Poll: Are current credit card charges debt?

[Mulligan]

Quote:

Originally Posted by Car-Guy 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.

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.

[enginerd]

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.

[Texas Proud]

Quote:

Originally Posted by Meadbh Thank you rodi. Finally someone who gets it!

Hmmm.. I think I got it before his post... and I posted before rodi...



(just having some fun).....

[Texas Proud]

Decided to go to investopedia to take a look... seems even they are split... so TECHNICALLY it is debt... but it is NOT debt...

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....

[MichaelB]

Quote:

Originally Posted by Mulligan Michael, you better take it down a notch or an academic nerd fest food fight is going to break out soon.

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.

[calmloki]

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.

[Mulligan]

Quote:

Originally Posted by Texas Proud Hmmm.. I think I got it before his post... and I posted before rodi... (just having some fun).....

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.

[Alan]

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)

[frayne]

We need a splitting hair emoji for this thread.

[niven]

Quote:

Originally Posted by Markola 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.

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...

[Mulligan]

Quote:

Originally Posted by niven 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]

Quote:

Originally Posted by Car-Guy 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]

Quote:

Originally Posted by MichaelB 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]

Quote:

Originally Posted by frayne 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]

Quote:

Originally Posted by 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.

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.