Dispelling Some Myths About Credit Cards
August 22, 2003 4:57 PM   Subscribe

Dispelling Some Myths About Credit Cards. In case you missed this post (via Kuro5hin), as this is an excellent explanation of how to stay debt free and things you need to know about owning a credit card. As a first time card holder, I found this post to be really, really useful. Anybody have any bad credit card stories?
posted by Keyser Soze (45 comments total)
another 'how-to' guide on credit. yeah. and if everyone followed these quite obviously wise suggestions, 'credit' - and the companies that profit from it - would cease to exist; IT (and they) haven't disappeared and that says something.

personally, i had a few credit cards when i was younger. when i got a $600 limit VISA and spent it immediately, i began making monthly payments on something like .18 interest. i tried (HONESTLY!) to double the monthly required amount, but after 6 months, i gave up and refused to pay. today? i live ONLY by what i can afford, and without the help of credit (being single and living meagerly helps a lot).

credit? what's that?
posted by poopy at 5:28 PM on August 22, 2003

I posted this because there's faint chance that someone will think twice when they're at Fry's Electronics, looking at that 47' Plasma TV with credit card in hand.
posted by Keyser Soze at 5:35 PM on August 22, 2003

Espescially! Young people get stuck in credit card debt, man. I know at least 3 of my friends under 21 who are screwed with minimum payments for the rest of their useful lives.
posted by Keyser Soze at 5:36 PM on August 22, 2003

It's all pretty good advice, and it's mostly how I use credit cards, but am I the only one that finds all that to be perfectly obvious? Of course I'll charge it. Of course I'll pay it off in full when the bill comes. In the meantime, my money is somewhere earning interest. I boggle at my friends that are five digits in debt.

On preview:
but after 6 months, i gave up and refused to pay.
Grumble grumble, rant rant.
posted by duckstab at 5:38 PM on August 22, 2003

oh....not knockin u Keyser Soze. i'm glad you posted it really. just venting over some idiot mistakes in the past. ON PREVIEW: yes!
posted by poopy at 5:39 PM on August 22, 2003

It's amazing how quickly credit/debit cards have become commonplace. Anyone interested in how this stuff works for the companies, within the economy, or even just in your own bill should really read Paying With Plastic, which gives an international perspective on credit/debit and how they came to be so popular...
posted by whatzit at 5:48 PM on August 22, 2003

I'm with you, duckstab. I have NEVER carried a balance on a card, even when I was literally searching the couch cushions for ramen money.

That's not to be all holier-than-thou -- it just has never occurred to me to do it any other way. The thought of owing someone money scares the bejeebers out of me.
posted by LittleMissCranky at 6:43 PM on August 22, 2003

I got my first credit card a few years ago with a $1,000 limit... since then I've never missed a payment and never owned an interest charge. Every few months or so they keep increasing my limit. I'm up to about $12,000 now or something, and although I really want to believe it's because of "how responsible I've been," I have this gut feeling that the VISA company is just really trying to trick me into suddenly thinking I can use it more often or something.
posted by XQUZYPHYR at 6:43 PM on August 22, 2003

This doesn't go anywhere near explaining myths about credit cards, or giving a good guide to understanding them or some of the secrets. This is worse than book-report material.
posted by jmccorm at 6:54 PM on August 22, 2003

Worst credit card ever: A Sears card, purchased because the 15% discount on the first purchase was awesome when I was buying my first ever luggage for my trip to Hawaii. I paid it off before the next billing cycle and forgot about it. I'd get monthly mail from Sears offering overpriced goods to me on convenient installment plans. After a couple I would immediately toss them. I'd get calls from telemarketoids offering me Sears life insurance, credit insurance, medical insurance and so on which I'd always say no to. I continued to ignore the mail from them until Sears credit called me with the nasty accusation of not paying my bills.

"Umm... What? I haven't used your stupid card since I got it." I respond. "Oh, you purchased credit insurance last year." I stated that I didn't, which I hadn't. After much digging around it turns out that Sears was in the habit of giving blanket fucking authorizations to certain scams.

If I could've gotten away with it I would've stabbed the head of Sears credit in the neck.
posted by substrate at 6:59 PM on August 22, 2003

i think 'how credit cards work' should be a required course for everyone gradutating high school. i honestly i had no idea what i was getting into when i was plied with credit cards when i was a wee freshman in college.

which is not to say that it's anyone's fault but my own that my credit rating is hosed (due to uh, not paying for several years). my fiance and i are actually paying off those bad boys tomorrow (so that i don't fuck his credit rating when we get married) and if the only thing i ever pay interest on again is a house or condo i'll be happy.

or, short form: i am thickheaded when it comes to Important Life Lessons (tm.)
posted by sugarfish at 7:13 PM on August 22, 2003

They are getting worse, BTW. I called their toll-free number to listen to my last few transactions. I was assulted by a 3 minute presentation on their credit protection program. They told me to hit '7' for YES, then '8' for no. After I hit 8, I was presented with another 1 minute presentation which was attempting to get me to change my mind. Again, I listened for the right keys, and hit '8' for no. Then I got the information that I wanted.

I hate just as much when I call the automated system (to get a QUICK answer) to be given a human. When asked, they say that they just like to do this as a courtesy when they're not as busy. But each time they're trying to get me to migrate to a different card, or buy credit protection, or some other scam.

Yes. This is Citibank. I used to hate Chase. Now I'm thinking I hate Citibank now that they're the ones pulling scams.
posted by jmccorm at 7:59 PM on August 22, 2003

Nobody will give me a credit card, and I'm a college student. Everyone offers me one, I'm always declined. One of these days I'm going to get a credit report, cause as far as I know I'm gold, but obviously I'm not. In the meantime, I'm far to poor and irrisponsible to be trusted with a credit card, so its probably a good thing.

PS. Can anyone spare a dime :)
posted by Grod at 8:33 PM on August 22, 2003

jmccorm Expect it to get worse. When the national no-call list goes into effect, direct marketing is going to get more obnoxious than ever, current customers are the only ones they'll be able to bother, so when you call any company, be it the phone company, your bank, or your isp, expect to suffer through long sales pitches and opt-out deals worded to make the gullible feel like opting out would be a serious mistake. If you don't opt-out, they'll be able to call you. I have the feeling that everytime you go to a hospital, hotel, anywhere you sign your name, people will try to get permission to call you, 'cause those are the only two loopholes.
You can force people to listen to advertising when they call your service and;
If you don't tell them not to, once you become a customer, they can call you.

I don't know how this is related to the topic at hand, but its become a pet peeve of mine.
posted by Grod at 8:37 PM on August 22, 2003

grod: you might want to hold off on applying until you check your credit report. every time your credit is checked, it reduces your points.

see, ironically, i worked for a credit card company last year. i know better now. :D
posted by sugarfish at 8:39 PM on August 22, 2003

Myth #1: Credit ratings are rational.

Myth #2 Credit Cards increase your level of affluence.
posted by troutfishing at 9:35 PM on August 22, 2003

my fiance and i are actually paying off those bad boys tomorrow (so that i don't fuck his credit rating when we get married)

Unless you don't plan on getting married for 7 years it'll still kill the credit rating. Yeah, it'll look somewhat better for being paid off, but it's still going to take a hit. (I've, um, got some experiance with that situation).

Everyone offers me one, I'm always declined. One of these days I'm going to get a credit report, cause as far as I know I'm gold, but obviously I'm not.

Keep in mind that when you're declined you're entitled to a free copy of your credit report from whichever bureau they use. And there's a few states that require the bureaus to give you one once a year.

Personally, I'm one of those that carry far too much credit card debt. Basically, I went through some bad times, and it just kinda piled up, and I had some accounts that ended up going to collection. Now, I'm finally starting to get it under control, and while it's still way too much on the cards, it's making steady progress downwards. It helps that my credit rating is far better now (everything derogatory has expired, and I own a house, which is a huge benefit), and I've been able to move it to much lower interest cards. It's still going to take me a couple more years to finish it off, but I have a solid plan, and it's nice to see the balances get lower.
posted by piper28 at 9:41 PM on August 22, 2003

Myth #1: Credit ratings are rational.

Myth #2 Credit Cards increase your level of affluence.

hehe.... i have a (now not-so) secret crush on troutfishing.
posted by poopy at 9:46 PM on August 22, 2003

I'm glad to see I'm not the only one who always pays off their card. All my friends think I'm a freak.
posted by JoanArkham at 4:37 AM on August 23, 2003

Rename them "Debt Cards" or "Debtor Cards."

Vote for me, and I will do it.
posted by Blue Stone at 5:12 AM on August 23, 2003

These obvious-seeming lessons were all ones I had to learn the hard way, right after graduating high school when the offers started coming in. My family was not a credit card family (more of a "pay the electric bill in quarters at the grocery store just before they cut the power" family), and I just didn't know what I was getting into.

I'm carrying a balance now due to a drastic reduction of my income in the last year, but I don't have any disasters to report - a late payment here and there which will make realtors look at me funny if I ever apply for a mortgage, but as that's probably years in the future (sigh), hopefully those bad marks will expire before it becomes an issue.

Add me to the list of people who hate the "credit insurance" scams - there was one point when I realized that I was paying for two types of insurance on the same card, without having signed up for either, and it took me numerous phone calls to reach someone who could actually deactivate them.
posted by hilatron at 6:50 AM on August 23, 2003

I'm just amazed that the fact that if you borrow money you have to pay it back with interest, needs to be explained to anybody at all.

I have friends who are in debt and depressed about it - and this just seems to spur them on to more shopping. They don't seem to get it.
posted by carter at 6:53 AM on August 23, 2003

Many credit card companies are predatory, extending huge amounts of credit to people they know won't use it responsibly. They're playing a game - try to get folks in debt without getting them in so much debt they declare bankruptcy.
posted by Nelson at 8:26 AM on August 23, 2003

i skimmed the article and didn't find this, so maybe it's not possible in the usa, but i always have an arrangement with the bank to pay the bill in full, automatically, each month. so i don't need to remember to post off the payment (afailk there's no reason to ever use a credit card for credit beyond the intiial month - if you need long-term credit, there are cheaper options).
posted by andrew cooke at 8:36 AM on August 23, 2003

Andrew, my impression is that in Europe your banker will sit you down and try to push all kinds of consumer loans on you. On the cards, they're happy just to get the annual fees. In the US, lots of different companies (not only banks) compete to try to get you to sign up for their cards and then use them for impulse buying. They have low annual fees and outrageous interest rates. Just two different approaches to getting people hooked on debt.

My experience has been that consumer debt is the hardest of hard drugs, and the people who tell you that they can touch the stuff without getting hooked are lying dangerously to themselves. The only people who don't enslave their lives to debt are the ones who stay off it completely and pay off their balances every month without fail. Listen to someone complain about their soul-destroying job, and you'll almost always find a credit-card balance or overstretched mortgage at the root of their misery.
posted by fuzz at 9:56 AM on August 23, 2003

just to clarify - i wasn't advocating credit; i've never used it, apart from a small mortgage when we bought the first house (paid off in a year or so). i agree with the soul destroying job thing - when you do have a crap job (and i did, recently), it's a huge help knowing you can just walk out (and i did, recently). but we're kind of odd - i don't know anyone else on our earnings who lives such a meagre lifestyle.
posted by andrew cooke at 10:28 AM on August 23, 2003

Credit insurance? Never heard of such a thing.

For the Canucks reading this: check out CitizensBank. Not only do they have better rates than the banks, but:
a) every time you use your card, 10c is donated to charity;
b) they'll call you up if some unusual purchase is made.

I bought a colour laser printer the other day. Within a few hours, I was called by C.B. to see if the transaction was legit. Very cool, I think.

My wiff and I are another couple who never carry a balance. We also live well within our means.
posted by five fresh fish at 11:10 AM on August 23, 2003

I'm with you, substrate. I had to get rid of credit cards based simply on the telemarketing calls and their irritating habit of charging me for credit protection services I never requested or authorized. The funny thing is that when you call in and tell them such charges are unauthorized, they act as if no one has ever made such a complaint before, that you are the first they know to be scammed this way. Of course, then you find out that the credit protection scam is administered by a subsidiary of the credit card company...
posted by troybob at 11:22 AM on August 23, 2003

No worries, andrew, I wasn't talking about you at all in my second paragraph. Sorry if it sounded the wrong way.

I'm really puzzled by the idea that it seems "kind of odd" to live within your means. JoanArkham said something similar upthread. Can it be that peer pressure to borrow and spend is even stronger than the banks' hard sell?
posted by fuzz at 11:32 AM on August 23, 2003

What's credit protection/credit insurance?
posted by five fresh fish at 12:25 PM on August 23, 2003

I went years and years without ever applying for a credit card. I was young, single and if I couldn't pay cash for something, I figured I didn't need it.

I took a vacation one Summer to LA and tried to rent a car. They wanted a credit card, I said "I'm going to pay cash." Turns out you need a credit card to rent a car. So when I got home I applied for one.

I rarely used it until about 10 years later...much had happened since then - I had a different job (with really crummy Blue Cross coverage) and I'd been dx'd with a chronic illness. I had no Rx insurance, and ended up having to charge my prescriptions, which were running about $800 per month.

I've since gotten a new job that does cover prescriptions, but I'm still paying off that old card.
posted by Oriole Adams at 12:50 PM on August 23, 2003

I'm with grod, no one will give me credit. Since I don't have a credit rating, I'm considered high risk. I've applied with many companies, Target, Apple.com, my bank, but the result is always the same.

I recently asked my bank for a credit card and was, predictably denied. I made the point to the rep that I had multiple accounts and a respectable balance and had never written an overdraft or had any problems. I was informed I could apply for a "secure" credit card. A "secure" credit card requires me to put at least $500 dollars in a savings account I can't access for one year in order to receive a $500 dollar line of credit at 18.5%. They wanted to charge me interest to use my own damned money. Bankers are bastards and not to be trusted. Line em' up with insurance execs and lawyers.
posted by elwoodwiles at 1:29 PM on August 23, 2003

And then there's the Sears card I got, specifically for an appliances purchase. No interest for somethign like a year, perhaps two, plus a shipload of Sears points, plus, IIRC, a bit of an extra discount off the sale price. Paid the whole shebang off owith nice monthly payments. Repeated it again for some other purchase, same deal, a while later.

It was the sort of deal one couldn't say no to. Worked like a peach for me. :-)
posted by five fresh fish at 2:23 PM on August 23, 2003

elwoodwiles, I had the same problem, an overseas student in the US, I needed a credit rating to get a credit card but didn't have one. Catch 22 etc. Managed without for a few years then joined a credit union, and they gave me one, with a small initial credit line, but that was fine by me.
posted by carter at 3:10 PM on August 23, 2003

I'm another pay-in-full-at-the-end-of-the-monther. I did over-extend myself while in school, which took years to dig myself out from under.

Credit does several nice things for me:
- It consolidates bills. Lots of monthly charges go on the card. One bill, instead of three or four, is easier to remember.
- Free heath insurance for travelling.
- Purchase protection for fraud.
- Free extended warantees. If I buy certain things, mostly electronics, with my VISA, I get an additional year free warantee.

Plus, the above-mentioned car, hotel or airplane charges are very difficult to do without a credit card.

Used with some care a credit card can be really useful. It's also a temptation. If I used my full credit limit, something like 3x my monthy cheque, I'd have great difficulty paying it off.
posted by bonehead at 3:47 PM on August 23, 2003

Carter: Yes, credit unions are the solution. I'm just now eligible to join a local credit union after jumping a couple paperwork hurdles and will be starting an account there soon, hopefully. I've eschewed credit for mainly philosophical reasons, but now as I'm getting older I realize the usefullness of credit, as bonehead sumarizes very nicely above.
posted by elwoodwiles at 3:57 PM on August 23, 2003

You know, I've never had heath protection while travelling.

But, then, I don't own any heath.

I didn't realize my VISA might be giving me an extended warranty. That's cool. I also like that if a seller is dishonest, VISA will cover my ass by refusing the charge.

What is "credit insurance"?
posted by five fresh fish at 4:09 PM on August 23, 2003

Oh pentapicene one, check your policy agreement. Lots of interesting goodies are stashed away in there. Which ones one gets depend on which of the bewildering array of credit "products" one decides to use.

Heath protection, obviously, is appealing to the modern upscale Scotts-on-the-go (and descendants) market. Verah popular in the Ottawar Valley.

I too am curious: what is this seemingly-oxymoronic "credit insurance"?
posted by bonehead at 4:39 PM on August 23, 2003

Credit insurance is that dealy they try to sell you that makes your minimum payment if you lose your job or are otherwise unable to work. Basically worthless, IMHO, since just making minimum payments is like jogging in place.
posted by kindall at 4:50 PM on August 23, 2003

Pentapicene. I liiiike that. :-)

In the (counts on fins and toes) sixteen years or so that I've used this alias, that's the very first time someone's come up with that variation. Very good!

Thx, kindall. I'm not sure there's such a thing in Canada. Seems silly.
posted by five fresh fish at 7:00 PM on August 23, 2003

Funny that you students/people with no credit history had a hard time getting credit cards. When I was in college/university (I did both) I had lots of friends who had them - they have special application terms for students. I even saw Visa and Mastercard booths set up on campus to court the students.

I got one very easily as soon as I got my first job, though I only made $10/hour and had no credit history. I think it had a $500 limit. It also had no annual fee. I also find it useful to have a card that awards points. I have a Visa Dividend. I laughed evilly when at the end of last year Visa credited me with $50 - I never pay a dime of interest or any user fees, so basically they pay me to use the card.

I don't have any sympathy for people who run their cards up through foolish spending. (Debt acquired because of emergencies like a lack of medical insurance or income is another matter altogether.) And so few of these people who load themselves up with debt ever seem to learn. But hey, if they didn't do such things people like me wouldn't have the convenience and perks of a credit card. So thanks, suckers.
posted by orange swan at 8:54 PM on August 23, 2003

I've never had a VISA with an annual fee.

I'm surprised there are people who do. I've never found it difficult to find a no-fee VISA, and I've never found the pay-for VISA benefits to be worth their costs.
posted by five fresh fish at 9:29 PM on August 23, 2003

This post made me go check on what happened at Savekaryn.com. Looks like that chirpy leech managed to pull it off. "Number of credit cards I have been offered since April 2003: 28".
posted by fuzz at 7:43 AM on August 24, 2003

'0% interest on transfered balance' is offered by many credit card companies here in the UK. I have a friend that has not paid any interest on his card for many years by changing cards whenever interest payment is imminent.
He can pay off his outstanding bill at his leisure, whilst not going into the red with his monthly bills.
posted by asok at 6:06 AM on August 25, 2003

five fresh fish, credit protection is indeed offered here in canada. i've been offered it several times.

for those who can't get a credit card, maybe you should get say, a phone or something in your name? i believe paying these bill also goes towards your credit rating. or maybe a department store credit card?
posted by xmattxfx at 9:17 AM on August 25, 2003

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