As of December 1, 2004, California residents are entitled to view their credit report from each of the 3 big credit bureaus, free of charge, once every 12 months.
I recommend that you get one of the three reports every four months so that over the course of the year, you see all three reports, but are monitoring your information once every four months.
You can begin the process at www.annualcreditreport.com.
Be fair-warned, though, while the reports are free, you’ll have to pay about $6 to actually see your credit score.
The good news is, though, you can dispute the inaccuracies that you find right then and there online.
Be sure to call your creditor yourself to dispute as well...don’t rely on the credit reporting bureau to do it all on their own.
Thursday, February 24, 2005
Tuesday, February 8, 2005
Truth About Credit Cards: So, In Conclusion...
So, as we sum up this look at the credit card industry, what have we learned?
There are no laws in existence today that limit how high your credit card interest rate can go. There are no laws in existence that limit the number of fees that the credit card companies can charge you, nor the dollar amount of those fees. Even though you can avoid fees by paying your credit card bill on time, all the credit card company needs to do to raise your rate is declare that you are in Universal Default and once that happens, they can amend their agreement with you however they wish.
If you feel that you are being ripped off, the only place you can turn to is an inept federal agency that isn’t going to do anything. We have learned, that in essence, the credit card companies can do whatever they want, when they want, and there is nothing that consumers can do about it.
So, why then, do millions of Americans keep running up credit card debt? Why do we all refuse to learn the knowledge that we need in order to make the right financial decisions when it comes to credit, especially these evil monsters known as credit cards?
It is because it is so easy. A piece of plastic you carry around with you that allows you to buy things that you don’t have the money to buy. It is instant gratification without any concern for the long-term effects of that instant gratification. If that does not define humanity, then I do not know what does.
There is an industry in this country that has perfected its methodology of legally extorting more and more money from the consumer over the course of the past 40 years that is working against us and we refuse to even be bothered with such chores as reading a credit card agreement from start to finish.
We all know smoking is bad for us, but there are still smokers out there. We all know that credit card debt is bad for us, but 90 million of us are Revolvers. 90 million of us at one point had $0 in credit card debt and knew long before we charged dollar one that credit card debt was a bad idea and was going to cost us in some cases over 100% more than the actual purchase price of whatever it was that we could not live without, yet we still handed that piece of plastic over to the sales rep.
They get us with late payment fees, over-limit fees, minimum payment fees, cash advance fees and interest rates that are completely ridiculous, especially when compared to deposit interest rates, yet we keep begging for more.
7 million bankrupt families worth of it over the past 5 years alone.
If you owned a 1979 Honda and a 2005 Ferrari and I bought the Honda from you for $300, then came back after the fact and told you I thought I paid $300 for the Ferrari then took you to court, we all know I’d be laughed out of there by the judge.
Yet, we “sign” open-ended credit card loan agreements that allow the credit card companies to change the deal after the fact however and whenever they want, and we keep screaming for more.
Everyone is up in arms about those damned evil cigarette companies that knowingly sold us poison for years, but how many of us are calling our government representatives about the credit card companies and the lack of laws and regulations that govern what they do to us?
How can a FICO score determine the home we get, the car we are able to drive, the very interest rates on everything that we borrow, yet be something that is a complete and total mystery to us?
How can we be surprised that a multi-billion-dollar-a-year industry has no concern for us on an individual level and be surprised when after making ten years worth of on-time payments, turn around and raise our interest rate and penalize us after just one late payment?
Whether we learned that fire could burn because our parents told us, or we found out the hard way, we only had to learn once that fire could burn and you can bet that we stay the hell away from it.
Why, if we all know that credit cards burn, do we all keep touching the flame?
Let me close with some final words...a quote from my Bank of America credit card agreement:
“If at any time during any rolling consecutive twelve billing cycle period you fail to make two Minimum Payments on a timely basis or exceed your Credit Limit twice, we may elect to increase your Purchase, Cash Advance and/or Balance Transfer APRs to the Penalty APRs.”
For my purchases on that particular card, that means going from an interest rate of 13.24% to 29.24%.
And that, is why the credit card companies love Revolvers so much...
There are no laws in existence today that limit how high your credit card interest rate can go. There are no laws in existence that limit the number of fees that the credit card companies can charge you, nor the dollar amount of those fees. Even though you can avoid fees by paying your credit card bill on time, all the credit card company needs to do to raise your rate is declare that you are in Universal Default and once that happens, they can amend their agreement with you however they wish.
If you feel that you are being ripped off, the only place you can turn to is an inept federal agency that isn’t going to do anything. We have learned, that in essence, the credit card companies can do whatever they want, when they want, and there is nothing that consumers can do about it.
So, why then, do millions of Americans keep running up credit card debt? Why do we all refuse to learn the knowledge that we need in order to make the right financial decisions when it comes to credit, especially these evil monsters known as credit cards?
It is because it is so easy. A piece of plastic you carry around with you that allows you to buy things that you don’t have the money to buy. It is instant gratification without any concern for the long-term effects of that instant gratification. If that does not define humanity, then I do not know what does.
There is an industry in this country that has perfected its methodology of legally extorting more and more money from the consumer over the course of the past 40 years that is working against us and we refuse to even be bothered with such chores as reading a credit card agreement from start to finish.
We all know smoking is bad for us, but there are still smokers out there. We all know that credit card debt is bad for us, but 90 million of us are Revolvers. 90 million of us at one point had $0 in credit card debt and knew long before we charged dollar one that credit card debt was a bad idea and was going to cost us in some cases over 100% more than the actual purchase price of whatever it was that we could not live without, yet we still handed that piece of plastic over to the sales rep.
They get us with late payment fees, over-limit fees, minimum payment fees, cash advance fees and interest rates that are completely ridiculous, especially when compared to deposit interest rates, yet we keep begging for more.
7 million bankrupt families worth of it over the past 5 years alone.
If you owned a 1979 Honda and a 2005 Ferrari and I bought the Honda from you for $300, then came back after the fact and told you I thought I paid $300 for the Ferrari then took you to court, we all know I’d be laughed out of there by the judge.
Yet, we “sign” open-ended credit card loan agreements that allow the credit card companies to change the deal after the fact however and whenever they want, and we keep screaming for more.
Everyone is up in arms about those damned evil cigarette companies that knowingly sold us poison for years, but how many of us are calling our government representatives about the credit card companies and the lack of laws and regulations that govern what they do to us?
How can a FICO score determine the home we get, the car we are able to drive, the very interest rates on everything that we borrow, yet be something that is a complete and total mystery to us?
How can we be surprised that a multi-billion-dollar-a-year industry has no concern for us on an individual level and be surprised when after making ten years worth of on-time payments, turn around and raise our interest rate and penalize us after just one late payment?
Whether we learned that fire could burn because our parents told us, or we found out the hard way, we only had to learn once that fire could burn and you can bet that we stay the hell away from it.
Why, if we all know that credit cards burn, do we all keep touching the flame?
Let me close with some final words...a quote from my Bank of America credit card agreement:
“If at any time during any rolling consecutive twelve billing cycle period you fail to make two Minimum Payments on a timely basis or exceed your Credit Limit twice, we may elect to increase your Purchase, Cash Advance and/or Balance Transfer APRs to the Penalty APRs.”
For my purchases on that particular card, that means going from an interest rate of 13.24% to 29.24%.
And that, is why the credit card companies love Revolvers so much...
Monday, February 7, 2005
Truth About Credit Cards: Universal Default
Universal Default. Sounds scary, doesn’t it? Well, it is.
When you apply for a loan for a car or a home, there is an agreement between you and the bank over the interest rate. In some cases, the rate is fixed for the life of the loan and in other cases, the interest rate may fluctuate as the prime interest rate fluctuates.
Either way, you do know what your interest rate is and there is an agreement between you and the bank that spells out what it is and how it is figured. Not with credit cards, though.
You may even have a fixed rate credit card, but even the interest rate on that card can change. A credit card is a short term loan, designed to be paid off each and every month. A credit card limit and a credit card interest rate are assigned to you based on what your credit score is at the time that you apply, just like with any other loan.
The difference between a credit card loan and other types of loans is that a credit card company views their terms with you as short terms and can re-evaluate you each and every month if they wish.
How do they evaluate you? They run your credit and look at what your score is doing. Say you applied for a card and had a 750 and landed a 12.9% fixed rate. Pay your payments on time and in full and keep your 750 and there is no problem, but if your score goes down, you have made a change in the terms and the credit card company can raise your rate based on that.
Also, if they give you credit based on a good payment history and find that a year later, even though you have been paying them on time, you have been making late payments elsewhere, they can find that you no longer have a good payment history and raise your rates.
This change in your credit score and payment history is the concept called, Universal Default. You have not made a late payment on your credit card, but a late payment on anything anywhere else, or a drop in your credit score can put you in Universal Default.
All credit card agreements site Universal Default as a justified reason for raising your interest rate, even on a fixed rate credit card. All they have to do is give you 15 days notice before they change your rate and they can raise your rate to whatever they want.
When you apply for a loan for a car or a home, there is an agreement between you and the bank over the interest rate. In some cases, the rate is fixed for the life of the loan and in other cases, the interest rate may fluctuate as the prime interest rate fluctuates.
Either way, you do know what your interest rate is and there is an agreement between you and the bank that spells out what it is and how it is figured. Not with credit cards, though.
You may even have a fixed rate credit card, but even the interest rate on that card can change. A credit card is a short term loan, designed to be paid off each and every month. A credit card limit and a credit card interest rate are assigned to you based on what your credit score is at the time that you apply, just like with any other loan.
The difference between a credit card loan and other types of loans is that a credit card company views their terms with you as short terms and can re-evaluate you each and every month if they wish.
How do they evaluate you? They run your credit and look at what your score is doing. Say you applied for a card and had a 750 and landed a 12.9% fixed rate. Pay your payments on time and in full and keep your 750 and there is no problem, but if your score goes down, you have made a change in the terms and the credit card company can raise your rate based on that.
Also, if they give you credit based on a good payment history and find that a year later, even though you have been paying them on time, you have been making late payments elsewhere, they can find that you no longer have a good payment history and raise your rates.
This change in your credit score and payment history is the concept called, Universal Default. You have not made a late payment on your credit card, but a late payment on anything anywhere else, or a drop in your credit score can put you in Universal Default.
All credit card agreements site Universal Default as a justified reason for raising your interest rate, even on a fixed rate credit card. All they have to do is give you 15 days notice before they change your rate and they can raise your rate to whatever they want.
Friday, February 4, 2005
Truth About Credit Cards: Watch Your Due Dates
So, they can do whatever they want to? Why yes, they can. Take a look at your due dates.
You might find that some of your cards have due dates that change each month.
There is not a wide fluctuation, like say from the 3rd to the 23rd, but it may move a day or two here and there.
So, what this allows the credit card companies to do is put your due date on a Sunday or a holiday here and there in the hopes that you might get a little too busy and forget to make your payment on time.
It might sound a little trivial, but they make millions in extra revenue each year by doing this and it is all perfectly legal...
You might find that some of your cards have due dates that change each month.
There is not a wide fluctuation, like say from the 3rd to the 23rd, but it may move a day or two here and there.
So, what this allows the credit card companies to do is put your due date on a Sunday or a holiday here and there in the hopes that you might get a little too busy and forget to make your payment on time.
It might sound a little trivial, but they make millions in extra revenue each year by doing this and it is all perfectly legal...
Thursday, February 3, 2005
Truth About Credit Cards: No Laws On Fees, Either
Just like there once was a limit to how much the banks could charge in interest on credit card loans, there once was a limit to the fees that they could charge you as well.
Then, a court decision, Smiley vs. CitiBank went in CitiBank’s favor and it removed all of the limits on fees.
Back in the 1970s and 1980s, a late payment fee was usually around $5 and all that happened when you reached your limit was that your card stopped working.
Today, the high late payment fees hover around $39 per occurrence and are expected to creep up to $49 pretty soon. Today, your card still works past the limit for a little bit so that when your statement cycles, you can be charged an over-limit charge.
All fees and charges go on your balance and can result in even more fees and charges. All of this is perfectly legal because thanks to Smiley vs. CitiBank, there are no limits to dollar amount of fees and the number of fees you can be charged.
Today, compared to twenty years ago, fee income for credit card companies has more than doubled. This is where the credit card companies really make their money today.
Thanks to Smiley vs. CitiBank, there have been no aspects of the credit card loan interest and fee rates that have been regulated by law since 1986.
This means that these credit card companies can charge us whatever they want to, when they want to and it is all nice and legal...
Then, a court decision, Smiley vs. CitiBank went in CitiBank’s favor and it removed all of the limits on fees.
Back in the 1970s and 1980s, a late payment fee was usually around $5 and all that happened when you reached your limit was that your card stopped working.
Today, the high late payment fees hover around $39 per occurrence and are expected to creep up to $49 pretty soon. Today, your card still works past the limit for a little bit so that when your statement cycles, you can be charged an over-limit charge.
All fees and charges go on your balance and can result in even more fees and charges. All of this is perfectly legal because thanks to Smiley vs. CitiBank, there are no limits to dollar amount of fees and the number of fees you can be charged.
Today, compared to twenty years ago, fee income for credit card companies has more than doubled. This is where the credit card companies really make their money today.
Thanks to Smiley vs. CitiBank, there have been no aspects of the credit card loan interest and fee rates that have been regulated by law since 1986.
This means that these credit card companies can charge us whatever they want to, when they want to and it is all nice and legal...
Wednesday, February 2, 2005
Truth About Credit Cards: Minimum Payment Scam
Now, let’s talk about minimum payments. Back in the 1970s when banks wanted you to pay your credit card balances down to get their money back because they really didn’t make that much from the capped interest rates, it was the norm to expect no less than 5%, and even sometimes more, as a minimum monthly payment on your credit card balance.
This average of a 5% minimum payment each month was the norm for many years, that was until the credit card companies turned to a man named Andrew Kahr, who today very rarely grants interviews, and will only do interviews if reporters promise not to reveal what part of the country he lives in and who his clients are and were.
The big banks that were turning into credit card companies brought Andrew Kahr in to see how they could squeeze even more money out of the consumers they were now charging 20% interest.
Andrew looked at the psychology behind America’s emerging lack of financial responsibility in the 1980s and came up with a theory. Andrew felt that the 5% minimum payment was requiring the debtor to properly manage and worry about the amount of debt they took on, but that if the credit card companies lowered that minimum to a mere 2%, the debtor would have a much smaller minimum payment to worry about and would feel free to become relaxed about their debt management.
Not only was Andrew’s theory correct, it resulted in a fringe benefit for the credit card companies. See, at a 5% minimum, it would take you much less than half the time to pay off the debt that it would at a 2% minimum, and on top of it, the people making the 2% minimum still would think they were being financially responsible because they were not missing payments.
Today, the 2% minimum is industry wide and consumers take on a larger amount of debt because their monthly minimum payments are lower and all the while, it is taking them more than twice as long to pay off their debt, giving the credit card companies more chances at late payment fees and over-limit fees.
This average of a 5% minimum payment each month was the norm for many years, that was until the credit card companies turned to a man named Andrew Kahr, who today very rarely grants interviews, and will only do interviews if reporters promise not to reveal what part of the country he lives in and who his clients are and were.
The big banks that were turning into credit card companies brought Andrew Kahr in to see how they could squeeze even more money out of the consumers they were now charging 20% interest.
Andrew looked at the psychology behind America’s emerging lack of financial responsibility in the 1980s and came up with a theory. Andrew felt that the 5% minimum payment was requiring the debtor to properly manage and worry about the amount of debt they took on, but that if the credit card companies lowered that minimum to a mere 2%, the debtor would have a much smaller minimum payment to worry about and would feel free to become relaxed about their debt management.
Not only was Andrew’s theory correct, it resulted in a fringe benefit for the credit card companies. See, at a 5% minimum, it would take you much less than half the time to pay off the debt that it would at a 2% minimum, and on top of it, the people making the 2% minimum still would think they were being financially responsible because they were not missing payments.
Today, the 2% minimum is industry wide and consumers take on a larger amount of debt because their monthly minimum payments are lower and all the while, it is taking them more than twice as long to pay off their debt, giving the credit card companies more chances at late payment fees and over-limit fees.
Tuesday, February 1, 2005
Truth About Credit Cards: Are You Friend Or Foe?
Some of this may be hard to hear, but believe me, it is important for consumers to know and understand this information. I've explained how the banks became credit card companies and I hope that we can all agree that someone who would borrow a dollar from you at 0.25% interest, then turn around and loan you that same dollar at over 20% interest, is not a friend.
So now, let me ask you if you are a friend or a foe of the credit card companies?
Don’t answer just yet...let me give you some more info first.
55 million Americans pay off their credit card balances down to $0 each and every month. The credit card industry calls those people “Deadbeats.” 90 million Americans do not pay off their credit card balances down to $0 each and every month. The credit card industry calls those people “Revolvers.”
Deadbeats are foes of the credit card industry and Revolvers are friends of the credit card industry. So, now, answer...are you a friend or a foe of the credit card industry?
Deadbeats are foes because the credit card company does not make any monthly interest off of them and does not make any fee income off of them with over-limit fees and late payments fees.
Though credit card companies make a small percentage from the merchants that the Deadbeats purchase from, that is all they ever get from Deadbeats.
Revolvers are wonderful friends of the credit card companies because they are able to make monthly finance charge income that, in turn, goes on top of the credit card balance, compounding to a point at which even the interest can result in over-limit and late fees. Revolvers are much more prone to miss payments or not make minimum payments, generating late payment fee income, again, which also compounds on top of the credit card balances.
So, now, answer...are you a friend or a foe of the credit card industry?
So now, let me ask you if you are a friend or a foe of the credit card companies?
Don’t answer just yet...let me give you some more info first.
55 million Americans pay off their credit card balances down to $0 each and every month. The credit card industry calls those people “Deadbeats.” 90 million Americans do not pay off their credit card balances down to $0 each and every month. The credit card industry calls those people “Revolvers.”
Deadbeats are foes of the credit card industry and Revolvers are friends of the credit card industry. So, now, answer...are you a friend or a foe of the credit card industry?
Deadbeats are foes because the credit card company does not make any monthly interest off of them and does not make any fee income off of them with over-limit fees and late payments fees.
Though credit card companies make a small percentage from the merchants that the Deadbeats purchase from, that is all they ever get from Deadbeats.
Revolvers are wonderful friends of the credit card companies because they are able to make monthly finance charge income that, in turn, goes on top of the credit card balance, compounding to a point at which even the interest can result in over-limit and late fees. Revolvers are much more prone to miss payments or not make minimum payments, generating late payment fee income, again, which also compounds on top of the credit card balances.
So, now, answer...are you a friend or a foe of the credit card industry?
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