Comments on: Terrible Advice From Suze Orman

By: Michelle

Michelle — Sun, 09 Aug 2009 19:24:14 +0000

You said, ” The problem here is that the more you pay down your credit cards, the more available credit you will have. ”

The problem with that is even if you make all of your credit card payments on time, the credit card company can slash your credit limit so you’ll never see the available credit you were hoping for.

Suze’s advice here isn’t all that loopy. It makes sense to save one to three months expenses as an interim measure, then resume aggressively paying down the credit card.

It makes no sense to save an unrealistic eight months of expenses if you’re hemorrhaging money in the form of 33% credit card interest.

By: Ro S

Ro S — Fri, 01 May 2009 16:25:01 +0000

I think you all need to see the big picture. Many of my credit cards have been reduced to the balance leaving me no room to charge. A few were cancelled on an opt out program. I opted to pay 12.99 percent instead of keeping the card at the new rate of 24.99 percent!!! So Suze is correct. The hell with my creidt cards, keep the cash to pay my car and mortgage – and guess what maybe some bill will be passed that will stop credit card companies from raising rates and then we can get them paid off. If I have a choice of what to pay and what not – my credit cards are going to the bottom of the pile. I would rather save my ride to work and my home then give more money to these credit card companies.

By: Becky

Becky — Thu, 16 Apr 2009 01:37:29 +0000

I agree with her! When you have the choice (while Earth is in economic turmoil) to either pay off your credit card or put money is savings you should put it in savings because it is not uncommon to have your credit limits lowered when a card issuer feels like it. It would be horrible if you used your only/last $10,000 to pay off a credit card and then the next month you find out you lost your job and your credit card limit was lowered to $1,000 and you have nothing else to fall back on. I would rather have $10,000 in my bank acct and have to pay for interest payments on my card(s) but still know I can pay my mortgage a few more months while I try and get a job again.

I know from experience that credit issuers lower credit lines. I pay my balance off each month and my credit lines keep going lower and lower as the months go by.

By: Funny about Money

Funny about Money — Wed, 25 Mar 2009 14:42:24 +0000

@ Eric: Thanks! I thought I was the only person on the planet whose teeth are set on edge by watching Suze Orman on the tube.

On topic: If you think you’re about to be laid off, you really should prioritize building an emergency fund. Better to have some cash to live on than to have to max out credit cards to eat and pay the rent. IMHO the reason has less to do with the fear that the credit-card industry is about to go under or that issuers will close vast swaths of accounts, and more to do with the fact that having cash on hand is crucial if you lose your job. After all: if you have to rack up living expenses on a card, you’re doing it at 20% anyway. In a sense, every dollar you have in savings is 20 cents you won’t have to pay to a credit card company if you’re laid off.

That’s not to say you shouldn’t be paying more than the minimum even as you build an emergency fund, or that you shouldn’t go back to paying off the card full-bore as soon as you reach your emergency fund goal.

By: Money Hacks Carnival—Spring Edition | Money TLD

Money Hacks Carnival—Spring Edition | Money TLD — Wed, 25 Mar 2009 10:50:32 +0000

[...] Credit Card presents Terrible Advice From Suze Orman posted at Ask Mr Credit [...]

By: Eric

Eric — Sat, 21 Mar 2009 02:33:05 +0000

I didn’t seem to interpret her advice as strongly as you did. Basically I think she just wants you to build up some kind of emergency fund even if it means cutting back on your CC payments for the time being. It’s important to have some kind of cash protection in this economic catastrophe right now.

As for her statement about the CC industry pulling back, it definitely doesn’t apply to people like us who have great credit, but you must realize that Suze’s audience are mostly people on the opposite spectrum from us. They’re lower credit people who advice like this applies to more. They usually have zero savings and reduced credit.

Lastly, people hate Suze because of her TV persona. I do too. However, I have to admit that her books are a completely different transformation. Solid advice and I enjoy reading them. Since no one here has seem to read them, I think you’ll gain a better opinion of her if you ever do.

By: Henry

Henry — Fri, 20 Mar 2009 19:43:06 +0000

I also agree, though I would say that it makes sense to maybe lower the amount you pay above your minimum payments – if, say, you’re paying $100 above the balance, which is recommended. As investments are so problematic, having this cash on hand is important. Though you can also have too big of an emergency fund, $ that should be put in other areas. It takes a delicate balance, but paying only the minimum doesn’t really make sense.

By: RAJEEVS TIPS ON SAVING

RAJEEVS TIPS ON SAVING — Fri, 20 Mar 2009 19:22:00 +0000

I agree with you.. any self proclaimed financial expert espousing to pay only minimum balance due on credit card debt must not be taken seriously. Credit card debt is the costliest debt to have in this world..nothing is more expensive.so why would you pay only minimum balance on it… ?? one should look to pay it off ASAP and then save for emergency fund while having his insurance done as pointed out. Suze..you got this one wrong…

By: Kevin B. O'Reilly

Kevin B. O'Reilly — Fri, 20 Mar 2009 03:10:44 +0000

Gotta agree with you on this. I haven’t read any of Orman’s books, but I do watch her show. She’s not usually this loopy.

By: the weakonomist

the weakonomist — Fri, 20 Mar 2009 01:44:41 +0000

You might have taken Suze’s advice a little further than I might have, but you make a very good point. The most fascinating observation though is that this down economy has even the biggest personal finance experts changing their own time-honored advice.