Deadbeats are generally considered to be worthless. Your neighbor who never returned those hedge-trimmers he borrowed from you two summers ago. That mom who drops her kids off for “sleepovers” when all she really wants is a free babysitter. Your own son who missed mowing the lawn for the third Saturday in a row. All deadbeats.
Strangely enough, if you are an outstanding credit card customer that is rarely subjected to interest charges or late fees due to loyal payments made in full on time each month, the credit card companies think you a worthless deadbeat. How can that be?! Aren’t you one of their best customers? Not really. Their best customers regularly pay interest and fees in addition to their normal credit card usage.
Imagine two people named Deadbeat and Revolver. They both go to the store and purchase a $5000 television. When their monthly statements arrive, Deadbeat transfers $5000 from his bank account immediately and returns to his new home theater to relax. Revolver dutifully sends in an $80 check for the “minimum payment,” congratulates himself for being so responsible, and is soon back in front of his own home theater.
Their creditor grumbles about Deadbeat’s payment. He didn’t make any money again! If the only customers he ever had were all like Deadbeat, he’d be out of a job! Luckily, people like Revolver are there to increase his bottom line. By allowing $4920 to “revolve” over to the next month, Revolver is now subject to $103 of interest. Revolver went from $5000 to $5023 and he paid $80 for the privilege!
If Revolver misfires next month and forgets to pay his bill on time, the creditor strikes gold. That’ll be a $39 late fee and another $105 in interest. Revolver is now up to $5158 and won’t be getting anywhere but further in debt if he continues to pay the minimum monthly amount.
Be a deadbeat. Live within your means and pay your credit card bill on time every month, month after month, forever. Sure, the credit card companies won’t like you – but you and your credit score will.
He served as a Senator for the Graduate and Professional Student Federation, fighting to keep tuition costs down for graduate students struggling with their finances and student loans. He also developed his budgeting skills during his time as a Treasurer for the Graduate Romance Association. He enjoyed becoming more active in his local community and working to make a positive effect on his surroundings.
While an undergraduate himself, he spent a year abroad in Europe earning his degree in Spanish and French. While studying in both Sevilla, Spain, and Montpellier, France, he was exposed to the everyday reality of living under different economic and financial systems. Among other interesting travels he has made is a financial pilgrimage to the Spanish stock market in Madrid.
Stewart Pelto brings his rigorous academic education and his international experience to the problem of raising credit awareness and promoting financial responsibility. He hopes that his articles will teach his readers about debt and credit in an easily accessible and readily understandable way.
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