TRY A CREDIT UNION
From David Ames: “My in-state bank sold its credit card portfolio to an out-of-state bank. My payment arrived one day late, so the bank assessed a $29 fine. (They call it a late fee, but of course the bank suffered no loss.) I found I had a credit-union alternative through my employment. They sent the bank a payoff check. Now I have an 11.9% rate instead of 16.9% and the terms of account are superior. For example, there is no ‘late fee.’”
BEWARE “CONVENIENCE CHECKS”
From Greg Ricketts: “I opened my Chase VISA bill over the weekend and was surprised to find a $70 finance charge. Being one who pays off the balance each month to avoid such charges, I was very concerned about the origin of this charge. It was noted under the cash advance column which I soon realized was the category they use for the “convenience” checks that I was sent some time ago with the teaser that read ‘Use just as you would your credit card.’ Well I had used the check to pay some fees associated with refinancing my mortgage that I was to be reimbursed for at the end of the month. I thought this would be a perfect use for the check and a way to avoid actually having to ‘spend’ any of my money. I guess this is a case of not reading the fine print on the back of the ad. The APR on the one check I wrote for $1875 was a whopping 46.67% (you read it right — forty-six point six-seven) for the 30 day period. The APR was plainly noted on my statement. Talk about loan sharking. I always thought that only the mob could collect that kind of interest. This type of activity should be illegal. It’s just another way these outfits have of fleecing the public ‘legally.’
“I called the Chase customer service line and demanded that the charges be removed. They agreed, but told me that if I had used a 7000 series check instead of the 4000 series check there wouldn’t have been any finance charges. Silly me, the 7000 series is the one that is plainly stated as being for transferring of other card account balances to your Chase card at some ridiculously low rate. I thought my experience might be helpful to your readers. It’s definitely something every credit card customer should be cautious of.”
A.T.: Indeed it is. Beware of those checks. (And be annoyed, too. Because if you just throw them out, someone could grab them from your trash and — well, the smart thing to do is to rip them up first. And why should we have to hassle with that?)
Then again, every once in a while some card will offer checks that really do NOT start the interest clock ticking. Or at least they used to. I wrote about one such example — gaping loophole since closed — just about a year ago.
IS ONE CARD ENOUGH?
From Trina Martin: “I am one of those people who learned about credit card debt and money management the hard way. Ten years ago while a freshman in college, I had 21 credit cards!! I have yet to find out why it is so easy for a college student with no job or a part-time job to get credit. By the end of my sophomore year I was in debt so far that I didn’t know where to turn. By my junior year I got wise and paid off all of my credit cards, but not before ruining my credit! I kept the Master Card that I had since I knew I needed a major credit card and this was the only one I was in good standing with. No one ever taught me about credit card management. I always thought that the more you had, the more important you were. Now, at 28, I know the real truth. I have one credit card — that same Master Card. Today I am much wiser. Three years ago I bought my car new and had to take a very high interest rate because of the damage I had done to my credit. I now have a 15% interest rate on my Master Card and a good credit limit that they raise about every six months. I always send in a payment of $100 when the minimum is only about $50. I only charge after the billing date and although I have a balance on this card, I pay the total amount of what I have charged. I am in the process of paying this credit card off, hopefully without any unforseen charges. In two years, sticking with my plan, I will have this card totally paid off. My credit is now back to good standing. Five months ago I purchased my first home. I plan to keep my one Master Card, since I now know one is all a person needs. I do have a question for you. Now that I am a homeowner, should I get one more credit card for emergencies or just stick to my one Master Card?”
A.T.: Wow. Well, that was a lot of struggling, but it sounds as if by age 30 your credit card woes, and even the relatively “low” 15% interest you pay, will be fully behind you, with nothing, let’s hope, but 60 years of clear financial sailing ahead. But, yes: a second credit card is handy, kept in a drawer at home, in case of emergency or some problem or dispute with your MasterCard. Indeed, if you get offers for 4.9% introductory-rate cards, and are very careful about paying on time, why not switch your 15% debt to one of those? You’ll have the security of a second, backup card and a break on the interest on your remaining outstanding balance.
THEY REPLACED HIS POWER TOOLS
From Terry in Calhan, Colorado: “I pay my credit card off each month, and try not to use it if cash or checks are available. The one exception is for the purchase of anything with a warranty. The reason is that most premium cards (gold, platinum, etc) will, in general, double the warranty of most items bought with the card. This is like getting a service contract for free. Even if the item does not have a stated warranty, many cards offer ‘Buyer Protection.’ This often will replace or refund items that have been stolen, lost or damaged in a way that a warranty would not cover. For instance, I bought a long handled yard tool by catalog, and shortly after it arrived, I mangled it in the garage door. A new one was on its way the same day, thanks to the ‘Buyer Protection’ offered by the card. I keep an up to date inventory of items like this, and I can tell at a glance if the item is covered by a current manufacturer’s warranty, or an extended warranty offered by the credit card. I have had several episodes where a power tool ‘died,’ and was past its warranty, but was replaced at no cost because of the double warranty from the card. The bottom line is: You can win at this game, but ya gotta know the rules!”
A.T.: This organized I could never hope to be. But more power tools you.
Quote of the Day
The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.~Adam Smith, The Wealth Of Nations
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