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lifecoach, wherefore art thou lifecoach...
Get ready for a shock
I posted about this in the stock market thread but realize a lot of you probably don't check that thread...
I know I have been the official doom and gloom guy on the economy for months now but as time passes I am proving to be more right than wrong, at least short term. Markets dropped another 5% today. Don't think that just because you don't own stocks or bonds that it won't affect you. Credit card companies are next. Those guys live on taking your new debt and packaging it into equities they sell to others so they can keep loaning you more money on your credit card. Oops. Nobody wants that junk paper anymore so the credit card companies aren't gonna have any money. Expect the "limits" on your cards to drop (maybe even below what you owe) and the monthly minimum payments to rise dramatically. The credit card companies are gonna want their money back. You think they can't do that? Think again...those pages of fine print that you just glanced at and signed years ago when you applied for your cards allow them to do basically anything they want...
lifecoach, wherefore art thou lifecoach...
I totally agree with CC.
Most of these card companies have stips in the fine print that allow them to change:
your minimum payment
due dates
available credit limits
interest rate
and so on
Even if you have a "good deal" or a decent respectable card beware. Most of the them will wait until you're near your limit to charge their annual fees which effectively puts you over your limit. This then allows them to raise your rate and minimum payment due where as the contract may not have allowed them to do it before.
So if you think you have safe guards to keep you locked in to a rate or payment just wait until you run your card over Christmas or next Christmas. You'll get your 45 dollar annual fee tacked on right after you swipe your card on a purchase that puts your balance at 480 bucks with a limit of 500. You'll think you're safe and then bam there's your annual fee putting you over the limit by a few bucks.
Now your iron clad contract is worthless because every single credit card company has stips that if you go over your limit just once your awesome 4.99% becomes 21.99% or worse.
I'm not perfect its happened to me too. Thankfully I had the money to pay off the account and close it before heavy interest started to accrue.
They can also do this without telling you . They bank on someone going over their limit and not knowing. Could be months of 19.99% interest before you even notice. They love how preoccupied you are with everything else.
Anyone who doesn't know CC companies can up your rates probably didn't understand ARM's either.
credit cards are the devil
no credit cards or credit card debt here.
if i don't have the money. i don't buy it.
Lots of people think fixed is fixed is fixed. The CC companies are selling fixed rates not adjustable rates they just fail to realize that if you're a day late or if you go over your limit its not just a 25 dollar fee the penalty is that you lose your fixed rate.
Don't get me started on ARMs I agree that some people are too stupid to understand what they're getting into but a lot of people were flat out decieved and lied to.
it I guess thats not much different that credit card companies. None of this is ever going to get better.
Its good for your FICO to a have a card (or two) with a reasonable limit and a balance around 25% of the limit. This kind of revolving debt potentially plays a larger role in your score than a 150k house thats been on time for 4 years. Revolving debt is a requirement at 90% of the banks lending for motorcycles, RV's and boats.
What I'm saying is that if you are already responsible with your money you'd really benefit from having a card with a minimal balance. Just pump a tank or two of gas a month and pay it off.
me too.
but i know getting a CC eventually will help my credit score.
are requirements for getting a credit card getting tougher now or are they giving them out left and right just planning on you not paying up in time? and i'm not talking about any platinum cards. just a regular bend-me-over-the-potato-sacks-later credit card.
Funny that you say that, cuz thats what I planned on basically doing whenever I get a card. However, I don't completely understand everything about credit. All I know is that I don't ever ing want to get into debt.
What should I look for when I'm ready to get one? I'd say I'm extremely responsible with money.
I have a credit card I use for dining out only. Balance never gets high, I pay it off every month.
Very tough question. Usually age, time in the bureau, recent home purchase or vehicle purchase can trigger a "pre-approval" for these companies but I have yet to determine if its based on dollar of purchase or what you're purchasing.
My best guess is that if you don't have an assload of chargeoffs and you have some reasonable recent history with a FICO over 580 you should qualify for a card.
My FICO depending my credit card usage ranged this year from 720 to 580ish. For the month or two that I had a score in the upper 500's low 600's I was still getting offers because they don't actually pull your score or bureau when they offer you a pre-approval...thats basically pot luck.
I've landed cards with rates under 10% with a low 600 score but that was two years ago.
You usually don't get offered the really good cards until you've purchased a home. They love giving 5k 10k cards to new home owners hoping you'll load up on new furniture.
Your best bet would be to pull your credit and score and see where you're at. I'd say that over 600 FICO with a decent bureau would earn you an average card. If you get rejected do not start applying everyone. Maybe hit up your bank.
I'm not a CC card expert but I would definately find out what the annual fee is and what are the penalties for going over your limit and making a late payment. I like cards that charge you a penalty for a late payment rather than up your rate. Those cards do exist but they're rare. If you get a killer card that 5% in interest and it has a limit of 300 bucks but annual fees of 250 then if you carry anything over 50 bucks on the card you're exposing yourself to them hitting you with their fees which will put you overlimit. This overlimit due to fees thing is exactly how they take your 5% to 20%.
I know I have a card right now thats 7.99% but if I go over my limit my rate jumps to 23.99%. My annual fees are 39 bucks. So I never allow myself to get closer than 39 bucks of my limit because if they hit me with the fees and it puts me over the limit the card turns to immeadiately.
Keep your balance at 25% of the limit. Thats the magic number. Rememer your FICO is really only valuable when you need to make a purchase. So what if you use your cards. Before you buy a car or boat or whatever just pull your credit report, pay your cards down and wait 45 days. Pull the report again to make sure the payments have been updated (your score will be higher because your available to limit dropped) and then make your purchase.
oh yeah. what credit card companies need to do is make the debts unaffordable so they too can experience mass defaults.
think guys, think.
That sure is funny, a fella who's not an expert doesn't normally go around telling people what to do alla time like you do.
It's not too late, I still have a spot for someone like you in my administration. You'll fit right in.
I only have one credit card with a $20k limit at 9.9%.
Usually carry a 20% balance month to month...the bank that I have loves people like me. I make 2-3 payments a month of $1000 and they roll in interest.
Not much longer, you es. 3 more months until payoff...
I'm a lot better versed in other areas but I still know more about CCs than the average moron like yourself.
I would consider myself a credit expert and master FICO manipulator.
Last edited by BacktoBasics; 11-12-2008 at 06:03 PM.
My thoughts would follow along these lines.
CC company exercises their ability to manipulate your account and raise your rate and payment. They already do this but they'll raise the frequency of doing it. They'll attempt to collect maybe a bit more than normal but secure somewhere around 35% of your principle amount. Then when you can't pay they'll charge it off and sell the inflated debt (due to the penalties and higher rate they had on you for a month or two) for 75% of what your balance is. This will roundabout effectively secure your full balance or more. Then the debt collector can attempt to work you over for more until they feel like selling it all over again.
Its not going to happen to everyone. If CC companies wanted to they could increase the rate of defaults right now but there is no reason to push the issue. I think sooner than later they'll make a larger push than they do now.
Again they are already doing this at a controled frequency. They'll simply up the frequency to compensate for loss.
sometimes they don't sell the debt they just hire the collection company to collect on their behalf for a portion. Sometimes they sell the debt sometimes not. Its already happening though. This isn't some new conspiracy theory.
Just paid mine off last week!!!! WooHooo!!!!
I paid my credit card off (AMEX) and they canceled my credit!
If you pay your card balances down to zero your score will actually e pretty nicely just be sure to use every card at least 2 or 3 times a year so they don't get cancelled.
My gf has already noticed a few cards shrinking your limit, even though she has never missed a payment and has low balances, this negative effects your overall score due to your utiliztion/credit available ratio. On average all three of my scores jumped 40 pts each when i had zero balances on all of my cards. Curretnly i owe maybe $2500 which i plan to pay off thru the holidays im not using even one credit card for gifts its all cash this year.
2 words in responce to what u just said ing awesome!!!!!! it just makes me want to go but a porshe and put it on my master card!!!! cant wait!!!
entire american economy < bucket of dog
credit cards.
I did a report in my ethics in business class. Just be aware, if you default on one credit card, expect other cards to charge you a higher interest rate. If you default on a house payment or car payment, your rates can go up even if though your credit card has nothing to do with it. They will say its justified because you become a liability if you can not pay all your balances on time. This is called universal default. I also learned alot of horrible things they can do and its all okay because its "disclosed" in the fine print. This is why I do not have a credit card!
I just got done paying $3000 off a couple of credit cards and I feel great. It's like a weight has been lifted.
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