MemberSince99 wrote:I think minimum payments are designed just as a temporary way for you to show you haven't forgotten about the debt, but I don't think any lender wants you to run up the card(s) and then just pay the minimum for the rest of your life.
I've never heard people who pay their balance in full referred to as "deadbeats" - can you give us any examples of that?
First of all if you do that, your credit will be trashed, the lender you screwed will sever ties with you for possibly many years (or maybe for good), your other lenders will be quick to take action to protect themselves and your credit will take a dive. For years. They don't have to accept debt settlement and may simply hire debt collectors to harass and eventually sue you. If you're thinking it's a free ride, nope, there is a price to pay for it. Trust me, take it from a person who spent years hiding out from the debt collectors, that's not a life style I could recommend to anyone, living on pins and needles always wondering if today is the big day you get served papers for a lawsuit.
I think you have some pretty big misconceptions maybe due to being new. I will agree it can be a bit of a "catch-22" to get started but there are ways around that, it's just not necessarily obvious what they are to most people starting out (for example getting a store card which is easier to get, a secured card, being an AU on someone else's card, a credit union, etc). If you were a lender, wouldn't you prefer to give credit to people with high scores and excellent history vs someone who just did a debt settlement for 20k? From their perspective it's all about risk, and trying to minimize it while maximizing reward (profit).
I understand they don't want you to default on your credit but I have heard of tricks that the credit card companies employ to get you or encourage to pay less every month and carry a balance, thus allowing them to make money on interest.
One of them is that if you set up a direct withdrawal of funds from your bank account, some of them will only pull the minimum payment unless you make sure you set it up to pay your balance in full.
To answer your question about "deadbeats" It's from "the Skinny on Credit Cards" by Jim Randel
In that book it also talks about how they lowered the minimum payment from 5% of your balance to 2% to get people to spend more and carry a larger balance or something along those lines.
It also talks about how they like giving credit cards to college students because they have a tendency to rack up debt.