Credit Card from 6.9% to 24.25%

RSKY · Feb 11, 2005

First you need to set down with a calculator and figure up how much the interest costs you when you carry a balance. Then you will pay off all your cards. I use credit cards to pay for everything I buy, but I NEVER carry a balance. I work too hard for my money to just give it away. And when you carry a monthly balance on any credit card that is what you are doing. You are giving away your hard earned dollars to a large bank for no gain to yourself.

I met a guy in 2003 that had an outstanding balance of $128,000 on more than twenty credit cards. I forget the exact number. He and his wife would get a letter in the mail and get the card and max it out. They had a combined income of less than $100,000. Interest was something like $25,000 a year. I owed nothing to anybody for anything at the time and he could not understand why I got a car loan and the bank would not loan him money to pay off his cards. He was really upset and could not understand the unfairness of the situation.

I left the bank and got in my 1993 pickup and waited to see what kind of car he had. He got in a fairly new looking Dodge pickup truck.

OkeeDon · Feb 12, 2005

I got rid of all my credit cards and use a Visa debit card linked to my checking account. It looks like a credit card, functions like a credit card when the merchant is not set up for debit cards, and substitutes nicely for a credit card for reservations, car rentals, aitline tickets, online purchases, online bill paying, etc. I never have to worry about paying off a balance -- the money is already in the checking account when I use the card, or I simply don't make the purchase. It has solved all sorts of problems. I do have to keep a decent "pad" in the checking account to cover emergencies, but it's easy now that my bills are lower...

BigDave · Feb 12, 2005

( She tells me they're looking over my credit report and I've crossed some threshold for my income to debt ratio. )

How do they know your income level?

DocHeb · Feb 12, 2005

You report your income level when you apply for mortgages and credit cards.

Henro · Feb 12, 2005

There was an interesting interview on PBS Frontline awhile back regarding credit card companies and how all this worked. A portion of the interview can be read HERE along with other valuable info. 

Madref,

That was a good read. Thanks for posting the link.

I just realized that I don't know and never cared what the my credit card interest rate was. I always just assumed it was out of this world and never, ever. in over 25 years, paid a single cent in interest, being a natural born deadbeat! /forums/images/graemlins/shocked.gif

I would do the same as OkeeDon, except that I like getting $150 or more back from Discover Card each year. We use that card for EVERYTHING and doing so does give a small reward, that otherwise we would not see.

Bird · Feb 12, 2005

I'm much like you, Bill. I have a MasterCard that I used once last year, for the first time in many years, just to see if it was still active (it was). I have a Visa from another bank that I use only when paying at a place that does not accept Discover Card. I have a MasterCard debit card that I only use for ATM machines, and very rarely. Everything else is on the Discover Card, and of course, paid in full every month.

Jackrabbit_Slim · Feb 12, 2005

I'm not sure how it works in the US, but up here, you pay interest on the maximum amount you've run up on the card. For example, if someone had their card up to $3,000, they'd be paying about $100.00 a month as a compulsory payment. About $45.00 of that (at around 17% interest) is going to pay for interest. So, after getting the balance down to say, $1,500, the consumer is still paying interest on the full $3,000 and will until the entire balance is paid off. Looks like it's a lot easier to be bandit with a briefcase than with a gun.

Slim

JDGREEN4ME · Feb 21, 2005

I posted earlier that I had no problems with Bank One...WRONG. Just received my last statement and my rate went from 7.9% to 29.49%. I called to see what the deal was and was told it was due to negative information received from Equafax. Today I called Equafax and was told there were no changes in my credit. Everything is fine and they did not post a single negative in regards to me. Further they went on and let me know that they have no record of any contact with Bank One. We have money in savings to pay off what we owe if we can not get this fixed but do not want to do that. Just sent a request to B1 to clarify what the **** they are talking about! /forums/images/graemlins/mad.gif /forums/images/graemlins/blush.gif /forums/images/graemlins/shocked.gif

slowrev · Feb 21, 2005

In todays business world something is wrong only if you get caught.

Junkman · Feb 21, 2005

I had about 4 cards from MBNA and I used each card for a different purpose. One day, I got a call from them wanting to consolidate the cards into one. In a weak moment, I agreed. When the new one card arrived, it had a 6 month expiration date. At the end of the six months, they canceled the card saying that the credit limit on that card was too high. I always paid all my cards on time and in full. Now, I have one credit card and two debit cards that I use. What was interesting is when I rented a car when in Florida, they car rental company insisted on a credit card, not a debit card that was being used as a credit card. Luckily I did have my one credit card with me.
Sure am glad that they are charging high fees though... it keeps my bank stock price growing. My Fleet stock just converted to Bank America. Anyone know if they are a high interest credit card issuer???? /forums/images/graemlins/grin.gif /forums/images/graemlins/grin.gif /forums/images/graemlins/grin.gif

ByronBob · Feb 22, 2005

Nice way to treat people huh? That's fine because places like this spread the word way more than I could any other way.

When I canceled the card last week they didn't even ask me why. I imagine they know.

Junkman · Feb 22, 2005

Don't feel bad about the way they treat you the customer. I was on the phone this morning with our credit card processor and they informed me that our discount rate was going up ten points.... that translates to 10/100 % more. Now that might not sound like much money, but when you add that into the past raises of .06 every six months for the past 2 years, it adds up quickly. He told me that it is the goal of Master Card and Visa to get there rate up to that of American Express.... 3 1/2%. This means that for every $100 that you charge, the credit card companies will receive $3.50 plus whatever the per item fee is. This can vary from $.05 to $.35 per item. 3 1/2% per ticket amounts to a annual rate of 42%. The banks and credit card companies are making there money the old fashioned way.... They Steal It From You!!! /forums/images/graemlins/mad.gif /forums/images/graemlins/mad.gif

slowrev · Feb 22, 2005

Junkman,
These fees raise the prices of the products for everyone, not just the ones who buy on credit /forums/images/graemlins/frown.gif
So those of us who do not use credit cards are subsidizing the ones who do. Would this be socialistic capitalism ???

Ben

Wingnut · Feb 22, 2005

As Ben pointed out ... we all pay the same price ... the merchant is not allowed to offer a "deal" for cash .... so .... I don't use cash.
I have several cards that "give back" based on annual or quarterly purchases ... Discover and my MBNA card are both at 1% but I'm looking at trading the MBNA on a gas/grocery/drug card that will pay back 5% on those purchases.
Since I get a "rebate" by using the card ... and no credit for not using credit (sorry, couldn't resist the pun) ... plastic is the way I go .... anytime I have a choice!
However!!! I do make sure I'm not PAYING for that rebate!!! I have not paid an interest charge in pretty close to 20 years .... so I don't care what the interest rate on my plastic is ... they could make it 100% and it wouldn't bother me.
A long time ago, I sat down and did some "what ifs" on a spreadsheet ... and decided then and there that interest was something I had NO interest in!

just my .02 ... capital only!

PitbullMidwest · Feb 22, 2005

They are all theives. I had cards from Chase and Providian. Last year I received a letter that Chase had purchased my account from Providian and that future payments should be sent to them. The first bill from Chase/Providian showed the interest rate was raised to 29.98% yet the rate on other Chase account stayed at 2.9%. I called to find out the reason for the increased rate and was told that after reviewing my poor payment history with Providian, I was considered a high risk. Poor payment history? I never missed a payment and made copies of the previous year's statements and mailed them to Chase.

Chase's response was they may have made an error but it is their policy to only review account rates every 6 months. I asked if that meant they wouldn't raise my rate if I stopped paying? No, they just wouldn't review it to lower it.

We paid both cards off and will not do business with Chase again.

OkeeDon · Feb 22, 2005

"...and decided then and there that interest was something I had NO interest in!" 

My wife carried the idea a step further -- she's decided that interest was ordained by God to be paid TO her, not BY her.

frank_f15 · Feb 22, 2005

( They are all theives )

YOU HIT THE NAIL SQUARE ON THE HEAD! I use CC strictly for my convenience, especially when traveling and then pay it off. The fine print is where they get you, be late one time and the rate goes from 6.9% to 21% or higher.