Advanced Personal Finance

(Note: This is NOT a paid post)

Capital One has rolled out a new service to try to get you to use their rewards credit card above all your others. It’s called Card Lab and it allows you to customize the credit card rewards to your specifications. After checking it out (though I didn’t apply for a card), I found the Card Lab to be a really cool idea, well executed.

Power to the people

I read about how credit card companies are trying to get people to use their reward cards rather than everybody else’s. They call it ‘getting to the top of your wallet.’ Anybody who uses rewards credit cards (and if you pay off your balance every month, there’s no reason you shouldn’t) knows that certain cards are superior to others in various situations. Some cards offer better rewards at gas stations, some give you rewards from buying from certain merchants.

Maximizing credit card rewards is almost a sport. Some very popular bloggers have explained how they maximize their rewards and make some pretty decent money doing it. But up until now, you had to play by the banks’ rules.

Not any more…

Without making any judgment about Capital One or their credit cards per se, I can say that their Card Lab concept is pretty cool. They present you with a list of categories (e.g. reward type, interest rate). Within each category, you find various choices.

You select which choice you prefer and as you do so, choices within other categories that are no longer possible grey out. It was easy for me to find my ideal Capital One card - no annual fee, cash rewards with a bonus kicker. I don’t care about interest rate on balance transfers, introductory interest rate, or what the APR actually is.

I’d like to see this catch on with other banks. I’m lazy and something like this could get me into the rewards game more than I am now. Right now, I have a really simple rewards program with USAA that I like. Keeping track of which card to use in which situation is way to much work for me.

Share This

Is there a point to signing credit card receipts?

I was at Home Depot yesterday buying a plumbing part we needed. I used the self check-out (I love self check-out). When I got to the part where you use the little light saber to sign your name, something a little odd happened. The screen where you sign your credit card ‘receipt’ was mounted at an odd angle. As a result, my signature looked nothing like it normally does.

(My signature as far as Home Depot knows)

Then it hit me.

Why the hell do we sign credit card receipts, let alone electronic ones?

Seriously, what difference does it make? Obviously it’s not legally required (e.g. you don’t sign at a gas pump). No one ever checks to see if how you signed looks even remotely like the signature on the card. (For a great post on signing the back of credit cards, see what Money, Matter, and More Musings has to say about it.)

So what’s the point?

Share This

Ugh. It was bound to happen. My 4-year old daughter got her first credit card application in the mail yesterday.

After we put the recycling out on the curb last night, I reached into the mailbox and grabbed what was in there. Coming inside with her, I said, “Hey! This letter’s for you.” (I saw it was from AirTran - we signed her up for their frequent flier program)

“Really?!?”

“Yep. Here’s your mail, ma’am,” I said, making a production of handing over the envelope.

She tore right into the letter while I moved on to the only other non-junkmail item. Honestly, I thought AirTran had sent her some plan-related form letter. Soon, however, the real contents were strewn about the kitchen floor.

“Daddy, look! I got a card,” she happily proclaimed. She meant like a birthday card. I look and she’s holding a return envelope. “I’m going to keep my card over here, ok Daddy?” she said as she proudly placed it on her little activity/art table.

“Sure, baby. That’s great,” I said as enthusiastically as possible. I bend down to recover the rest of the envelope contents and am soon slapped in the face with the absurdity of the situation.

Way to go, AirTran. You just sent a credit card application to a 4-year old. Congratulations.

I tore up the application, but thinking about it now, I should have kept it. [Sniff] My baby’s first credit card application. [Sniff]

Share This

It’s been a long time since my wife and I were in debt. Right now, the only debt we have is our mortgage. For some reason, a recent post at Paid Twice made me pause and take a look back on our debt history. As in many of her posts, she talks about how she made a ’snowflake’ payment to her credit card.  (For those who don’t know, ’snowflaking’ is a term popularized by Dave Ramsey.  My understanding of the term is to send in any small amount of money available to pay debts, usually credit card debt.)

When I read stuff like the Paid Twice post (and there are lots of people in the same situation she is judging by my RSS reader), I get a feeling beyond sympathy. I can easily see why people ignore their debts and never total them up. I can see why people pretend bills don’t exist and simply don’t pay them.

When you have tens of thousands of dollars in debt, it seems so pathetically small when you send a $50 additional payment. Funny thing is, I don’t remember it feeling this way when we were in that situation.

How we got out of debt

Years ago, when we owed money on credit cards, student loans, and a car loan and were working to pay them off, I knew nothing of Dave Ramsey’s ’snowball’ technique. I’d never heard of Suze Orman or any of the rest. This is what we did.

• We prioritized. Nothing novel here. We wrote down what we owed to whom. Then we ordered the list according to what was costing us the most money in interest. Not surprisingly, it was credit cards. We decided to pay them first.

• We sent a bit more than the minimum to the highest priority debt. The rest got the minimum payment. It’s been a long time, but I remember the additional amount being pretty trivial - maybe $100 a month. As a percentage of the debt, it was a soul-crushingly small amount. But we didn’t despair because…

• We applied any large amounts of money toward the debt. We sent every cent of our tax refund straight to the debt. Any work bonuses went to it. When I left the Army, I had leave saved up, so I was being paid by two different jobs for a month. This one was huge. Anyone voluntarily changing jobs can easily apply the same technique. It made a world of difference.

• We kept at it. We were disciplined and relentless. Getting out of debt was our mission. We didn’t live like misers or never take a vacation, but we made the debt first priority until it was gone.

What I learned from our debt journey

• Ignoring the problem won’t make it go away. You owe this money. You will pay it - it’s only a question of when and how much it’s going to cost you.

• Commit to a plan. Use whatever method you like - pay your highest debt first; pay the smallest balance first; whatever. I don’t care. But decide on a plan. Later, if it’s not working for you, change it.

• Get everyone on board. My wife was a key motivator and player in this. The entire family must understand the objective and how you’re going to achieve it.

• Don’t make the problem worse. You cannot buy a new car on credit. Don’t charge something you cannot pay off right then. Don’t go deeper into debt.

Nothing I’ve written here is novel. It’s just our story. We made it out of the hole. We’re on the other side. If you’re in debt like I was, don’t give up. You can do it.

Share This

Thursday, Experian announced that, starting November 1, it will allow consumers the option of ‘freezing’ their credit file. Experian is the final credit bureau to allow credit freezes. Equifax and Transunion have previously announced their intention to do so.  Their programs roll out October 15.

A credit freeze prevents access to your credit file. Since no one can check your credit, would-be identity thieves cannot open new lines of credit in your name.

It will cost $10 to freeze or unfreeze your file, unless your state’s law mandates a lower cost. The option to freeze your file will be available to consumers in all 50 states. Currently, only 39 states had provisions for freezing a credit file. This action makes that a moot point.

Here’s another post I wrote about credit freezes you might find of interest.  Among other things, this article explains how to go about freezing your files.

Share This