http://www.nodebtplan.net/2008/05/20/credit-card-and-depreciating-assets-dont-mix/#utm_source=rss&utm_medium=rss&utm_campaign=credit-card-and-depreciating-assets-dont-mix A personal finance blog teaching you how to live debt free and use credit wisely. Fri, 10 Feb 2012 15:18:07 +0000 hourly 1 http://wordpress.org/?v=3.3.1 http://www.nodebtplan.net/2008/05/20/credit-card-and-depreciating-assets-dont-mix/#comment-1000 Lo. Price Wed, 04 Jun 2008 07:22:25 +0000 http://www.nodebtplan.net/?p=219#comment-1000 I think this oversimplifies the matter a little. If you really think about it, you break even when you buy on credit and the appreciation rate of the asset is equal to the interest rate you pay minus the cost of inflation (not taking into account transaction costs). Theoretically, if you can buy everything on credit with a lower interest rate than your salary increase, you are coming out ahead, regardless of appreciation or depreciation. The problem of course is that most credit cards charge double-digit interest, and even people who take advantage of short-term lower rates end up paying double-digit rates eventually. My point is that it is hard to argue that simply buying depreciating assets on credit cards is a bad idea (therefore arguing that buying appreciating assets on credit cards is a fine idea). If you want a simple mantra, just don't ever carry a balance on credit cards. I think this oversimplifies the matter a little. If you really think about it, you break even when you buy on credit and the appreciation rate of the asset is equal to the interest rate you pay minus the cost of inflation (not taking into account transaction costs). Theoretically, if you can buy everything on credit with a lower interest rate than your salary increase, you are coming out ahead, regardless of appreciation or depreciation. The problem of course is that most credit cards charge double-digit interest, and even people who take advantage of short-term lower rates end up paying double-digit rates eventually. My point is that it is hard to argue that simply buying depreciating assets on credit cards is a bad idea (therefore arguing that buying appreciating assets on credit cards is a fine idea). If you want a simple mantra, just don’t ever carry a balance on credit cards.

]]> http://www.nodebtplan.net/2008/05/20/credit-card-and-depreciating-assets-dont-mix/#comment-845 jamal Mon, 26 May 2008 07:18:58 +0000 http://www.nodebtplan.net/?p=219#comment-845 ok so according to this most of the stuff we buy on credit cards are depreciating asset. If a majority of the things we buy are depreciating then according to this we shouldnt be using credit cards at all. I dont get it....I guess for me it all about the value of your investment. If i use my plasma tv for 5 years then yes i am willing to take that $300 finance charge hit till i pay it off. However if im using that tv for only 6 months thats a different story. ok so according to this most of the stuff we buy on credit cards are depreciating asset. If a majority of the things we buy are depreciating then according to this we shouldnt be using credit cards at all. I dont get it….I guess for me it all about the value of your investment. If i use my plasma tv for 5 years then yes i am willing to take that $300 finance charge hit till i pay it off. However if im using that tv for only 6 months thats a different story.

]]> http://www.nodebtplan.net/2008/05/20/credit-card-and-depreciating-assets-dont-mix/#comment-796 Wednesday Roundup! | Master Your Card Wed, 21 May 2008 05:27:48 +0000 http://www.nodebtplan.net/?p=219#comment-796 [...] from No Debt Plan outlines the reasons why using your credit card to purchase depreciating assets is a bad [...] [...] from No Debt Plan outlines the reasons why using your credit card to purchase depreciating assets is a bad [...]

]]> http://www.nodebtplan.net/2008/05/20/credit-card-and-depreciating-assets-dont-mix/#comment-788 MyMoneyAdventure Tue, 20 May 2008 17:22:22 +0000 http://www.nodebtplan.net/?p=219#comment-788 The key to financial success is limiting buying liabilities. Some people just don't get this. The key to financial success is limiting buying liabilities. Some people just don’t get this.

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