The Dumbest ever customer comment to a credit card

•July 3, 2007 • Leave a Comment

Credit card companies are able to do lots of unpleasant things to their customers. One action is to decrease your credit line, or close it completely if your credit score and status starts to behave like you’re in trouble (Stay away from cash advances). However, if they do decrease your credit line, and you want to “punish” them, don’t say what one customer said to me the other day.

Customer Dumbazz: “Fine… but I’ll tell you what, we’ve been making large payments to this card… but from now on, we’re only going to pay the minimum due! <click>”

Bemused ole me: “….errr…’thank you?'”

I can’t get my head around that, seriously, that’s what we WANT YOU TO DO DUMBASS!! That means we charge you more interest…. Donkey.

Best way to punish a credit card is to build your credit back up, and then use their best 0% balance transfer offer you can find and use their money to save you money (or even make you money), just be sure to avoid any Balance transfer fees.


Building your Credit

•July 3, 2007 • Leave a Comment

Seeing as this is one of the more popular reasons why folks end up here, I figured I should at least have something regarding this.

Store Cards, Secured Credit cards, Auto Loans are the 3 easiest ways. If you’re rebuilding your credit, the latter two are your only two realistic options.

 Secured Cards are going to cost you an annual fee from $25.00 up, plus a minimum deposit of $200-500 to start with. Go direct to Orchard Bank, or Bank of America as two possibilities on decent cards with fairly low annual fees. Be sure to read all of the account restrictions, and if you don’t understand them, call customer service. My personal feelings on Capital One is to avoid because of the way they report your credit to the bureaus.

If you choose that option, be sure to never carry a balance of more than 30% of your credit line. Better still, pay it off entirely each month – you do NOT need to carry a balance to get the best reporting, but you do have to use it. Best option is to put one or two reoccuring monthly charges on there and pay them off each month. Don’t wait for the statement, do an automatic bill pay if you can. (And electronically so the Post office doesn’t screw your attempts to build your credit). After about 6 months of healthy, smart usage, approach the bank, ask to speak to the supervisor or retention department and explain you’re planning to close the account soon, unless they can unsecure it, or remove the annual fee. If they don’t, try again in 2 month increments until the year is almost up. 2 months before your year anniversary, cancel your reoccuring charges and then pull your annual credit report to get your FICO. Call them again, ask for the retention department, and explain you’ve cancelled the reoccuring charges, that your FICO is X and would they convert the account to an unsecured, no-annual fee card so you can continue doing business with them, explain that the APR is unimportant. (Because you’re never going to carry a balance, right? RIGHT????)

Finally, if they still will not convert you, be sure to apply for a new unsecured/No annual fee card and if approved, cancel the secured card (Which should be before you get billed the annual fee again) , as closing an account can temporarily lower your FICO. Be sure to find out how your deposit will be sent back to you.

Ideally, you want to move off from a secured card as soon as you can (Earliest is 6mths) and be sure that the issuing bank is reporting it correctly as such.

Auto Loans are another way to have your good payment history reported, and you don’t need to borrow a lot of money against your title. But check to make sure who ever you borrow the money from does report to all 3 major Credit Bureaus. Your bank may even be able to help you.

 Store Cards are pretty sucky overall, but usually easier to get than an unsecured Major Credit Card. Best option is a Target or Walmart card, put your groceries on it, and pay it off in full each month. You build up reward points or Rebates, so it will help save you money each month… but do NOT carry a balance, the APR on those cards is horrid and it will not help improve your Credit rating by having a balance.

Ideally, you should have no more than 2-3 Major Credit Cards, 1 store card (optional as it doesn’t help your credit that much), 1 personal unsecured line of credit, and an installment loan – like a car loan, but for as low an amount you can. 24mths of solid payments, and keep your overall Debt ratio at no more than 30% of your total credit limits and you should be on your way to pushing up your credit score.

Things you already know about your Emergency fund

•June 14, 2007 • Leave a Comment

1) You really should get one, you know you should, and you’ll get around to it as soon as you can start making headway against some of these bills.

2) See 1)

 Now what an Emergency fund is for is saving your tail in the event of something dire coming up. It’s not savings for a vacation, new PC or Big Screen TV. Part of it should be immediately accessible. The rest should be accessible within about 3 business days. Once you’ve got your credit under control (i.e. you have almost no debt) its ok to put the majority into a 30 day CD or something similar, charge the emergency on a credit card, and then pay it off immediately to avoid the finance charges (personally I prefer ING Direct to a CD – 4.5% APY no minimum deposit to get that rate and funds reach your account usually in 2-5 business days.)

 The Amount you need is about 3 months worth of Living Expenses as a rule.

You can usually have your employer put a portion of your paycheck directly into your savings account. Start small, say $10.00 a week to start with and add to it where you can, you should probably still concentrate on your high APR cards first but by aiming (remember Goals!) for a $500.00 starting emergency fund, that will cover a number of unpleasant things that can happen.

Once you’ve reached the 3 Months amount, you can start padding your nest egg. Ideally, this should be something like a Roth IRA if you’re eligible, but if you use the Emergency fund, you need to commit to refilling it again. Always diversify your savings strategy, and this needs to be funds you can liquidate quickly and rely upon, so don’t use it to invest in that “sure thing” that Uncle Ernie is convinced will allow him to retire to Antigua with.

ABCs of getting out of debt.

•June 13, 2007 • Leave a Comment

A is for Analyse your current monthly outlay, what can be reduced in terms of your utilities. Maybe you can set the thermostat to 77 instead of 75 in the summer, and 68 instead of 72 in the winter. Cancel HBO, Showtime, Cinemax, Stars and ditch the digital box – do you really have time to watch all those extra channels? If you like movies at home, consider Blockbuster Online – 3 movies out at any one time, you can return either free in the mail, or drop it off in the store for a new movie without waiting, all for under $20.00 a mth. (Free trial available). Best of all, you get to watch what you want, rather than having to watch what’s on.

 B is for Budget. Yes, its a dirty word, like “Diet” – but unless you have a plan to discipline your spending, you’ll be paying the finance companies for the privilege of using their money. MSN have a simple budget you can get straight into.

C is for Consolidate. When possible move your High APR balances to a single payment, lower apr loan. Look out for transfer fees, sometimes 3% no cap on balance transfers, be sure to find out what can change your APR, such as universal default, returned checks, late payments. And make sure there are no pre-payment penalties so you can pay it back faster. Don’t forget to talk to your bank, especially if you’ve been a good customer of theirs – they may be able to come up with an unsecured loan to pay of some of your higher APR cards.

D is for Discipline. You have to be serious about getting yourself out of this hole. That means STOP DIGGING! Being on a reduced spending budget is a lifestyle change, instead of splurging to make yourself feel better, budget to reward yourself for keeping on track.

E is for Emergency Fund. Life happens. Car trouble, equipment failures, medical expenses can come out of nowhere. If you don’t have a fund to cover these eventualities, you’ll be forced to finance them, which, seeing as we’re trying to get out of debt is going to be a serious setback.

F is for Fees, late Fees, payment by phone fees, ATM withdrawal fees are all fees that can be avoided with some planning. Otherwise these will nickel and dime you to death.

G is for Goals. Like any diet, keep in mind what being debt-free will do for you. Build into your budget saving for some fun stuff, but keep the big dreams for after you’ve escaped. Imagine what all of those payments you make each month on your debt could buy each year if you put it in a savings account, a dream trip to the Bahamas, Hawaii, Florida, Europe maybe? A sexy new Computer, or Big Screen TV. Find your motivation, and set a goal to make it happen.

H is for H.A.L.T. – When you’re Hungry, Angry, Lonely or Tired. Stop DON’T Shop. The little high you’ll get will be far outweighed by the guilt. Being broke isn’t fun, being in Debt and Broke is far worse and the only way to stop being either is by planning and by being responsible with your financial means.

“Playing” An MMORPG is a job… don’t kid yourself

•June 10, 2007 • Leave a Comment

In that to be successful at it, you have to be dedicated, and willing to occasionally spend your time “playing” doing something you don’t really care for.

This isn’t necessarily a bad thing, as hey, flying a spaceship for a living beats cleaning toilets. But should your pastimes ever be considered work?

“Politicians are like diapers…”

•June 9, 2007 • Leave a Comment

“They should be changed often, and usually for the same reason”

 I’m very up on the idea of Barack Obama being the next president of the united states. That is, if George Dubble-ya isn’t proclaimed lord high regent or some such other before the 2008 elections.

 I think it would be even better if Hillary was his running mate. Imagine that. You could piss off half of the united states and still have a very good chance of a viable world leader.

But ultimately, the political scene is not likely to change all that much. Only the people can do that.

You don’t have excellent credit

•June 9, 2007 • Leave a Comment

Listen up folks, payment history is not the be all and end all of your credit. It’s important, to be sure, but it has to also be about how much credit you have, how you’re using it, and how much you could use if you got a wild hair up your ass and went on a Vegas spree, courtesy of your trusting lendors.

 It’s about what your income looks like next to the credit you already are servicing.

 So do yourself a favor. Research what makes credit “good”. Stop spending above your means, and work out how to rid yourself of debt. You only have excellent credit if you don’t need it.