Cap Urged On Hike In Credit Card Limit

[Dave Hounddriver]

Cap urged on hike in credit card limit(My comment) Here is some good advice that won't be followed. What got me smiling is that the advice is given by a 61 year old American woman, living in Chicago, who feels qualified to tell the Philippines what to do because she is some kind of financial expert in her own country (which is doing SO well, financially) and because: "Orman admitted that she had Filipino housekeepers as they were reliable and trustworthy. But a few of them send all their money to their relatives in the Philippines but do not save for themselves." Anyway, here is the article.MANILA, Philippines - One of the world’s most respected personal finance advisers is urging Philippine banks to put a cap on increasing the credit limit of their card holders.In a media briefing at the Bank of the Philippine Islands (BPI) head office in Makati yesterday, Suze Orman likewise encouraged overseas Filipinos to save on their own, aside from sending support to their families in the Philippines.The 61-year-old native of Chicago was ranked among “The World’s 100 Most Powerful Women” by Forbes Magazine. USA Today has called her “a force in the world of personal finance” and “one-woman financial advice powerhouse.”“If you have a credit card, immediately pay in full before you start using it. When you start delaying payment or just pay for the interest incurred, you are in card debt,” Orman said.She recounted that the United States is a country in debt and one of the contributing factors is that Americans failed to pay their card debt, amortization, and lack of financial discipline.“In US, the few rich are getting richer, the poor are getting poorer. There are 15 million Americans in naked poverty, another 100 million in the brink of poverty, and there are a lot more about to get there.”She admitted to have spoken to the BPI group that handles credit cards and urged them not to be gracious in extending the credit limit of their cardholders.Orman reminded that banks and other financial institutions make money when people use the card. And that it was greed that make financial institutions allow extending the credit limit of delinquent or irresponsible cardholders.“Don’t be an aid to somebody’s destruction,” she said.Meanwhile, Orman admitted that she had Filipino housekeepers as they were reliable and trustworthy. But a few of them send all their money to their relatives in the Philippines but do not save for themselves. In the end, they are forced to continue working well beyond their effective age.“Their relatives in the Philippines do not save for them but use all the money sent for themselves. So my Filipino staff have to stay employed to start saving for themselves,” she lamented.The seven-time Gracie awardee said that people must attain or create financial freedom.“Wealth is built on what you do with your money. Wealth is not what you do with your money, but what you do with your time; the more you save, the more you have; the more you work or make use of your time, the more you earn,” Orman advised.“Money is nothing more than the currency of life,” she added.Meanwhile, Orman stressed that everyone must have an insurance policy for the protection of their loved ones.The two-time member of Time Magazine’s 100 Most Influential People said that she prefers term life insurance (20 years) since it is more focused.Whole life insurance is a lot of money with promises of claims, and for the meantime, the insurance company can make tons of money from the premiums you pay.“Term insurance also means money you (or your loved ones) can enjoy while you are alive.”Orman said that everyone must have an insurance policy to protect the people they love, “the people that you brought into this world.”Orman is a social work graduate of the University of Illinois. After college, she worked as a waitress earning $400 a month. Today, she is paid $90,000 for a 90-minute talk.She has published nine books on financial literacy and personal wealth, earning her millions of dollars. She has seven homes in different parts of the US since she is always traveling around the country.Majority of her earnings goes to various global financial literacy endeavors and humanitarian efforts.

[JJReyes]

Why is this Suze Orman butting into other people's culture based on her experience of having hired a few domestic helpers who happens to be from the Phiippines? I think someone should ask Homeland Security to check if her helpers are legal hires. Then the IRS to make sure she is paying Social Security and Medicare as an employer.Her financial advice follows the traditional big business mantra of saving money, which includes having a bank account paying interest that won't cover for inflation; term insurance policy "which you can enjoy during your lifetime" (I think this is a misquote); and credit cards. For many Filipinos, credit cards are not for the purpose of incurring debt. It is a convenience card with the monthly balance paid off -- unless, of course they have lived a long time in the United States and have fallen into bad habits. The credit card with a high limit is for emergencies like hospital care. Unless times have really changed, taking care of less financially fortunate relatives is recriprocated based on the Philippine social context. When you are old and feeble, one or two nieces will be assigned to care for you. Suze Orman is from a "dog-eat-dog" environment and that's fine. All of a sudden, with limited knowledge, she is now claiming to be an expert on the Philippines.

[Tatoosh]

JJR, I'm a bit surprised at your viewpoint. Her advice in terms of finance is generally sound regardless of the culture. Yes, she is speaking from her experience and viewpoint, which is strongly affected by the credit card debacle for the USA. With a burgeoning middle class in the Philippines, a cautionary warning or request not to create a similar situation is not "strong meddling" in the Philippines. She doesn't regulate the banks, just gives what she sees as good advice. Do you think no one should have a view on the Philippines?The "system" in the Philippines does not work to protect the masses any more than it does in USA. The Philippine culture does have some very good aspects, as you mention. But that is not the same as intelligent policies for money handling, both from the top (banks and financial institutions) to the bottom (people's use of credit/saving). We can have differing opinions about the efficacy of savings versus inflation. Every family in the province prizes their jewelry, the real stuff out of gold, because that is what they pawn when they are broke or faced with overwhelming bills. And lately, a good hedge against inflation too, eh? She may not see that, but you and I know that is where Filipinos tend to "invest" their savings.But the bottom line is having something set aside for emergencies, to not be encumbered by large debt, and to have enough to raise your children. Do you think that having seven or eight kids, of which maybe one might be able to go to a cheap, provincial, garbage-level college here is adequate foresight and diligence on the parent's part? One kid has a degree and six or seven others barely have a high school diploma. Is that what she should butt out of?The USA gets a lot of criticism, much of it deserved, but no small part is also from envy and crab mentality, wanting to tear it down. There are some very good aspects to the USA, one of which is the concept of self-criticism or self-evaluation. There still remain jingoists that have the "love it or leave it" mentality, that think the USA is chosen by God to be the leader and set the standards the world should run by. That came out of the 18th and 19th centuries with the concept manifest destiny and still bubbles up today. But if the USA is not perfect, does that mean its people should hush up and not have a viewpoint? Do you believe that all Filipino maids and helpers are honest? And hard working? Heh, you ain't been living here a lot then lately. Some are superb. Some are not. Just like anywhere on the face of the planet. Should they investigate her help? Sure, but not because she has a viewpoint of people, Filipino, American or wherever staying out of debt, having monetary resources and some sort of financial plan. I'm sorry JJR, but really, the problem seems to be that the Philippines has nothing to learn and shouldn't be criticized by Americans, apparently. Or have I misunderstood you?

Edited February 28, 2012 by Tatoosh

[Call me bubba]

seems she is in town and causing some people to think of the Hard, Ugly truth of what many natives are not doing,,, You can't count on remittances foreverMANILA, Philippines - Families of overseas Filipino workers must anticipate the day when remittances from their loved ones will stop coming, international personal finance advisor Suze Orman said on Monday in Manila.,said that families who are dependent on remittances must always think that the money will not flow forever; their loved ones can lose their jobs abroad, get sick, or even die."Anything can happen at any time and the problem that is going on out there [abroad] when one person from over there stops sending money in here, you've not only affected one person there but also four, five or six people over here. Then that starts the very dangerous possibility of things going wrong,"Orman said in a talk hosted by the Bank of the Philippine Islands.OFW-dependent families have to understand where that money comes from in order for them to get motivated to fix their household finances, she added.The Philippine economy is kept afloat by consumer spending that is primarily fueled by OFW remittances. Last year, overseas workers sent $20-billion back home, a record in remittances. According to a survey conducted by Citibank in 2007, however, only one of 10 Filipinos save enough to last their families nine weeks.Orman said OFW dependents must change their expectation that the funds they receive every month are going to always be there."And once we understand it is possible that that check would stop [coming], you would think twice before you go out and buy a flat screen TV or you do things other than saving that money," the financial advisor said.No money of their ownOrman shared that members of her household staff are Filipinos, so she is familiar with the habits of OFWs, and the culture of sending their entire paycheck back home and leaving nothing for themselves."And we always say 'Can't you just save a little money of your own? Can you just keep a little something for yourself?' It goes on for 10, 15, 20 years," she said.Then Orman observed that in the last two years, her staff stopped coming home to the Philippines for their annual month-long vacation every May. When she asked, they said they wanted to save the plane fare money and open a bank account."They are afraid they don't have money themselves and what are they going to do? And their parents can't take care of them, their parents just died or something happened," she said.That sudden change in their thinking was brought about by the realization that they are getting older and they are not feeling as sprite as they did 10 or 20 years ago.The personal finance guru noted that this phenomenon is not exclusive to the Philippines but it resonates to economies that are dependent on remittances such as African countries.Change culture of mendicancyOrman said that it is important to evaluate the realities that are besetting OFWs and their families. They should also think about whether or not perpetuating the culture of mendicancy among the able-bodied members of the extended family is really helping them and the economy."Are we helping those people by sending money to them so they never have to dig deep themselves and reach their own potential because the money is coming into them like clockwork when they haven't made any contingency plan in case that money stops because they don’t think it will ever going to stop?It is possible that we're hurting them rather than helping them/ Because a lot of times they [dependents] are still very young," she said.The personal financial advisor related that some members of her household staff have dependents that are young, employable people. One of them told Orman that her 23-year old brother ""just does not want to work" despite being in perfect health."But it's another thing for parents. I believe all children should take care of their parents, I don't care where they are. I take care of my own mother, she's going to be 97. It's an honor to have money to take care of my mama. [but] it's a whole different light if you're talking about brother, sister, friends, or things like that," she said.http://philnews.com/...news_0228ah.htmslightly edited from original post

Edited February 28, 2012 by Call me Bubba

[Mike S]

You don't have to be a Rhodes Scholar to know that credit cards was and still is the downfall of any countries people financially .... the tendency with credit cards is to spend .. spend until you max the sucker out and then worry about how to pay for it ...... unless you are a very disciplined person you will not use your card and pay off the purchases at the end of the month ...... it just doesn't happen ...... why do you think so many people declare bankruptcy ...... they over spent and one way is with credit cards .......My own personal experience with the card is that for the first few months you do great ...... but then the car needs tires and the frig crapped out ....... now you can't pay everything off the next month so you carry it over to the next month ..... now you got 20% interest tacked on to you bill and from there it snow balls ....... it took me 3 whole years to pay off my credit cards with making no purchases on them before moving here ...... I didn't want the debt following me to a place I could not earn extra money to pay them off ..... the only way I could do it was to find cards that offered you interest free for 1 year if you moved a previous balance to their card ...... before I was done I had 10 CC's with no balance ..... I closed all but one account which I keep today and make very small purchases just to keep the card open ....... Now I have nothing against Pilipinos .... if I did I wouldn't be living here ...... it is damn hard to live around people you dislike but some manage to do so but bitch about it all the time ..... but we are talking about people that for the most part live for today and to heck with tomorrow ...... so I just can't believe that they would get a card and ONLY use it for emergencies or pay it off at the end of the month ..... some .. maybe rich people ...... but the majority of common working people no ....... it's no different than any other people in any other country ...... they do the same thing ........ someone doesn't have to be of a certain culture or nationality to see or predict what will happen if people over spend on their credit cards .... no rocket scientist is needed .... just someone who has walked the walk and talked the talk ...... and I don't mean culture wise .... I mean through trial and error ....... and someone who is willing to share their knowledge and offer help to another person or country ......... sorry but I just don't see that as stomping on someone's culture ......... IMHO

[Dave Hounddriver]

I have yet to see an American citizen who lives below the poverty line and has a healthy savings account. Thus it is pompous to tell filipino citizens, who live on even less, that they should have savings accounts and not live on the charity of OFWs.I say Americans because the one doing the 'preaching' is from that nation but, in truth, it would be a strange occurrence to find citizens of any nationality living below the poverty line with a healthy bank account.

Edited February 28, 2012 by Dave Hounddriver

[Tatoosh]

That is a very good point Dave. And my observations didn't keep a focus on the group that will likely have access to credit cards. That is unlikely to be the truly poor or day worker types. Professionals, business types and so forth who have incomes in the 30k and up range might qualify. Many double income families will see incomes in the 60k to 80k range if both are mid level professionals. Those folks are as susceptible to "keeping up with the Jones" as anyone else. Upper class or aspiring upper class Filipinos disdain the ukay ukay markets and love flashing name brands. Could high credit limits come around and bite them if they overindulge? Of course, there is little to restrain them but their own good sense. Which I am sure some will have and others will not.There is a real middle class, but much of the base line consumerism for the masses are based on OFW or foreign spouses as sources of income. A good wage for a Master Electrician starts around 19k if he's hired by one of the utility companies. That is 1/2 to 2/3 of what he will make overseas as a basic electrician. A teacher starts in the 15k range and works up from there. A nurse is maybe 10k if she is hired as regular staff by a public hospital while most are knocking down 5k to 6k as they get enough experience to work overseas. If they are lucky. Many of them have to PAY the hospital to work there so they can have enough experience to qualify for a shot with recruiters. Can these folks resist the urge to rack up debt in hopes of a better life? JJR sees them keeping the card as a hedge against drastic or emergency requirements, which is an ideal solution, or paying it off each month so they don't incur large interest payments. But I have my doubts that most Filipinos are economically more astute than any other group. How many of us know of sari sari stores that run only when there is a sudden inflow of cash to buy stock. Many run out of stock and do not budget their cash flow to cover replacement. If they can't budget a sari sari store, why will they budget a credit card much better, should they qualify for one?There are very astute business people here, to be sure. They have successful businesses and continue to do well. I don't mean all the rich governing families. I mean local families that run all sorts of good businesses. Car parts, food stalls, building supply concerns. I can think of dozens of them I have run across. Those are likely the people that banks want for credit card customers. And their success in business bespeaks their ability to manage their money. These are likely the very folks that JJR sees as being in little need of a visiting American's advice. And I wouldn't argue that. There can be differing answers based on the group you are looking at and the scenarios that each of us foresee.

[JJReyes]

Everyone has a right to an opinion and to criticize. That's what we all do in this forum and may I add, it benefits everyone. If Suze Orman had spent a year in the Philippines, her opinion thereafter would have value. But she shouldn't breeze into town spousing her "expertise" without a clear understanding of the local culture. Bet she will be there only a few days and it is mainly to promote her books or television show.Have you ever wondered why the Philippines went from self-sufficiency in rice production to the world's largest rice importer? One reason is USAid. American farm experts arrived and observed that the farmers who were preparing their rice fields were using a carabao and plow. It was inefficient. The aid solution arrived in the form on International Harvesters and John Deere tractors. Unknown to everyone then was just underneath the topsoil was a layer of clay followed by sandy soil. The huge plows destroyed the clay and the fields couldn't retain water. To cover the mistake, they replanted them to coconuts. Then the do-gooders American socialists arrived and told the Philippines that the remaining rice fields should be taken from the rich and redistributed to the poor. Excellent idea. The wealthy simply told their tenant farmers to stop planting rice. The poor eventually got the rice fields, but not the capital needed to buy seed, fertilizer, and money to feed their families until harvest. What happened to the coconut trees planted to cover the tractor mistake? Someone forgot to tell everyone they would eventually become senile. The Philippines will now have to cut down and replace more than 50 million coconut trees. By the way, Afghanistan experienced a bumper opium crop. USAid in the form of chemical fertilizers was diverted for the opium fields. The Taliban takes a percentage. The money is then used to pay fighters, and to buy guns and ammunition from Pakistan, who probably received the guns and ammunition from the United States in the form of military aid. Suze Orman is a financial expert in the United States. If she visited the Philippines to promote her books and television show, prepared for an American audience, no one would listen. So she has to pretend to be a financial expert on the Philippines. That's the reason I got pissed.

[i am bob]

BPI brought Suze Orman to the Philippines to speak to their higher value customers and not the average lower-income Filipino. Suze Orman did not come on her own to distribute her ideas on "Financial Well Being" regardless if we find them pertinent or not... BPI is also known for bringing in different well known financial "guru" who have similar views as BPI. So what is the issue? If we believe in BPI's regimen for helping their customers, great! And if we don't believe, great again! Simply put - what BPI is doing is not meant for the low income Filipinos and that isn't great... Of course, that responsibility belongs to a lot more than just BPI!Just so I can say that I did say - The ideas floated by Ms Orman in regards to every one of us is, in my opinion, a darn site better than what most others say... Term insurance when younger, invest regularly and in the market best for you, keep out of debt as much as possible. Pay yourself first and if you can't, you have too much debt! And when people use the argument that "if everybody did this, our economy would crash" - look them in the eye and let them know that could never happen because too many people will still be borrowing too much! Wish I knew this when I was younger...

[Curley]

Hear, hear, I am Bob. I couldn't agree more. Our economy would crash if nobody borrowed? Haven't many so called first world economies just crashed because too many people borrowed too much money?