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“Credit Cards” Archive
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I’ve known that we have paid some serious money to our credit cards in terms of finance charges. For a while there, we were paying $400/month during our heaviest debt load and interest rates. It always wasn’t that high because our balance wasn’t always that high. I became curious as to how much we have paid towards finance charges.
I dug through all of our old paperwork and started logging each credit card statement and finance charge into a spreadsheet. If I didn’t have a statement, I contacted my credit card companies to see if I could get copies. Some had it where you could request copies online which was very convenient, but you could only request so many copies at once. Since I was going back to the beginning of it all (1995), it took a while to get everything together.
I tend to be a perfectionist when it comes to numbers. I like my numbers to be exact. Try as I might, I couldn’t get an exact number because one of our old cards was a store credit card. The company went out of business and there is no way to contact them (that I am aware of). I didn’t keep those statements. Probably because we did end up paying the card off and we closed the account. Then there was another account where it cost money to get copies. I didn’t want to do that, so I only included the statements I could find.
I thought about it, and I need to get this off my chest. I don’t have an exact number, but I am 100% sure of the following…
We have paid over $10,000 in finance charges!
It makes me sad that we didn’t realize how much we were paying and didn’t put a stop to our credit card debt a long time ago. Looking at my spreadsheet, some months seemed pretty innocent, especially in the beginning. $20 here…$40 there…it didn’t seem like too much at the time. It all adds up!
Right now, all of our credit card debt is at 0%. It will remain at that rate for a few more months and then the “normal” interest rate will apply (whatever that will end up being). Yes, it is definitely time to kick into high gear with our debt reduction.
This is a guest post from Family Man at Build Tomorrow - Another Day of Life. He’s a married, 35 year old father of three who has some significant debt he is trying to pay off. He gave me this article, and since I don’t always keep up with current events I thought this was a great article to share.
Earlier this year the Federal Reserve proposed new rules for credit card companies. The major issuers immediately spoke out against the proposed rules, claiming that they would result in less competition, higher prices, and less choice for us the average consumer.
So what do these proposed rules mean for you? It first of all means that banks will have less opportunity to make changes to your account for arbitrary reasons. Some of these fundamental changes are as follows.
- Banks wouldn’t be able to hit you with a higher interest rate on debt you already owe.
- Prohibits “two cycle billing.” This is a practice that computes finance charges based on previous billing cycles.
- Banks would have to apply at least a portion of payments toward higher-interest rate debt. In the past issuers put payments consumers made toward cheaper debt, like balance transfers that generally had lower rates.
- Banks would have to provide consumers a reasonable amount of time to make payments.
- Credit Card Holds. The proposal would prohibit banks from imposing a fee when the credit limit is exceeded solely because a hold was placed on available credit. This can occur where the final dollar amount of a transaction was not known in advance (for example, when a consumer checks into a hotel, a hold is placed for the expected cost of the stay).
This potential rulemaking is a huge step in asserting consumer rights in the area of credit. Many at the fed believe this is a necessary step toward recovering the credit market. Will this limit some of the credit available to consumers? Absolutely! Over the last 9 years credit was made so readily available to individuals, that could not afford it, it has become a major contributor to today’s economy. These rules will tighten lending to those who can afford to pay it back. While that may seem more restrictive it is more in line with consumer sentiment.
The Federal Reserve needs your help. Public comments are being requested before August 4, 2008. I plan to post mine. I believe that interest rates should be capped at prime plus 12%. This will allow those in debt to recover, while still allowing banks to make money. As consumers get out of debt, they will have more disposable income, and spend more (cash I hope). If you agree I hope you will make your voice heard.
Go to federalreserve.gov and click on “consumer information” at the top of the page. Then click on “Proposed Rules for Credit Cards and Overdraft Services” and scroll to the bottom of the page. Look for Regulation AA and click on submit a comment.
Direct link here.
Thanks, Family Man for the guest post!
Over at the Consumerist, they wrote about how credit cards are raising interest rates if you happen to go over the credit limit:
Discover is the new cheerleader for penalty APRs and plans to asses rates of 31% on top of their $39 over-the-limit fee. Other creditors are rushing to get in on the action, too.
[Via Consumerist.com]
Make sure you read the comments on this one. You’ll read about credit card companies lowering credit limits to just above how much you have charged on it. If you do not catch it, and pay extra next time, the finance charges they charge you may just put you over your credit limit. Scary!
Always check your statements!
This guest post comes from Jonathan from Master Your Card. He discusses everything about credit cards over there. If you like what you read here, check out his blog or you can subscribe to his feed here.
It’s one of those things that none of us like to talk about, but unfortunately for many families not talking about it can lead to undue stress and complications should the unexpected happen. The subject we are talking about is death – and sooner or later it will affect every one of us. Unfortunately, for many families, they find out during this time of immense grief that the sudden death of a loved one or family member has brought about another unforeseen burden – credit card companies wanting to know who is going to be responsible for the deceased’s debt.
It’s almost unimaginable to think of – you are dealing with the death of a spouse or other family member and the phone rings with someone from the deceased’s credit card company wanting to know how you plan on settling the bill. The sad fact is that many companies try to take advantage of people during periods of grief to make decisions without understanding what they are doing. Know the facts to help you protect your family from credit card debt after a loved one passes away.
First and foremost understand that you are [generally] not responsible for a family member’s debt unless you:
- Co-signed for the credit card
- It was your spouse and you live in a community property state.
These are the only two ways, despite what the credit card company will tell you, that you are responsible for the debt of the person who has passed away.
A co-signer is not the same as an authorized user. Authorized users are not responsible for the debt of the deceased. They should immediately report the death to the credit card company and cease using the card, but their obligation stops there. Despite what the credit card company may tell you, you are not obliged to repay the debt if you were an authorized user.
Co-signers on the other hand are responsible for the full amount of the credit card debt. They become 100% liable for the debt at the time of passing of the deceased. Essentially you agreed to be responsible for the debt in case the original borrower could not pay it back – and this situation, unfortunately, qualifies as one in which they can’t pay it back.
If the deceased was your spouse and you live in a community property state you should also be aware that under state laws you will be responsible for the debt of your spouse (whether you were a co-signer, authorized user or not) at the time of their passing. Community property states [as of March 2008] are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.
You should also be aware that if you held any joint accounts or real estate with the deceased that a portion of those accounts become part of the estate of the deceased and will or no will, the creditors will get their money first. The only financial asset that is protected from creditors at time of death is life insurance policies.
Don’t leave your family in a financial nightmare should you pass away unexpectedly. Take some time to go over your debts and financial assets with your spouse or significant other. Know the laws of your state and consult with a family lawyer to make sure that your credit card debt won’t haunt your family long after you are gone.
Thanks Jonathan for the guest post!
Another payment for some work my husband did arrived in the mail this week. It was long overdue and I was starting to wonder what happened to it. That check was what we needed to be able to get our debt under $13,000 for March since our tax refund is delayed. Our credit card debt is now $12,998 
Now here’s some inspiration from Pants In a Can. He has paid off ALL of his credit card debt. How much? $28,000! Congrats!
Bjefferies is finding that it’s easier for him to reduce debt than lose weight. I’d have to agree. My thought is that with paying off debt you see that total go down immediately. It can take a little while for that scale to go down from eating healthy and exercising.
Arduous has an awesome list of changes she has made since starting her blog. There are quite a few things on her list that I’d like to try.
Tomorrow…I am going shopping for a pair of jeans
My poor laptop. It was in the direct path of some spilled soda pop. Not a lot spilled on it, but there was just enough to cause some sticky keys on the keyboard. This weekend I’ll have to back everything up and then try to give it a good cleaning.
I also plan on finishing our taxes and working on our will. My life sounds pretty exciting…doesn’t it LOL?
Here’s a few articles that caught my eye this week:
My Money Blog has a cynical review of Maxed Out (movie about credit cards). I guess you can watch the movie for free online. When I get a chance I hope to watch it.
Gather Little by Little explains why he thinks peer to peer lending is a bad idea.
Blunt Money explains how you are standing in your own way. I agree that great things can happen when you change your attitude.
I’ve been on a big “Get Rid of Stuff and Organize Our Life” kick lately. One benefit of this kick is that I have located many of our past credit card statements. It has been very interesting because I’ve realized a few things:
1.) My credit card didn’t increase my credit limit as quickly as I thought they did. I always thought they were quick to increase the limits when I was near the limit. In fact, in the beginning it took them a while before my very first credit limit increase. Once I get all the data assembled, I’ll have more on that.
2.) We spent a decent amount of money after we purchased our house. I knew we spent some to buy carpet and some furnishings. But my memory was fuzzy and I didn’t realize exactly how much we put on credit.
3.) I’ve had a few “binge and purge” shopping trips. I almost flipped when I saw a $900 charge to Walmart and then I felt a little better when I saw that money come back with a refund. I couldn’t remember what it was, but my husband did. I bought a laptop and then returned it. Yikes!
4.) I went a little charge crazy when we lived a few months in a bigger city. Target and Meijer were my favorite stores. I remember finding some great deals in those stores, but I didn’t remember the two page long credit card statements. If we move to a bigger city with more stores, I will have to be very careful not to go deal crazy.
My memory can be fuzzy at times, and it turns out that it was pretty fuzzy when it came to our past credit card spending. I’m glad that I am taking some time and reviewing old statements. Now it’s fresh in my mind how we got into the situation we are in and I can work to make sure it doesn’t happen again once our credit card debt is paid off.
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