Credit card thread from Yahoo! Finance

#1 (**permalink**) 10-07-2006, 06:54 AM

Nothing really earth shattering to learn from the article but it does expand on the use of universal default a bit, some triggers I didn't know about.

http://biz.yahoo.com/weekend/plastic_1.html

Quote:

In fact, because of a practice called "universal default," credit-card issuers are actually allowed to hike their rates for pretty much anything, according to consumer-watchdog group Consumer Action. In its 2005 Credit Card survey, Consumer Action found that 90% of card issuers would use a universal default rate hike if a customer's credit score decreases, 86% would do so if they paid a mortgage or any other loan late. Nearly half (43%) would hit you with universal default if they decide you have too much debt, while 33% would do it for the exact opposite reason: too much credit available. You can see a rate hike even if all you do is get a new credit card (33%) or shop around for a car loan or mortgage (24%).

all in all, just more reinforcement to be careful, ultimately they're out there to make money (over and above the income they get from the day to day use of the cards) and do it at your expense if they catch you not paying attention.

PRICEPLUS · #2 (**permalink**) 10-07-2006, 02:21 PM

It really amazes me how creative CC companies are at screwing people out of their money. I can't wait to have them paid off in full. They are, in my opinion, EVIL!!!! (Just my opinion!).

Ima saver · #3 (**permalink**) 10-07-2006, 02:52 PM

To me it doesn't matter if they raise the rates or not. I just pay them off in full each month.

PRICEPLUS · #4 (**permalink**) 10-07-2006, 02:53 PM

I don't know. They always seem to find a way to fleece folks!

Ima saver · #5 (**permalink**) 10-07-2006, 03:06 PM

I have been lucky, I have never paid them an extra dime. This summer I earned enough to get $550 back, just for charging building supplies.

PRICEPLUS · #6 (**permalink**) 10-07-2006, 05:18 PM

Way to go!!!

MonkeyMama · #7 (**permalink**) 10-07-2006, 05:29 PM

http://www.pbs.org/wgbh/pages/frontline/shows/credit/

We saw this special on Frontline a while back. It was extremely eye opening. The website has some interesting articles and interviews. Plus it is crazy how much our current society relies on debt versus decades of past.

It still leaves me wondering why so many of credit card practices are legal.

I totally agree with the whole "evil" thing.

They really have a license to kick you when you are down.

Mathew Green · #8 (**permalink**) 10-07-2006, 06:32 PM

Quote:

Originally Posted by rexdart

all in all, just more reinforcement to be careful, ultimately they're out there to make money (over and above the income they get from the day to day use of the cards) and do it at your expense if they catch you not paying attention.

Yep. One of them almost got me this month! I was well aware (I'm much more aware now!!!) that some CC companies schedule your due date on a weekend or holiday hoping you'll screw up and not pay it soon enough to have it processed on the last business day before it's due. Because of that, I always make my CC payment at the CC company's website and do it a few days ahead of time, so there won't be any question about it being early enough to process prior to the due date.

This pay cycle my checking account balance was tighter than normal so I put off making the payment on a CC (due Oct 9th) untill Friday morning the 6th because I wanted to be sure (1) they wouldn't take the payment early (2) my auto-deposited paycheck was in the bank and for the amount I thought it would be (3) my mortgage payment, due on the first but always taken out on the 7th, hadn't been taken out early.

Imagine my shock when I realized last night that Monday the 9th is Columbus Day! If I had been in a hurry Friday morning and waited till after work to make my online CC payment, I would have been hit with a late fee and also would have had to pay interest for this two-month cycle because of not paying my balance in full by the due date.

Jacklad · #9 (**permalink**) 10-07-2006, 08:12 PM

Quote:

Originally Posted by Mathew Green

Imagine my shock when I realized last night that Monday the 9th is Columbus Day! If I had been in a hurry Friday morning and waited till after work to make my online CC payment, I would have been hit with a late fee and also would have had to pay interest for this two-month cycle because of not paying my balance in full by the due date.

Does it matter how you do it? I ask because with one of my accounts, if I initiate the payment from my chequing account (a "push"), the transfer takes two business days. If, however, I long onto the credit card site itself and initiate a "pull" transfer, the company credits me immediately (although it takes two days to show up in my chequing account). Needless to say, there's a double benefit for me to make sure I initiate the payment from the credit card side of the house (immediate credit and additional interest from my chequing account).

Jackie

Mathew Green · #10 (**permalink**) 10-08-2006, 07:10 PM

Quote:

Originally Posted by Jacklad

Does it matter how you do it? I ask because with one of my accounts, if I initiate the payment from my chequing account (a "push"), the transfer takes two business days. If, however, I long onto the credit card site itself and initiate a "pull" transfer, the company credits me immediately (although it takes two days to show up in my chequing account). Needless to say, there's a double benefit for me to make sure I initiate the payment from the credit card side of the house (immediate credit and additional interest from my chequing account).

That's why I always make online transactions on the site of the company the money is going to. However when your account gets credited is a function of company policy and 'business days'. One CC company credits any transaction initiated before 6 pm on the day you made it, IF it's a regular busness day. Another CC company has a 3 pm cut-off time. And a third has a 12 noon cut-off time. It all depends on the company, and if you don't make the cut-off time your payment isn't credited till the next business day.

It's just like taking your paycheck to the bank on Friday afternoon. The bank stays open till 6 pm. The teller hands you a receipt for your deposit. But the money isn't actually credited to your account till the bank opens Monday morning. (Although the check will usually show as 'pending' if you look at your account information online, most banks don't include it in your balance till it's posted on Monday.)

Since it's in the best interest of the CC company to make your payment be late, there's no leeway if you don't initiate the payment by the cutoff time or if you schedule it for the date it's due without realizing that date is on a weekend or holiday.

RJB1180 · #11 (**permalink**) 10-09-2006, 06:23 AM

Chase credits my online payments no matter what day it is. obviously from the Chase website. Last month my due date was on the 10th credited on the 10th altough it was a sunday.

rob62521 · #12 (**permalink**) 10-09-2006, 08:22 AM

Quote:

Originally Posted by MonkeyMama

http://www.pbs.org/wgbh/pages/frontline/shows/credit/

.

I wasn't aware of some of this stuff on credit cards like they can charge whatever they want if you are late making a payment and why they are located in two certain states. Pretty scary!

poundwise · #13 (**permalink**) 10-09-2006, 08:32 AM

There are definitely some pitfalls and the credit card companies have the legal right to do many things that most of us would judge as unfair and even immoral, however, one of the things we can all avoid is having late payments.

If you are carrying a balance, instead of having the mentality of getting a payment in by the due date, start making the payment when you get the statement. That is, if you get a statement on October 14 it may state that the due date is November 13. Pay it October 15 or 16 or before the end of October at least. Then you won't have to worry about the due date.

If you don't carry a balance, pay your charges twice a month. Once, right after the statement and then again in the middle of the cycle or at least before the due date. Of course, at least one major credit card company has gone so far as to only allow you to make one payment per cycle on some of their accounts. In my view, the best thing you can do with such a card is close it and get rid of it.

poundwise · #14 (**permalink**) 10-09-2006, 08:35 AM

There are definitely some pitfalls and the credit card companies have the legal right to do many things that most of us would judge as unfair and even immoral, however, one of the things we can all avoid is having late payments.

If you are carrying a balance, instead of having the mentality of getting a payment in by the due date, start making the payment when you get the statement. That is, if you get a statement on October 14 it may state that the due date is November 13. Pay it October 15 or 16 or before the end of October at least. Then you won't have to worry about the due date.

If you don't carry a balance, pay your charges twice a month. Once, right after the statement and then again in the middle of the cycle or at least before the due date. Of course, at least one major credit card company has gone so far as to only allow you to make one payment per cycle on some of their accounts. In my view, the best thing you can do with such a card is close it and get rid of it.

jmjj215 · #15 (**permalink**) 10-09-2006, 11:10 AM

One way to make sure you don't get snagged is to limit the number of cards you have. That right there mitigates your exposure substantially.

Elgin526 · #16 (**permalink**) 10-09-2006, 01:36 PM

Quote:

Originally Posted by poundwise

There are definitely some pitfalls and the credit card companies have the legal right to do many things that most of us would judge as unfair and even immoral, however, one of the things we can all avoid is having late payments.

If you are carrying a balance, instead of having the mentality of getting a payment in by the due date, start making the payment when you get the statement. That is, if you get a statement on October 14 it may state that the due date is November 13. Pay it October 15 or 16 or before the end of October at least. Then you won't have to worry about the due date.

If you don't carry a balance, pay your charges twice a month. Once, right after the statement and then again in the middle of the cycle or at least before the due date. Of course, at least one major credit card company has gone so far as to only allow you to make one payment per cycle on some of their accounts. In my view, the best thing you can do with such a card is close it and get rid of it.

This is what I do, fortunatly neither of my credit cards limit the number of payments you can make. I pay the minimum due when I get the statement and then I pay the rest (or as much as I can on the one I'm paying off over time) later in the month as we have the money. This way I'm never late or trigger universal default. The worst that can happen is that I forget the second payment and I get charged interest. That's never happend though, due to my bill payment system on my desk. I have an "not paid" box and a "paid" box, the payment slips for each bill stay in the "not paid" box until they are paid (just guess where I move them too after they are paid, go on, guess!

). Even though I've paid the minimum, the bill stays in the "not paid" box until I make the second payment. So every time I sit down at my desk I see them sitting there, waiting for the second payment. Only after I make the second payment do they get moved to the "paid" box. It's great for all my bills, I always know what needs to be paid and what I've already taken care of and I don't accidently make an extra payment on something because I forgot it got paid already.

slimcustomer · #17 (**permalink**) 10-09-2006, 03:33 PM

Quote:

Originally Posted by jmjj215

One way to make sure you don't get snagged is to limit the number of cards you have. That right there mitigates your exposure substantially.

This also limits how much you can take advantage of and profit from credit cards. I like to think of all the arbitrage opportunities that low rate credit card offers open up to me. Most of my cards aren't used for spending, just for funding investments in cds with 0% or low rate balance transfer checks.

jmjj215 · #18 (**permalink**) 10-09-2006, 07:46 PM

Quote:

Originally Posted by slimcustomer

This also limits how much you can take advantage of and profit from credit cards. I like to think of all the arbitrage opportunities that low rate credit card offers open up to me. Most of my cards aren't used for spending, just for funding investments in cds with 0% or low rate balance transfer checks.

I'm doing that with one as well. That's really a whole other beast entirely though

JoyJoy · #19 (**permalink**) 10-16-2006, 03:45 PM

There are people here in our Town of Amherst, New York and Buffalo, NY as well, sweating over being late with their credit card payments this week and triggering universal default on their 0% balance transfer cards. School taxes are also due. A 22-24 inch Columbus Day snowstorm has paralyzed our cities and power is out througout the cities and there is a ban on travel.

I agree with the posters to make your payment as soon as you get your statement. Pay the minimum atleast and then add more if you like before your statement date. Don't lose those 0% balance transfers and purchase offers!!