Master Your Card

The very talented CM over at CreditMattersBlog.com has a weekly segment entitled ‘10 Questions and Answers at CreditMattersBlog.com’ in which he answers some of his readers more poignant questions. I like the idea so much that I’ve decided to steal appropriate it for Master Your Card.

Like CM, I don’t collect any personal information, but I can see the search terms that people use to find the site using Google Analytics (free, and highly recommended if you’re a webmaster!). Whenever I happen across 10 or so questions in my traffic logs I’ll paste them up here along with a brief but (hopefully) helpful answer.

So without further ado, here are the first 10 Questions and Answers from Master Your Card readers. By the way, I’m not an expert but if you ever have any credit or finance related queries please don’t hesitate to shoot them over using the contact link in top right hand corner.

Q: How do I get a lower interest rate?

A: If you have consistently made your credit card payments on time and haven’t exceeded your credit limit then you should call your credit card company and simply ask for a lower interest rate. If they’re unwilling to lower your interest rate then shop around for a card with a lower rate. It won’t be hard to find another card with a better interest rate if you have a good credit score.

—–

Q: When is a credit card payment considered late?

A: Technically, your payment is considered late if it isn’t received the very next day after the payment is due. Some credit card companies offer a short grace period of a few days (generally no more than 25) after the payment date when they won’t charge a fee or raise your interest rate, but not every company does this so don’t assume you credit card company offers a grace period. Find out by speaking to a customer service representative at the credit card company. Even if a grace period is offered, it’s not a good idea to consistently send your payment in late as a habit, because you might find the grace period revoked.

—–

Q: What is a charge-off?

A: A charge-off is when the lender essentially gives up at ever receiving payment on your account. You won’t receive calls from the credit card company anymore, and the account is written off by the lender. This doesn’t mean you’re off the hook for the debt, though, because the account is usually sold to a collection agency that will still aggressively pursue payment. Charge-offs are not good for your credit score.

—–

Q: How do I raise my limit?

A: Sometimes credit card companies will raise your spending limit, even if you don’t want them to. If you would like your limit raised then call your credit card company and ask for a higher limit. They will take a look at your account and your payment history and might even glance at your credit report before granting the increase. If the company is unwilling to increase your spending limit you can apply for a different card with a higher limit.

—–

Q: How do I get a credit card?

A: You have to actually apply for a credit card before you can get your hands on one. Even if you are sent a preapproved offer through the mail you still need to go through the application process. Your chances of getting a credit card are greatly increased if you have a steady source of income and a decent credit score. If you have absolutely no credit, apply for a credit card designed for people with little or no credit and then pay consistently. You’ll soon be able to get a credit card with a lower interest rate and a higher spending limit.

—–

Q: What is APR?

A: APR stands for Annual Percentage Rate. This is the interest rate that your credit card company charges you for your balance, after any grace period, plus whatever fees are imposed. The lower your APR the better, because this ultimately dictates how much money you’ll pay out in interest on any balance you carry.

—–

Q: How do I find out what my interest rate is?

A: Your interest rate should be listed on your credit card statement. If you can’t find it, call your credit card company to find out. Since credit cards usually have variable interest rates - some dictated by an index and others dictated by your payment history - your interest rate might change quite often.

—–

Q: How does my credit card company calculate my minimum payment?

A: Your minimum payment is based on a percentage of your balance. Some credit card companies will give cardholders “months off” where the cardholder is not required to make any payment whatsoever during that particular billing cycle. No matter how low your minimum payment is, however, most financial experts agree that consistently making nothing more than the minimum payment on your credit cards will result in paying a great deal of interest over time.

—–

Q: How do credit cards affect my credit score?

A: Credit cards can be a huge boost to your credit score if you manage your account well, such as making timely payments and not exceeding your credit limit. Any credit card you have, whether you actively use it or not, will have an effect on your credit report. The longer you maintain a credit card the better, although too many open credit card accounts can actually start to lower your credit score. The bottom line is this: Manage your credit card accounts wisely and don’t open more accounts than you need, and your credit score will reflect this positively.

—–

Q: What kind of fees should I expect with my credit card?

A: The amount of fees you pay on a credit card depends on the type of card you have. You can almost always expect to pay costly fees any time you deviate from the original agreement (such as making your payments late or exceeding your spending limit), and there are also other fees that may apply to balance transfers, cash advances, using an ATM, and any other number of transactions. Request a Schedule of Fees from the credit card issuer so you can get a good look at the fees you are subject to.

-

That’s it for round 1 guys and girls. Please keep those questions coming!

With credit card deliqnuincies approaching a 3 year high, banks are getting a little skittish about who they lend money to. Raising rates and fees, suspending 0% balance transfer offers, and now a tsunami of credit limit decreases - all tricks designed to deter us from using the very products they’ve been busy shoving down our throats for the past decade.

In other words, if you feel like you’re being screwed a little more than usual, you’re not imagining it, and the mainstream media has begun to pick up on it.

Last week ABC ran a story entitled Credit Card Companies Slash Spending Limits:

Without even warning their customers, some credit card companies are slashing the maximum spending limits.

American Express, Bank of America, Citibank and Discover are among the major issuers who are lowering credit lines.

“Good Morning America” technology contributor Wendy Bounds stopped by the show today to explain what this could mean for the consumer.

Who’s at Risk

“The first people in the line of fire will be those who have high balances, people who have low credit scores and are not paying off their bills on time,” Bounds said.

But the pain is spreading to those with average or even good credit scores.

“Even those who are paying off in full, they are in the line of fire as well,” she said. “The banks don’t just look at the one card that you have, they look at your entire credit history. Having problems elsewhere? They know it. That could hurt you as well.”

The Consumerist also ran a story on Citibank raising rates on millions of its card-holders, often for no apparent reason. This comes literally days after the Treasury injected a further 20 billion dollars into the ailing bank.

In a statement, the company offered few details but acknowledged that it was “repricing a group of customers” in order to “continue lending in this environment.”

Those who pay their balance in full each month have nothing to worry about. And from what we can tell, “promotional balances” - such as that 1.9% balance transfer you might have taken advantage of - are not affected.

Based on admittedly-unscientific online discussions, customers across the risk spectrum have been targeted - including, most oddly, lowest-risk customers with top FICO scores who don’t carry balances. This would seem to indicate that the repricing is more widespread than Citi has indicated.

This deals an embarrassing death blow to the company’s enthusiastic promises last year, when Citi Cards CEO Vikram Atal told the United States Senate that they would abandon the practice of hiking rates on existing balances. Atal said the company was “giving up that practice,” and

“…will not voluntarily increase the rates or fees on the account until the card expires … the only reason we would consider increasing the rates or fees before the card expires would be if a cardholder pays Citi late, exceeds the credit limit, or pays with a check that bounces. We believe we are the first bank to adopt this policy.”

Citi claims that the rate increase will affect only 20% of its customer base, but anecdotal evidence would indicate that this number is much, much higher.

Anyone received the dreaded rate-jack letter from Citibank (or any other card issuers, for that matter)?

The newest Consumer Report is in and their agenda was the dozen or so cards that consumers should be seeking out, and the several to stay away from. So, without further adieu, here’s an abbreviated list of them.

The Best of the Best

The best of the best category includes those with low rates and low fees. Given that so many people in the U.S. are seriously in debt, it was believed that this category trumped the rewards category.

1.) Capital One Platinum Prestige
2.) Clear - American Express
3.) Iberiabank Visa Classic (I have no idea what this one is…I’m in the process of researching it)

The Best for Cash-Back

These cards are pretty self-explanatory. They offer the best options for cash-back, usually somewhere in the neighborhood of 3-5% for certain purchases with 1-2% on others. Just be sure to read the disclosures to make sure it’s a card you can use!

1.) Capital One No Hassle Cash Rewards
2.) Chase Freedom Visa (one of my favorites)
3.) Discover More

Top Gas Cards

There were several on this list, but the top three are as follows:

1.) Chase PerfectCard MasterCard ( I believe this is a business credit card…I don’t remember this one from when I worked at Chase)
2.) Discover Open Road
3.) Hess Platinum Visa (this is another Chase card - though again, one I don’t remember…but, Chase has over 900 credit cards and I didn’t know them all)

Top 3 Credit Cards To Avoid

Consumer Reports has spent a good deal of time looking into which credit cards are considered the best, and which are worthy of the round file ( i.e. the trash). To that end, here are the top three credit cards to stay away from, per Consumer Reports:

1.) First Premier Bank

If I’m not mistaken, this is one of those “repair bad credit” type of cards, which means there’s likely an annual fee, a monthly maintenance fee, and a pretty low limit to start with, all of which is then eaten by the aforementioned fees. And, from personal experience, the customer service on these kinds of cards suck!

2.) HSBC American Dream Card

I’ve never had the American Dream card, but I have dealt with HSBC personally and through helping my clients. They’re a nightmare! Avoid them if you can. One thing I truly hate about this company is that you call in to fix something minor and they bombard you with sales pitches. I called to have them correct my address; something minor, it was missing the apartment number so I wasn’t receiving my statements, and had been locked out of my online account because they had received returned mail. When I finally got to a live person I couldn’t understand a word she was saying - she sounded like my three year old nephew (I don’t speak baby very well) and every other sentence out of her mouth was a sales pitch. It was enough to make me want to rip my hair out.

3.) New Millennium Visa or MasterCard

I don’t know much about this card, which is to say that I don’t know anything. But, if it’s among these other two then I’m willing to bet it’s just as annoying as its predecessors.

Tips to Navigate the Waters

Consumer Reports offers a bevy of tips on how to make sure you get the most bang for your buck when it comes to using your credit card. Most of these you probably know, but just in case, it’s worth mentioning again.

Tip # 1 - Use credit responsibly

Make a budget and stick to it, don’t rely on your credit cards to fill the gap. In addition, if you have a lot of high interest debt that’s sitting there, skip the rewards and go for the low rate/low fee cards, preferably one with 0% balance transfers.

Tip # 2 - Choose your card carefully

Make sure you choose a card based on your current needs. If you carry balances, then a rewards card may not be for you. On the other hand, if you pay your card in full every month, then it’s best to take advantage of the rewards - unless you’re stoozing, in which case, stick with the low rate cards.

Tip # 3 - Avoid the pitfalls

We all know the industry is changing, but until the laws come to pass, things like double billing and the universal clause are still in affect. Check the fine print carefully before deciding to use a card.

Tip # 4 - Don’t be afraid to contact the lender

If your rate has suddenly jumped into double digits from a very low one digit, you have every right to call the lender and demand to know what’s going on. Pick your battles, but if you feel you’ve been treated unfairly, don’t be afraid to use your loyalty as leverage to lower your rate. Still, some companies are being stubborn, so if you make any threats, be prepared to follow through on them.

Tell us, have you used any of the cards on the list? What were your experiences? Any that should be here that aren’t?

This is what I imagine took place between the CEOs of GM, Ford, and Chrysler when they all decided it would be a good idea to work for $1 in 2009.

Warning: Probably not for the easily offended.

Rick Wagoner, Alan Mulally, and Bob Nardelli - the CEOs of GM, Ford, and Chrysler respectively - all plop down on Wagoner’s lavish furniture in his designer decorated office back in Detroit.

Wagoner: I can’t believe Congress is going to make us “come up with a plan” just to get the money. I mean, it’s not like we’ve done anything wrong here.

The other two nod in agreement as Mulally jumps up to pour himself a drink from the bar.

Mulally: Well, I can tell you right now, I’m not cutting my salary to get this deal. We’re good as gold. There’s no f%&*ing way the government will let us fall, boys.

Wagoner: Maybe, but we’ve still got to salvage a plan for show. You know how the public is, always whining about someone making more money than them.

Nardelli: We could cut bonuses for lower management and void all merit-based raises in 2009.

Mulally: (sloshing his drink) Hell, yes!

Wagoner: That could work -

Mulally: Hold it! I’m not going to have to give up my summer home, am I?

Wagoner & Nardelli: No! Definitely not!

He nods, appeased for the moment.

Wagoner: I suppose we’ll have to begin production on those electric cars, too. You know they’ll want to hear about that.

Nardelli: Yes, but Exxon won’t like it. We’ve been taking kickbacks on gas prices for years.

Mulally: So we grease the wheels with the next big company that fuels cars, big deal. What I want to know is why we’re still paying salaries for those idiots we laid off. I mean, I didn’t even know we were doing that.

Wagoner: We’re not paying all of their previous salaries, just a portion. And remember we talked about this. It looked good to the press and the average American sitting at home.

Nardelli: Truthfully, I thought it would help us sell more cars than it did. It’s a waste of our resources so let’s add it to the list of expenses to cut. Let them stand in the unemployment line.

Nardelli scribbles some notes on a cocktail napkin in front of him.

Mulally: Well, I suppose we can sell a couple of the jets. I think you two should sell yours. I mean, mine is more comfortable by far, don’t you think?

Wagoner and Nardelli look at him with disgust.

Nardelli: And were you planning on selling anything to get this deal done, or are you just going to be a selfish a$$?

Wagoner: Let’s not start. We’re not the enemies here. It’s a matter of milking the proverbial tit, so let’s just do what needs to be done. We’ll sell the jets if you agree to a pay cut, Mulally.

Mulally spews his drink down the front of his Armani suit.

Mulally: I think I’m fine where I am. I already agreed to no Christmas bonus. Do you know how hard it is to survive on the $22 million base salary? I mean, what am I supposed to give my wife for Christmas? Diamonds? I was planning on buying that little island called Jamaica for her and now you really expect me to give up my salary, too? No way, I won’t do it!

Wagoner: What if we tell Congress we’ll work for $1 in 2009?

Mulally: WHAT?!

Nardelli: Excuse me?

Wagoner: Think about it. It gets us the deal from Congress and sets us up as heroes in the public eye. CEOs willing to work for $1…it’s never been done.

Nardelli: Actually -

Wagoner: Oh shut up, Nardelli! If we don’t get this deal done our companies will have us out faster than you can say electric car, and the severance package won’t even scratch the surface of what we’re making right now.

Mulally: You know, I’ve never understood why they don’t give CEOs more money in their severance packages. I mean, they have to survive somehow, right?

Wagoner: Whatever. Look, the idea is simple. We TELL everyone we’ll be working for $1 in 2009. But, in reality we get with the accountants and find out how we can get paid under the table. I’m thinking some sweet kickback deals from vendors and the manufacturers could prove to be pretty lucrative. Plus, the company still has to match our 401(k)s.

Nardelli: Hmm. This could work, provided the accountants can find a way to make us money under the table. It’s pretty big gamble to run with this before talking to them.

Mulally: Well I don’t like it!

Wagoner: No one asked you! Either you’re with us or you’ll be joining the idiots you laid off in the unemployment line!

Spittle flew from Mulally’s mouth as he tried to think of something to say. Nothing came to mind so he closed his mouth.

Nardelli: Ok, so we’ll tell Congress we plan to cut expenses by limiting employee benefits, including merit raises; we’ll tell them we’re looking more seriously into electric cars, or at the very least starting production on the hybrids; and we’ll unveil the plan to work for $1 in 2009 as the companies rebuild and start making a profit again. Sound about right?

Wagoner: Sounds good to me. They can’t complain with that, I mean, look at what we’re sacrificing….Stop pouting Mulally. You have plenty of money to last you through the year making a little less than your $22 million, and besides, it’s only for a year. Do you want the deal with Congress or not?

Mulally: Fine! But I don’t have to like it! And it’s only for 2009, dammit!

Nardelli: Then we’re all agreed. I suggest we get someone to type up these plans tonight since we’ve got to fly back to Washington tomorrow. By the way, should we jetpool this time? I think the Senator was quite put out that we hadn’t done that the last time.

Wagoner: Yeah, I noticed that. Can’t imagine what was stuck in his craw. But, yes, I think it might be best if we ride together. Besides, it gives us a chance to rehearse our speeches.

Mulally: If we’re done gentleman, let’s head to the country club for a round of golf.

The others agree and they all leave the office, the cocktail napkin laying on the table. Someone will be typing that up tomorrow morning before they leave for Washington. Probably someone headed to the unemployment line.

Daycare is a pretty big expense for most households. The trouble is, the price of daycare is going up, even in hard economic times. With parents losing their jobs or having their hours seriously cut, many people are left without many promising options as they can no longer afford their childcare expenses.

I was reading an article about this over at USA Today that basically said daycares with year-round waiting lists are now struggling just to fill the open slots. It’s no longer about making a choice to have a second car or take a family vacation. It’s now about making the choice to feed the family.

I’m not a mother, so for me I had never really given this matter a lot of thought. It wasn’t part of my budget, so I never worried about it. But, I became more concerned about the problem last week when I experienced something I’m still not sure how to take.

There’s a Chinese food restaurant here in Austin that I frequent quite a bit. It’s a great little place, family-owned, sort of like my own personal little “Cheers” bar…everyone knows my name. At any rate, there’s a waitress who works there that’s as wonderful as can be. Not only does she know my name, but she knows the dishes I like and how I rotate them. Basically, she knows what I want when I walk in the door.

So, I go into the restaurant last week for dinner with a friend and we’re enjoying our meal when several cops burst in and demand to speak to our waitress. Naturally, the entire restaurant is confused and wants to know what’s going on. It turns out, the waitress had taken her kids to work with her and left them locked in the car with food, water, games, and movies to watch. She was going out every 15-20 minutes to check on them and make sure they had plenty to drink and so forth. Someone called the cops on her.

Upon questioning her, the police discovered that she couldn’t afford the cost of daycare and she didn’t have any family in Austin that she could turn to for help to watch them. She explained she brought them to work and that she was checking on them every 15-20 minutes. The police spent some time examining the kids and they were perfectly healthy, nothing wrong with them at all. They were, in fact, cranky to have their movie interrupted by all of the grown-ups wanting to check them out.

Given the nature of the situation, the police sent her off with a warning, but told her that they were required to report it to CPS. She could expect a full-blown inquiry from them and what happened after that was between her and CPS. She was pretty distraught, so the restaurant sent her home for the evening.

Now, I’m not saying I agree with leaving the kids locked in the car. However, my mom did this with us kids when she went grocery shopping and it was never a problem. We were always left with things to keep us busy and plenty to eat and drink - especially the drinks. Still, I see the other side where it’s plenty dangerous to be leaving your kids in the car, even for a moment.

But what are parents supposed to do? Quite their jobs? How will they take care of their families?

I did some reading and found a few tips for those of you out there with kids.

1.) Switch to night shift, if possible

Sure, working nights isn’t exactly on the top of the list for most people. But, usually there’s a pay differential and it may be easier to have your kids stay with someone while they’re sleeping.

2.) Teenage babysitters

Teenagers are usually much cheaper than a daycare and more flexible in the hours. Of course, you’ll want to make sure they’re CPR certified and have some references, unless you know them personally. Otherwise, it’s a good way to save money and help them out, too; especially during the summer when teenagers are looking for part-time work.

3.) Family and friends

A lot of us may have family and friends that we could ask for help, but we don’t. Maybe it’s because we don’t want to intrude on their lives or maybe it’s because we have too much pride to ask for help. In either case, sometimes we just have to ask. If you can afford to offer them a little money, then do so. Or, if not, offer to help out with household chores as a way of repayment.

4.) Start a community co-op

We did this in our neighborhood and it seems to be working out well. Most of us in the apartment building I live in know each other pretty well. So, we decided that we’d get together to watch each others kids and rotate it to give everyone a break. Even though I don’t have kids, I still participate to help out when I can. There are probably some stay-at-home moms and dads that would be happy to help out by joining forces and watching the kids. Never hurts to look into it!

Something else to consider is leaving the oldest in charge. I didn’t put this as an actual tip because this is really to the discretion of the parents. Obviously, a 4-year-old isn’t ready to be in charge of his or her 2-year-old sibling. But, what age is a good one to leave them home by themselves? I have a friend who leaves her 10-year-old home alone after school until she gets off of work. He rides the bus home and when he gets home he locks the doors and double checks the windows. He’s not allowed to answer the door or the phone and he has all of his mother’s contact information in case of an emergency.

She’s also laid down very strict rules about what he can do in the house, as well. No cooking. He can have a sandwich or something that does not require him to use the stove or the microwave, but that’s it. He does pretty well and there haven’t been any issues for my friend (knock on wood), but I personally feel 10 is too young. But then again, I’m not a mother, so I don’t know. Is 10 too young?

What do you think about this whole daycare thing? Are you paying way too much for daycare now? And what about my waitress friend? Did she get off too easy in your opinion, or was she doing what she had to do? Would you have called the cops?