My Credit Card Loves Me
Earlier this week I got mail from Citicard and they told me that they love me. Well, maybe not in so many words. But we’ve had the card for only a few months and already, they’re raising our limit. I don’t remember what our limit exactly was before, but it is being raised by about $2000.
This is the card we got for the 0% no fee balance transfer offer and now holds our remaining credit card debt. Since receiving the card in August, all we’ve done is transfer ~$5100 to it and then worked at aggressively paying it off ever since. I guess that’s enough for them to decide that we should have even more money to potentially spend. I don’t see the logic in it, but there it is.
Maybe the card didn’t want to give us too high of a limit in the beginning to prevent us from transferring too much in the first place since it was a special no fee 0% offer. But if I transferred more, wouldn’t I be less likely to pay all off in time allotted and so they’d make money in interest on the other end? So shouldn’t they give me all the limit they wanted to up front? I don’t know. I don’t understand this at all and all I can do is laugh, since I’m not going to run out and buy something with my newfound buying power. Although I originally wrote that as “newfound money”, so I guess my old bad habits of how I thought about credit as free money are not *quite* cured.
Maybe they think I will run out and charge a bunch of stuff and lock those charges behind my 0% balance so they can merrily accrue interest while I can’t get at them. But would I seek out such a specific balance transfer offer to take advantage of and then do something silly like that? Not now… but maybe I would have in the past. I hope I wouldn’t have, but I’ve done other silly things that make no sense to me now.
I can’t get inside the heads of the credit card company people, so why do I try?
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November 28th, 2007 at 7:36 am
Sneaky of them. Even with your early payoff plan, there’d still be 8 or 9 months of interest on the new purchases.
November 28th, 2007 at 9:45 am
As long as you still have open accounts (my understanding is that you never closed your accounts, plus you still carry around those cards in your wallet) the credit card companies know (from massive studies) that you WILL falter and use the available credit.
Truthfully, if you were serious about getting out of debt you would have closed your accounts. You are holding onto a false sense of security for whatever psychological reasons.
I wouldn’t be wondering or trying to figure out the credit card companies. Their direction is clear. They are in the business to sell credit. I would be wondering why you still carry those cards in your wallet and why you have not closed down those accounts. That’s the real crux of your problem. Until you cut the umbilical cord, you’re just treading very dangerous water.
November 28th, 2007 at 9:59 am
@ Harry - That’s your opinion and you are certainly entitled to it wholly and completely. I however completely disagree.
I do have three credit cards, all open, all in my wallet. (I did take two of them out for a time a few months back but then I forgot where I put them and one of my kids found them instead. So I put them back in the wallet.) And I don’t use them. I *wish* the crux of my problem was that i hadn’t closed them - if only it was that simple.
I am very serious about getting out of debt and if my actions on that behalf haven’t convinced you, I think that you’re not really able of convincing on that front in regards to me. Closing credit accounts and destroying cards (a one time action that I could easily reverse with a few mouse clicks and get more credit) doesn’t speak louder, to *me*, than years and years of consistent non-credit use.
But I respect that your opinion and assessment is different and colored by your own experience. Thanks for stopping by and weighing in!
November 28th, 2007 at 10:31 am
@paidtwice - I think you nailed it. The bank believes, given enough enticement and time (and sufficient ‘emergencies’) you’ll put charges in front of your balance transfer. As you allude to, credit card companies apply payments to the lowest interest rate debt first.
harry is correct, too, that these companies know what they’re doing. They employ massive computing power and fat-brained people to study us. They apply facts and science to the situation. And the fact is, many people will falter in this respect.
This is why credit card companies compete fiercely for new customers on everything except what you’d expect - cost of credit (in the form of APR). Ever notice that’s not really a competitive market (after teasers)? It’s because studies show people say they won’t run a balance, but they almost always do.
Those fiendish credit card companies…
November 28th, 2007 at 10:37 am
@KMC ~ I’m not disputing Harry’s assessment of credit card companies. I’m disagreeing with his assessment of me :). We always think we’re the exception to the rule, right?
My whole life has been about being the exception to the rule so I’ll continue my quest to be so. But - at the same time, until all the debt is gone and a sufficient emergency fund can be formed, I am, indeed, simply treading water in the edge of disaster. I don’t dispute that idea at all. I’ve come to an uneasy truce with it for now. But it could get ugly. Which is part of why I am trying so hard right now.
I’m too stubborn to quit though
November 28th, 2007 at 11:21 am
Am I mistaken or does closing accounts hurt your credit score? It’s better to have the account with zero balance than to close the account. Maybe I’m wrong. Paidtwice, you’ve done plenty to prove your dedication to paying off your debt and not using credit.
November 28th, 2007 at 11:56 am
A credit score is exactly this: a score used to loan you MORE credit. Since you are trying to get out of debt, what do you care what your score is? Plus, creditors look at your report to see how much available credit you have already. Since you were just increased another $2000 in available credit, the banks know you have the POTENTIAL to use all your available credit, so your score has probably been lowered already.
If you are worried about future events, thus the reason why you hold onto your credit cards, you should up your emergency fund (even if that means only sending in minimum payments for a while) and then close out your accounts. Or, just keep one credit card open for emergencies and close the rest. You should also get those cards OUT of your wallet. Never mind the excuses. Lock them away in a vault or freeze them in your freezer. Your son can’t get to them in there, now can he?
I am sorry Paid Twice, but until you get rid of those cards you are just fooling yourself (and your readers). Those credit cards are walking time bombs. Like an accident waiting to happen. You would be amazed at how differently you would think and act once they were really, really gone. (but you could hold onto one until your emergency fund makes you feel secure)
Once those cards are paid off and you never use debt again, you can sock so much money into a savings account, retirement funds, college funds……you would be living a better and more wealthy life!
November 28th, 2007 at 1:16 pm
lol
My son can open the freezer. But that’s beside the point.
Explain why they need to be frozen, and I’ll think about it.
Statistics predict the actions of groups, they do not predict the actions of individuals. Therefore any argument about a statistical group being applied to one single individual doesn’t hold water. Hmm… I see a post in that. I’ll write it down for future reference.
I didn’t claim to be concerned about my credit score. I actually didn’t address why I keep the cards at all. Just that I do, and it is my choice to do so. There are reasons and I could expound on them (and may in the future) but honestly, I didn’t think they applied to my answer. My reason is immaterial. The fault I find with your reasoning is your prediction of my specific future behavior based on an analysis of a group as a whole. Which is what I addressed.
I don’t need an excuse. I’d rather the cards in my wallet than hidden in my house. Plain and simple.
You can continue to feel you know me better than I do based on a statistical likelihood of a certain behavior, and that’s fine. I don’t mind disagreement.
I am going to quote something: Once those cards are paid off and you never use debt again, you can sock so much money into a savings account, retirement funds, college funds……you would be living a better and more wealthy life!
I agree with that. THAT is why my emergency fund is a minimum. THAT is why I put every single penny I can scrounge up to paying off debt. THAT is why I am doing this. Cards in my wallet or not is immaterial to that. Having the cards in my wallet for years now and not using them hasn’t fixed the problem of me having debt. If I didn’t have them in my wallet (and, actually, to be completely accurate, for a while I had two expired cards in my wallet because I didn’t get around to activating the new ones, THAT’S how much I think about them
) it would make no difference in how much money I owe right now.
What’s made the difference is deciding to change and deciding to pay *as much as I can* not *as little as I can get by with*. That was the difference, and that has nothing to do with some plastic in my wallet.
Hope that helps explain my tenet and position. I think that last line might be a post in itself too. Must write it down.
November 28th, 2007 at 2:14 pm
Paid Twice-if a catastrophe hit you right now-what would you use? cash or credit? If the answer is credit, then you have put yourself in a Catch 22 position.
You need an emergency fund first to keep you out of credit card trouble. Once you have that in place, then you can attack the credit card debt. You are doing it backwards otherwise.
Suit yourself. I really don’t care. The fact that you keep credit cards, expired ones, no less, in your wallet, displays a disjoint in your head.
Would you keep photographs of people who have abused you or mistreated you or hurt you in any way, in your wallet? Then why oh why do you keep credit cards, cards that have financially hurt you and your family in your wallet? Yet, you refer to your credit cards that ‘they love you’, ‘they miss you’. Do you get what you are saying yet?
(you keep the cards in the freezer to stop yourself from using credit without thinking first before they defrosted.)
Do what you want. You, like so many millions more delude yourself into a false life.
End of comment. I’m out of here!
November 28th, 2007 at 2:36 pm
Bye! Hope you come back later :). I think I might write about some of this tomorrow in a post type format. It has given me tons of ideas popping in my brain! thanks!
“(you keep the cards in the freezer to stop yourself from using credit without thinking first before they defrosted.)”
That’s what I figured the reason was. I don’t use them so I don’t see a point in freezing them.
YES - If a total catastrophe hit me right now, like a more than about $3000 catastrophe that I had to pay for right away, I would most likely have to use credit. Which is kind of the point - paying them off (and actually most of our debt is student loans not credit cards) is a high priority so we can save more towards an emergency much more quickly without having huge debt payments looming over our heads. That isn’t backwards to me but it can be backwards to you - there are so many ways to go about this and one size does not fit all.
The “love me” and “miss me” was sarcasm.
Although I think they do miss me. Heh.
Credit cards haven’t abused and mistreated me. In the past I used them irresponsibly - well actually, I was irresponsible about money in general. That’s why I’m fixing things now. if I wasn’t irresponsible, I’d have nothing to fix. that isn’t the fault of the cards it is my own fault and I have taken responsibility for that numerous times.
I hope you keep checking up on me and monitoring my “false” life - I’d love to show you there isn’t just one way or the highway. You’re welcome any time and all comments are embraced with open arms and my healthy love for discussion and analysis.
Thanks!
November 29th, 2007 at 7:44 am
The way I see it is that if a person is paying off their balance every month, the credit card company would increase their limit to a level where they can no longer pay off entire balance in full and would need to carry the balance over, earning them interest.
November 29th, 2007 at 2:06 pm
A very interesting exchange between Harry and PaidTwice.
As PaidTwice said, the problem isn’t the credit cards - it’s the way she used them. Harry gives a lot of power to little plastic cards with numbers on them - a power I don’t choose to bestow.
Credit cards are tools, not evil incarnate. You can use those tools to make smart financial decisions, or you can use them to make not-so-smart financial decisions. I use mine to make my money go further - by charging everything and paying them off every month I get dividends and other rewards. And by knowing what my credit score is and making sure the decisions I make keep it as high as possible, I save money for myself later, when I’ll be in the market for some good debt (like a mortgage).
I don’t take issue with Harry’s strategy for destroying or freezing the credit cards. That’s like setting your clocks five minutes late to avoid being late. I, personally, don’t see the value in that FOR ME, as I know I can always have the store call and get the card reopened, or do it myself. And I know that the clock is five minutes ahead, so that just doesn’t work for me. But it is an option that works for many people, so it’s all good. Each person should do what works for them.
PaidTwice didn’t accrue debt because of a lack of self-control. She seems to have accrued debt because at the time she wasn’t thinking about the consequences of her financial decisions - a trap many, many young people fall into. People with strong self-control don’t need to hide their credit cards, or set their clocks ahead. They just stop using them, and show up on time. Like PaidTwice has been doing.
I do, though, think that Harry gives us evidence of a lack of self-control by to stooping to a personal attack. Just because someone disagrees with you, Harry, doesn’t mean they’re delusional or deluding others. You have strategies that do work for some people, Harry, and I hope you continue to share them. But please don’t attack.
November 30th, 2007 at 1:39 pm
Wow, I missed all of the controversy…not sure how I did that.
I don’t base people’s intentions by whether they carry cards or not, however as Harry mentioned it does raise the question of how serious a person really is.
Have read Jaimie’s blog from months ago, I know she is serious…I wish I was AS serious.
In general though, as Harry did I really would question the average “joe/jane” that states they want to be out of debt, yet still carries the card.
I would equate it to the alcoholic visiting the bar, gambler going to Vegas, etc. I kept mine because they were a crutch…and unfortunately continued to use that crutch. Statistics show most people do this, and the credit card companies bet on it.
So I cut mine up, temptation gone…and it’s testing me to see how serious I am. 1 year later, haven’t used a credit card yet.
Regarding credit cards being evil…technically no they aren’t, they are just a piece of plastic. The credit card companies ARE in fact evil.
Are guns evil? No, people that use them are. Do most people consider guns evil? Yes because they are a dangerous tool that causes people to do dumb things and hurt themselves, sometimes unintentionally.
Card cards, while they won’t kill you directly, are very similar.
I am of the opinion that removing credit cards from society would have a much better impact on people than keeping them…but it is a free country, and people are left with a choice.
I challenge everyone to cut them up…you won’t miss them, but if you do…well go online and get another. It’s really easy…too easy…and there is a reason for that.
Thanks Jaimie, great and interesting discussion. I love reading passionate arguments from people.