Wednesday, December 28, 2005

    Finances with JustaDog - Be Smart!

    Credit Card companies are a business and these businesses are very competitive. Credit cards for consumers (won't cover business card accounts here) are even more competitive and companies try to think of more attractive marketing concepts to lure you in - some with terrible consequences. I'll cover the most likely common tactics in this post.

    Convenience Checks - often mailed with your statement avoid using these at all costs - they are convenient only to the company and will cost you greatly. SIF (Shred It Fast).

    Promotional Rates - on new or existing accounts be very aware. The usual practice is you charge say $600 at 2% (assuming you don't just pay it in full when you get the bill). Let's say your account has 12% interest on the current balance. The company will split these principles at their different rates. When you pay your payment it will be applied against the larger interest rate balance only - until it is paid off. Your special rate will continue to accrue interest, which will further add to the next billing period's finance charge. Clever huh?

    Personalized Cards - one of the greatest marketing tricks. You belong to a club, an association, whatever - you will get a mailing for a credit card with your club or association's name - even with different colors to choose. Heck, even with patriotic printing or slogans. SIF. Card companies pay these associations money to include their logos or names on the cards and guess who pays them back in higher-than-market rates! A big no-no is paying to get a different color of card than someone else has. How vain (and costly)!

    Fee Cards - There is no reason in the world to pay a fee to use a credit card. I pay a fee for my American Express card - a charge card, not a credit card. I do this because I travel and AmEx is globally accepted. AmEx is great because it forces you to pay the whole balance each time you get your bill. BTW, I have the cheapest green card - the same power of their FSP (For Stupid People) Platinum Card that carries an annual fee of $395. Wannabes will pay that just to try and impress people - to me it flashes the "I'm stupid" sign. I know multimillionaires, including my brother - believe me, they don't fall for stuff like this.

    Airline Mileage Cards - If you don't travel allot then these are just another gimmick to avoid. They might start you out with even 15,000 miles but most carriers require at least 20,000 miles for an off-peak limited seating ticket. So if you think charging $5,000 to get to a "maybe" ticket you're not thinking straight. These cards will also cost you more than a "regular" card because they are paying the airline and thus you reimburse the card company through fees or higher rates.

    If you need a card use one with no fee and pay it in full - the best way to go.

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