Tag Archives: credit cards

The Connection Between Scary Movies and Credit Cards

August 27, 2016 By in Grab Bag, Money Tags: , , , , , , , , , , Leave a comment

Let me just start by saying that I actually really like credit cards and that they don’t scare me. But horror movies do- and even scary, or semi-scary, TV shows can keep me up at night. Hell, just a trailer for a scary movie makes me immediately plug my ears and avert my eyes.

People may laugh at me when I scream in fear during the first episode of Stranger Things, or The Walking Dead, and turn away from the shows for good, deciding to probably never watch them again. But I know myself. I know how scary movies and books and TV shows might seem fun to me at first but can give me terrible nightmares, especially when I’m alone at an old hotel in the middle of Oklahoma City.

And since I know myself, I also know that I’m as good with money as I am bad with horror films. I was that kid who would look for money hidden in the coin returns at arcades and collect it, as opposed to using the coins to actually play the games. I know that credit cards will never tempt me into spending more than I have because I’m just a cautious type of person.

 

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Yikes!

However this isn’t true for lots of people- and if you’re one of them, don’t be ashamed. Be glad that you know yourself. The amazing finance blogger J. Money, on his fantastic blog Budgets Are Sexy (I only very recently discovered this extremely relatable and super fun-to-read blog, and I highly recommend it), writes about how he was solicited by TD Bank to create a credit card article targeted to millennials. Instead he describes how millennials are actually doing great things for themselves by avoiding getting into credit card debt. The reason TD Bank, and many other banks, are especially targeting millennials for credit cards is because millennials have been shying away from the cards due to worries about ending up in debt. According to the Budgets are Sexy article, almost half of all millenials- 44% – aren’t using credit cards at all. After all, many millennials-including myself- grew up and/or spent their early twenties during the recession of 2008 and are already saddled with insanely high student loan debt and a degree of worry about incurring any more bills.

TD Bank was trying to get Budgets Are Sexy to write about the benefits of credit cards and how millennials should establish credit so that they could borrow money later to acquire a car or a house. Yet J. Money, although he likes credit cards for their various perks and benefits, thinks that avoiding debt is way more important than your credit score. And I completely agree. Although I love credit cards personally because they’ve enabled me to take many a free flight somewhere, and to pass the credit check to rent my apartment, I disagree with telling millennials they should establish credit in order to take on lots of debt down the line… especially when millenials are already worried they’ll take advantage of “free money” credit cards and take on debt from unnecessary things!

I think it’s important to know yourself, and if you know you can’t handle the temptation of credit cards, stay away from them! I’ve cut scary movies out of my life because I know I can’t handle them, and I’ll never look back!

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This creepy image scares me a lot. It’s actually from a protest against credit card debt, that I found in a How Stuff Works article

Should You Have Lots of Credit Cards In Your Thirties?

September 28, 2015 By in Money Tags: , , , , , , , , , , , , , , 1 Comment

You know it’s true: You’ve been tempted by credit card sign up bonuses in the past. And you’ve maybe even signed up for a credit card solely for the sign up bonus… and then canceled it? Or have you been scared that opening up or canceling lots of credit cards in your thirties could hurt your credit score?

There’s a lot of mixed information in this area that might leave you puzzled. Here’s the deal: credit cards can be really helpful and pretty benevolent unless you can’t use them wisely. It’s like anything: if you develop an unhealthy (overspending) addiction, you need to stay away. Otherwise, proceed wisely and happily. There are lots of benefits to having multiple credit cards.

Here are some tips for having various credit cards in your thirties:

  1. Pay your credit cards off in full every month

This is pretty self-explanatory, but the real trick to benefiting from credit cards, and especially from having multiple credit cards, is to make sure you pay the full balance off every month, not just the minimum. If you can’t pay the full balance off every month, stay with fewer credit cards until you can. Sign up bonuses and points aren’t worth the crazy expensive interest charges you’ll have to pay if you rack up debt.

2.  Don’t cancel the random credit cards you opened in your early twenties

Part of your credit score is calculated based on length of credit history. If you cancel the first card you ever opened, you’re shortening your credit history, and this will hurt your credit score. Unless a card has a high annual fee that you don’t want to pay, there’s no reason to cancel. If you don’t want to use the card anymore, pay it off and cut it up.

3. If you’re opening multiple cards for a point bonus, make sure you can meet the minimum spend in the correct amount of time

If there’s an American Airlines card that will give you 50,000 miles when you spend $3,000 in 3 months, make sure, if you get the card, that you’re gonna spend the $3000 in 3 months. I’ve screwed this one up before and have actually forgotten to meet the minimum. Put all your other cards away and solely use that one for awhile. If you can pay major bills, like your rent, on your credit card, you should be able to easily meet the minimum. There are actually services that can help you do this –this one is called Plastiq. Though Plastiq charges a 2.5% service fee, it can be helpful if you need to meet a minimum.

4. If you can meet multiple minimums at once, it’s best to open more than one card on the same day

Even if you have great credit, you’re more likely to get denied for a card if you open a new card every few weeks. I’ve actually opened and been approved for three cards in one day (I’m really good with credit cards and pay them off in full every month). If I’d opened one card and then waited a week to apply for the next card, I would have probably gotten denied. Wait at least 90 days to apply for the next credit card(s).

5. You won’t ruin your credit from having multiple cards

In fact, the opposite is true. Your credit score is partially calculated from something called a debt-to-credit ratio. If you have more credit available, you’ll have a better ratio.

6. You won’t ruin your credit from canceling a card

If a card has a high annual fee and it’s not worth keeping, go ahead and cancel it. Your score will only drop a tiny bit from your lowered debt to credit ratio. And it will come back up again as you continue using your remaining cards wisely. The annual fees aren’t always worth keeping the card. The only exception to this rule is if you cancel your oldest card- that will definitely lower your score more than the others because it will change your length of credit history… as I mentioned above.

There’s a lot more tips for enjoying multiple credit cards safely, but I hope this is helpful! As always, please comment below with any questions you may have! Thanks for reading!

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Is a 0% Interest Credit Card Just a Blatant Lie In a Pretty Package?

September 1, 2015 By in Money Tags: , , , , , , , , , , , , , 1 Comment

Oh my god!! A zero percent interest credit card?? Does that mean I will have unlimited money and can buy whatever I want forever in my thirties? And then I can simply pay money back super slowly until I die…. interest free?

Short answer: no.

Long answer: no.

I mean, come on.

I was listening to reruns of The Suze Orman show podcast the other day (it has sadly gone off the podcast air this summer) and a few people mentioned using a zero interest credit card and asked Suze for her advice.

I remember the first time I heard about zero interest credit cards. I thought to myself “what the heck is a zero interest credit card? Why would card issuers would give someone money interest free? In what way would credit card companies benefit from this?”

Here’s a simple answer: zero interest offers always expire. And card issuers almost always benefit.

Here’s another simple answer: zero interest credit cards are usually a bad idea for the consumer. And then card issuers benefit.

Here’s why:

Let’s start with the way zero interest credit cards work:

  1. There are two different kinds of zero interest credit cards: deferred interest and waived interest.
  2. For both types of 0% interest cards, the 0% interest rate only occurs for a certain period of time (say, 6 months) and then expires.
  3. For both deferred and waived interest cards, after the 0% interest rate expires, the new interest rate is EXORBITANT- more than almost any other type of credit card. It could be as high as 26%, which is basically highway robbery.
  4. A deferred interest card is VERY bad, and a waived interest card is not much better. Here are the differences between the two:

a) For a DEFERRED INTEREST 0% interest card, interest is actually accruing during the special 0% promotion period (that certain amount of time I mentioned above when the card is still zero percent), but it’s being deferred. So if you buy something on a 0% credit card that’s 0% for 12 months, interest occurs during those 12 months. but you won’t have to pay it until month 13. If you pay off your original purchase by month 12, you never have to pay that interest. But if you haven’t fully paid off your purchase by month 12, you get hit with THE FULL YEAR OF INTEREST CHARGES!!!

So lets say you bought a $1000 bed on a 0% interest credit card that is deferred for 12 months. Let’s say that card has a deferred 23% interest rate. This means that about $20 in interest is adding up on your card every month. You won’t have to pay any of that interest for those first 12 months, but the card company has a record of it. If you pay off that bed within 12 months, you’ll never have to pay the interest. But if you just pay the minimum every month, the SECOND those 12 months are up you’ll be hit with a $240 deferred interest bill PLUS interest will continue accruing on anything you didn’t already pay off!! At a whopping 22% a month interest rate! This is terrible.

b) For a WAIVED 0% interest rate, lets say you bought that same $1000 bed on a 0% interest credit card that is waived for 12 months. Let’s say that card also has a waived 23% interest rate. This means that for 12 months no interest is accruing on your card. If you pay off that bed within 12 months, you’ll never have to pay any interest. But if you don’t finish paying the bed off, the SECOND those 12 months are up you’ll be hit with a 22% a month interest rate! This is pretty bad, though not as bad as the deferred card.

Credit card issuers count on you being dazzled by the zero percent interest rate and simply impulse grabbing one of their credit cards to make a big purchase. Don’t fall for it!! You’ll likely end up paying way more in the long run!

And if this hasn’t yet convinced you not to get a zero percent interest card, here are two more evil tricks 0% interest card issuers may be playing on you:

  1. For some 0% interest cards, if you’re late to pay or miss even one payment, the 0% interest offer is negated, and you’ll end up having to pay interest right away- before the 0% promotional period is even up! And it’ll be higher than other credit cards!
  2. Also, on some 0% interest credit cards, the 0% offer is only good for the first major purchase, and not the purchases thereafter. So if you continue using that 0% card, it won’t be zero interest anymore for anything other than your first purchase!

Read the fine print on 0% cards. And of course, if you can, avoid purchasing things that you couldn’t afford without a credit card anyway. A lot of times when it comes to interest rates, credit card companies are selling you very blatant lies wrapped in very pretty packages.

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