a few micro blips. I have a $1000 cash back bucks accrued on my monthly expenditure CC I pay off each month.

 

[panacea]

Technically yes, but in practice "no" if paid in full each month with no carrying/finance charges. If it is debt, to me everyone would have debt. Example, my monthly electric and water bills are based on usage playable only "after" I use it. Is that debt? Technically yes, but not really for practical purposes.

+1
I voted yes because it is indisputable debt. But practically speaking we don't carry a balance and always have enough cash on hand to offset the next balance due. Therefore I leave it off my net worth statement... even though it should be reflected if prepared properly.

 

[braumeister]

True. As Danmar posted in another thread, it is getting a bit silly. It's still fun, though, and one of those opportunities to not take ourselves too seriously while we fervently disagree.

I think it's entertaining as hell.
We have some world class hair splitters on this site and I'm always intrigued to see what they come up with.

Technically, everyone here is constantly "in debt" because by the time you get your utility bills, you have already used some of the current month's total and you owe them for it.

In my view, there is no difference between that and the CC bill I pay every month. So I cheerfully maintain that I have no debt.

Those who disagree with me are simply wrong. Some of them are also evil, ugly, foul-smelling, and cruel to animals and small children.

OTOH, those who agree with me are not only correct, but some of them are kind, attractive, pleasant company, and great humanitarians.

My problem lies in my utter inability to determine the intersection points of those sets and subsets. We are so lucky to have the anonymity factor going for us on forums like this!

 

[Helena]

.

I use a cc for most of my monthly purchases for the cash rewards benefit. Then I pay the cc off every month so there is no interest charge or fees.

Actually, the cc company is paying me to use their cc.

So no, I don't consider a cc balance as debt unless you carry it over month to month and incur interest charges.

 

[Texas Proud]

OK.... let's look at it from the other side....

If you write a check to someone, do you still have the money They have not yet cashed that check... so it is still in your account...

If you said yes, then what if you had just bought a new car with cash and it was a $30K check Do you still claim to have the money?

I would hate to be the one who looked at a checking account and did not consider any checks written against that account when deciding if you can write another....



OR, say someone gave you a check to pay you for something... do you now think you have more money I would think you would.... but if CC debt is not debt then having a check in your hand is not having more money...

 

[COcheesehead]

We need a splitting hair emoji for this thread.

No sh_t! It's a debt. Short term, but still a debt.

 

[Helena]

.

I never understood why Dave Ramsey hated cc even for the financially astute.

He advocated debit cards even though a debit card is potentially much more dangerous than a credit card.

.

 

[ShokWaveRider]

I have not missed a CC payment way before the due date in 10 or 20 years, or at least as long as I can remember. So no it is not debt. For all you hair splitters and nit pickers, think what you like. If you carry it over or past the due date, and /or you do not have the cash in hand to settle it, then it becomes debt for my accounting purposes.

 

[Meadbh]

You are all so societally conditioned to being in debt that you don't even recognize it when you see it. Most of you, anyhow.

 

[ShokWaveRider]

You are all so societally conditioned to being in debt that you don't even recognize it when you see it. Most of you, anyhow.

I would say this may partly / loosely accurate for folk in general, but the financially astute community, that most folk here are, it is not.

 

[Walt34]

I would hate to be the one who looked at a checking account and did not consider any checks written against that account when deciding if you can write another....

When I worked in the Fraud Section those people were my bread and butter.

One of them actually said to me "How can I be out of money? I still have checks!" And these people are allowed to have children....

 

[ShokWaveRider]

When I worked in the Fraud Section those people were my bread and butter.

One of them actually said to me "How can I be out of money? I still have checks!" And these people are allowed to have children....

.... and vote!

 

[W2R]

We need a splitting hair emoji for this thread.

Here's another hair to split. Be patient with me because I am a credit card newbie!

I figured that since my credit card bill was paid in full by automatic bank deduction on the 15th, and since I hadn't charged anything since that date, I most definitely had no debt!

BUT - - it just occurred to me that what the credit card company paid itself from my bank account on the 15th didn't include everything up to that very date; it is a month behind, because that's how they do it, and stuff that I charged shortly before September 15th will be paid on October 15th.

So, even though it is automatically paid in full, I would still have debt unless I had charged nothing since August 15th.

If that's not splitting hairs, I don't know what it is but there you go.

 

[Nemo2]

If your doctor tells you you have a month to live....are you dead now, or when the month's grace period is up?

 

[Meadbh]

If your doctor tells you you have a month to live....are you dead now, or when the month's grace period is up?

Statistics show that your doctor is probably wrong. So go ahead and get working on the bucket list.

 

[ziggy29]

Yes *and* no. Yes it is debt strictly speaking. But when used responsibly by someone who has the means AND discipline to pay it off in full each month, it isn't toxic, wealth-destroying debt.

That said, I (and I suspect many here) know how much they are charging and at least mentally considering that money already spent. In other words, if I had $4,000 in checking and I charged $800 so far in the month, I think of myself as having $3,200 available in checking.

 

[Meadbh]

Yes *and* no. Yes it is debt strictly speaking. But when used responsibly by someone who has the means AND discipline to pay it off in full each month, it isn't toxic, wealth-destroying debt.

I'm glad you agree that it is debt, strictly speaking. In accounting, strictly speaking is the way to go. No judgments on good or evil are required.

 

[REWahoo]

No judgments on good or evil are required.

Unlike this thread.

 

[Ronnieboy]

I guess what this thread has boiled down to, is it depends on how the person reports it

Personally I don't consider my impending credit card payment debt as I don't count my current checking account balance in my net worth, as it pays the current household bills (including CC bill). So it is a wash, now my Crapcast bill is paid ahead so I guess they owe me money. Even if it is my own

 

[ziggy29]

I'm glad you agree that it is debt, strictly speaking. In accounting, strictly speaking is the way to go. No judgments on good or evil are required.

True. But personal finance, with the possible exception of tax preparation, doesn't require strict accounting or GAAP. If it were an accounting, yes, any debt, even that which is paid off in full each month and accuring no ancillary interest charges, is a liability on the balance sheet.

 

[Helena]

.

Am I in debt to a store between the time I put the items in my basket in the aisles and the check-out register ??

I consider my cc statement the final check-out register.

 

[Meadbh]

True. But personal finance, with the possible exception of tax preparation, doesn't require strict accounting or GAAP. If it were an accounting, yes, any debt, even that which is paid off in full each month and accuring no ancillary interest charges, is a liability on the balance sheet.

Let's say you go grocery shopping on Friday and and spend $200 on food for a party on Saturday night. By Sunday morning the groceries have been consumed. Are you liable for paying the grocery store bill? Do you owe the grocer money? Are you in debt to the grocer? You betcha!

 

[Ronstar]

We all may be right to a certain degree. This what I remember from my working days. There are two accounting types - accrual basis and cash basis. Most businesses are accrual basis, one that recognizes expenses at the time of purchase. So any expenses not paid at the time of purchase are liabilities until they are paid.

Cash basis recognizes expenses at the time of payment. So I can see where one can consider credit card balances as not being debt if the total balance is paid by the due date.


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[REWahoo]

We all may be right to a certain degree. This what I remember from my working days. There are two accounting types - accrual basis and cash basis. Most businesses are accrual basis, one that recognizes expenses at the time of purchase. So any expenses not paid at the time of purchase are liabilities until they are paid.

Cash basis recognizes expenses at the time of payment. So I can see where one can consider credit card balances as not being debt if the total balance is paid by the due date.

Yep, give the man a cigar (just be sure you don't charge it!).

The main difference between accrual and cash basis accounting is the timing of when revenue and expenses are recognized. The cash method is most used by small businesses and for personal finances. The cash method accounts for revenue only when the money is received and for expenses only when the money is paid out.

How does accrual accounting differ from cash basis accounting? | Investopedia

 

[socca]

If I entered each credit card charge immediately into QuickBooks and then generated a personal balance sheet, the accumulated unpaid credit card balance would reduce net worth and appear as an unsecured debt. However, since I don't do this and pay off the card each month, I never generate a statement where credit card charges appear as a 'debt'.