Credit Card Musings (er, Woes)

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If there is anything that I have learned during all my years of existence, it is that you do not get answers if you do not ask any questions.

So I ask my questions, no matter how silly or how dumb it sounds.  Doubt is also an element that I constantly entertain in my mind, so I confirm and re-confirm until the thing has no choice but to sound true.

So on the day that I got my credit card statement and alarm bells were sounding in my head, I picked up the phone and called Citibank direct.

I confess.  Hubby and daughter and I have been trigger happy with travels and travel purchases for the month of November 2009 so we accumulated, let’s say, about USD$2,300 in my Citibank credit card.  The next month, my tail was between my legs as I accepted a USD$80 finance charge (which is 3.5% of USD$2,300).  To stave off the guilt (and the interest charges), I paid about ¾ of my credit card balance.  So this month I thought I would have to just pay at the maximum a USD$30 finance charge.  But no, the finance charge was still USD$80, despite the balance being less than USD$800.

I thought I had repented enough.  I thought there must be some mistake.  I hyperventilated.

The other person at the end of the line gave me a lesson in reading the fine print (that no longer appears on my e-statement).

Turns out that the finance charge (usually 3.5%) is multiplied on the previous balance (that is USD$2,300) for as long as that balance is not fully paid.  Let’s say I owe only USD$100 on that balance but hey, the 3.5% will still be multiplied against the original balance of USD$2,300.

There is no rhyme, nor logic, only fine print, and I guess a little mumbo jumbo to stun the unsuspecting, hapless credit card owner/debtor.

The other person at the line told me: “Ma’am, if you would pay off your balance of USD$800, we can reverse your finance charge.” Reverse, as in zero.  If I had not known that, and I did not know that, I would forever have been paying that USD$80 and hitting my head on the wall.

I shudder to think of what they have up on their sleeves next if my purchases accumulate (which will undoubtedly happen).  Where will that 3.5% be pegged on next?  Until when do I pay for my sins?

Things to think about when signing up for a Citibank credit card (or any credit card for that matter):

1. Annual fees go as high up as USD$100.  Supplementary cards are at USD$70.  If you do not think your rebates will even reach that, do not sign up for the credit card, or if you already have it, cut the card.
2. There is wisdom in paying your balances in full.  This way, the card will only be a tool for convenience, not a tool for your ultimate doom.  Please do not even think about paying only the minimum.  That will add 10 years to you and your debt, literally.
3. Look at your credit card statements.  There might be extra swipes there.  Gasoline stations are particularly notorious – I have experienced (and challenged) about at least 2 entries in my credit card statements.  If this happens, the credit card company will fax you the document that you signed – most of the time, you will see that it is not your signature that appears on it.  Credit card companies usually reverse this type of charges, but after making you prove that it is not actually yours. (sigh)
4. Maintain at most 2 credit cards.  Cut the rest. If a credit card company that I have stored to the deepest recesses of my closet charges me an annual fee, I cut it.  Most times, they would plead with me not to and tell me that I need only to spend USD$100 and the annual fee would be reversed – they need the business, you know – so  sometimes, I capitulate.  But if you have a supplementary card on that card, cut it.  For some reason, annual fees on supplementary cards cannot be waived.
5. Pay in cash, or get a loan.  Credit cards charge you monthly and if that accumulates, you would more or less be paying 42% (3.5% x 12 months) on the money that you borrowed.  No amount of “Priceless!” is worth that.
6. Ask questions.  Even if it means that you have to wait 15 minutes for the credit card representative.  It might save you a lot of money.

Ah, the price of progress, convenience and living without paper money.

I am sure you have them too – what are your credit card woes?

Be rich,

Issa

Article by Issa. Art by D. Copyright 2009.
Website: www.YouWantToBeRich.com
Email: issa@youwanttoberich.com

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