Comments on: Credit Cards Calling The Shots

By: Click4Credit

Click4Credit — Mon, 09 Feb 2009 22:37:31 +0000

Yes,a ll good advice here. First of all I know it can be easy to use credit cards to get a small business off the ground. Often it can seem like one of the few options when you start out but you need to think about the repayments. Close to 30% interest sounds criminal, if you spotted this situation earlier then perhaps a balance transfer to a low interest card would be good. Need to look for ongoing low interest not just intro offers. The issuers offer sounds like a big improvement but I think many of us have learnt from past experiences, if it’s not in writing it’s not worth a thing. Get them to confirm and then take the offer.

By: Alicia

Alicia — Wed, 28 Jan 2009 02:46:41 +0000

This is all good advice. My husband and I also own a small business and unfortunately got into credit card debt shortly after we opened. We would never carry a balance on a card personally, but being in a business situation was totally different. If we cannot afford something personally, we just make do and do without. But with the business, there are certain things that you cannot do without or you cannot be open. We didn’t really think about this much before we opened. Our biggest mistake was undercapitalizing with our SBA loan in the first place. We simply underestimated start up costs and had to start putting things on credit cards or close. We are in about 3 years right now with a business that seems to be successful outside of the debt. It’s going to be so freeing when we can see that debt paid off, have a little breathing room, and really start to see the profits soar.

By: RICHARD

RICHARD — Mon, 26 Jan 2009 22:24:12 +0000

It’s easy to take back control from all of these evil credit-card companies. STOP USING CREDIT CARDS. If you cannot discipline yourself to paying them off 100% each and every month, cut them up.

Yes this guy should take the 4.75% deal, and he should use the experience as a lesson rather than as a springboard to more borrowing.

Our entire nation is addicted to debt. Did anyone really believe that could go on forever, without ever having to pay the piper?

By: JoeB

JoeB — Mon, 26 Jan 2009 21:52:31 +0000

I think that there are some great comments in here. I agree that the credit card companies are some of the worst crooks. If in my business I did what they do to people there would be huge lawsuits looming and we would have no customers.
It would be awesome to have people take bake their financial health and make credit card companies go into extinction!

By: Chrissy

Chrissy — Mon, 26 Jan 2009 20:34:31 +0000

Years ago when I was getting married, we had put all the wedding expenses on my credit cards, my fiance passed away unexpectedly.
Now I had about $15,000 in debt on my cards and was trying to work out a plan with the companies. I was offered a 1% finance charge on the balance of one card for a period of 1 year, but it had to come out of my bank acct automatically – which was fine – only they did not send a bill once the 1 year period was over – after several calls, I did get a bill for a years worth of late charges and they jacked my rate up to 32% – get everything in writing and take names – you never know what they will try and do next!

By: DavidK

DavidK — Mon, 26 Jan 2009 16:21:34 +0000

“I haven’t used it in almost 2 years because the rate is 29%.”

I meant to say I haven’t used it to purchase anything in almost 4 years. I’m not firing on all cylinders this morning.

By: DavidK

DavidK — Mon, 26 Jan 2009 16:18:44 +0000

(As per my usual) A few things to mention:

1) Paying late on a card is NOT the same as a late mark on your credit report. Late payments that are reflected on your credit report MUST be at least 30 days late or more. Slightly late payments to a credit card company will invoke their “late fee”, the “rate adjustment” clause and cause them to basically be unfriendly to you from then on. They will jack your rate to just under 32% (which is just below what would invoke many states usury laws) and probably move your payment date up toward the beginning of the month. I have had the same thing happen to me on my Chase card. I only keep the card so I don’t lose the 10 years of credit history with them. I haven’t used it in almost 2 years because the rate is 29%. Bleh.

2) Closing your account and paying off the remaining balance does not reflect negatively on your credit report except in the “average credit life” part of the score. Since the card holder would be requesting the account to be closed, it would appear as “Card holder closed account” on his credit report. This is different from the credit card company closing the account due to non-payment, death, etc and shows up differently on the credit report.

3) Yes, you should get the terms of the “pay-off deal” stated in writing before doing it, but don’t be surprised if they don’t do that. About the only thing that has to be done in the agreement is that they have to send you a bill with the due date stated clearly on the bill. They have to send it to you with enough time for you to pay it and you have to pay it. Other than that, the “terms and conditions” are all up in the air. I would recommend taking out a simple payment consolidation loan, or using the Lending Club as FrugalDad suggests to pay off the card in full and close it. One the balance is paid off and he’s made major payments on the loan, then apply for another credit card somewhere else. (If he does have any “30 day late” red marks on his credit report, he won’t get a very good card limit but you will probably get better terms.

I have had this happen to me as well. I’ve had a Chase Platinum Visa for over 10 years now and in the early days had been late a couple of times. Unbeknownst to be, they jacked my rate up to ).99. (This was before I was bit by the frugal bug and watched my credit card bills like a hawk.) Ever since then, I’ve tried getting them to lower my rate with the only success being that they will lower it by one point every 4-6 months. So far I’m down to &.99 — not the greatest but I have also transferred the entire balance to another card. When that credit card company wanted to jack my rate on the transferred balance from %4 to .99, I transferred it back to the Chase card at %3.99. Ironically, Chase hasn’t done anything to the terms and is glad to collect my minor interest payments every month. In this time of card companies losing what little minds they have, I highly recommend having several cards you can use as the chances of getting bit in the butt by all of them are low.
Gah, long post. I’m done. I hope this helps someone out there in the “huge series of tubes”.

By: Personal Finance Ology

Personal Finance Ology — Sun, 25 Jan 2009 23:21:59 +0000

4.75% is way better than 29% I would take the deal. Of course get it in writing you don’t want something shady going on. It would be best if you could get along w/o using a credit card, but I know that is not always possible.

By: Eric S. Mueller

Eric S. Mueller — Sun, 25 Jan 2009 15:21:04 +0000

In my experience, credit card companies will play tough as long as they have the upper hand. I once had an AT&T Platinum Master Card. I got it because the rate was 10.99%, which is decent for a credit card. After years of on time payments, one payment showed up 1 day late thanks to the U.S. Post Office or even the credit card company’s mail room. It was paid and sent in plenty of time, but somehow got there a day late. My rate was automatically jacked up to 25.99%. I called to complain, but got no result. About the same time, we had the same thing happen on another card.

We did a second mortgage, and put both cards on it. After the balance was zeroed out, I called to close the accounts. When I was transferred to the cancellation department, they asked what they could do to keep me as a customer. I explained that I was canceling because my interest rate was jacked up to an unreasonable level because of a 1 day late payment. At that point, the offer was made to lower my rate down to 9.99%. I demanded the account be closed and stated that I would not do business with them again.

From listening to Dave Ramsey, it seems that credit card companies are not above declaring payments late even when they’re not just to get an extra $30 in late fees. As long as they have the upper hand, they can pretty much do whatever they want. The only way to get the upper hand is to threaten to close the account and actually have the means to do so.

By: John Delaney

John Delaney — Sun, 25 Jan 2009 00:36:56 +0000

I think your advice to “John” was excellent. I started my own business 15 years ago, but fortunately did not go into credit card debt to do so. However, during trying economic times I’ve found myself in credit card debt.

I love Frugal Dad – and I’m also a big fan of Dave Ramsey, having completed Financial Peace University about six months ago.

Ramsey’s debt pay down snowball process is amazing and very effective.

After years of being a debtor, I’ve finally wrapped my brain around being debt free and living within my means. No more of being a slave to the lender.

I will be debt free, except for my mortgage, by the end of the year – thanks to tips and guidance from Frugal Dad and Dave Ramsey.