Give me a little credit...

Factual Questions
1

So I’ve built up my credit where I have a few credit cards now. They all have something in common - insane interest and all of them required a starters fee ranging up to $150 to get the card.

I realize that sucks, but I didn’t want a secured card, as it wouldn’t look as good on my credit, and I was able to float that fee into small payments.

Anyway, I’m at the point now where I feel I should be getting some good credit cards.

A lower interest rate, a higher credit limit, and no stupid fees. I realize that Platinum cards with $50,000 limits and 2.9% fixed rates are out of my range. But there have got to be cards in the middle, right?

I was told that owning a house is the key to getting better credit cards right off the bat - well, is there any way for a renter to get - not the great cards, but something better than the bullshit ones?

Brian O’Neill
CMC International Records
rockuniverse.com/cmc/cmc.html

ICQ 35294890
AIM Scrabble1
Yahoo Messenger Brian_ONeill

2

One thing you might try is to phone your current credit card companies, and ask them to raise your limit or lower your interest rate. Assuming your payment history is good, they’ll usually go right ahead change the terms a bit. They’re usually more reluctant to change the interest rate than the credit limit-- that’s where they make their money, after all.

If you really want a new and different card, you may have to cancel one or more of your current ones first. Most creditors don’t want the combined limit on all your cards to be more than X percent of your annual salary. That’s because there’s nothing to stop you from maxing out all the cards at once, and if you were to put yourself too deeply in debt that way, the creditor would probably lose money on you.

I’m not a warlock. I’m a witch with a Y chromosome.

3

While I don’t use credit cards, (I enjoy travelling, and saving a big pile of money is almost impossible if you’re carrying expensive debt.) myself, I prefer living in a cash economy. But I have noticed one very curious thing. Prior to taking a 2-3 month holiday we extract our savings from the bank and head to the American Express office to purchase travellers cheques. ( Usually 3,000$ or more depending). What is odd, is that after returning home for about a year I get Pre- approved credit card apps from American Express. I earn minimum wage, and don’t own a home or a car, so this strikes me as very strange. I don’t think it has anything to do with where you spend the money or on what. So I can’t see anything from stopping you from converting all your money into cash and then travellers cheques before you spend it on the usual things. In not too long, I suspect you would have purchased enough Amex TC’s to qualify for the computer to send you the same pre-aproved app. Once you get a Amex, keep it in good standing for a couple of months and, I think, you’re golden for all the others.
It’s just a thought ! Hope it helps…

4
      • Where do you get a credit card unsecured, if you have no previous credit rating or a good co-signer? I never heard of a third way. (I have a hard time believing that anyone will “sell” you a card for $150 that you can turn around and charge $300 on.) - MC
5

I think you can apply for unsecured cards through most banks. Otherwise, you can call the 1-800 numbers for Visa, MC, Discover or Amex and apply by phone.

Veni, Vidi, Visa … I came, I saw, I bought.

6

Satan:

Why are you so interested in getting credit cards?

Allow me to share my experience with you. I used to really dig the idea of credit cards. I thought they were just IT…buy now, pay later. Loved 'em. Got all excited when I got offers for new ones.

10 years ago, my life fell apart. I would have filed bankruptcy, except that if I could have afforded a bankruptcy, I could have afforded to make payments on my cards.

My credit crashed and burned, and I learned to live on cash.

In the past few years, my income has undergone quiet a transformation. In other words, I have money. Not a huge amount, I still have some debt, and paying my taxes is the next best thing to a nightmare, but I am comfortable. I can buy clothes. I can fix my car. I can pay vet bills, go to the movies, pay a housekeeper and get new equipment.

You know what I suddenly realized? How incredibly UN-interesting credit has become. I have a corporate AMEX (paid off monthly), a debit/mastercard (sucked right outta the bank) and one small credit card I am paying off and never use. My fiance’s cards we closed and reorganized and are paying off. I get offers for credit cards all the time, and they have NO appeal for me at all. Why should they? Why should I WANT to pay interest on something? Why would I WANT to acquire debt?

Moral of the story:

The only people to whom credit is interesting are people who do not have much money. And people who doo not have much money are the LAST people who should HAVE credit, because they are the ones who will be in deep shit if they get in too far, lose their job, get hit by something unexpected, etc.

Think about it. Think about it HARD.

Stoid

I am #1. Everyone else is #2 or lower.

7

One more thing…

I wish I had the exact figures in front of me, but I’ll wing it and you will get the idea.

Suze Ormond (financial whiz chick) was on Oprah talking about credit, and how evil and insidious it is. She had many examples. One lady bought a beautiful $300 jacket for her daughter. Suze asked her if she would have paid $900 for the same jacket. She said no, of course not. Yet, if she made the minimum payment on her cards, that is what she was going to end up paying for that jacket.

If you have, for instance, $3000 in credit card debt, and you only pay the minimum amount due, not only will it take you years and years to pay it off, what you will end up paying is something like triple or quadruple that original amount.

Credit is an evil scam. It can be useful, used wisely, but it is such a horrible trap. For REAL emergencies, for important large purchases, maybe. But that’s it. And even when you DO use it, you should then make your top financial priority PAYING IT OFF.

Really, think about this carefully.

Stoid…been so painfully there, you have no idea.

I am #1. Everyone else is #2 or lower.

8

Amen Stoid, very well said.
My friends are stunned that I choose to live in a cash economy, without relying on credit. I’m not wealthy and it is a challenge, but it’s easier than the stress of debt, if you as me. The only people I’ve encountered who see the wisdom of it, are people who have been privy to the dark side of the cost of credit.

9

I agree with Stoidela. Oh Dark One, don’t let the credit card companies fool you into thinking that credit cards are the only way to establish credit. You establish credit throughout your life by buying a car from a bank or dealer, buying a house, or even having a monthly payment type deal set up with a company like ADT (if you sign some kind of contract like we did-long story!). I believe that you are entitled to receive your credit report free on a yearly basis (I think they do it that way in Michigan). Your local credit bureau should be able to pull this for you.If not, it’s worth the $15.00 or so it costs to have it pulled. It’s always good to review your credit report yearly because you can make sure all the information on it is correct; there can sometimes be information on there that will false (the jewelry company you bought a ring from saying you never paid them, etc) and that you can have them put “Consumer Comments” on. Plus, false or incorrect information can sway future lenders (like a mortgage company) from steering away from you. Have the credit bureau help you interpret it cause they are confusing but they should be happy to help you with this. Good luck!

And can it be that in a world so full and busy, the loss
of one weak creature makes a void in any heart, so
wide and deep that nothing but the width and depth
of vast eternity can fill it up!
-Charles Dickens “Dombey and Son”

10

My sole credit card, a Master Card, now has a limit just shy of $12,000. Not great, but not bad for a recent college grad who’s had the card for only three years - especially considering the card started with, if I remember correctly, a $400 limit.

The secret to my stellar credit rating: use the card, use the card, use the card. I’m the exact opposite of Elbows: since getting it, I have paid for every single transaction possible with it. I buy my groceries, my clothes, my movie tickets, and even my Taco Bell with it. If my apartment management would let me, I’d pay for rent with it too.

I don’t buy anything I can’t afford, and (with only one exception in three years) pay off the balance in full at the end of each month. My limit keeps increasing each month, though the cardholder has seen maybe $50 in profit from me; I guess they’re just hoping that some day I’ll charge a whole buncha stuff I can’t pay off.

I find living on my credit card excellent for four reasons:

  1. It makes for an awesome credit rating.

  2. It’s safer. I wouldn’t carry $12,000 in cash in the city, but I can do so with a credit card without fear.

  3. I don’t piss my cash away and wonder where it’s gone. At the end of each month, I get a bitter reminder of exactly how much I’ve spent on what. I can (and do) tally things up and see that I’ve spent maybe 20% on groceries, 10% on transportation, 10% on clothes, and 40% on eating out. I know it’s definitely time to pack my lunch to work! I’ve found with cash, the money just disappears, and I’m left wondering, “Now where did that $50 I had last week go?”

  4. It actually saves money - but only if you pay the balance in full each month, and keep the money you’d otherwise spend in a savings account. Say that with all your expenses for a month, you charge $1,000. So at the end of the month, you’ve still got that $1,000 sitting in savings account earning 4% interest per annum. That means your $1,000 has made about $3.30 that month. Not a lot, to be sure. But it’s Taco Bell! And, of course, the more you charge, the higher the number’s going to be.

~ Complacency is far more dangerous than outrage ~

11

I’m with Stark. Measure expenses, charge them all. Added benefit, using my airline-sponsored card that accrues miles, is once every couple of years I get a free trip.

12

Blah, blah, blah- credit cards suck, etc…
Providian Financial will give about anyone a credit card- unsecured. I got one with a $1,000 limit and I have “questionable” credit. Try them. Also:
Cross Country Bank
The Future Card

Make regular payments and before you know it, the offers start pouring in. Just be careful.

An optimist sees an opportunity in every calamity; A pessimist sees a calamity in every opportunity.

13

A subject I can address w/some passion! 10 years ago I quit my job and started a business w/a partner. I had stupid young (note to posters on other threads - highly subjective interpretation of “young”) guy unsecured credit debt of ~$17K @ the time (the joys of credit: I actually did shit like buy a round for the house, etc.), and managed to get that down to ~$10K in a couple of years. Then the business got lean and I survived one no income year coming out at the end @~$20K credit debt. Finally in 1996, the nature of my business changed such that we had to make some capital investment (we are a high risk business that is not at all popular w/lending institutions) and I wound up hitting a personal high of $56K in unsecured credit debt in October '96. Since then I have had a mission in life - get rid of that debt. This month I crossed the $26K line and expect that in 2 years it will be GONE, GONE, GONE! That’s $30,000 in unsecured debt gone in less than 3 years (and it probably cost me twice that to do it). I just looked at the spreadsheet I must maintain to keep this effort going and I find I have 10 Mastercard/Visas, 1 Amex Gold, Optima, Discover, bounce-proof checking at my bank & 1 department store card. Along w/regular living expenses, this means I’ve got some payment due every other day. I have no idea what my credit limit might be, but, as with STARK, it keeps going up. Since most of these card accounts are 7-17 years old, I’d guess total limits might be around (a very expensive) $150K. Somewhere in the past both of the following have occurred: 1) by whatever means they use to profile us, some of my creditors decided I was “wounded” and thus subject to the highest tariffs and 2) some others saw that I was making payments over the minimum and decided they must entice me w/balance transfers. The deal on balance transfers: They come in at 2.9 to 4.9% for 3 to 6 mos. and then roll to either a “decent” rate of 12.9% or the standard f— you rate of 19.8% or so. Payments to your account are applied first to any existing balance, so if you have one, it’s unlikely any payment will affect the transferred balance. The way to play that game is to use a balance transfer from another ASAP after receiving your statement for the target card to pay off your balance with them, get confirmation and then transfer a balance to them (w/a plastic inventory like mine, there’s always one of those transfer options lying around). If you’ve then got that chunk of debt parked at 3.9% for a few months, make minimum payments on it while you direct any cash you can at the high interest rate cards. Now I charge nothing - I use the Amex for business expenses and overpay to the extent I can all credit cards and I will NEVER buy a goodie that I can’t pay for now (incidentally, my first swim in the waters was to get $900 cash to buy a Fender 1957 reissue Precision bass and a Peavey MKIV amp and speakers - as with tales you’ve heard of other afflictions people have gotten through (or not) I have a clear memory of my first time - sitting in my car at the ATM on that rainy summer night 17 years ago, drawing out REAL CASH that I did not own YET!).

OK, so I realize that this ain’t answering your question directly, but it is useful info if your going on the credit dive (and is a natural response to a theme that helps drive this MB; we love to talk about ourselves). So, having dealt w/thoughts on what to do once you’re there, let’s address how you might get to a better there. One option is to just call the credit companies with whom you have established a relationship. You can tell them that you’re getting a better offer from so-and-so and can they match that. Try to make that a real offer to which you refer as they’re in the game and know what you might possibly have a lead on. They will sometimes respond w/a counter. Another tack is to just call and ask what better deal they might make (I offer my own observation (others more informed than I might feel this is malarkey) that it is a good idea to try a quick read of the service rep’s mood/psychology and abandon effort if you’ve got one mad monkey on the line); I’ve got a couple of alternative cards that trade off the no annual fee/19.8% for $20/year/12.9% —definitely a better deal. One overriding theme: call’em up and talk to 'em.

Anyway, I know I rambled (that’s part of why I come here). This was all SOC, but I hope this helps.

Regards

14

Stark - What you described works wonderfully well, but only for a small percentage of people. While I applaud you for having the discipline to live within your means, the temptation to spend is too great for most people and they get in over their head before they know it. For the ones who can handle temptation, though, the method Stark outlines is one of the most efficient I’ve seen. Stark lists the reasons this method works so well, but I have to nitpick #1:

Your credit rating is a factor of income, debt outstanding (balances owed), potential debt outstanding (credit limits), payment history (how many times you have been 30, 60, 90, or 120+ days late), and public records (bankruptcy, judgements, liens, etc). Assuming all else is even, a person who charges $10 per month and pays it off on time has the same rating as someone who charges $12,000 per month and pays it off on time.

That is credit rating (or scoring) in a nutshell. There are other items that go into the rating, but if you want more details you’ll have to ask for the 25 cent tour.

The overwhelming majority of people have more than the average (mean) number of legs. – E. Grebenik

15

Anybody know the situation with CCs issued by Arkansas banks?
For years, I believe ARKANSAS had a usury law that limited interest rates to 10%-can you still get a card with this feature?

16

Start wrote

Don’t forget about the 1%-5% that they get from your purchase. The store receives considerably less from the bank than they’d get in cash from you. (That’s why they’ll never refund cash if you return something; by putting the credit on your card, they only give the bank the 95-99% which they had gotten on your purchse originally.)

17
      • I have never heard of anyone getting credit without a good cosigner or a security deposit. My parents both blew their credit ratings and I had to go it alone. I looked at several area banks and credit unions and none would just hand me a credit card.
  • Satan, I am curious: the card you paid a $150 startup fee for - what was the credit limit on it originally? - MC
18

As long as you pay off the balance every month, a credit card makes far more sense than a debit card.

With a debit card, you need to have the money in your checking account. It’s just sitting there doing nothing, until you use the card and withdraw it for a purchase.

Credit cards, on the other hand, only bill you at the end of the month. Up to that time, you can keep your money in a savings account, earning interest. By the time the bill comes, you’re a little bit ahead of where you would have been otherwise.

I’m not a warlock. I’m a witch with a Y chromosome.

19

The breadth of my credit card ignorance will now be laid bare for all the world to see:

Dr Jackson, I didn’t realize that credit ratings were calculated in such a way so as to provide equally good credit to two people paying off widely disparate balances. Hmmm.

Keeves, I didn’t know the cardholder received any profit from my transactions, other than interest accrued from unpaid balances. Why do stores accept credit cards, then? What’s in it for them?

~ Complacency is far more dangerous than outrage ~

20

STARK asked:

I’m not Keeves, but I’ll give at least a partial answer. It costs a great deal of money (in the form of wages) to handle cash. It must be sorted, counted, bagged and deposited. Also, some banks charge fees for counting change, so you either pay the fee to them or pay an employee to count the change into rolls. Credit cards also make it much more difficult for an employee to pilfer the register.

Additional WAGs:

-people tend to spend more with credit cards, thus increasing sales volume

-people expect to be able to pay with plastic these days, so all cash businesses may be at a disadvantage at luring customers in the first place.

Rick