patrick.net

They make plenty on the rate they charge merchants, if they don't like that you pay on time move on.
I've had the same CC for 15 years and have never carried a balance, not a single month. If they raise my rates I will tell them to DIAF and either use a different CC or pay cash.
My usual approach to these kinds of things is to say: you can make 2% or you can make 0%, your choice, it makes no difference to me.

Vincent, I've been here a long, long time (either during or before HARM started posting). Been here long enough that I can't remember.
Not that it really matters, but I'm a big fan of your posts, wish you would post more.

Just thought I would mention that :)

CrazyMan says

but I’m a big fan of your posts, wish you would post more.

+1

Cancelled my Capital One MC 6 months ago........took about 30 seconds, not even a goodbye from them.....$5K limit, always paid in full each month, never late in 6 years........just been using my VISA a lot more as of late for the FF miles accumulation.

I've been living without credit cards for over 3 years now. I could apply and get one, I'm sure. It's just that I'm very gun shy about the whole thing. It seems that too many credit cards are messing with their agreements all too often lately. I don't want to pay a fee per year for not having charged much of anything. The only reason why I'd want a credit card again is for the occasional emergency to be paid off at the end of the month, and if I ever want to rent a car again. Car rental places insist on keeping a $300 or so "deposit" while you rent a car without a credit card.

It's quite amazing how you get treated when you don't have a credit card and only use your debit card.

Maybe it's just me, but since I am in a similar boat regarding my usage of credit. (eg pay it off in full every month, lest the rare screw up.) so the way I look at, they can jack my rate up to the moon... since I pay it off in full, the rate is non-consequential. I have my one card that gets me reward points, that's all I need. Just my personal two cents.

Vicente, I also enjoy your posts.

The wife and I each have 2 credit cards, used only for convenience and cash rewards, that are paid off every month. We have Visa rewards cards used to pay all utilities, health insurance, gas, groceries, etc., and American Express Blue Cash cards used only for Costco. Cash back each year is over $2,500.

No idea what the APR is on the cards. Doesn't matter to us.

If they start charging fees for paying off the card every month, and those fees exceed the rewards, then we'll give 'em the finger and go to cash, bill-pay and ATM. Thinking I may need to take an evening class on how to write a check...it's been a long time :)

+1 re: Vicente's posts. I've been a lurker on the forums for over 2 years.

I know that a major/large organizaion recently announced the cancelation at the end of this month for their corporate/business AMEX cards for all of their staff/faculty etc. It seems it is being done due to new rates and rules that AMEX said were non-negotiable under a new contract just two months old. I guess AMEX was wrong about the non-negotiable. The only thing that really bugs me about this is that the story most likely will never hit the mainstream media. People need to know that corporate customers are being hit by bad credit card rates and rules and taking action as well. I am certin that this event shocked many in the credit card business.

Clearly the banking/credit card industry must know of some major undisclosed issues coming. They are clearly shutting down their credit card businesses.

Thanks...

They're getting rid of the dead weight. By dead weight I mean people who don't pull their weight. By that I mean those of us who:

Don't commit overdrafts
Don't carry a balance
Don't use cash advances
Don't use the pretty checks that come with every statement

The big money is made from people who don't have any. Most people in poverty are a 25-500% ROI for the banks.

Been a fan of Nomo's for a while, too. Don't think I'd want to shake his hand, though.

I really think what we are seeing is that the free markets may actually work after all. EVERYONE I know is canceling their credit cards. The banks thought- Wrongly that they could be arrogant - get their money from the taxpayers at 0% and then turn around and gouge us and we would take it like we always did. People are finally saying enough. It will be fun to see what happens when nobody uses their credit cards in the next couple of years. My prediction is that our lawmakers will make it mandatory that people use credit cards instead of cash. Only by our elected officials messing with the free markets will people use credit cards in the future. My fear is that may happen. Laws will require us to use credit cards instead of cash. That's the only way I see it happening. I took a shotgun to my credit cardhttp://www.youtube.com/watch?v=rV3ImC4Ol7s and posted on youtube. "say you want a revolution, we all want to change the world"

Don't get mad, get even. If you still do get a credit card application in the mail like I did last week. I sent it back in the self addressed stamped envelope. With masturbation stains and a note saying to f off. And 666 =Banks. Now that's relief you can believe in.

So where they are going to get y'all....

Like where they GOT us, is all the FEES and interest.

That one month where you move your checking account to a new bank, and forget about updating the auto-pay information, that's when they make the money back off you that they didn't the rest of the year. This is what happened to us. Yes we thought we were smart & responsible to, have been really good about it for many years. And then you get caught in the drift-net of fine-print and fees.

Yes we called, and argued with them about the charges for late payment etc. but they weren't budging. We didn't want to leave opportunity for the parasites to accidentally make money off us again so we cancelled. The bankers need a new Maserati every year, and with everything else tanking they are NOT going to just blithely drop charges any more when you call & complain like they used to.

To me the idea of "yes well I pay off my card always SO FAR, and it gives me access to $10K in credit...." that is dangerous thinking like the loan-owners who think of the HELOC available as "their money". No it isn't money available to you, it's LOAN-SHARK ACCESS that you have on tap. It's increasingly blatant loan-shark rates too so why do we all have wallets filled with plastic? Best to lose that phone number, so to speak.

And hey thanks I thought my posts were generally ignored except by Bap33 & co.

Vicente says

So where they are going to get y’all….
Like where they GOT us, is all the FEES and interest.
That one month where you move your checking account to a new bank, and forget about updating the auto-pay information, that’s when they make the money back off you that they didn’t the rest of the year.
[..]
To me the idea of “yes well I pay off my card always SO FAR, and it gives me access to $10K in credit….” that is dangerous thinking like the loan-owners who think of the HELOC available as “their money”. No it isn’t money available to you, it’s LOAN-SHARK ACCESS that you have on tap. It’s increasingly blatant loan-shark rates too so why do we all have wallets filled with plastic? Best to lose that phone number, so to speak.
And hey thanks I thought my posts were generally ignored except by Bap33 & co.

Vicente, I read you too and have for a long time.

I had a similar experience with Capitol One. Like you and others I pretty much paid it off. I unfortunately had a little balance last year and then by paying extra times (a couple checks a month in order to pay it off) I somehow got out of synch with the payment date. Figure that: I pay extra times but somehow missed a payment? CANCELLED. And they keep sending me offer letters every week for another card ...

Love the comment on HELOC - I know folks who are pissed because the bank has limited access to 'their money' now with house values plunging. Right ...

Bank=666? cash reserve ratio in UK = 0.15%. 100/0.15=? You got it! 666. So, legally, the limit for leverage is 666 in UK. Info courtest of "The Economics of Money, Banking, and Financial Markets". Its a college textbook but is really a hoot to anyone who can think. Its like a documentation of how the scam works!

I'm not sure.
A. They are clearly shutting down their credit card businesses
B. getting rid of dead weight

This is worth figuring out. Would be worth knowing if they are cutting those who pay fees. I also wonder if the "carry trade" is breaking their backs as the dollar plummets then them carrying debt might mean they lose more. E.g. maybe they sell their debts as bonds or something and as these become less attractive due to continued money devaluation, then they have to factor their cost into their pricing. Anyone know how this works? How they get the money they loan to CC holders?

Just got a new AMEX "The Preferred Rewards Gold Card Membership Certificate"

-Free for 1st yr.
-then $125 per yr.
-$35 for each additional card after the 1st, up to 5 cards.

Late Payment Fees:
"Varies from state to state from zero to the greater of $35 or 2.99% of delinquent balance."

Did you see the word "zero"?

Off course “All charges made on this Charge Card are due and payable when you receive your billing statement.” I guess the credit card industry is finally realizing the older more risk adverse ways are better.

I just got offered a $125 per year AMEX card with a 2.99% default rate.

I think they may have finally heard the cries of those that do not ever carry a balance.

An offer too late to the wrong person. Frankly, I am insulted they sent me this offer.

Why would they want me as a customer after they just kicked a lot of the people I know off their corporate cards by giving them very bad and non-negotiable rates and rules? They need to learn the cost of bad public relations. The existance of this offer makes them look bad. Very bad.

FWIW...American Express historically provided charge cards and not credit cards. Now they do provide both. I'm not an expert on the difference but charge cards are generally due upon receipt whereas credit cards are revolving credit.

http://en.wikipedia.org/wiki/Charge_card

I remember years ago when MasterCard was MasterCharge. I guess they were originally providing charge cards versus credit cards like they do today.

I'm not sure about amex, but in general there are 3 parties involved in credit cards. Merchants bank, Visa, Consumers bank. I'm not exactly sure who shares the 1.5+% fees on the transaction, but I'm guessing the merchant bank gets some of that, dependent on the agreement they setup with the merchant, and probably a piece goes to Visa, but probably nothing to the consumers bank.

Which would explain why consumers banks are behaving this way. People who pay off their balances probably do cost them money. Especially if they're paying out rewards of roughly 1% (dependent on card).

American Express is a big user of H-1B's in their IT department. I have a friend who is a consultant and he was let go as AE still keeps bringing in cheap foreign workers.

+1

And lately I have been hearing some FUD on the media
"don't cancel your card, it will affect your rating"

That is really stretching the truth. There *might* be a small ding (5 points) to your credit score. The credit score companies have already adjusted their formulas to take this into account. So your credit isn't going to jump off the cliff.

Don't buy this BS... just go ahead and cancel :-)

Credit Cards in the hands of a intelligent person are a great deal... I remember when I moved out to CA over 7 years ago I had about 3 grand in debt post-college that i balance transferred from 0% interest card to 0% interest card for years until i got enough money to pay it off in full. I used the credit card companies to lend me $3000 interest free for nearly 3 years. The 0% balance transfer offers dried up a year ago.. But I've gotten one in my mailbox everyday this past week. I only use 2 CCs.. one with a $15K limit.. another with a $13.5 K limit. They are both offering .99% interest free balance transfer for 16 months...

If something bad happened I'd have nearly 15K in credit i could borrow at 1% interest... without overloading any one card... i could split it on each and apply for a third for daily spending. Put the other 2 in a box somewhere and pay 1% interest for a year... Then i could balance transfer them back to each other the following year at maybe even 0% interest...

If your smart.. you can get dirt cheap loans from credit cards and never have to pay back the money for years and years.

The trick is to never use the cards you balance transfer money to... Put them in a drawer somewhere and pay the minimum each month. If you use those cards.. they can screw you by charging you higher interest rates on the original balance transfer. It's the trick that catchest most people.

By balance transfering and putting it in a drawer.. and using another card for daily charging that you pay off on time every month. You can get VERY cheap loans...

In my opinion... This is the most effective way to say F.U. to credit card companies.. By outsmarting them.

(By the way... I've collected over $1000 in rewards from one of my credit cards in the past 4 years). They are paying me to use credit cards responsibly... AND giving me cheap 0% and 1% loans.

permanent_marker says

And lately I have been hearing some FUD on the media
“don’t cancel your card, it will affect your rating”

Every time I hear someone mention the importance of credit scores I can hardly keep from laughing out loud. Sure they are important if you laden with debt and looking to gorge on more. However, the last thing someone should want to do is finance anything they don't absolutely, positively need right now. I understand that it can be necessary in some cases and I have no objection to someone borrowing for an education in order to qualify for better paying work or buy a car (maybe a used one) or home as a long-term purchase. I can even accept financing a wedding or honeymoon under the guise of it being a once and a lifetime event. But borrowing endlessly to increase one's level of consumption beyond one's means at the expense of saving for the future is almost certainly a mistake. I've done it and it's the road to financial hell. It can be tough to turn over a new leaf and start being more disciplined in order to scale back once you've gotten ahead of yourself. It can be even harder to get back to even when you are trying to pay down a mountain of principal and the associated interest. Once you finally get even your only broke so for all practical purposes your just at square one.

Ironically, if you could care less about your credit score and you live within your means, the odds are that you'll have a pretty good credit score if you ever find yourself in the need of one. Few people can buy a house outright for cash so that could be considered a reasonable need provided the house is appropriate for their income level. Most people will borrow for a car too but they would probably be better off learning to save at a good clip (like 10-20%) and simply pay cash for it when they have sufficient savings. When I see people that are earning minimum wage (~$15k annually) drinking a latte from Starbucks every day (~$1500 annually) I can't help but think they are totally clueless about money. Starbucks can't possible taste that good.

While I dont share Doc Nomo's desire to masturbate while reading Vicente's posts, I do sorta take a liking to Tenouncetrout's post : I mean "+1" is the absolute most frickin' intelligent thing I have seen today. Asserting the positive ... priceless

@rmm221

Watch out on those deals now. They charge a small fee for imitating the transfer. Usually 3%, max $50-$75 (If you do $10,000) this adds almost nothing to the 0% rate you get, but if you take out a few hundred it's 3% interest.

Last year I noticed every card dropped the maximum. Now if you take out 30,000 you pay 3% up front, not even yearly. If you pay it back in 6 months, you've essentially paid 6% a year!

I used to take their offers and put them into a savings account and return them at years end. It netted about 6K/year in interest. So I'm careful to read their fine print, and was saddened when I saw all my current cards and all offers coming in with no maximum now.

@doubleup

To add to that, I'm betting that the average person being offered a loan get the highest rate the bank thinks they can get away with. A sales persons job is to judge the likelihood of you taking an offer or looking around. Even with a super high credit score, if they find out a candidate won't be shopping around, they will likely offer far worse terms than a person who they know will shop around.

I'm betting shopping around with whatever your credit score is, will yield far better results than increasing your credit score and going to the first bank you see and never looking elsewhere.

I'm always amazed at the number of people who don't realize they have a choice, or believe they need to go with the bank they have a history with.