A Griffith Listing

Real Estate Services by Jon Griffith

You are here: Home / Archives for credit card

Another Credit Card Company Scheme

by

Credit card SEO Agency companyes come up with any and every desperate attempt to keep you as a “customer.” They do not treat you like a customer, however, and you’re the one who pays their bills with outrageous interest rates and risk of fees that your mother would be ashamed of.

The most recent interaction with a credit card company happened today when I noticed that my card company had boosted my rate from 12% to 25% for the second time. I pay my bills on time. With interest rates doubling, so do monthly interest charges. Their software is designed to work in their favor regarding statement dates and due dates.

To save you hours of frustration, do yourself a favor. Pay cash for things you buy. Reward points are not worth it, and this has been proved with statistics that show that consumers will spend on average 12-18% more using a credit card than they will using a debit card or cash.

The Scheme of the Day

If I enroll in a new program at the credit card company, which they say is completely free, I have the opportunity to be credited up to $550.00 just for making my payments on time. The trendy company names program lasts 8 months, and I have to make on-time payments every month for those 8 months. After this period, I will receive a credit of 10% of my balance up to $550.00 no later than 3 months after the program ends.

What do I see here? I see a credit card company desperately trying to lock me into an account that I cannot close. I see a scheme to force me to hold a credit card for at the very least, 8 months, and possibly 11 months. I’m sure that the cc company has researched the behavioral habits of overspending due to credit cards, and the increased likelihood that a card holder with a zero balance will soon become a card holder with a balance.

My representative was very short with me as I asked questions that slowly revealed the truth in the program. Sure, the program is free, but it’s worth more to me to not take on any risk at all.

Cash is King: Lower the Rate

by

(Note: I’ll preface this by letting you know that a credit card is the devil.)

Today, while using a credit card that I usually use, that I’ve had for over 10 years, which has a limit over $20,000, to pay an important bill, I was declined.

What?  Declined?  How can that be?  Here’s how.  My credit card company (AT&T Universal Card), in their infinite wisdom, made an executive decision to tighten my credit line to the balance on my account.  In a time when Cash for structured settlements
is king, and required to continue moving the parts of the machine that allow me to make an income, the last thing you want to have happen is this, as it completely eliminates your cashflow.  When I asked them why, they told me they ran a check on my credit report.  Why would they do that?  I don’t believe they did it.  I think they’re just telling us that and the real story is that they’re scared to death that they’re too exposed.  That’s fine and dandy and all, and they have every right to do so, but let’s be reasonable here!  No letter, no phone call, no notification at all.  Ask forgiveness instead of permission right?  Get this…I was paying my AT&T phone bill with my AT&T credit card!

As a 100% commissioned sales person, my income depends on the closing of the next sale.  Expenses that have a return on the investment, such as placing sign posts, sending out cards, subscriptions to various marketing services, and oh yeah, my monthly cost to the brokerage, are typically floated on my “business line of credit,” or, the credit card that I choose to use to fund my operations.  Whether it be a small monthly fee to DocuSign, or my brokerage fee, the credit card is a critical cashflow tool that makes it much easier to manage my monthly expenses.  One payment at the end of the month, easy to track, no problem.

Closing a sale results in me paying off the balance in its entirety at which point I realize my profits and recover my operating cash.  Due to the recent (pardon my french) banking bullshit that we the little guy have been forced to feel through the disgusting practices of some extremely greedy people at the top, many of us are no longer able to pay the very bills that we need to pay in order to continue making money.  How can a credit card company cut off my purchasing power…the very line of cashflow that I need to generate income?  Well, they can and they do.  But that’s just one part of the story.  The interest rates that credit card companies charge are yet another piece of this idiotic puzzle.

Interest Rates are Criminal

After a long phone call, I was able to get my rate reduced from a criminal 29.99% to 12%.  Others have not been so successful.  One colleague recently called the credit card company to have her rate reduced and instead, they eliminated 90% of her purchasing power.  They dropped her from $20,000 to $2,000, and didn’t even giver her a rate reduction.  I was rather shocked to find that I had been increased to a criminal rate.  I’m tempted to never pay them back at all, but that would not be the right thing to do.

I’m not sure how I managed to get the rate reduced, other than being good at sweet talking the operator, but I did get it reduced, and thankfully, they also went back 6 months and credited me the difference of 29.99% and 12% because I had overpaid unjustly.  Missing a payment by one day will screw you so hard your head will spin, and they usually just apologize at you and say there’s nothing we can do.  “You’ll have to contact Experian,” they say.  “They’ll be able to show you why we made the decision.”  No maam, they will not.  They will not be able to show me why your credit card company decided to limit my purchasing power.  They will not be able to show me why my rate cannot be reduced to retain my future business.  All they can do is show me my credit history.  They have no idea how to read your mind anymore than I do.  I have no idea what your executives were deciding when they made the call to cut off my cashflow.

$1000.00 at 30%

I’ve written about this before, but there’s no doubt that it needs to be known by all who use a credit card (which I will reiterate takes extreme financial discipline, which most people don’t have.)

A card with a balance of $1000.00 usually requires only a minimum payment of $15.00/month.  You can buy that new laptop for only $15.00/month right?  Not so fast.  Let’s assume you pay $25.00/month instead of the minimum of $15.00.  At 29.99% annually, you will be paying somewhere around $4300 for that $1000.00 laptop and it will take you 15 years to pay it off. CRIMINAL!  If you fall into this trap once, that’s okay, get yourself out as fast as you can.  If you fall into it more than once, you’re an idiot.

The real lesson to learn about finances is that when you owe someone money, you become enslaved to them and the freedom to experience life as you were designed to experience it is virtually eliminated.  If you can, at all costs, and all interest rates, avoid credit cards entirely.

The Compounding Problem of Credit Card Debt

by

Dave or Susie

I won’t go into a dissertation on debt and the economy, but I will respond to an article that I read recently that posed the question, “Is Dave Ramsey’s way better, or Susie Ormond’s way better.”  The question of the best way to pay down credit card debt seems like a pointless argument as there really is only one way to pay down debt.  Just pay it down.

I have been listening to Dave Ramsey’s advice on managing money, and while I agree with everything he preaches, there’s a lack of practical application, and no possible way to address each and every problem out there in a few seconds on the radio.  It is a “broad” transmission, after all.  I have never listened to Susie Ormond, so I can’t say anything about her.

The $1000.00 Example

Credit card debt in this country is massive, and it starts with each individual’s spending habits.  Before I continue, I’ll lay out a little analysis of what credit card debt actually  means to you, if you have it.  If you don’t, stay that way.

Let’s take $1000.00 for instance.  When you purchase an item for $1000.00 using a credit card (firstly, understand you’re much more likely to purchase something if you have a credit card…retailers bank on it, literally) you’re not actually spending $1000.00.  You’re spending a) $1000.00 that you don’t have yet, b) more than $1000.00 after interest adds up and c) the depreciation in value of the item you purchase.  So how much are you actually spending?  That depends on your interest rate.  Let’s say it’s only 15% annualy.  Take 15% and divide it by 365 days and you get .0004109 % per day.  Now multiply that number by 30 days and you get .01232 % per month.  Multiply that times your balance and you have the following.

The $1000.00 you borrowed grows in one month to $1012.32.  Your minimum payment for the month is probably $15.00 on a $1000.00 balance (check your card agreement) which means that if you pay the minimum payment every month, you will pay the credit card company $1112.15 for a $1000.00 purchase for a total of $2112.15 and it will take you 11 1/2 years to pay it off.  That does not take into account the decline in value of whatever it is that you purchased if it holds any value at all.

But I Rationalized My Purchase

Sure you did.  Just like they planned.  They know that you’ll say something like, “I’ll pay it off before the end of the month.”  Thank bank on that, because it’s likely you won’t pay it off, and your payment due dates do not correspond with the end of the month.  Don’t rationalize your purchases.  If you have the cash to pay off the purchase, then just use the cash.  Those incentive programs that they offer you, like the “no payments for 12 months” programs are designed to push you to rationalize your way into deeper debt.

“No Payments for 12 Months”

So what’s so bad about that?  Well, firstly, in order to take advantage of these programs, you have to go into debt, which is not a very smart decision.  It may seem great at the time, but if you’re someone with no discipline to pay the credit card off prior to the expiration date (the exact day) then you’ll be surprised at the end of the promotion period to see all of the interest for the entire 12 months slapped onto your bill.  These programs are expected to attract the purchases of people who would normally not spend anything at that time.  Think about all of the trips to the hardware store you’ve made that resulted in you thinking you needed more than you came to get.  If you find yourself short of self control in this area, get rid of the credit cards.  You’ll be surprised at how less often you browse the malls and retail stores just looking for an excuse to spend money you don’t have.

So I’m in Debt, What Do I Do?

Dave Ramsey lays it out quite simply.  Look at all of your credit card statements.  Put them in order of importance from the lowest balance, to the highest balance.  Determine how much of your budget you can afford to pay towards your credit cards, pay the minimum payments on all of your cards, and focus the balance of your remaining budgeted payment to the card with the lowest balance.  Other methods involve knocking out more than one card at a time, and this may work for you, but I have found in my life that working with one card at a time helps me reach shorter term goals more often, which gives me a sense of accomplishment, and therefore adds to the positivity that I need in my life to not feel so enslaved by the lenders.

If you aren’t familiar with Dave Ramsey, I highly recommend listening to his radio show or subscribing to his podcast.  You can hear his show on his website as well.  They post the show every day he’s on the air.  Listening to the success stories will help you know that you can move forward in your life and get out of debt.