Remember Traveler’s checks? Do People Still Use Them?

Posted by Debt Destroyer on April 25, 2009

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Yee-Haw!

The Debt Destroyer clan finally got out of Dodge (meaning we took a quick vacation over Easter break). And with such a trip, there are all the last minute preparations you need to take care of before leaving.

Making sure the kids are all packed up.
Making sure the van is ready to go.
Bring snacks, DVDs, & music for the trip.
Drop off the dog.
Get Traveler’s checks(cheques).

I crossed the last one off because it’s the 21st Century.

While I might pretend to be a pretty cool cat, I’ll admit to being old enough to have used Traveler’s checks. When my high school marching band went to Disneyworld (early 90s), my Mom made me get some. It made sense, I mean I wouldn’t trust a high school kid walking around with a wad of cash either. I of course would’ve wanted big bills, and if I had lost them I’d have been screwed.

So looking back I think she made the right move in making me get some Travelers Checks. And I actually remember using them (I think it was in the gift shop after watching the Muppets in 3-D).

But just a few short years after that trip, while sitting in a dorm room playing Techmo Super Bowl, I would be solicited to apply for my very own credit card(by a very attractive young lady…what are the odds?). And I would never use a travelers check again.

But should I be?

Looking at some sites it seems like they can serve as a nice emergency option when traveling abroad. But sadly my international travel experience have only been a couple of trips to Canada(Honeymoon & Pearl Jam concert), so I didn’t feel the need to worry about that.

Does anybody use these things anymore?

No really, I’m curious if people still use these or not. If you don’t, did you ever?

Until next time,

-DD

» Filed Under Cash, Credit Cards

Paying Off Credit Cards With The Credit Card Snowball

Posted by The Happy Rock on April 8, 2009

This is a guest post by Trisha Wagner. Trisha is a freelance writer for DepositAccounts.com, where you can compare rates from dozens of banks in one place. Trisha writes regularly on the topics of personal finance and saving money.

Credit card debt is among the hardest debt to pay off once you have accumulated it. Not only are the interest rates pretty high, but most people use their cards regularly, which means they add to the balance just as fast (or faster!) than they make payments on them. If you make a payment late or charge more than your available credit, you get slammed with additional charges on top of the interest.

Paying off high interest credit cards should be your first priority for finally taking control over your financial situation. Here is a method you can use to pay off your credit cards in a way that gives you results early, and helps you build momentum and motivation to pay them all off!

Step One: Figure out how much you owe. Sit down with each of your credit card statements and write down the total amount owed, the current interest rate, and your minimum payment. Also figure out your living expenses (rent/mortgage, other loans and debts, utilities, etc) to figure out how much money you have available to contribute to your credit card payments on a monthly basis.

Step Two: Call each of your credit card companies, one by one. You’re going to say something similar to the following, in an effort to get your interest rates lowered:

“I have been offered a 5% balance transfer offer from another credit card company. They are willing to transfer the balance from this 18% interest credit card to theirs for a 5% interest rate for the life of the balance. I’ve gotten great service from you, but I am going to have to switch my balance to help me save money if you can’t lower my interest rate.”

The response at first will probably be something they read off their customer service response manuals, and basically tell you that your rate is the best they can offer. Thank them for their time and let them know you will be transferring your balance since they are unable to help you. Many customer service representatives will put you on hold to speak to their managers at this stage, and will come back with a lower interest rate to keep you as a cardholder. Sometimes, they don’t help you but they can’t raise the interest rate just for trying to get a lower one, so what do you have to lose?!

Step Three: Once you have called each of your credit cards (and hopefully lowered a few interest rates), re-arrange the order of your credit cards on your list of accounts so that the smallest balance is first, followed by each of the others ordered by balance owed.

Step Four: Pay all of the cards on your list the minimum amount due, except for the credit card in the first position. You will send this account as much as you possibly can every month until it is paid off. So if the credit card with the smallest balance owed is $300 and you can afford to send them $100 a month, it will take you 3 months to pay it off, during which time all of your other accounts receive the minimum payment.

Step Five: As soon as you pay off the account in the first position, take the amount you were sending to that creditor and add it to the minimum payment you had been sending to the credit card second on your list. So if you were paying that card $20 each month, you’ll know send $120 a month until it’s paid off, while paying each of your other creditors the minimum amount due.

You’ll simply continue this process, getting larger payments to apply to each of the credit cards on your list as you pay off the one before it.

Many people argue that you should pay off accounts with the highest interest first, but for most of us, we need to get results to stay motivated. If your highest interest account also happens to be your largest balance, you could be paying for years on that account before you see it get paid off. When you can pay a card off rather quickly and make a larger payment to the next one in line right away, you start to see the benefits of your hard work much sooner, and are more likely to continue your debt repayment process.

» Filed Under Credit Cards, Debt Elimination

$500 Credit Card Cashback In A Year

Posted by The Happy Rock on March 2, 2009

chase-freedomcheck-2

I just recently received another $250 from my Chase Freedom rewards card. The check arrived almost exactly on my one year anniversary of signing up for the card. I have some unspent cash back still on the account, so even accounting for the $26 dollars in charges for an 8 hour late payment I still made $500 this year. In reality I only had to earn $400 in cash back rewards since Chase still adds $50 to a $200 check request. A nice little perk for funneling our cash purchases through a credit card and paying of the balance each month.

I am not telling everyone to go sign up for credit cards, since the debate about whether it is worth it still rages on. There are many downside factors that people often don’t consider when using rewards cards.

Current financial discipline
Current income and debt
Past credit and financial history
The rewards and credit costs that are passed on to merchants
Spending with plastic can cause you to spend more
Hassle and stress factor of dealing with a card or with mistakes. There are no late payments or double charges or finance charges with cash.

What are the reader’s thoughts? Credit cards rewards: worth the effort or not worth the hassle? After my last late payment debacle I am getting closer and closer to the not worth my time and energy side of the debate. My time and energy deserves to be spent on much more important things.

» Filed Under Credit Cards

Removing Finance Charges From My Chase Freedom Credit Card

Posted by The Happy Rock on February 16, 2009

After two months of procrastination, I finally called Chase to ask that they fully remove any finance charges related to my first time late payment offense. Did I ever mention that I hate making phone calls even if it is just calling a service rep that I don’t know to get late fees and finance charges removed? The introvert in me often hopes that avoiding the calls will make them go away…that rarely works.

The thing about this charge was that it left me seething. Every time I thought about it, I got upset. Upset because:

One 8 hour late payment resulted in about $100 in late fees and finance charges, $39 late fees and $51 dollars of finance charges that were spread out over two months of statements.
The bill was due on a Sunday and the payment was ready to be picked up on Sunday, but they don’t process payments on Sunday.
As someone who has paid their bill on time for the good part of ten years, I don’t like being treated as a delinquent.
My attempts at removing the fees(5 emails) had failed thus far and I suspected that if I talked to the right person they would remove the fees.

The only thing that kept me using the card is $500 in cash back in just one year of using the card.

After some prayer I was finally motivated to the point of action. I armed my self with all the relevant information which included the statements for the credit cards and for my bank payment. holding strong to the fact that they thought of me as a valuable customer. They had just raised my limit to $5,000 in a slow economy. I didn’t even plan to try and use ‘I own a personal finance site that talks about your company’ line.

When I called I got a reasonable customer service rep who listened intently as I laid out my case as strongly and politely as I could. She started to give me an annoyed scripted response about how the due date can fall on any day, but I politely persisted and said that she had to get a manager to remove the fees. A friendly manager came on and I politely told the story again and added stronger language about how I have one credit card and switched to Chase because of their service, but now every time I use the card I want to cancel. I continually stressed how I was a good loyal customer and how if this was resolved I would be a loyal customer again.

She relented and offered to remove half of the fees($26). I was placated. Not completely happy, but placated nonetheless. If I wasn’t averaging $40 a month in cash rewards from the card, I would be much more upset. Plus at $26 replaced in ten minutes, it feels like earning $156 an hour.

» Filed Under Credit Cards, Money Savers, Productivity(Financial)

Credit Cards Make Purchases Cost More

Posted by The Happy Rock on January 30, 2009

Here is another strike against credit cards. Not only do they often cause us to spend more, but they make merchants charge more to cover the credit card processing fees are usually 2-3%. The best cash back credit card that I use can end up costing merchants even more because credit companies pass an extra fees to cover the rewards which then gets passed right back on to the consumer. Americans spend an estimated $50,000,000,000(500 billion) in processing fees, almost the cost of one stimulus or bailout package.

Here is the scoop from True Cost of Credit :

Rewards cards cost businesses more than non-rewards cards because the credit card issuers pass the cost of the rewards onto the businesses by charging them higher Interchange rates. Rewards interchange rates are typically around 0.30% higher than the rate for a regular card. However, many smaller businesses actually get charged more than 0.30% additional for such transactions because it triggers a downgrade, which allows their credit card processor to charge them as much as an additional 1.50%.

The True Cost of Credit site combines information from several sources to provide you the estimated fees that were paid by merchants to your given credit card company. Just click through to the site and put in the first six digits(Issuers Identification Number) of a credit card and the site will give you a report on the fees merchants pay when using that card. Here is the report for the Chase Freedom Card, if you are interested. The report also offers examples of fees for different types of purchases that is also quite eye opening.

A pack of gum at a convenience store: $1.50

Credit Card Fees: $0.38 (25.1%)

So next time you swipe your card think twice about how much it might be costing you. What do the readers think about all of this?

» Filed Under Credit Cards, Personal Finance Systems

Crafty Creditors Are Making Changes

Posted by The Happy Rock on January 14, 2009

This is a guest post from Tisha Tolar is a freelance writer providing content for CreditCardAssist.com, where she regularly writes about credit cards, rewards programs and general consumer finance issues.

******
As the economy remains rocky and the credit card industry works through the crunch, it is important for consumers to take heed and pay more attention to what they are getting in the mail. Per law, credit card companies can change the terms of their issued credit cards provided they send notice 15 days prior to alert customers of the impending changes.

Due to the credit crisis, many credit card companies are resorting to different tactics to reduce their risks and increase their income in order to survive.

The Tactics

Some card companies are steadily analyzing customer accounts and dropping credit limits for the riskier clients, those who have been late with payments or have other debt. Even good customers are seeing their higher credit limits slashed up to half the original amount. Another tactic is the increase of interest rates. Back in the day, a customer was subjected to higher interest rates when they missed several payments. By today’s standards, a good customer can simply be late paying a debt other than the credit card and find their interest rates skyrocket, sometimes as high as 30%. It does not take long for debt and charges to accumulate, leaving you in even greater debt. Credit card companies rely on the fact that you don’t pay attention, thus making it easier to make money off of your lack of knowledge.

The Expectations

Credit card companies are fully aware that many customers will disregard written notices sent through the mail. It is common practice for people to skim over a contract, skip the fine print, and sign off without so much as a question. In keeping with that theory, the same people will likely toss privacy statements and notices beyond their monthly bill into the trash, without a second glance. It is only after that things have changed for the worse do customers sit up and take notice. Credit cards send out term changes and privacy policy changes essentially knowing the customer will not be looking very closely.

The Lesson Learned

The information we throw away often contains the important details about how the credit card company collects and uses our personal information, how our interest rates are calculated, and the regulations on fees and charges for late or missed payments and default. The statements also reveal the details of how the company reports your information to the major credit bureaus. It stands to reason that each and every customer would want to know and retain this information for future disputes. If you have to initiate a correction or an argument, it is best to know what you are talking about before jumping too far ahead. You can also help stop the sharing of your personal information with third-party sources.

In the world of credit, ignorance is not bliss. It can cost you dearly if you don’t know what is going on with your finances at all times. All too often we read of stolen identities or excessive debt brought upon by miscommunication or a misunderstanding. It’s your finances and your responsibility. Live up to them and live debt-free - or at least fool-proof.

» Filed Under Credit Cards

Holiday Spending 2008 - DD’s Quick Recap

Posted by Debt Destroyer on January 2, 2009

I hope you are all enjoying the holidays. For those of you who haven’t, the good news is that they are over.

Long time readers might remember that I mentioned my Christmas Budget technique is to save up our cashback credit card rewards and use that money on presents. This year we had $420 to work with.

Let’s see how we did:

$90 - Our kids
$100 - My folks
$75 - Wife’s folks
$57 - My family
$78 - Wife’s family
$30 - Angel Tree Gift

Total = $430

We only missed our goal by $10, not counting the gifts we got for each other(we don’t pre-budget those in order to surprise each other). If we’d add those in our total would be very close to $600.

$600 is more than I wanted to spend, but considering this covered 22 people it’s not so bad.

This is about the amount we’ve been at for the past few years. So I guess we’re leveling off. I think the only way to shrink it down any would be to cut out some people and use The Happy Rock’s idea about skipping Christmas presents.

Actually this almost happened for us this year.

Last week one of my wife’s family members called wondering if we’d be cool not exchanging gifts this year (due to me not working). And instead of saying yes, my wife told them that we’d already bought them some. This was the truth, but as I explained to her we could’ve easily taken the gifts back.

Oh well, no biggie. We’ll just have to remember this for next year.

Enough about me, how did you fare this holiday spending season?

Did you come in under/over budget? How did this year compare to others?

Until next time,

-DD

PS Happy New Year!

» Filed Under Credit Cards, Spending

Credit Card Late Fees With Chase Freedom - One Strike Down

Posted by The Happy Rock on December 9, 2008

That’s right, the saga of my brain dead late 12 hour late payment continues. When I went to pay my bill for the month I noticed that Chase had charged me over $38 in finance charges. The finance charges shocked me, because my old Sunoco Mastercard didn’t charge backfinance charges only charges going forward. Well I already got the late fee removed, so I tried the finance charges. I sent a few stern email and even asked to talk to the supervisor to no avail.

Does anyone have experience with the Chase Freedom card customer service? Should I try again over the phone, asking for managers, and continue to push the issue? Hopefully, someone will have some encouraging stories. Otherwise that is the cost of doing business with the best cash back credit card in a slimy industry. They might not be as willing to work with me since they are giving me around $400 a year in cash back.

Needless to say this bothers me to no end, though given the cost and hassle it most likely it won’t happen again for a long while. I have already gotten a $250 check this year, so I am still way up, but I am giving myself three strikes. One strike down and if it happens two more times I will have to seriously reconsider my cash back setup.

» Filed Under Credit Cards, Money Savers

Getting A Credit Card Late Fee Removed

Posted by The Happy Rock on November 10, 2008

That’s right, even someone who has a great 5 year track record with credit cards can occasionally make a mistake. This past weekend I submitted an electronic bill pay request for my credit card that was due on Monday. Normally I pay my bills well in advance, but rewards of financial simplicity have started to set in and I only have three bills to pay at the end the month which has dulled my watchfulness. I knew that the payment should take two days to get there, but I just overlooked that for some stupid reason.

Other than carrying a balance this is exactly the type of thing rewards credit cards thrive on and exactly the type of thing that can make having a rewards card quickly not worth it. The fee was $39, which was pretty ridiculous and it was charged instantly without any grace period.

Once I noticed the charged I quickly emailed Chase through there customer support center asking for grace.

Here is the email I sent :

I am writing to request the removal of a late fee that I was charged this month. I sent out an online bill pay before the due date, but it didn’t seem to arrive on time.

Please provide a loyal customer grace and remove the fee.

Thanks

They promptly responded and removed the fee, no questions asked. Chase said I was a valued customer and removed it as a one time courtesy. I wouldn’t expect them to do that too many more times, so I will make sure that I don’t make the same mistake again.

Just remember that everything is negotiable, especially with credit card companies.

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» Filed Under Credit Cards

Credit Card Signups At Checkout - Worth it or not?

Posted by The Happy Rock on October 26, 2008

As I was in the line at Home Depot with all the supplies to redo our bathroom, I did something I haven’t done in years The seed was planted by an extremely helpful employee in the bathroom section and by the time I was about to check out with $400 worth of materials the frugal side of me couldn’t resist the 10% off savings of $40 if I signed up for a credit card.

After a short walk to the customer service desk, few tidbits of information, and about 10 minutes I had a new credit card with a $10,000 limit and $40 off my bill.

The weird part is that I felt a little dirty afterward. We spent so long digging out from under 70k in debt that it feels crappy being in unplanned debt even if we pay it off when the bill comes. It felt sort of like I cheated after going years with only one credit card.

Once I was able to separate myself from the situation, I could see that it wasn’t that big of deal and I saved $40, but the real question is “was it worth it”? I would love to hear the readers thoughts on the matter.

Here is my take :

Hassle - It took an extra ten+ minutes to check out, plus the extra stress and hassle of making sure you remember to pay the bill and cancel the card. Let’s say it took about an hour all told, $40 an hour is a pretty good return.

Risk - What risk you ask? Risk that you get late fees and penalties. Risk that you can’t afford to pay the bill when it comes. Risk that the card and company is reputable. Risk is one of the huge components of debt that people often overlook and don’t respect. It is the part of debt that has people in foreclosure, bankruptcy, or buried under piles of interest. Everyone says that it won’t happen to them, but it happens more often than people care to admit.

Card Quality - When signing up for a card at a check out counter, you give up your ability to research the card and the company. Often the ‘check out’ cards are more dubious in quality than some of the major common cards like American Express Blue Cash. ‘Check out’ cards are often willing partake in questionable practices that regular cards don’t like hidden fees, really high interest rates, fees for returns, short grace periods, etc. Turns out the Home Depot card has gotten terrible reviews in this regard.

One Drop Syndrome - Doing it once starts to break down your resistance towards debt and makes doing it again all the more appealing. Eventually and usually without knowing you are doing things with credit that you wouldn’t have pictured just months earlier.

Credit Score - This one really shouldn’t matter too much, because a good score means that you can just get into more debt which you shouldn’t be doing. A new hard pull on your credit does ding it for while and the new card may or may not effect it, but it is at least worth noting.

With all that said I really don’t think that I would do it again. I am not saying that I will never do it, but I think the amount that I will save will need to be greater than $50 or more. That’s my take.

Update - The bill is paid and the card was canceled without a problem. They did start offering me free coupons if I kept the card open, but I politely declined.

» Filed Under Credit Cards, Frugality

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