Credit Card Applications Demystified

You learn something new every day! While reading some personal finance blogs tonight, I came across a great post that goes through almost everything on a credit card application.

A few things that I learned:

1.) Some cards with balance transfer offers may have a pre-payment penalty.

2.) Just because it says “Pre-Approved” doesn’t really mean you are.

3.) Always read the fine print.

If you are thinking of applying for a credit card, make sure you read this post first. Cap did a great job laying the important stuff out there in an easy to understand post.

Posted by Tricia on August 4, 2006 at 11:24 PM in Credit Cards | 5 Comments »
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Fred Hilgers responded:
Posted: August 6th, 2006 at 9:07 am
Credit cards are always portayed as evil. I consistently make money by using my cards to buy virtually everything we use! Here are the rules:

1. Use only a card that gives cash rebates, has no fee, and does not charge interest if the balance is paid by a certain grace date. Don’t accumulate air miles or trading points; you want CASH. Discover is one that fills the bill.
2. Keep a daily running record of the balance due and include this payment in your budget. This can be set up like a checking account in your computor financial program. If you keep the receipts, you can also check your bill like you would balance a checking account. Every once in a while you will catch a double charge or a plain old error. It helps to number the receipts for reference.
3. Pay the entire balance each month!!! There can be NO slipping to cover something unexpected. Don’t EVER “borrow” from a credit card!!! Find a credit union you can join if you must have an emergency loan.

Our rebate usually comes out around $21 each month. No, it doesn’t make us rich, but it does beat the heck out of paying interest. Admittedly, if everyone did this, the card companies would close the loop quickly, but as long as there is a majority who don’t, the door is open!
Tricia responded:
Posted: August 6th, 2006 at 10:59 am
Thanks Fred for bringing this subject up. Using our credit cards to make a little bit of money is where I would like to be one day. But before I do, I need to make sure that I will be able to pay the balance in full each month. I do not ever want to go back to where I was in February. It is very encouraging that others are doing it and it works for them. Thank you for sharing.
Fred Hilgers responded:
Posted: August 6th, 2006 at 1:44 pm
Act like it’s a debit account as you go along. You could even subtract the balance from your checking account daily. That way, at the end of the month, the money is in checking; it just doesn’t show. You could always keep track by remembering that your actual checking balance is the one shown PLUS the amount owed on your card.
Fred Hilgers responded:
Posted: August 6th, 2006 at 3:00 pm
If we get this whipped, I’ll explain how to buy all your cars for cash after 25 years of disciplined economics! That sounds like a long time, but the system really begins to pay off after 5 to 10 years.
Tricia responded:
Posted: August 7th, 2006 at 8:27 pm
You know Fred, that’s a pretty good idea with keeping track of the credit card spending within the checking account. I think I will have to see if I can whip up a method to do this in Quicken and post it on my other blog. Hmmm…