Skip to main content

Don't Be Fooled - Even A Credit Won't Save You

One of the more advanced topics in personal finance is the use of credit cards for your own benefit. Some people are involved in applying for credit cards and moving the balances around to get balance transfers. Others are simply using cards that have the best interest rates and reward programs.

Now that I am credit card debt free, I have chosen to continue to use a single credit card because I get rewards on the card which can be used later on for higher-education related expenses. So, this is what I have been doing for the past year or so. Every time I buy essential expenses like gasoline or groceries, I buy them with the credit card and pay the balance each month.

Recently though, I've become aware that credit cards have resumed their dirty tricks and have started moving around the due dates of the statements. This means that inadvertently, you can miss the payment date and be slammed with late fees and extra interest. So, I decided to fight back. I wanted the rewards but I didn't want the risk of being late on a payment. So, I started pre-paying my card by a couple of weeks when I knew I had purchases that were on there.

I was foolish though. Banks, and especially credit cards, always win! This past month, my card had a 93 dollar credit balance in the middle of the month. Less than 5 days later, there was over 100 dollars worth of charges on the card. However, on the date that there was a credit balance, they zeroed it out and cut a check for the credit. Then, the charges hit and now, here I am, wondering whether or not to pay the card.

Now I have to cash the check and send it right back to the credit card company.

1. For me, it makes sense to carry the "credit" balance for a week or two at a time on the credit card. It makes me no money in the bank checking account and I use the card usually 2-3 times a week. There's always new expenses.

2. Obviously, it seems like a ploy by the company to rack up the balance and then charge me late fees and interest when I don't pay enough or don't pay on time.

Moral: Be careful. Carrying a credit won't save you.

Comments

Anonymous said…
The way I manage my cards is not prepay. I pay on the day instead.

I have ING (email me if you need a link to get a new account and a bonus $25) and if I use my card today to buy gas, then when I get home I go into ING and tell it to send a check for that amount. I set the date for a week from today so that by the time the check goes through the mail and the company goes to cash it I have not accrued any interest fees but the card will still be paid.

You might want to try this method instead of waiting until the end of the time to pay the balance in full. Or you can just set it to send a payment every two weeks instead. That way you never have to worry about the statement date changing because the payment will always get there in time. Your payment gets there within two weeks of the charge so if they go to a twenty day billing cycle you still have a grace period.

Popular posts from this blog

Blogging WealthTrack: Christine Benz (Retire Early? Or not?)

 This morning I've watched an interesting video on Consuelo Mack: WealthTrack. Here, Consuelo's guest, a longtime contributor, Christine Benz, a personal finance expert from Morningstar joined Consuelo for a discussion on issues related to retirement, in particular in the current market environments. This conversation is even more interesting against the backdrop of The Great Resignation. I found Christine's advice to be particularly interesting on a couple of fronts. Her advice in dealing with talking about retirement in general, in particular for people who are in the process of thinking about retiring early gave me pause. She is considering the traditional advice of a 4 percent withdrawal rate to be dangerous and indeed, actually concerning. According to the recent research she cites, a 3% withdrawal rate is a better option. Even more than the four percent rule, I think that her comments on annuities are particularly interesting. While annuities have been given a bad nam

More Money Into Ibonds

 At this point, it seems like a well-known strategy for handling inflation: ibonds. While there was not much press about this, it is in fact something that I did late last year in order to capitalize on the fact that this interest rate was bound for up to 10000 dollars as part of my allotment for 2021. Then now that we're in the new year, I have moved another 10000 into the account. All of this can be done easily at http://treasurydirect.gov if you're willing to give up the fact that the money is locked up, that the interest rates to be paid will be somewhat lower than you could earn in the market, and you're able to ensure that you're not needing the money for the near future.  For me personally, I find that this is a great way to lock up about 25% of my emergency (safe) money instead of putting it into a High Yield Savings account. This interest rate changes every six months, but even if it is much lower, I think that we're going to be in much better shape than if

Credit Report Review

So, one of the things that I've started doing is trying to pull my credit reports at regular 4 month intervals so that I get a free one frequently to make sure that things are progressing as I'd like them to and also as a safeguard against identity theft. Of course, the part that I don't like is that these reports don't include a fico score - the key number when it comes to determining if you are going to be extended credit and at what interest rate. This time, I got the report from Equifax - I went to the end of the process and for 8 dollars more I could get my credit score. And the Equifax gave me a credit score of 742. This of course is not even close to the perfect score of 850 when it comes to fico score nirvana, but 742 is still a respectable fico score. Things to improve are basically lowering my balances on my credit cards and loans, which I already have a plan for. And also I noticed that the amount that I paid off on one of my loans is actually still being rep