About credit cards...

[Joacheme Misrahe]

Now that bankruptcy has been changed I would advise people to read the disclosures very carefully when you get a credit card. Usually they will not be able to screw you if you shop around and get a card with reasonable terms and handle the card in a manner that leaves a trail.

Here are some tips I've found:

1. Stay FAR away from discover. They do a "two month average" in calculating your interest. They are one of the only card issuers that still plays that game. If you get a discover card, trust me, you will be screwed if you fail to pay in full 100% of the time. Stay away from any card that says two month average.

2. Pay attention to who actually ISSUES the card. For example, if you go to Wachovia bank you can get a "Wachovia credit card". However, the card is actually ISSUED by MBNA.... it's just branded "Wachovia". MBNA has bought many accounts (in america you can actually BUY a persons debt... creditors buy and sell peoples accounts all the time), and if you are not careful you may find your self getting a card issued by a lender you would not like to deal with.

MBNA is one of the heartless ones. (well, they are all pretty heartless but some more so than others) If you can't pay up they will screw you. It's good to research different lenders and find the better ones based on peoples experience with them.

3. Some people have the mistaken impression that your payment will be due at the same time every month. These people need to realize that every month does not have the same number of days. If you read your card agreement you will usually find that you have X number of DAYS from X to pay. Therefore your payment date will not be the same date every month simply because the date changes as the number of days in the month changes.

4. It usually is a good idea to keep an extra card around with a zero balance and low APR on it. Why? Sometimes a creditor will rate jack you when they suspect you can't pay. (for example, your interest rate suddenly goes from 7.9% to 22%) If that happens you will be very glad you have something to balance transfer to. Even if you have a "fixed" rate they can raise it at any time.

5. USE A CREDIT UNION IF AT ALL POSSIBLE. Generally credit unions have much better terms than banks, and are generally not out to screw you. If you can get a card from a credit union instead of a bank do it.

6. DO NOT MAIL IN YOUR PAYMENT IF AT ALL POSSIBLE! This is asking to be screwed. If at all possible do an EFT. (electronic funds transfer) Either online or by phone. This is much better because it 1. Leaves a history of payment (no "we never got it") and 2. Has pretty much a fixed post time. No lates.

7. If you can get a better deal someplace else DO IT. Don't stick around with a card that has 23% interest when you have good credit and can get a card with 8% interest. If you don't carry a balance get a rewards card - they can actually pay off if you shop around for a good one.

8. Best rule of all - if at all possible never make your self a slave to a credit card. Don't spend optionally unless you can pay it off easily. If you're buying something that will take a year to pay off minimum realize that one slip up and they'll do everything they can to make sure you're still paying for it in 3 years.

on edit: Forgot cash advances. Unless you have a card with the same APR for advances as purchases (VERY rare to find such a card) remember advances are usually 20+% APR. And ALL credit card issuers pay lower APR balances off FIRST. So in order to pay down a cash advance you must first ENTIRELY pay off your purchase balance before you can even begin to pay down the high APR advance balance.

[progressivebydesign]

1. Thankx for the tips. We are going credit free this summer..

.. after tiring of the game. Luckily we have some equity to use for this.. as we'll be downsizing to a more modest house. Living debt free sounds heavenly right now.

[Melodybe]

20. MBNA is owned by the Saudis! Read it in the WSJ, they are bad evil people

avoid MBNA!

[CoffeeCat]

2. Although you make some good points...the best advice...

...is to dump the credit cards entirely.

There is no reason to have a credit card. None.

If you have a debit card, it works the same as a credit card. You can use your debit card to rent cars, book hotels, etc. All of that garbage about needing a credit card to book a hotel, etc is just that--garbage.

It's probably not a good idea to have a zero balance on a card that you don't use. If you're trying to build up your credit score or buy a house--banks consider the combined limits on all cards. If you have many cards with high limits--this can be used against you.

Credit cards are an invitation to screw yourself. If you're buying things on credit--then you can't afford them and you shouldn't be purchasing them. Plus, you end up paying off that trip to Pier 1 or dinner or expensive sweater for years--and with loads of interest.

The only people who win in the credit card game--are the corporations.

With the bankruptcy laws changed--this leaves consumers even more vulnerable. The only way to keep yourself safe, debt free and to make your money really work for you--is to stay away from credit hell. When most of your paycheck goes to interest (house, cars, credit cards, store cards, student loans)--you do not own your life--someone else does.

No credit cards!

[Joacheme Misrahe]

7. This is not true

"There is no reason to have a credit card"

What if you don't have health insurance but can't afford a medical bill? Could be anything from surgery to a prescription.

What if you have a serious emergency and need money you don't have?

I'm glad you're in a financial situation where you don't have to worry about unexpected medical bills or emergencies leaving you with out any money at all. Unfortunately that is not the case with everyone.

A credit card is essentially a loan. Just like a loan to buy a house. But it's an optional one. My opinion is have it, but don't use it unless it's an emergency or you can afford it short term.

"Credit cards are an invitation to screw yourself. If you're buying things on credit--then you can't afford them and you shouldn't be purchasing them"

I agree if you're buying cars on it. But some people don't have all the money in the world and sometimes a loan really helps.

Hell, I've used credit cards to buy food I otherwise would not have been able to afford on a low wage job. Can I afford the extra $50 loan that I don't have money for? Not until the next pay check, but after that it's paid off... and I get to eat that month.

Would I ever put a big screen TV on it that I can't afford? Not bloody likely.

"Plus, you end up paying off that trip to Pier 1 or dinner or expensive sweater for years"

Never once have I used a credit card to buy this. Perhaps those with high paying jobs do, but if you went through my credit card statements for the past year 99% of the transactions would be food at the grocery store. I've never carried a balance more than a month in all that time.

It's easy to talk about using a credit card for expensive clothes and say use a debit card when you actually have cash to use your debit card with. When you make $8/hr however it becomes a survival tool. Not a big screen TV purchasing tool.

[fortyfeetunder]

10. Unfortunately, when I eventually dump my credit cards

I will have a #*$)#&$(*# mandatory bleeping company issued credit card which is billed directly to me. The reimbursement procedure is a *#$_#$)#*$)#(* piece of #($#$#_)*$#_)!!!, the absolute worst (graphical user interface I have ever seen software written in.

If there are any late fees, the burden is on the peon to prove it was the company's fault, else pay up...

[wickerwoman]

18. This is too general.

A lot of people can make credit cards work for them as long as you use a little fiscal discipline. My parents get tons of free airline flights (at least 3-4 tickets a year), free hotel rooms, etc. by putting everything on credit cards and paying off every cent every month. They just spent two weeks in England and didn't pay a penny for flights or hotel rooms. If you get the amazon.com card you can get free books and DVDs. They'd give my brother and I a $100 voucher each for Christmas every year. You just have to make sure you aren't charging things you can't pay off straight away. And all you need to do is save receipts and spend five or ten minutes a week budgeting and tracking your spending.

I have an emergency credit card because I live overseas. I don't want to tie up $10 or $20,000 in the bank on the off chance that I have a medical emergency or need to buy a plane ticket pronto but I like knowing that if I absolutely need access to that kind of money right away that I can get it. And since I never, ever charge anything on it I'm not paying any interest on it.

While I agree that credit cards companies are predatory and often irresponsible, you can't argue that no one can use them responsibly or to their advantage.

[lakeguy]

22. debit cards are NOT a good replacement for a credit card if

you can use a credit card within your means. credit cards provide a buffer between you and your bank and also offer many protections (i.e. extended warranty on purchases) that debit cards do not. You can also dispute charges on a credit card, which I've done a few times now, all successful.

on a side note, i've made over $1100 from credit card campanies this year..

$300 from ATT universal 5% promotional cash back on everything
$115 from Chase (1% back on a BT somehow)
$150 from MBNA first purchase bonus
$100+ from American express (either 1 or 3% back depending on purchase)

This doesn't include interest I'm making on 0% balance transfers (no fees) I have in the bank at 3.25%. It's a pain with all the monthly payments (until you get a program and do it all online), but I've made almost $500 doing this so far this year. I'm sure it's not a great hourly rate if you factor in all the work, but it's nice to be taking from the CC companies, and not giving!

[jojo54]

3. MBNA is a crappy CC

Hub and I have one but it's paid off now and we keep it locked up, for emergency use only. 6 yrs ago we took out a cash advance. 2 years ago, we called because we were still getting charged the higher interest rate on the advance. We were told that even though we were sending in about $150 mothly payment, only a few dollars was going towards paying off the advance. In essence, the cash advance would literally never be paid off until the balance was clear. F_ckers! So, what did we do? We transferred the balance to a new CC. It's kind of like jumping from the pan into the fire, but at least we've got an 8.9% fixed rate with this new one and we pay cash whenever possible.

[happynewyear]

4. I have credit cards

I pay them off every month. One is a 1.25% cash back and they give you the money ever month when the billing cycle closes. :)

I have two different Discover cards. I would not recommend against them! If you pay them off they can be a great advantage to have. I used the Discover Home Improvement card while having my kitchen remodeled and got about $150 cash back (I paid the card off at the end up the cycle) and the other Discover is good for the shop center (great links - a whole set of luggage for $99. from Samsonite worth over $500) and also if you pay attention to it, you can sign up for special offers they have for short periods of time, like 5% cash back for Ace Hardware, etc. Right now, its 5% cash back for gasoline purchases. It changes, but I always pay them off.

I have one MBNA L. L. Bean VISA card. It gives you 3% cash back (in L. L. Bean "bucks") and gives you free shipping and monogramming. However, otherwise it is rather useless (.5% cash back only).

I also have a Costco American Express card. This is good too for a variety of things, like 3% cash back dining out, 2% on hotel/travel and 1% on all other purchases. The downside is you get something back only once a year.

I use the first card I mention the most as I make money off of it. I make money off of all of them. I just make sure I never carry a balance. I'd love to dump MBNA. They are draconian vampires IMO.

The secret is to pay the cards off always and make money off of THEM. :D

:dem: :kick:

[Joacheme Misrahe]

9. I use the Citi Plat Select Div card

5% cash back on grocery/gas/drug stores and 1% on anything else. It's very helpful to have the extra money.

I agree discover has a decent cash back program, but again if you don't pay in full that cash back can quickly be consumed by interest with the two month average.... Otherwise it's a decent card if you always pay in full.

[question everything]

5. About number 6

Several months ago all of a sudden I realized that I forgot to send a check to a Citicard Mastercard. I called and talked to a customer service rep, and asked whether I could pay by phone. I could, with a fee of $20.00.

Well, we have excellent credit history and have been using their cards for years now, so she gave me extra week, or so for my payment with no late fee.

Another thing is that it appears that the time to pay is getting shorter and shorter. First, with some cards it takes about a week from the closing date to the time I find it in the mail. Second, be aware of when you usually get your statement - if you will be gone for more than a week. The statement will arrive in your absence and the due date maybe, perhaps in a week. So send a check to the cc issuer even before you get a statement.

Good points, otherwise, especially the Discover one. This card I always pay in full.

[Joacheme Misrahe]

12. I was not aware citi charged a $20 fee

for the phone pay. That's pretty crappy of them.

I know that citi has online statements though. You can view your statement 24 hours a day and don't need to wait the week to get it which is what I do.

I also usually make payments prior to statement date if at all possible as you do.

The main thing I hate about citi is the constant high pressure sales tactics they use whenever you call even if it's just to check your balance.

[question everything]

21. Indeed, or just to activate a new card

I would often just hang up on them when they tell me to "wait" while meanwhile playing their sales pitch...

One more thing.. I am trying to keep my email address limited as far as organizations that are involved in sales. We are getting so many offers for new Citi cards - even though we already have 3, that I know my inbox would be swamped.

(added one more thing..)

[warrens]

6. I was editor of a credit card publication

Your advice is very good. I don't think Discover is worse than most. My main advice is, use a debit card or get a credit card issued by a credit union or a local small bank.

Every portfolio contains a stack of terms. It's dizzying, and your credit record and spending behavior affect what offer you get. If you run up huge balances and pay the minimum, they'll be on you like white on rice. This is, of course, why they are such hypocrites about bankruptcy. They encourage it, then act surprised when the guy with $68K on other cards runs up $10K on their card, then goes BK.

As a rule, the best deal is the AmEx standard card. You pay a yearly fee, and you have to pay it off every month, but there is no interest for 30 days credit and they are very flexible on late fees. They actually value their customers, and I think they are a truly great company.

The main thing to remember is what was pointed out. The industry makes its money on fees. Since they can't charge a membership fee, they maximize late fees, over the limit fees, cash advance fees and so on. They will send you a pack of checks with a note saying, if you have emergency expenses, use these checks. They have interest rates that are out of sight if you use them and they lock up your credit line.

A lot of the big ones, like Capital One, have been caught freezing mail, refusing to open it, so you get hit with a late fee. As long as they don't stamp it, it didn't arrive, by their rules. They also post at 8 a.m., long before the mail arrives.

My advice is, get a debit card. No fees, no late fees, no nothing. Hotels now accept them like credit cards, and there is a lot of noise about making car rental companies take them too.

If you looked at the average credit card debt people are carrying, it would freak you out. It's hundreds of billions, and the average cardholder has thousands in debt.

The credit card started out as a pretty good product. It allowed you to buy on time for major purchases without going to a finance company, and it made life a lot better for business travelers, who no longer had to go on the road with a wad of cash in their pocket. But as a pop object, it's a bad thing. I see people all the time paying for groceries with high interest credit cards. That was never the idea.

If you have to get one, get an affinity card, like your college or something. They have to be very careful with these groups because they could lose hundreds of thousands of accounts overnight if they abuse cardholders. Retail-related cards issued by major banks are also a better bet, because the retailer knows you will hate THEM if the bank fucks with you.

Basically, you're not much worse off borrowing from the local loanshark. Credit cards are among the most profitable products in the country, and SOMEONE is paying that money. Probably you.

[Joacheme Misrahe]

13. I've always wondered

Does AMEX put high pressure on you to buy extra services from them when you call for anything? (even if it's just to check your balance)

I know with citi they do and I've very tired of it.

[linazelle]

8. EFT is NOT best...

There have been many instances where EFT's did not go through, if you are referring to auto-bill pay. When that happens, it's a real pain getting this straightened out. EFT/bill pay's are set up on a day of the month schedule as well, which works against the number of days billing you mentioned. EFT needs to be refined before it replaces other means of bill payment.

[Joacheme Misrahe]

11. Not referring to auto-bill pay

Even though auto bill pay is usually a scheduled EFT.

I am referring to an EFT in which you call the credit issuer and say "I want you to electronically withdraw the funds from my bank account to pay my balance". (or instruct them to do the same via the net) Those usually post the same day or 1-2 days later.

EFT's ALWAYS go through because they instant electronic transactions. (unless you provided the wrong account/routing numbers) Scheduled bill pay, however, may not go through for several reasons.

[linazelle]

15. The just in time EFT's cost anywhere from $12 to $30+ --not practical. nt

[Joacheme Misrahe]

16. Washington Mutual

lets me make unlimited EFTs for zero dollars. I suppose it depends on who you use to make them.

[linazelle]

17. All of the companies I do business with charge a fee for EFT. nt

[Joacheme Misrahe]

19. Open one (free) washington mutual checking account

and you will be able to pay them all with EFTs 100% free.

[MojoXN]

14. I like rule #8...

Yours truly has credit card debts to the tune of $2500. Sucks proverbial balls when yours truly is currently underemployed. Trust me, ladies and gentlemen, that "free" money will call the piper at some point.

MojoXN