Poll: Are current credit card charges debt?

Are credit card charges the same as debt

  • Yes, current credit card charges are the same as debt

    Votes: 67 41.4%

  • No, current credit card charges are not the same

    Votes: 88 54.3%

  • Another poll? Really? Too busy to answer

    Votes: 7 4.3%
  • Total voters
    162
rodi said:
I think the polls talked about "investable assets" rather than net worth...
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Do you then include future stock dividends, payable within a year by the companies with whom you hold shares, as part of your net worth?

(How many credit card holders can dance on the head of a pin?)
 
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Meadbh said:
Actually, the lowest level answer was:

I have no debt whatsoever, not even a credit card bill.
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I think you know what I meant. I'm talking about someone with an unpaid CC balance, no matter how inconsequential relative to total assets... the lowest level answer was in fact "<10%." Given the number of respondents/commenters whose only "debt" was small CC balances paid in full monthly, that poll choice was too broad.
 
If a "not yet due" credit card balance is not yet an obligation, how can it be considered debt? If I charge an item and transfer the cash to my payment account, and the credit card company has not yet billed it and chooses to delay withdrawing the funds, this is a liability but not a debt. It becomes debt once it is billed.

If we want to get technical and look at corporate finance, it would probably be considered an "accrued expense", but might be "accounts payable" or "trade and other payables".
 
Yes, All credit card charges are debt from the time that they are charged on the credit card to the date that they are paid. Credit card expenditures are considered current liabilities for business accounting purposes. Same for individuals. If not, then the business schools have been teaching this wrong for decades.
 
I mean, if we want to count the angels on a pinhead, writing a check is a form of debt, too. So is using fiat currency itself, really, so how far do we want to take this? If I pay off my CCs before I have to pay interest and I get some travel points to boot, it's a loan but one they pay me a little to take and I'm happy.
 
MichaelB said:
It seems to be an unsettled question over at this poll, so I thought it might make a reasonable new poll question.

So, if you pay your credit card balance each month in full, is the current, not yet paid and not yet due balance considered debt?
Click to expand...
Well I'm glad this new poll settled that question.
 
It doesn't matter because my net worth calculation includes all my outstanding credit card balances that I pay off in full. It's just cash flow to me. I have other bills I owe and get charged after the fact. 30 days is a pretty normal period of elasticity as far as paying due bills is concerned,
 
If the credit credit is paid off in full each month, there is no debt, at least in my way of thinking.
 
Danmar said:
It is technically debt of course. But if you pay it off every month, it's more like a payment mechanism. If significant and you are calculating your net worth, you should include. Having said that, I certainly consider myself debt free because this is my only debt and I always have the cash to pay it in full. Having a few thousand dollars in current CC charges that will be paid by the due date, does not (in my view) mean you are "in debt". If you were nobody would ever be debt free. Must be a slow day?
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My view exactly... Only a credit company pulling your file on a date you had money on the CC that day would view it differently. I know its a slow day for me... Im posting while struggling to watch my Ravens season over bet play out against boring Jaguars...
 
MichaelB said:
If a "not yet due" credit card balance is not yet an obligation, how can it be considered debt? If I charge an item and transfer the cash to my payment account, and the credit card company has not yet billed it and chooses to delay withdrawing the funds, this is a liability but not a debt. It becomes debt once it is billed.

If we want to get technical and look at corporate finance, it would probably be considered an "accrued expense", but might be "accounts payable" or "trade and other payables".
Click to expand...



Michael, you better take it down a notch or an academic nerd fest food fight is going to break out soon. :)
 
Mulligan said:
I know its a slow day for me... Im posting while struggling to watch my Ravens season over bet play out against boring Jaguars...
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Slow day for me too since I have no bets on any of today's games. Made my weekly "donation" Thursday night. But to try and stay on topic of this thread, I still have no debt since the "cash" (no credit cards accepted) was paid to the pot before the game.
 
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Car-Guy said:
Slow day for me too since I have no bets on any of today's games. Made my weekly "donation" Thursday night. But to try and stay on topic of this thread, I still have no debt since the "cash" (no credit cards accepted) was paid to the pot before the game.
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Great! I can do the same...I am going to Vegas next weekend to lay my NHL season total bets. Just took out an additional 5k on my 2% access checks to make sure I have plenty of money to "invest". I stole from my betting kitty a few months ago to buy some preferreds on sale. Dont want anymore short term cap gain taxes so Chase is going to help me out here.
 
Even if you pay your credit cards in full before your payment is due, your credit report will still show you have debt. The only way for your credit report to show you have no debt is to pay off your balance in full the day before your billing cycle ends. That way your bill will show a zero balance.

So, I vote that if your credit report shows you have no debt, then I will agree with you that you have no debt.

However, I think the way some people are arguing, "the moment you swipe a card, you owe a debt" then you would also have to all your bills as debt as well. The moment you turn on that light switch you owe the electric company, the moment you own a house (even if paid off) you owe real estate taxes, etc. Unless you are prepaying for all those services, then no one could could ever be debt free by some of your definitions.
 
Decided to go to investopedia to take a look... seems even they are split... so TECHNICALLY it is debt... but it is NOT debt... :facepalm:



DEFINITION of 'Credit Card Debt'

A type of unsecured liability which is incurred through a short-term revolving loan facility. While, technically, all purchases made by credit card create a debt to the user, these debts typically do not incur interest until the grace period has expired. Thus, credit card users who pay off their balance each month are generally not considered to have credit card debt. Rather, the term applies to users who continue to carry a balance on their credit cards after the grace period has expired and the debt begins to bear interest.







​
But... it still is a debt no matter what people say...



In accounting, you put down debts on the books when they occur and are known... not when you get a bill... however, there is leeway for materiality.... so, if your bill is small etc.... then you can ignore it.... however, if it is bid (like mine right now), you should not....
 
Mulligan said:
Michael, you better take it down a notch or an academic nerd fest food fight is going to break out soon. :)
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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. :)

What really matters is being financially consistent. If this is not considered debt, then the funds to pay should not be considered assets or even cash.

FWIW, Fair Isaac (now FICO) does consider the "not yet due" balance as credit card debt. A high ratio of "unpaid balance to total credit limit" is one reason for a lower credit score even when the entire bill is paid when due.
 
Maybe it's my Eeyore personality, but if I haven't paid for something I haven't bought it. Cash is pretty presumptive, my good check is ok, but a credit card swipe? I've just indicated I'll pay at some point. Quicken and I have a daily relationship; and when I look at the 21 different card accounts 8 of them have red dollar numbers, the others say $0. All of them are paid as requested and we don't pay interest - but red still indicates debt and I normally have charges after the card cut off dates.

On the other hand, on the loans payable to us I just show the principal due, not the daily interest that accrues - that's just that understating Eeyore personality glimmering through.
 
Texas Proud said:
Hmmm.. I think I got it before his post... and I posted before rodi...



(just having some fun).....
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Speaking of having fun....Who would trust accountants anyways?.... While I was taking a graduate accounting course, instructor shows 2 income statements with one making a million dollars and the other showing a million dollar loss. He asked us which company we would rather be the CEO. Of course all us idiots chose the profitable one....He tricked us, it was the exact same company! Its all how the accountant (with pressure from CEO probably) chose to use his pencil. Both methods were GAAP acceptable.
 
A few months ago our son finally got a rewards credit card instead of paying everything with his debit card or automatic charges to his bank account. Last week he was telling me that he hasn't yet become accustomed to having outstanding debt and being sure he has enough in his checking account to cover it at month end.

I pointed out to him that he can make as many payments as he likes during the month so he can maintain zero debt and still get his cash back reward for using his card. (I consider CC balances at any time to be debt obligations)
 
Markola said:
I mean, if we want to count the angels on a pinhead, writing a check is a form of debt, too. So is using fiat currency itself, really, so how far do we want to take this? If I pay off my CCs before I have to pay interest and I get some travel points to boot, it's a loan but one they pay me a little to take and I'm happy.
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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... :LOL:
 
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