The Evolving Face of Credit Card Scams

An anonymous reader writes "The 12 Angry Men have a followup to their piece on the cross-sell scam credit card companies have begun using. Their new article concerns another evolving scam being employed, where users are racking up huge fees and charges on cards that have never even been activated. The article goes deep into the standard way the scam plays out, as well as detailing some interesting history on how credit applications are processed, and where they are typically (and frighteningly) subject to tampering."

Comments

Come on

[2.7182]

you have to give them credit for originality.

Re:Come on

[Anonymous Coward]

you have to give them credit for originality.

I see what you did there.

Re:Come on

[2.7182]

Thanks for noticing my pun. No one else seems to have.

Re:Come on

[Garpin]

I just canceled a cc I didn't use. I received a "late notice" from them. Seems there was a $6.00 per month participation fee. That coupled with the minimum $.50 finance charge against the 6 bucks. Me being a dumbass thinking I didn't use it there wouldn't be a payment. 2 Months roll by and they charge me 2 $35.00 late fees against the participation b.s. I cancelled it and paid it off. The card was through "Applied Card" which used to be Cross Country Bank. If that wasn't enough it turns out the thing had a 30% interest rate. Word to the wise : READ THE FINE PRINT!.

Simple (sort of) solution:

[Z80xxc!]

Just don't use credit cards. Really. Using credit gets you into debt anyway. True, there are other ways to get scammed, but if you don't have a credit card, they can't rack up the charges. If you were to use a debit card instead, then you stand to loose something, but once it runs out, it's gone and they can't keep charging more. Credit is necessary in some circumstances, but for day-to-day purchases, you might be better off without one.

Re:Simple (sort of) solution:

[Feminist-Mom]

Credit cards don't get people into debt - bad judgement and perhaps poor mathematical skills do. It is simple - you know how much you make each month, and have in savings, and don't run up a bill you can't pay. It's just a matter of computing your total resources R, and making sure R > amount you spend.

Re:Simple (sort of) solution:

[andy666]

True, but the fact of the matter is that people DO get into debt more when they use credit cards. But maybe one way to look at this is that a credit card is a easy way to get a short high interest loan, and people are fine with that. On the other hand, most people don't treat it that way and it turns into a long term high interest loan. So it is sort of psychological reasons that get people into trouble. Many people are not disciplined enough to do what you recommend.

A lot of people gamble and get into trouble because of bad judgement. It's sort of like that. Basically a lot of adults act like kids, and you have to expect that as the norm.

Re:Simple (sort of) solution:

[ThinkingInBinary]

I disagree. I'm a college freshman, and I just picked up one of the Linux Fund credit cards. I'm not in any sort of debt -- in fact, I pay off the card in full every month, if not more often (if I've made a large purchase) to keep the balance down. If you pay for all your purchases at the end of every month, a credit card is an awesome tool to simplify your life rather than a potential source of monstrous debt. Just don't spend what you don't have, and you'll be fine.

Re:Simple (sort of) solution:

[ejdmoo]

Just don't use credit cards. Really. Using credit gets you into debt anyway.

Wrong. Using credit gets you into debt, maybe, but not me. Credit does not get you into debt; debt comes from not repaying your creditors.

People these days just can't accept personal responsibility for things; it's ridiculous.

Re:Simple (sort of) solution:

[ChatHuant]

Just don't use credit cards. [...] if you don't have a credit card, they can't rack up the charges. If you were to use a debit card instead, [...] once it runs out, it's gone and they can't keep charging more.

That's not necessarily true, because of a nice feature named overdraft protection. It's a big moneymaker for banks; you could argue it's an opt-in service, but here's a recent press release, describing a debit card with "built-in" overdraft protection (the link is to the cache, because the original article has expired). And I'll bet dollars to pennies that you won't get a warning when the overdraft "protection" kicks in, so you could just continue blissfully using the card and get hit with multiple overdraft charges.

Re:Simple (sort of) solution:

[zgregoryg]

Use a debit card instead? Good one, then scammers can empty your account and you have no recourse. Scammers racking up fraudulent charges on a credit card is a non-issue, you are only liable for $50 max. The credit card companies lose; not you. If you really want to be safe; prevent identity theft by locking your credit report with the big 3.

Re:Simple (sort of) solution:

[Anonymous Coward]

I hate to tell you, but in the Real World (TM), where credit matters (for house loans, car loans, etc) and where credit cards are much easier/better/faster and more available than money (never have to run to the "Credit Machine") - the option of NOT using credit cards does not exist.

Instead, look for companies who protect you from credit card fraud, shred all credit applications (don't just rip them) and be smart about where you use your credit card.

Re:Simple (sort of) solution:

[smittyoneeach]

you have to expect that as the norm.

Why do we simply accept these societal variables as if they were constants?
There really is no requirement for people to act as if compulsive behavior is uncontrollable.
The roots lay elsewhere...

Re:Simple (sort of) solution:

[AK Marc]

Using credit gets you into debt anyway.

Hmmm, I have about $150,000 of debt to three separate institutions, and not a single one of them is a credit card company. Well, not counting credit cards paid off within 30 days with no finance charges as "debt." I have about $50,000 available on my cards, and use it like a convenient checkbook that pays me money for using it and takes nothing from me in return. Anyone not using credit cards for all possible purchases is losing money.

If you were to use a debit card instead, then you stand to loose something, but once it runs out, it's gone and they can't keep charging more.

Debit (tied into your bank account) gives you less protection than a credit card. Also, if there is a problem and your charge account is frozen, if you have credit cards, you pull out another. Most people don't have a full backup checking account in case the first one doesn't work.

Credit is necessary in some circumstances, but for day-to-day purchases, you might be better off without one.

The way I see it, using a credit card for all purchases gives me rebates (cash, airline miles or whatever) protects my checking account from loss, and leaves a more trackable account history than checks or cash. Using credit cards is something people should do, not avoid. Now, the question of paying it off is a completely separate issue. Just like you shouldn't write a check your account can't cash, neither should you charge something more than what you can write the check for when the bill comes.

Re:Simple (sort of) solution:

[Firethorn]

True, but the fact of the matter is that people DO get into debt more when they use credit cards.

Of course they do. Then again, with things like payday loans and rent to own(effective interest: up to 400%!), there's plenty of people who get into trouble even without credit cards with an interest rate generally less than 30%.

Many people are not disciplined enough to do what you recommend.

True, of course even though I do the same thing, there are things I could theoretically do to increase my earnings/save money even more, but even though it should be fine, I consider it too dangerous or too much work.

For example, I could get a home mortgage for ~6%. My investment returns are averaging 10%. So I could theoretically make more money keeping my house mortgaged(essentially renting it), and going for that 4% marginal. Sure, I'd have to pay income tax on the 10%, but the interest for the house is deductible. Still, that means risking my house - for a measly 4% on average. Sure, some people do it, but I don't like it.

We'd probably be better off teaching fiscal responsibility and budgeting in HS, but even then - we can't make people listen, and that 52" plasma TV looks real good...

Here I am driving a 5 year old car(bought new, paid off, I plan to drive it at least 10 years. $300/month pays for a lot of repairs. Stuff left over once I decide to get rid of it can go towards buying a new car - possibly entirely. I also have a 7 year old 32" TV I bought on special, etc...

But there's people who make less than me running around with HDTVs and expensive cars etc... My only consolidation is that I'm much more likely to be able to retire early and with a better standard of living than them. My goal is to be one of those 'quiet millionaires'. You know, live modestly, but have no real financial worries.

Re:Simple (sort of) solution:

[Anonymous Coward]

That's "...lie elsewhere." But, otherwise, a great post.

Re:Simple (sort of) solution:

[Anonymous Coward]

Talk about cutting off your nose to spite your face.

When you get scammed with a credit card, you call your card company, explain the situation, they say "Thank you Mr. X, we'll investigate it", and then a month or two later you'll get a refund. At no point during this situation did you actually lose any money. At worst your credit limit was artificially low for this period.

When you get scammed with a debit card, you call your bank, explain the situation, they say "Thank you Mr. X, we'll investigate it", and then a month or two later you'll get a refund. In the intervening period you have no money. If you are like many people and have no significant liquid assets outside your checking account, you may end up not eating for a while.

Also note that if you lose your debit card and someone starts using it with your PIN (that they may have scraped off a keypad you used just before they stole the card from you) then you are liable for the charges right up to the point where you call the bank. If a credit card is stolen then you are never liable for any charges you did not personally make unless your signature is present, and even then you are limited to $50/charge.

I personally never use my debit cards because the possibility of having the information stolen is too scary. On the other hand I use credit cards freely have no worries about getting them stolen, because even if someone steals my information the process for resolving it is painless. Of course I also watch what I spend and pay off my cards every month, so that I never get any finance charges. Some people are not capable of staying out of debt when carrying a credit card, and to them I would recommend sticking to cash or checks.

Re:Simple (sort of) solution:

[camperdave]

No, I'm afraid you're wrong. The moment you charge something to your card you are in debt. Now, you may well pay that debt off promptly and completely. However, that is a side issue.

Re:Simple (sort of) solution:

[Osty]

I pay off the card in full every month, if not more often (if I've made a large purchase) to keep the balance down.

Unless you're paying off a large purchase in order to make room for another large purchase within the same month (in which case you may want to rethink what you're doing), paying your credit card bill multiple times per month is costing you money. As long as your bill is paid off at the end, it doesn't matter whether the charge sat on the card for 1 day or 30 -- you're not going to get a finance charge. At the same time, the moeny that you used to pay off your bill in the middle of the month could've been generating you interest for another couple weeks before spending it to pay the bill at the end of the month. While the amount of interest you're going to make in that amount of time is minimal unless you're talking about large dollar amounts, over time that amount can add up. And even if you are just throwing away a couple of cents each time, that's real money you're losing.

Re:Simple (sort of) solution:

[king-manic]

Hmmm, I have about $150,000 of debt to three separate institutions, and not a single one of them is a credit card company. Well, not counting credit cards paid off within 30 days with no finance charges as "debt." I have about $50,000 available on my cards, and use it like a convenient checkbook that pays me money for using it and takes nothing from me in return. Anyone not using credit cards for all possible purchases is losing money. Many non chain stores will discount you ~4.0% for using cash. So unless you make back more the 4% you sometimes lose money using credit. The 4% is the amount the credit company charges the merchant. Which is in fact where a large part of the credit companies revenue comes from.

Re:Simple (sort of) solution:

[dosius]

It lies in the (and I am referring vaguely to the DEVO/Jocko Homo ref in your .sig btw) de-evolution of American society into a group of people obsessed with buying, buying, buying - whether they have the money is irrelevant, GOTTA HAVE IT, and gotta have it NOW.

When we realize we don't NEED this junk and especially when we know how to wait for things ("good things come to those who wait", ain't you heard?), how to save up for stuff (this is one of my vices, I spend money like sand going through my fingers), how NOT to get into debt, we will be much better off.

The closest I'll ever get to touching a credit card are those All Access Gift VISA prepaid debit cards I buy every month at Tops so I can buy stuff online.

-uso.

Re:Simple (sort of) solution:

[EvanED]

So? Blame the people, not the tools. I haven't carried a balance since I got my card.

Re:Simple (sort of) solution:

[MBCook]

Agreed. My only debt is my credit card, which I pay off every month. I've had it for about 2 years, spent plenty of money (bought a HDTV, and a Laptop, along with all my gas) and yet I've never paid them a cent of interest.

The thing about credit cards is that they are a double edged sword. One edge is blunt, the other is sharp as hell. If you do what I (and the parent poster) do, it's a blunt sword. You use it to make life a little easier, you get a small benefit (1% cash back or whatever, depends on card and whatnot). If you screw up, they bleed you. Chances are you don't get 10% interest rates. Most people don't. But even 8-10% can be quite a bit of money.

But that requires you to be responsible. To pay your bill on time. To only spend money you already have.

If you don't do that, a credit card is a really sharp sword. Playing with credit cards (especially the "I'll move my balances to this new 0% card" game) is russian roulette. You know how sharp things like Ginsu Knives are (in the ads, not in real life)? Multiply that by 100, coat the sword in motor oil, and that's what a card is.

If you can't control you spending, you will get yourself into big debt. There is a decent chance that the debt will become normal to you. Once you get one card, it is easy for you to get another if "run out of money" (a.k.a. your up to your limit). You will dig yourself in DEEP.

My best summary would be this: if you don't need a credit card, if you don't spend money... they are safe. If you "need" a credit card, if you like to spend money... they are very VERY dangerous.

There are things that could be done. Overturning that stupid ruling that let banks export usury rates. Ban advertising cards on college campuses (as well as promotions involving cards... no more "Buy one pizza, get one free when you sign up for a Visa card"). Make it illegal to give cards to people who are near their credit limit on most/all their cards already. No "loyalty" cards that have credit attached (i.e. what you see at Best Buy, Circuit City, Nordstrooms, Gap... just about everywhere. Mandatory financial counseling in school (Ohio is moving to something like this I hear) so that kids have a chance to learn this stuff the easy way.

And of course, credit card companies tend to be on the evil side of shady. But I think that of most banks at this point, cable companies, cell phone companies, and quite a few others. What can I say... I'm not a big fan of how many large companies are run.

Re:Simple (sort of) solution:

[iminplaya]

Ya know, I used to be totally unsympathetic on the subject of addition, until I read about the real physical effects it has on the brain, and its chemical balance. Even the "psychological" ones. I still believe the cure can only come from within, but now I have a better understanding of the difficulties involved. Melding spiritual discipline into the physical universe is a daunting task.

Re:Simple (sort of) solution:

[Anonymous Coward]

whoever modded parent troll and grandparent insightful is a fucking idiot

Re:Simple (sort of) solution:

[smittyoneeach]

Should have said "The roots lay elsewhere, he mused", he mused.

Re:Simple (sort of) solution:

[Anonymous Coward]

using a credit card for all purchases...leaves a more trackable account history than checks or cash.

That's exactly the reason nearly all of my purchases are made with cash.

Re:Simple (sort of) solution:

[Lehk228]

and credit card companies will yank your merchant account if your store does this and is found out.

Re:Simple (sort of) solution:

[Anonymous Coward]

BZZZZZZZZZZZZZT! Thanks for playing!


When you get scammed with a credit card, you call your card company, explain the situation, they say "Thank you Mr. X, we'll investigate it", and then a month or two later you'll get a refund. At no point during this situation did you actually lose any money. At worst your credit limit was artificially low for this period.

Sorry! It doesn't work that way. Contesting a charge is VERY VERY DIFFICULT. The credit card companies will drag it out for months and keep rejecting your claims over and over again hoping you'll give up. It's a myth that you can just call up and they'll undo it.

Re:Simple (sort of) solution:

[skelly33]

Ah yes - that reminds me of the scam that I got hit with by a bank that starts with a "W" and ends with an "ells Fargo"... but I won't name names.

It all started when I made a series of mistakes (ancient history) and ended up having myself added to the bank account of a girlfriend so that we could access the same cash pool. Her account, my name added for ATM access. That relationship didn't work out and, after returning the ATM card, we parted ways.

So, none the wiser, I went to the same bank and opened my own account and got my own ATM card, and life as a bachelor was good. That is until about a year later when I got a call from the bank.

The woman on the phone explained that my girlfriend had over-drawn her account by nearly $1,000 and, since my name was on the account I shared the responsibility for payment. "Excuse me? No, no, you don't understand..." Furthermore, since my account is also with the same bank, they can just transfer the funds from my account to hers for added convenience. "EXCUSE ME?" A spat ensued. She won, though I got in my share of colorful euphemisms.

Ever since I have refused to do my banking with anything bigger than a local credit union who takes care of customers with nervous precision.

Re:Simple (sort of) solution:

[king-manic]

and credit card companies will yank your merchant account if your store does this and is found out. Depends on your contract and jurisdiction. My parents did it for years but in the form of variable rebates. 10% for cash 5% for credit. the lady who processed the merchant account was a regular customer ans she never said anything.

Re:Simple (sort of) solution:

[Jah-Wren Ryel]

Way to be pedantic!

Now, what exactly did your pedantifilia add to the discussion?

Re:Simple (sort of) solution:

[Jah-Wren Ryel]

and credit card companies will yank your merchant account if your store does this and is found out. No they won't. A cash discount is not in violation of their merchant agreements. What is in violation is a surcharge or fee for using a credit card. It's a subtle difference - mainly in wording - but the OP wrote "cash discount" and so his description was correct.

Re:Simple (sort of) solution:

[UbuntuDupe]

You know, anyone who's read my posts will know I'm the greediest capitalist out there. I don't have any love for people who get into debt without thinking about the consequences. Esp. the mortgage idiots who are surprised to see an adjustable rate adjust. So on any other issue, I'd be on your side.

But most of what credit card companies do is too much, even for me.

For example, look at this. Bank of America gave this guy a big credit limit at a "fixed" rate of 6.9%. Then he borrowed on that for wedding expenses, at which point it immediately shot up to 20%. Now, we can debate the merits of going that far into debt for that purpose. And certainly, the fine print allowed that. But advertising a 7% rate that becomes 20% if you have the audacity to actually take the offer? It's legalized fraud.

And on top of that, you have to get a credit card to exist in the financial system, even if you don't borrow against it.

(And then there's the whole issue of why the risk-free rate is so low despite the non-existent savings rate for Americans...)

Re:Simple (sort of) solution:

[nilbud]

All very well for addition, even subtraction but multiplication and division are gateway processes and can lead to differentiation and even (lord help us) statistics. Kids there is no such thing as a "standard" deviation.

Re:Simple (sort of) solution:

[kongit]

Wow, first of all debt is not a bad thing, not repaying your debt is. When I use my Visa card to buy myself a new TV theoretically I am using Visa's money to buy that TV. I am then under obligation to pay back Visa the money I spent. The instant I purchase my TV I am in debt to Visa. However, this debt is not a bad thing in and of itself. When I made a contract with Visa to use one of their credit cards, part of that contract was on how I was to repay my debts on that card. If I don't follow the conditions of the contract to repay my debt then I am in trouble. It isn't debt that is the problem, but me not following the contract that I signed.

I don't agree with using credit cards because I don't like spending someone else's money for menial purchases. In effect every thing purchased on a credit card is a loan from the credit card company under conditions usually stipulated by the credit card company. In most cases a debit card can be used as easily and puts my bank under the loan condition from the credit card company so I am not in the loop and in effect the money is withdrawn straight from my checking account. In my opinion one should only use loans and credit when it is the best option such as in large purchases like cars or houses. Since I use my own money to buy my lunch and not Visa's I am more likely to spend less and not have to worry about creating a large enough debt with Visa that it becomes problematic for me to repay it. Debt is not bad, large debt is, and credit cards can cause many people to create a large debt because of its ease of use and the fact that you aren't spending your money initially but Visa's

Re:Simple (sort of) solution:

[Anonymous Coward]

I've contested charges before and never had a problem ... the service reps at the credit card company(ies) were unfailingly polite in handling my situation.

I once had a credit card cloned and a whole bunch of fake charges appeared at gas stations all over California. Because I wasn't (note the past tense) in the habit of carefully checking my statement each month some of the earliest charges actually took place more than "X" days before I informed the company (where "X" is the time limit for notifying them according to my contract - I think it was 45 days). Even with my fuckup, they still reversed every single one of the fraudulent charges.

Re:Simple (sort of) solution:

[timmarhy]

there is nothing wrong with credit cards if they are used in a responsible manner.

I for example use mine a lot and i've never been ripped off once. I use mine to smooth over cash flow issues, and it's cost me $100 in interest in the last 5 years.

likewise with other debts, i own my car, i purchase a decent 2nd hand car and which i took out a $10,000 loan for and paid off right away.

I'll be doign the same with the house i buy soon. it's not the biggest and the best but it's reasonible and well within my means to payback inside 10 years.

The key to managing loans isn't not to be in debt, that's impossible, but to be more concerned with your ability to pay it back.

Re:Simple (sort of) solution:

[Anonymous Coward]

I do not have great experience in this matter, but the one time I had a fraudulent charge placed to my account, my card company caught it even before I did, let me know, reversed the charge immediately, and sent me a new card with a new number within the week.

Re:Simple (sort of) solution:

[ed.markovich]

Wrong. Using credit gets you into debt, maybe, but not me. Credit does not get you into debt; debt comes from not repaying your creditors.

People these days just can't accept personal responsibility for things; it's ridiculous.

You're correct, although I understand that some people can't resist the temptation to over-spend. From my point of view, use of credit cards can actually make people wealthier rather than poorer, in 4 ways:

* Rewards. It's easy to find a credit card that gives you some percentage of your spending back as cash or gasoline or airline miles. All other things being equal, this benefits the user - free money!

* Building of credit history. The longer you have credit card accounts in your credit profile (assuming you pay them off or at least pay on time) the better your credit score. This lets you borrow money at a lower rate when you realy have to - say a mortgage.

* Interest. When you buy an item with cash, you no longer have the cash. When you buy an item with a credit card, you get to keep that money until the bill is due - which could be a month or more in the future. You can put that money into a savings account meanwhile and earn interest.

* Barring scams and identity theft, credit is safer than cash. If you lose your credit card, you can replace it for free. Cash cannot be replaced in the same way. Also, credit cards provide a convenient way to dispute charges. Let's say you made a deposit for a service that was never provided. You may have a tough time chasing down the entity you made a deposit with, but you're a phone call and a fax away from your credit card refunding you the money and investigating (yes, in that order!)

Another great feature of credit cards is the monthly statement itemizing your expendetures. If you're into any type of cashflow analysis or budgeting, this could be valuable.

Of course these benefits only accrue to those with sufficient restraint to avoid abusing their cards. If you don't buy anything on the card that you'd not have bought with cash you have access to, you'll be ahead of the game.

Re:Simple (sort of) solution:

[Anonymous Coward]

It's important to keep in mind how the system is set up.

Basically, the card company has very little reason not to believe you, and every reason to reverse the charges without any complaint.

Card companies are middlemen. They take your money and give it to the businesses where you use your card. Likewise, when you initiate a chargeback, they take your money away from the business and give it back to you. They lose absolutely nothing in this process, except for the potential to get finance charges off that transaction if you don't pay the entire balance.

On the other hand, if you get pissed off and switch cards, they lose all the money they get to skim off your transactions. This is of course how they make money, so they really do not want this to happen. They make huge profits off of interest payments but their bread and butter is the 1-3% that they skim off of every purchase, so even if you always pay your statement on time they still have every reason to keep you. Knowing this can give you good leverage when dealing with the companies. Miss a statement and forget to pay? Call and cancel. When they ask why, say you missed a statement and forgot to pay, and you don't want it to happen again. Chances are excellent that they will offer to take the pesky late fee and interest off your account to make it right. And if they don't, well, obtaining a new card isn't exactly difficult for most people, so this isn't a big gamble.

But if they piss off the businesses, who cares! What are they going to do, stop accepting credit cards? As if.

This system is kind of harsh on business owners but it sure makes life easy as a credit card user.

Re:Simple (sort of) solution:

[Anonymous Coward]

I challenge your assertion that you are legally responsible for a fraudulantly used debit card, even when it is used by a PIN. It would not surprise me if some bank told you that, or if it was a common urban legand, but it is not true. After $50 the burden of proof is always on the bank to show it was used legitimately, otherwise it is presumed that your claim is correct.

Re:Simple (sort of) solution:

[karnal]

Ya know, I used to be totally unsympathetic on the subject of addition, until I read about the real physical effects it has on the brain, and its chemical balance. You probably didn't mean "addition" but that single sentence had me rolling. Thanks!

Re:Simple (sort of) solution:

[Anonymous Coward]

Using a credit card gets you in debt by definition, hence the 'credit' part. The moment you use it to pay for something, you're using 'the bank's' money, thus creating a debt. That you'll have to repay it in, let's say, one month time and have the means to do so, does not change much. It's still a liability, an obligation to pay it back.

Though for some creative bookkeeping your definition would do well.. 'look at these amazing debt/equity ratio's!' ;)

Re:Simple (sort of) solution:

[Belial6]

It is amazing how many people I know that I would generally think are intelligent, who for some reason cannot understand what you just said. Hell, Visa even advertises on TV how easy it is to commit fraud with a "Check Card".

Re:Simple (sort of) solution:

[Firethorn]

I kinda use my credit card for overdraft protection - charges go on the card, not against my checking account. My account sees about five withdrawals a month - to pay various bills. I always find the $49(or whatever) fees against a sub $20 check funny.

Not only can overdraft allow crooks to charge more up on your account before they're stopped, unless your bank is nice you're out of that money until the investigation is complete.

With a CC card, it's the CC company that's left holding the debt until the issue is resolved. That's one reason I use a CC card rather than a Debit.

Re:Simple (sort of) solution:

[simontek2]

I am terrible with credit cards. I will have a good job for a year, then get a credit card, cause I can use it. Then lose job, then debt. Yes, I stay away from them now. Its happened 3 times. My wife is 150k in debt, thanks to college.

Re:Simple (sort of) solution:

[mechsoph]

Many non chain stores will discount you ~4.0% for using cash.

Where do you live? My understanding was that in the US the merchant agreements with the credit card companies prevented differential pricing. I think I read though that Australia passed legislating preventing this type of agreement and allowing differential prices.

Re:Simple (sort of) solution:

[Anonymous Coward]

Wise man.

I think that way too.

Re:Simple (sort of) solution:

[mechsoph]

It's a myth that you can just call up and they'll undo it.

Your right. I just filled out a form on Discover's web site and they reversed the charge within a few days. Granted it was only about $30, putting it well below the cost of finding a replacement customer. However, since the chargebacks are usually passed straight back to the merchant, the amount of the charge shouldn't too be significant.

Re:Simple (sort of) solution:

[davetd02]

I'm trying to understand where the "scam" is here. You officially became a joint owner of the account. Presumably there were some documents and signatures involved. You never told Wells Fargo that you were no longer the joint owner of the account. Wells Fargo, thinking you to still be the joint owner of the account, did exactly what "joint owners" do. You get all of the benefits AND all of the drawbacks.

The right thing to do would have been to do more than return the ATM card to your ex-, but also remove yourself from the account.

Re:Simple (sort of) solution:

[Anonymous Coward]

CIte

On an EFT card, your liability for an unauthorized withdrawal can vary:

• Your loss is limited to $50 if you notify the financial institution within two business days after learning of loss or theft of your card or code.
  
• But you could lose as much as $500 if you do not tell the card issuer within two business days after learning of loss or theft.
  
• If you do not report an unauthorized transfer that appears on your statement within 60 days after the statement is mailed to you, you risk unlimited loss on transfers made after the 60-day period. That means you could lose all the money in your account plus your maximum overdraft line of credit, if any.

There are limits but they are much less friendly than credit card limits. In particular, the two-day period to notify the bank is about twenty times shorter than the period to notify a credit card issuer. The $50 does not apply to just about any fraudulent credit card transaction (nobody is going to be signing your signature) and the fact that you become fully liable for all transactions made after 60 days is somewhat backwards from how credit cards work.

So you're right, it's not unlimited (unless you're really negligent), but it's still far worse. I'll be sure to remember the facts in the future, though.

My general philosophy of fraud is that the person with the money is the person with the power. When dealing with a credit card company, you have the money, and so you have the power. When dealing with a debit card, the bank has your money, and so they have the power. Even if you can get most of your money back eventually, you still may end up subsisting on ramen for a while until they decide to give it back to you.

Re:Simple (sort of) solution:

[LurkerXXX]

Agreed. My only debt is my credit card, which I pay off every month. I've had it for about 2 years, spent plenty of money (bought a HDTV, and a Laptop, along with all my gas) and yet I've never paid them a cent of interest.

Start. At least once a year allow at least a small amount of debt to roll over (which you then pay in full the next month). It actually helps build your credit score to have it on record that you had a standing debt that you repaid. A bit silly I know, but that's the way the strange credit score calculations work.

Re:Simple (sort of) solution:

[Firethorn]

Overturning that stupid ruling that let banks export usury rates.

You think CC cards are high? The complaints I've been hearing is about the payday loan places - many charge so much that their effective interest rate is 400%!! Heck, a federal law recently went into effect limiting the rate charged to military members and their dependents to 36%, and suddenly the payday loan places don't want to talk to military.

Make it illegal to give cards to people who are near their credit limit on most/all their cards already.

Tough to do. You'd need some sort of national database - I don't know about you, but I think that there's already plenty of information on my credit history that's available to the public, I don't really need them finding out about my balances as well.

I think what I'd do is simply make declaring bankruptcy easier again. CC companies aren't stupid, they won't loan to somebody if they think that they're going to lose money. They'll willingly ruin your credit though if they think they can still make back more (IE they make back the money they loaned you +10%, but not the 30% they were looking for). Still, I think that that's a reasonable thing - the person didn't pay per the terms, therefore they're a credit risk. Their own fault. Make declaring bankruptcy easy enough the companies won't loan to the worst offenders, like they used to do in the old days. Of course, back then you needed to be 'upper middle class' to get so much as a regular CC card, much less the premier 'gold card', or the practically unheard of platinum card.

Then again, easy bankruptcy encourages people to play the system - I know, bring back debtor's prison. IE the person goes to jail for X number of days(which sucks), but has his debt wiped out(CC company not interested in financing a deadbeat). Have X dollars be wiped out per day in prison, highest interest rates first(so the home mortgage company loses their claim last).

No "loyalty" cards that have credit attached (i.e. what you see at Best Buy, Circuit City, Nordstrooms, Gap... just about everywhere.

Tough, seeing as how this is how 'credit cards' got their start - it was an extension of the old store credit system. You could buy stuff on credit with Sears before American express

The Diner's club card wasn't started until 1950, AmEx started in 1956. Sears opened it's first retail store in 1925.

Mandatory financial counseling in school (Ohio is moving to something like this I hear) so that kids have a chance to learn this stuff the easy way.

Very good idea. I'd call it 'training' not counseling. Counseling implies a one on one affair like setting up a specialized budget for each student, which isn't necessarily needed. Knowing how to create a budget, balance a checkbook, and some basics about investments is. I say investments because more and more people are having investments - even if only in the form of retirement accounts.

Of course, along with sex&drivers ed, and gun safety*, I think that in some problematic districts we also need to teach 'basic' skills like washing clothing, cooking(even for the boys), basic court system tactics**, among other things.

*personal gripe.
**IE written contracts, proof, and not pissing the judge off.

Re:Simple (sort of) solution:

[c_sd_m]

I'm a college freshman [...] I pay off the card in full every month, if not more often (if I've made a large purchase) to keep the balance down.

Without a decent income GPs credit limit likely isn't high enough to buy a plane ticket anywhere plus a decent dinner or a Wii plus a few games. It's easy to get a credit card but it's not always easy to get a credit limit for more than a few hundred dollars. Also, if you're getting any incentive from your credit card company (and you should be, unless you need a low interest rate for some reason) you're earning something for each dollar charged to the card, which may offset the minute interest the money would earn in a savings account (assuming if you need it in a few weeks it's not worth the fees to invest it elsewhere).

Re:Simple (sort of) solution:

[king-manic]

Where do you live? My understanding was that in the US the merchant agreements with the credit card companies prevented differential pricing. I think I read though that Australia passed legislating preventing this type of agreement and allowing differential prices. Canada. Agreements vary but our outlined a provision forbidding extra charges but a cash rebate was okay.

Re:Simple (sort of) solution:

[poopdeville]

Compulsive behavior is by definition uncontrollable.

Re:Simple (sort of) solution:

[Firethorn]

Here's a trick I was taught: Treat the card like a set of checks.

Seriously, keep the card in your checkbook with a register. When you buy something, deduct it from your checking account. Total up those expenses when the bill comes, verify charges are good, and send them a check in full each month.

Re:Simple (sort of) solution:

[Osty]

Without a decent income GPs credit limit likely isn't high enough to buy a plane ticket anywhere plus a decent dinner or a Wii plus a few games. It's easy to get a credit card but it's not always easy to get a credit limit for more than a few hundred dollars.

You'd be very surprised what credit companies give students these days, then. Back when I was a college freshman 11 years ago with no real job (just lab sitting) I was able to get two cards with several-thousand dollar limits each. I didn't use them for much then, but getting them establish credit and now those same cards have 11 year credit histories on them and are still the only cards I have or want. Long credit is good credit.

Re:Simple (sort of) solution:

[littlerubberfeet]

I agree. I do all my banking through a little (well, by little they hold less then $1.5 billion USD) local bank. When I was opening business accounts, the VP of loans poked his head in and introduced himself. I had a problem when I moved, with credit information not being updated, and they sorted it out, in person. I just walked into the main branch, and a half hour later, there was no problem anymore. They are also willing to do odd things, like find a strap of sequential uncirculated ones.

I have a personal account with a credit union for just the reasons the parent mentions. I get better rates on credit (if I need it), better rates on CDs, and the customer service is top notch. The other benefit is that business and personal accounts are separated, so they can't pull the "we can transfer easily" crap. Also, if I ever actually make any money, having assets at two institutions increases my FDIC coverage allowance to $200K.

My only regret is that I pay fees at all ATMs.

Re:Simple (sort of) solution:

[iminplaya]

Yes...well...Think of it as one of those movie marquees that never have enough letters. Actually the "c" fell off as I was putting up the post.

Re:Simple (sort of) solution:

[c_sd_m]

I doubt I'd be that surprised given that I am a (grad) student with a decent credit limit and a long credit history for my age. It's certainly possible to get a few thousand dollars as a credit limit but if your university will let you pay tuition on a credit card that won't go very far that month. Tuition plus a plane ticket home for Christmas (since that's probably the same month that you get your exam schedule) would've exceeded a few thousand dollars for me during undergrad and I had "cheap" Canadian tuition and a relatively short trip home. Plus I already had a few years of credit history with my current card so I wasn't going to cancel it and I didn't want to sign up for more cards before I got a feeling for what would best suit my long-term financial habits. If you're willing to sign up for half a dozen cards (probably even right on campus in September) there's no problem getting the credit that you want.

My point was really just that it's not very far-fetched that a freshman would pay off a credit card twice in a month since they were close to the limit. If I were traveling I'd want to have a reasonable amount of available credit and that could involve partly paying off the ticket to get where I'm going.

Re:Simple (sort of) solution:

[kryten250]

I am in the rental business on the side and do pretty well I'd say, no foreclosure risks. I go into tenant apt's all the time for various reasons and it's always the people close to default or that are late that have the best stuff, 52'' LCD screens, 2+ laptops, new king size bed and bedroom set, sub zero fridge. One tenant that had those things was being 100% subsidized by social services. It's crazy, but just like you I live below my means to have no financial worries but it always seems like the ones who default and break the rules make out in the short term, I guess it's monkey see monkey do at that point...

Re:Simple (sort of) solution:

[letxa2000]

On the "non-activated card" scam, I was waiting for the "gotcha" moment. Apparently, though, the "gotcha" is that consumers don't open their friggin' mail! I'm sorry, if you open an account for "Card XYZ", you get a plastic card from "Card XYZ" and cut it up and throw it away, and you keep getting mail from Card XYZ, would it cross your mind to maybe open the friggin' mail and see what's going on? I agree that the opt-out is devious and I agree that charges shouldn't be posted to non-activated accounts... but come on, the consumer has some responsibility here. OPEN THE FRIGGIN' MAIL!

I open every piece of mail I get. Loose publicity gets thrown away. Anything that looks to have even the slightest possibility of being sensitive (credit card offers, etc.) gets opened and I extract the part of the contents that needs to be shredded and throw away the rest. If I got something that looked like a statement, I'd immediately take care of that business.

PEOPLE THROW AWAY MAIL WITHOUT LOOKING AT IT AT THEIR OWN PERIL. That's NOT the fault of credit card companies (though they might be taking advantage of the stupid people that do it... but there's one born every minute).

Re:Simple (sort of) solution:

[dubl-u]

People these days just can't accept personal responsibility for things; it's ridiculous.

Choosing not to use credit cards sounds pretty responsible to me. Not only is it fiscally responsible, but he knows his limits and is sticking to them. What's not to like about that?

Re:Simple (sort of) solution:

[ejdmoo]

You're technically correct ("the best kind of correct").

However, we are extended all sorts of credit, yet we wouldn't define it as debt until the payment is late. Just because you haven't yet paid for your meal or your gas doesn't mean you're in debt. It just means you have yet to pay.

Re:Simple (sort of) solution:

[duggi]

Spending is an industry now, get over it. I have a credit card only because some of the payments I make on the net need to be done through credit card. But I don't expect everybody else to have good sense. Instill good sense in people and hope for the best?? Today it is more of "lure them, fool them, get rich or die trying".

Re:Simple (sort of) solution:

[Bloke down the pub]

True, but the fact of the matter is that people DO cut themselves more more when they use knives.

Fixed that for you.

Re:Simple (sort of) solution:

[Colin Smith]

Sorry, no. Credit makes up 95% of the US money supply. It's literally impossible for everyone to remain out of debt.

Re:Simple (sort of) solution:

[Hognoxious]

Tough to do. You'd need some sort of national database

I'm pretty certain some countries - it seems to be the 'Napoleonic' ones - have that. I did some work on an interface many years ago for reporting that to the Spanish government. And when Mrs Hog went for a mortgage they knew even before she told them what credit cards she had and the limits too.

Re:Simple (sort of) solution:

[Moridin42]

It is anecdotal, but for me paying tuition on a credit card would be insane. The best rewards card I have would get me 1.5% of tuition back. It would cost me a 2% "convenience fee" to pay by credit card. I am not at all certain where the convenience is, given that the other payment option is by ACH draft out of my checking account. (Yes, I do actually know why they charge the fee. But it is misnamed)

Avoiding over-limit fees is really the only reason to ever need to make multiple payments per month. I know some people that routinely do it by design. It helps them keep their mind on their expenditures. They're aware it costs them some amount of interest. But they're willing to forego that in order to avoid over spending.

Me, personally, I pay for everything with credit. I can count on one hand the number of times I've paid cash in the last 5 years. With fingers left over. I pay it off every month, collect my rewards, and pay attention to my bill.

Re:Simple (sort of) solution:

[Firethorn]

Credit reports have that information already in the USA. What I was talking about was a national database that included balances. IE 'Sorry Mrs Hog, but it shows you have $10k in credit card debt so we can't give you a car loan' instead of looking at just more general credit history and what other companies report, like credit limits and payment information.

Re:Simple (sort of) solution:

[Anonymous Coward]

Promptly and completely is the main point here.

If you pay off most they can charge a balance transaction for example if you pay off $100 after 29 days forgetting one dollar the credit balance for that that time is 101/30 + 101/29 .... +1/30 at the prevailing interest rate.

Re:Simple (sort of) solution:

[Tim C]

When you get scammed with a debit card, you call your bank, explain the situation, they say "Thank you Mr. X, we'll investigate it", and then a month or two later you'll get a refund. In the intervening period you have no money.

A work mate of mine had his bank account emptied a few years ago. He spoke to the bank, contested the purchases/withdrawals, and he had his money back within a day or two.

True, he then had to contest the charges for going over his overdraft limit, but they were dropped too. The point is, if it takes "a couple of months" to get your money back, you're banking with the wrong people.

Re:Simple (sort of) solution:

[Firethorn]

Bingo. As far as 'living below your means' goes.

Assuming an *Average* return of 10%, and that you invest half your income -

You'd be able to retire* in 8-12 years. 8 years would replace your lifestyle(you're used to living on 50% of your income), 12 years for full income replacement. Given that you are used to a lower lifestyle - that should cover the benefits rather nicely.

Of course, this is forgetting about inflation, pay increases, etc... Assuming a 5% pay increase each year, you'd need 9 years net income replacement, 15 for gross.

Of course, I'm only investing ~20% of my income(at that high of a rate, I can't keep it stable, I invest extra when I can). At that rate, assuming an annual 5% raise, it'd take 28 years for my investments to be able to produce my gross pay each year.

Consider this: If you seriously enter the workforce at 21, assuming no significant debt**, you'd be able to retire at 49.

Yes, this means not dumping all the money into retirement accounts, as you're going to need a chunk of it earlier.

*Don't forget that you'd have to replace job benefits like healthcare in the USA.
**By this I mean something that'd prevent you from saving 20% of your income.

Re:Simple (sort of) solution:

[smittyoneeach]

You're right, I probably meant impulsive.

Re:Simple (sort of) solution:

[thogard]

Barring scams and identity theft, credit is safer than c
Scams and identity theft can lead the crooks to your cash as well (if its in a bank). If someone steals money out of your credit card account, they stole the banks money but if they steal money out of a debit card, they steal your money. Guess who is in a better situation to deal with the loss?

Re:Simple (sort of) solution:

[PhoenixFlare]

Many non chain stores will discount you ~4.0% for using cash.

Nobody in the US does this, or at least not anybody i've ever seen during visits to stores in 14 different states and DC.

Re:Simple (sort of) solution:

[Hognoxious]

For the credit cards it's just the limit (interesting if you have an Amex) - this should in theory give them a worst case scenario. For the Spanish thing it was the balances.

Re:Simple (sort of) solution:

[bgat]

Never use a debit card for anything. Period. Don't even carry one if you don't have to.

If someone obtains your debit card number, they can empty the account(s) behind it and you have very little recourse, at least here in the USA. A debit card is the virtual equivalent of cash. It looks and feels like a "credit card", but the two are completely different financial instruments.

In contrast, if you promptly report a stolen credit card then you aren't liable for the charges the thief racks up. Yes, there's generally an investigation, but at the end of the day the money becomes someone else's problem.

The PP is technically correct--- when the money behind a debit card is gone, then it's indeed GONE. But in many cases, you can't get it back, either. Ever. With a credit card, purchases that you didn't make get charged back to the vendor and/or eaten by the card issuer. The theft becomes a non-event to you, other than some paperwork.

The simplest solution is this: If you don't want credit, then pay your balance in full at the end of the month. And if you don't want plastic at all, then don't carry plastic--- at all.

But if you DO want plastic, then DON'T use a debit card. Whether you want credit, or not. Seriously.

Re:Simple (sort of) solution:

[EricWright]

I agree with you for the most part, but do not EVER use a debit card online, unless you "buy" a one-time use number with it. Card numbers will get stored. PERIOD. I know for a fact that Oracle eBusiness Suite (major ERP system) keeps customer credit cards in a table that is directly related to the main invoice table. Not storing the card breaks relational integrity, so it is kept until the data ages sufficiently that it can be purged (typically 1-3 years minimum). Take a wild guess how many companies encrypt/scramble/otherwise obfuscate this data... not very many.

Why does that matter? Well, if your debit card is stolen from such a system and someone starts making purchases, that is REAL MONEY that comes from your checking account. Trust me, I learned the hard way by having nearly $3000 siphoned from my account in very short order. I got lucky since all of the charges occurred in the UK, and the bank realized that I wasn't going to pay overseas shipping charges for something I could get in the US. Although everything worked out in the end, I had to dip into savings to replace the money for the 45 days it took for the investigation to run its course.

What if I had used a credit card? Well, I would have had a large outstanding balance on my card until the matter was resolved, but nothing would have affected my checking account balance.

None of this goes against the basic premise that you must keep a close eye on expenditures and keep them in line with your available income. You still have to live within your means or you will go into debt.

Re:Simple (sort of) solution:

[GooberToo]

Just don't use credit cards. Really. Using credit gets you into debt anyway. True, there are other ways to get scammed, but if you don't have a credit card, they can't rack up the charges. If you were to use a debit card instead, then you stand to loose something, but once it runs out, it's gone and they can't keep charging more. Credit is necessary in some circumstances, but for day-to-day purchases, you might be better off without one.

This is just horrible advice. Using credit cards actually provides significant buyer's protection and is often the only tool available to consumers to level the playing field against retailers. Credit cards are significantly regulated and are geared to protect the consumer. Using credit cards does not mean you have to use it as a revolving credit line. Get your bill and pay it off every month. You still have buyers protection with support of a 800lbs gorilla in your corner without debt.

On the other hand, theft of a debit card is horrible! It can literally takes months for your money to be returned; if it is ever returned. This can cause checks to bounce and rack up a huge number of bounced check fees. Not to mention, your credit can be significantly, negatively affected for non-payment. Fixing this is a nightmare.

The rule of thumb is, NEVER use a debit card except at a known safe ATM or bank. Only fools use debit cards for every day purchases. Banks love debit cards because they are not required to extend you protection on the monies transferred; authorized or otherwise. Banks love debit cards because they don't have to pay the high credit card processing fees. In fact, many banks do their own, in house debit card processing, paying only a small (pennies) electronic transaction fee versus a precentage. In other words, the ONLY people debit cards help are the banks.

If you can't responsibly use a credit card, don't use one. Just because you may not be responsible is no reason to give extremely poor advise to other consumers. Use of a credit card is extremely good practice. If you don't want debt, pay it off every month. Nothing about credit cards require you use a card as a revolving credit line. Simply pay it off every month. If you're poor at tracking your monthly expenditures, simply write down the amount you spent on a piece of paper. Use a new piece of paper every billing cycle. This makes it easy to see how much you've spent when you're itching to buy something with your card. Carry the paper in your pocket. Or, better yet, rubber band the paper to your card.

Re:Simple (sort of) solution:

[Anonymous Coward]

While I agree the guy should have removed himself from the account immediately. . . I would say he should have never signed up to be joint owner of an account with a *girlfriend* in the first place. How stupid is that? I realize sometimes people get burned in marriages, but why bother taking responsibility for someone else's financial obligations if you aren't even committed enough to each other to get married yet? (Granted, I realize for those in non-traditional relationships where marriage isn't an option, this is not applicable; but even in that case, don't take responsibility for someone you've known for a relatively short time, and to whom you have made no long-term commitments to each other).

Re:Simple (sort of) solution:

[UbuntuDupe]

Yes, this means not dumping all the money into retirement accounts, as you're going to need a chunk of it earlier.

You can withdraw early from retirement accounts without penality as long as you take "substantially equal distributions" as calculted by various IRS formulas. There are sites that can guide you through it. The relevant term is "42(t) withdrawl", 42(t) being the part of the tax code that allows it.

Re:Simple (sort of) solution:

[ObsessiveMathsFreak]

Wrong. Using credit gets you into debt, maybe, but not me. Credit does not get you into debt; debt comes from not repaying your creditors.

Wrong.

Credit cards, by their very definition, put the user in debt. You have borrowed money from the lender, albeit in an automated way, in order to purchase something. Admittedly there is an agreement that interest will not be charged on you loan unless you fail to pay it off in time. However, after that point, the interest rates are colossal.

People think that you're only in debt once you've failed to pay off a bill and are no being charged interest. That's not true. You're in debt the moment the card clears the payment. You're in line to receive a bill no matter what, just like an electricity, phone or internet bill. You're in debt, you just haven't accepted it. Most people treat credit cards like debit cards, but the fact is they are not.

This is why I don't like being forced to use a credit card to pay for everything online. Everyone treats a credit card purchase like its just handing over cash when it isn't. The money in my hand is concrete, and I know that as long as I have it there, I'm not in the red. Credit cards do not offer that security. You may think things are fine, but an unexpected bill or expense can and will quickly break that assumption.

I like paying with cash because it means I don't go into debt. I like not having to pay a ~$40 a year credit card tax in order to simple buy things. Nowadays, I'm at more risk of credit card fraud than being mugged, and even if I am mugged, the loss will likely be a lot less than if someone got my credit card number.

Cash is King. It also feels nice having it in your pocket.

Re:Simple (sort of) solution:

[TimeTraveler1884]

Most people don't have a full backup checking account in case the first one doesn't work.

Not that I am supporting the GP in using debit cards, but this "backup checking account" is what a savings or money-market accounts are for.

Re:Simple (sort of) solution:

[ehrichweiss]

The roots are telling untruths in places besides here?!?!?!? Perhaps you need to go back to English 101. You lay down to sleep. You lie to your boss about being late.

Re:Simple (sort of) solution:

[Cro Magnon]

[averageAmerican] What's a savings account? [/averageAmerican]

Re:Simple (sort of) solution:

[UbuntuDupe]

No, I'm afraid you're wrong. The moment you give the waiter your order at a restaurant you are in debt. Now, you may well pay that debt off when they give you the bill. However, that is a side issue.

No, I'm afraid you're wrong. The moment a cashier rings up your order at the supermarket you are in debt. Now, you may well pay that debt off within the next three seconds. However, that is a side issue.

Pay your full CC bill when it arrives, before the deadlines, and it costs you nothing beyond your purchase price. Plus, it (somehow) gives conclusive evidence you are creditworthy. (Don't ask me how their system works, I haven't sold my soul.)

Re:Simple (sort of) solution:

[tobiasly]

Just don't use credit cards. Really. Using credit gets you into debt anyway.

False. Not knowing how to manage your money is what gets you into debt. I have had a credit card since I was a teenager, I pay off the balance each month, I rack up hundreds of dollars a year in rewards points for gift certificates, and get this: when it was time for me to buy a house, I got a good credit score! When I need to finance a car, I get a preferred interest rate!

You see, using a credit card regularly can be a very good thing if you do it properly and responsibly. Now that even fast food restaurants take them I hardly even carry cash anymore.

Even if you don't see buying a house in your future, the likelihood that you will someday need to borrow money is high enough that you will very much regret having zero credit history at some point. I know too many people who thought they were being responsible by never using a credit card only to find out that people with no history are considered high risk by the banks, even if they have a good job.

Re:Simple (sort of) solution:

[Firethorn]

Sounds strange - and I'm not having much luck with my google-fu. IRS site gives up a bunch of stuff on section 72 when searching for "substantially equal distributions".

I haven't found anything that says you can use that rule to withdraw money early without penalty.

Besides, it's good to have a slush fund available anyways.

Re:Simple (sort of) solution:

[Anonymous Coward]

"And on top of that, you have to get a credit card to exist in the financial system, even if you don't borrow against it."

This is completely false. I haven't had a credit card in over 7 years. The only reason I had them before that was because my ex wife (then current wife) wanted them. You don't need a credit card to "exist in the financial system". If you live within your means, you can get any kind of loan you actually need for large purchases such as houses or cars by saving a reasonable down payment. Everything else just requires a little discipline (for most people) to achieve without credit. There are some exceptions to this for lower income folks buying houses in certain areas of the country, but in general credit isn't necessary.

Re:Simple (sort of) solution:

[ffejie]

I'm a big fan of credit cards for most of the reasons you lay out above. However, credit cards generally don't make the user wealthier. However, they do make the banks wealthier. Every time you buy something on your credit card, a x% fee gets charged to the merchant, for the privilege of accepting a credit card. This costs the merchant, who in turn has to change his prices and charge you more. (Yes, I know that they can't charge different rates for different payments, but overall, the price is inflated for this operational cost the merchant endures.) What you're doing is actually transferring wealth from you to the credit card companies.

Now, for the reasons you've laid out, society has decided (and we're along for the ride) that this is a fair trade. I like carrying almost unlimited amounts of buying power in my pocket with little risk of theft. I'm not complaining, certainly. However, to say that we're wealthier because of credit cards is a bit misguided.

Re:Simple (sort of) solution:

[UbuntuDupe]

Okay, I had an experience that directly contradicted this claim, but since evidence doesn't matter to you, there's not much point in discussing it.

Re:Simple (sort of) solution:

[Reliant-1864]

The advantage to using credit over debit is that credit card companies will offer better protection against fraud. In a dispute, credit card companies know they have to get your money after the fact, so you simply withold payment until it's resolved. If you use a debit card, when there's a dispute, they already have your money and the onus is on you to get it back from them. I know someone who had debit card fraud, and he had to swear under oath in either the city hall or in a courthouse that he didn't make those charges before his bank would refund his money. It's a lot more lost time, and not all banks will be that easy either.

Re:Simple (sort of) solution:

[jedidiah]

This all requires vigilance above and beyond what the normal average
consumer has grown accustomed to. That's the main problem. The credit
card companies (and affiliates) have gotten sleazier and sleazier and
some seem intent on trapping us.

The whole subprime mess is a great example of that. Those lendors did
their best to put you upside-down even when you told them you wanted
to cover your P&I.

Plenty of people get in trouble not for lack of virtue but for lack
of paranoia.

Re:Simple (sort of) solution:

[jedidiah]

If people are tossing away important mail it certainly is the fault
of the credit card companies. They are far too prone to sending endless
streams of junk and like to play games disguising "enhancement"
solicitations as bills.

These companies intentionally lower the S/N ratio of the US mail.

Re:Simple (sort of) solution:

[king-manic]

Nobody in the US does this, or at least not anybody i've ever seen during visits to stores in 14 different states and DC. Really, It's very common here in Canada and as well in a few places I've been in California. It's especially common for restaurants.

Re:Simple (sort of) solution:

[Jason Levine]

When you get scammed with a credit card, you call your card company, explain the situation, they say "Thank you Mr. X, we'll investigate it", and then a month or two later you'll get a refund. At no point during this situation did you actually lose any money. At worst your credit limit was artificially low for this period.

My experience was even better. I've had my credit card number stolen a few times in the past. The last time (a couple of months ago) was the only time a fraudulent charge got placed on my card. (All other times, my credit card company got notified of a merchant's security breach and issued me a new number just in case.) Discover Card called *me* up and asked me if I charged $3,600 from "Paypal/NewEgg." I said no. They asked if my wife could have. I said definitely not. So they canceled the charge, went over all charges posted since my last bill (we found a $1 charge obviously used to test the card), sent me a new card (closing my previous account), and promised to investigate the incident.

All in all, I was impressed. Discover Card could have waited for me to report the charge to them and then dragged their feet on the issue. Instead, they took the initiative to recognize an out of the ordinary charge and investigate it for possible fraud.

Re:Simple (sort of) solution:

[SCHecklerX]

And what happens when somebody siphons money from your debit card? I'm sorry, but Cash leads to extra spending / shortages, and I'd rather pay with my debit card, thanks.

All that said, I'm much more worried about the kid taking my pizza order over the phone, or ringing up my gas stealing my number and using it for online purchases than I am having it 'hacked' from my own online purchases. There is also the local car wash that uses a wireless credit card reader. Breaking into that and sniffing it is quite tempting.

Re:Simple (sort of) solution:

[jahudabudy]

Nope. I lie down. I lay you down. Lie (in this particular use) always refers to the subject; lay typically refers to an an object. See definition 2 lay vs. definition 1 lie.

I blame the old nursery rhyme for all the confusion on this matter - "Now I lay me down to sleep". While technically correct in its usage of lay (not in its usage of me, should be myself), it is a rather unwieldy usage. Much cleaner to say "Now I lie down to sleep", but the scansion is off. Of course, it doesn't help that lay is the past tense of this usage of lie; lied is the past tense of the "telling untruths" use of lie. "You lay down to sleep" IS correct, it just means you did it in the past. Freaking English! I don't know how non-native speaker EVER figure it out.

Re:Simple (sort of) solution:

[ed.markovich]

However, they do make the banks wealthier. Every time you buy something on your credit card, a x% fee gets charged to the merchant, for the privilege of accepting a credit card. This costs the merchant, who in turn has to change his prices and charge you more

This may not be as straight-forward as you'd think. First, there's a cost associated with handling cash also - trips to the bank, risk of theft, etc, so at least some of the transaction fee is recouped in that way. In the case of entities like your cell phone company, I am almost positive that it's cheaper for them to process your automated credit card payment then to hire people to take your checks out of the mail and process them. In the case of web merchants, the business model is barely viable without credit cards to begin with.

Even if we limit the discussion to brick-and-mortar businesses that can easily accept cash, it's not clear that credit card transactions force them to raise their prices accross the board.

Let's consider two businesses. Business one is a Japanese noodle place on 6th Avenue that I go to for lunch sometimes. The place is always filled to capacity, and can handle no further business. Therefore it has remained a cash-only business.

Compare it to some other place which isn't utilizing its full capacity. Can they get better sales from credit cards? Sure, accepting credit cards will allow them to capture 3 demographics - those who love to charge everything to their cards, those without sufficient pocket cash at the moment, and those who go into credit card debt. If the business can sell more units of output to this larger demographic, its fixed costs (such as rent) will be averaged out accross more units sold. Thus, eventhough a percentage of the credit card purchases goes to banks, the business is clearly in better shape than it was before - all of its cash transactions are there, but now there are new transactions. Of course, some of the existing cash business will become credit card business and get hit with the fees, but it's possible that the bigger sales due to CC acceptance will more than make up for that.

Re:Simple (sort of) solution:

[Ken D]

And this is why I will never keep my deposit accounts and my credit accounts at the same institution.

For example, did you know that Citibank can sell your stock out of a Smith Barney brokerage account (a Citi subsidiary) to collect on your credit card debt?

Financial supermarkets, a bad idea.

Re:Simple (sort of) solution:

[Anonymous Coward]

I like paying with cash because it means I don't go into debt. I like not having to pay a ~$40 a year credit card tax in order to simple buy things.

First, if you are paying any fee just to possess a credit card, you either have terrible credit or just haven't looked around enough. Yearly fees do exist, but there are so many cards you can shop around until you find one that doesn't have one.

Second, since you are paying credit card fees for every purchase you make with cash anyway (assuming the vendor takes credit cards), you might as well have the advantage of a credit card. Vendors pay a percentage (others have given actual values, but 1-3% seems to be the norm) on all credit card transactions. Vendors factor this into prices based on what dollar percentage of their transactions use credit cards, so all prices are raised about 1%.

Third, if you restrict yourself to cash, you very likely pay a lot more for things than those of us who have credit cards and use them wisely. An example was a recent online purchase of ten 3ft Cat6 Ethernet cables for a total of $18. If I could find 3ft Cat6 cables locally, they would be about $5 each, so my credit card saved me $32. Sure, you could use some forms of "cash" (money order, wire transfer, certified check, or maybe even a regular check) for some online purchases, but it's not convenient, increases the time until you receive your merchandise, and is much less secure.

Last, the leverage of a disputed credit card charge and the resultant chargeback to the vendor can help you with disputes when the vendor is being a jerk.

Re:Simple (sort of) solution:

[justthinkit]

...the amount of interest you're going to make [from my advice] in that amount of time is minimal

And what you stand to lose if you go over-limit is large. So, by all means make a "mid-month" payment if you just bought something unusually large to avoid going over-limit.

Credit cards are a stacked deck in favor of the crooked credit card companies. Avoid, at all costs, going over-limit or being late in your (minimum) payment. Maxed Out should be required viewing.

Re:Simple (sort of) solution:

[skelly33]

Yes, unfortunately some of us learn many lessons the hard, painful way. With neither sufficient parental guidance nor any useful input from a public school education, one has little opportunity for avoiding costly mistakes. The particulars of the relationship however are not the point and thus were omitted.

Re:Simple (sort of) solution:

[Le Marteau]

That's exactly the reason nearly all my purchases are made with credit cards/debit cards.

Let them track me. I hope they do. I hope I have a transaction record as thick as a phone book. It'll make it much easier for me to pass any government checks (at borders, airports) it'll make it much easier for me to get big credit if I should ever want it. I hope my smiling visage is all over Big Brother's computers, and I intend to keep on waving to him, posing coquettishly and saying "How you like me now?" :: waves to BB ::

Re:Simple (sort of) solution:

[AK Marc]

Many non chain stores will discount you ~4.0% for using cash.

That's illegal for gas stations and not practiced anywhere I know of. It used to be popular, but now it is completely gone everywhere I've been in the past 5 years. Do you live in a small town?

Re:Simple (sort of) solution:

[jrminter]

Discover has been good to us. They have caught fraud and notified us. No problem getting bad charges removed.

Re:Simple (sort of) solution:

[AK Marc]

Credit reports have that information already in the USA. What I was talking about was a national database that included balances.

The credit reports include that now. The numbers are self-reported and sometimes wrong ("balance" being available credit, not actual balance, "balance" being last payment, or some other screw up), but the information has a place in the credit reports and is generally reported. And you don't need to be so strict. If the rule was "knowingly" whatever-you-want-to-ban and it will work as well. They are going to pull a credit report, sometimes three, and they will look at your balances and such. Currently, they already know what it is you are looking for, and they still purposefully loan to people they think might not be able to pay it off. The shady lenders will see if you can absorb the extra cost in a credit card for 6 months. People will default on credit cards before a house payment, and if they can get you into a house payment you can't afford, then sell the paper to some other financial institution, then it doesn't matter if you stop paying from the 7th month after. That's one of the problems with the current sub-prime lending. It wasn't just sub-prime, it was everyone. The lenders were pushing people into loans that hurt them, and the customers didn't know any better. The lenders knew exactly what they were doing.

Re:Simple (sort of) solution:

[ealar dlanvuli]

* Building of credit history. The longer you have credit card accounts in your credit profile (assuming you pay them off or at least pay on time) the better your credit score. This lets you borrow money at a lower rate when you realy have to - say a mortgage.

This is a lie perpetuated by the credit card industry. You simply need credit cards with reasnoable limits, and you need to use them for about 6mo. to establish revolving debt.

After that they only hurt your credit score if their balance is nonzero at the exact moment the balance is reported 5-7 days prior to you checking your credit score.

Re:Simple (sort of) solution:

[UbuntuDupe]

Hm, I saw a neat calculator for this a while back. The Wikipedia article on 401(k) references it but doesn't say further. I'll dig up more substantiation in the future.

(Worst comes to worst, you can borrow from it and flee the country...)

Re:Simple (sort of) solution:

[jandrese]

Maybe that's a regional thing? I've never ever seen a sign that suggests anything like that in any store in my 30 years. I've been across much of the US, but spend most of my time on the eastern seaboard, so maybe it's a west coast thing?

Re:Simple (sort of) solution:

[ed.markovich]

This is a lie perpetuated by the credit card industry. You simply need credit cards with reasnoable limits, and you need to use them for about 6mo. to establish revolving debt.

After that they only hurt your credit score if their balance is nonzero at the exact moment the balance is reported 5-7 days prior to you checking your credit score.

That's absolutely untrue. The age of your oldest account of record is one of the biggest determinants of your credit score, all other things being equal. Someone who's had a responsible credit history for 20 years is a lesser credit risk than someone with the 6 months of history you mentioned. That means for example if you get a credit card at the beginning of your college education - even if you never use it - you'll be 4 years ahead in building your history compared to someone who gets a card when they graduate.

Perhaps you're arguing some other point but all I am saying is that having credit cards is an easy way to establish your history at an early point in your life - well in advance of needing mortgages or autoloans.

You're right in that having a larger balance at the time your score is checked if a factor since % of credit utilization is a factor of the score. So all things being equal, having more cards (and thus larger total available credit) while having very small balances (hopefully just whatever you're going to pay off at month's end) is beneficial. That being said, this is secondary to the average age of your credit. If you have a card that's 20 years old and you open another one today, even if this doubles your available credit, it hurts your score by reducing the average age of your accounts to 10 years.

Re:Simple (sort of) solution:

[netsphinx]

Not always true. If your credit card company uses the average daily balance system of calculating interest rates, you benefit from paying it down as low as possible as often as possible.

Average daily balance is calculated by taking the daily totals of what you owe on each day of a billing period, adding them all together, and dividing by the number of days in the billing period. Not every card uses this method, so it's best to check your own account terms to see which strategy is going to rack up the least interest.

Re:Simple (sort of) solution:

[PhoenixFlare]

Really, It's very common here in Canada and as well in a few places I've been in California. It's especially common for restaurants.

Yeah, I guess it was more popular 10-20 years ago, but it's vanished now (and heavily discouraged by the credit card companies, i'm sure) - speaking for myself, I don't even carry cash for my bus fare anymore.

The only thing i've ever seen that was close to a cash discount is businesses (often small grocery and convenience stores) not accepting credit cards for any amount under a minimum - which is technically not allowed under their merchant agreements, but most of them manage to slip under the radar unless someone loudly complains.

Re:Simple (sort of) solution:

[ehrichweiss]

Did you happen to read the commentary on the page for "lay"? Seems both of us are correct.

Re:Simple (sort of) solution:

[Osty]

Not always true. If your credit card company uses the average daily balance system of calculating interest rates, you benefit from paying it down as low as possible as often as possible.

That's assuming you're going to carry a balance. No credit card company charges you interest if you pay off your balance each month, and that was the scenario given by the original poster. But yes, you're correct. If you're going to carry a balance on your card, you're better off paying it off as soon as you possibly can, even if that means paying multiple times within a single month. The quicker you get the balance down, the less interest you'll have to pay.

Re:Simple (sort of) solution:

[Ubergrendle]

"The particulars of the relationship however are not the point and thus were omitted."

Sounds pretty straight forward to me -- he was sleeping with her and received financial gain. There's a word for that, I'm trying to remember it...um...

Re:Simple (sort of) solution:

[Dogtanian]

Okay, I had an experience that directly contradicted this claim, but since evidence doesn't matter to you, there's not much point in discussing it. You seem to be under the impression that the GP's interest (or lack of it) is the only relevant thing here. This is a public forum, and many people will follow what is being said even if they aren't taking part in the conversation. It's somewhat self-indulgent to pretend otherwise and withhold this supposed "evidence" (which is relevant to the discussion being followed) just because the GP wasn't interested.

And if you wanted a private conversation, don't conduct it via Slashdot.

Re:Simple (sort of) solution:

[Dogtanian]

No, I'm afraid you're wrong. The moment a cashier rings up your order at the supermarket you are in debt. Now, you may well pay that debt off within the next three seconds. However, that is a side issue. If you're going to play the word-substitution pedantry-to-prove-a-point game, you'd better make damn sure that your argument is correct and flawless.

In this case, I can't say for sure, but I'd be willing to bet that the title to the goods doesn't pass to the buyer until they have actually been paid for. In other words, you're not in debt because they're not yours until you paid for them.

Re:Simple (sort of) solution:

[UbuntuDupe]

LOL!!! This is priceless! I point out the absurdity of one poster's pedantic use of a term to prove a point, and then I get accused of using pedantry to prove a point! You can't make this stuff up, folks.

Remember, I'm playing the EXACT same world games as the person I was originally responding to, and, continuing that process of extending meanings to meaninglessness, I can just as easily say that "At the supermarket, you do have a debt, it just gets canceled if you decide not to pay, and they return the goods to the shelf."

Now, back to the world where you don't get modded up for making phony insights through word games...

Re:Simple (sort of) solution:

[letxa2000]

I re-iterate: You throw away mail unopened at your own peril. Especially mail from companies you have done business with.

Re:Simple (sort of) solution:

[toddestan]

I've only seen it at places like craft fairs, state fairs, etc. especially when it's a big hassle for these people to process the card transactions in the first place.

Re:Simple (sort of) solution:

[UbuntuDupe]

Okay, I'll share then:

A year ago I applied for a mortgage. I was, if I say so myself, an ideal borrower:

-No current debt, at all.
-~3 year history of paying every bill on time: cable, water, insurance, electricity, rent, etc.
-Steady employment for 18 months.
-No unpaid debts.
-No judgments.
-No kids.
-Verifiable liquid assets valued at ~1/3 of value of loan.
-Stable income from largest for profit employer in the area.
-Income > 2x median for the area.
-Applying for loan less than 2x yearly income.
-Monthly payment (which would be ALL debt payments) less than 20% of gross, even for high interest rate.

BUT! Here's the kicker: I'd only had a credit card for about four months. The result? Almost no one wanted to deal with me. Why? "No credit history." All those bills don't count, after all. What's worse, freecreditreport.com did list me as having scores from the credit bureaus in the 725-740 range, but from the lenders' perspectives, they only got "insufficient data". And no, there were no flaws in my credit report.

So, the only ones that did deal with me classified me as "subprime"(!) Best offer? 80% financing at 10% interest on a 3/1 adjustable. (Unlike *real* subprime people, I'm smart enough to know that if those are the terms on the mortgage, buying a home is not a good choice.)

And, for the final kicker: ALL of them told me I needed a credit history -- which having a credit card would count toward -- of at least 2 years in order not to get "insufficient data" when they pull my credit. I would have been able to establish that if I had done EXACTLY what I did the past three years, but had moved the expenses onto a credit card and paid the full balance.

Moral: Yes, you need a credit card.

Does that satisfy your curiosity?

***

The reason I didn't expand on that before was that the AC claimed that, based on his own individual experience, that suffices as evidence that you don't need a credit card. (It doesn't.) Since he couldn't see how his wife having a credit card established his existence in the financial system, in a proof of why you don't need a credit card to exist in the financial system, argumentation looked pretty pointless, and most people don't read ACs anyway.

Re:Simple (sort of) solution:

[UbuntuDupe]

Ah, okay, that's right, it's 72(t), not 42(t).

Here is a primer.

For me, it's more of a psychological thing: knowing that, at some point in time, I *could* just quit and plausibly live off investments is a quite a weight off my back, even if I don't exercise the option.

Re:Simple (sort of) solution:

[Firethorn]

Sounds interesting, but I think that I'd still be a bit scared of it. It's also not applicable in my case - I have no IRA to rollover(work doesn't offer them).

There are shady accountants out there, and one of the IRS's rules is that you're responsible for your taxes(and penalties), not any accountant you hire.

Though if you can show that you acted in good faith, you might be able to sue them.

Re:Simple (sort of) solution:

[UbuntuDupe]

If you have a 401k or other tax-deferred or tax free program with your employer, that is an IRA that can be rolled over. That site was just to explain how it works, I'm sure there are a lot of others and you can probably get advance approval from the IRS.

Re:Simple (sort of) solution:

[hidave]

At least two more financial reasons to use credit cards: Pay off your card each month and get the benefit of drawing interest on your money for an additional month after you spend it! AND get free airline miles. Over the last twenty years I have spent an average of about $50K per year with my Visa card; so that is a LOT of free interest and a LOT of free travel. So that benefits me about $200 per year in interest plus two free airline tickets per year. All I have do is make sure I'm not charging more than I can afford to pay off. And I'm not "rich" by any means. If you can't afford to pay off your credit card balance every month, then transfer the balance to a credit card with zero interest. I have a $15K balance on one card that I just move around to a different card each year. I'm in no hurry to pay it off since I'm making interest on that money. This is all pretty easy, and I'm no rocket scientist.

Re:Simple (sort of) solution:

[vivtho]

I used for work for Capital One customer support ... it's been a while but IIRC, as long as the amount contested was not too substantial (around $100), the charge would be taken off without any questions asked. Only of the card (not the cardholder) had a history of contested charges then the call would be transferred to second level customer support where the possibility of identity theft would be investigated.

Re:Simple (sort of) solution:

[Dogtanian]

I point out the absurdity of one poster's pedantic use of a term to prove a point, and then I get accused of using pedantry to prove a point! Then you entirely missed *my* point, despite it being there in plain English. I was well aware what you were trying to achieve.

Despite being nowhere near as witty or innovative as you seem to think it is, my point was that if you still wish to make a point via word substitution (tedious Slashdot favourite) and extreme pedantry, you have to make sure your facts are correct. Here we go:-

I can just as easily say that "At the supermarket, you do have a debt, it just gets canceled if you decide not to pay, and they return the goods to the shelf." I had already spelled out clearly why this was (probably) wrong, and you still didn't get it:-

"I can't say for sure, but I'd be willing to bet that the title to the goods doesn't pass to the buyer until they have actually been paid for. In other words, you're not in debt because they're not yours until you paid for them." Now, which part of this don't you understand?!

Even if I was wrong and you were right (though I know which side I'd put my money on), I'd expect anyone with half a brain to be able to understand and reply to that! In your own words...

LOL!!! This is priceless!

Re:Simple (sort of) solution:

[Dogtanian]

Does that satisfy your curiosity? Fair enough; it makes the +4: Insightful of your original post seem justified now that you've backed it up.

Re:Simple (sort of) solution:

[ThinkingInBinary]

Let's just make this discussion easier: The limit I got was $1000. It's a student card, and that's as high as the limit goes. Perhaps in six months or a year I'll be able to get a regular card with a higher limit, assuming the bill gets paid on time (which I can't see being a problem, because I pay it as soon as I get it). And, indeed, the reason I have paid it off in the middle of the month is because I had made a major purchase, and the balance would have been up in the $600's, and I wanted to keep more headroom than that.

who would cross-sell with such losers?

[Greenisus]

i don't know about most e-commerce operations, but where I work, we make a point to not tie ourselves in with the kinds of companies that would do these sorts of cross-sell scams. TFA says some people think of this as free money, but it's not at all. when you hand control of what your users see to a third party, that's not free.

Re:who would cross-sell with such losers?

[moderatorrater]

You work for a very unusual company indeed. Your so-called "company" really respects consumer's opinions more than the bottom line? Do you work in Narnia or something?

Re:who would cross-sell with such losers?

[Greenisus]

it's actually a charity.....

Re:who would cross-sell with such losers?

[moderatorrater]

I just want to say that your charity is easily the one I respect the most. Hats off to you sir.

Re:who would cross-sell with such losers?

[Anonymous Coward]

Respecting your customers is good for the bottom line, unless you plan on going bankrupt, then you just screw every one as fast as you can.

Fight back

[Anonymous Coward]

Instead of sitting around and letting credit card companies make money off you, there are ways you can get them back.

Sites like Katie's Credit lists a bunch of innovative ways -
* pretending to cancel your rewards card
* charging just under $2 every month on unused cards
* cashing in the $20 checks they send you and canceling before 30 days is up
* and of course, the standard 1-2% cashback

I've read sites like fatwallet and getrichslowly which also have some great techniques with credit cards. Just because they're screwing you over doesn't mean you have to take it.

Better solution

[Anonymous Coward]

Self-control.

Credit cards are handy just because they give perks (cashback, free rental car insurance, etc.) and because they are actually more secure than debit (can instantly create new throwaway #s with specific low limits for one-time use at shady places, and it's generally easier to do a chargeback with a credit card where you haven't paid the money yet than a debit where the money leaves instantly).

Yes, debt is a problem, but if you can't handle the fire, stay out of the kitchen.

Plus, it does build a credit history to use a credit card and always pay it off.

Re:Better solution

[Dunbal]

Credit cards are handy just because they give perks

      What, you think people give stuff away for free? Believe me, you have more than paid for those perks. You just don't realize it.

Re:Better solution

[Firethorn]

The only way CC companies make money off of me is via store processing fees. As the places I shop at don't give cash discounts, that doesn't cost me except in a theoretical way. Before going ape about 'processing fees', remember, there are business expenses related to the handling of cash as well. Handing that $20 to pay for something might actually have more overhead in handing that bill and your change than the processing fees charged by the CC company. Remember, you have to reconcile the till, count and lock up cash, transfer it to the bank, etc...

I haven't paid a cent of interest or fees to the CC companies in a decade. I'll admit I was a bit stupid as a teen - though I didn't dig myself in deep, fortunately. Paid a little interest on my first brand new personal computer though.

On the other hand, the CC company shouldn't be too pissed with me, I'm a quiet customer who pays his bills on time and in full. Sure, they don't get interest from me, but they also don't have to worry much about me not paying my debt and forcing them to write me off as bad debt.

Re:Better solution

[jedidiah]

The perks are in exchange for your buying habits. If it's a
loyalty program with any sense, the end result will be spam
for things you might actually want.

That's not so bad.

Of course you have to shop around and find good deals.

Like anything else, 80% of vendors/merchants are trying to
bend you over and stick it to you in the most brutal way.

They're all a bunch of bastards

[Anonymous Coward]

my credit card story - I had a credit card with a small limit (sub $500 AUD) perfect for small purchases on line, I was happy with this, any debt was paid off the next payday at the latest.
Then the credit card company merged with a major US bank. A couple of years later when my old card expired later they sent me a new card with a letter saying that my credit limit increase to $24, 000 was pre approved. I rang their (Indian based) call center to tell them I wanted to complain saying I didn't want this limit and when the call center staff told me that I couldn't go back to my old $500 limit I told them I refused to let them activate the new card and wanted my account cancelled. Six months later I'm STILL trying to get them to cancel my account, the new card has never been activated, I've never confirmed my new credit limit and they keep charging me fees (including some penalty fees) on a card that has no debt run up on it, That has never been used, that I no longer want and that I've asked them to cancel. Next step is that I will lodge a formal complaint with the Banking and Financial Services Ombudsman that arbitrates Credit Card disputes in Australia

Re:They're all a bunch of bastards

[ScrewMaster]

I'd say accept that $24,000 card and use the credit to hire a good lawyer to sue their pants off.

Re:They're all a bunch of bastards

[Daltin]

And then, they cancel it. Then what?

Re:They're all a bunch of bastards

[fotbr]

At least its canceled, which is part of what was desired in the first place.

Re:They're all a bunch of bastards

[Anonymous Coward]

well yeh exactly what I want, and hopefully the Ombudsman will can all the fees as most of these fees are exactly as the article mentioned, for "protection insurance" policy that was rolled over from my old credit provider but at far far more expensive rate. As I've asked them to cancel I don't feel I should have to pay fees dating after the time I put in my cancelation, either for the original account protection fees, or the penalty's on not paying these fees. I've since got a new card from my local professional association credit union , where they were more than happy to give me a sub $1000 limit and the card account manager sits no more than 20 meters away from the tellers and comes out to speak to you personally if you wish to query any issues.

Re:They're all a bunch of bastards

[Anonymous Coward]

If you're in Australia and "major US bank" is American Express then forget about it. I spent 6 months trying the same thing. The banking and financial services ombudsman has no power over non-Australian card companies (Amex, GE, etc), or so they told me when I complained. In my case I'd requested direct debit payments of the full amount when I signed up for the card. They went along OK until the full amount was quite significant one month (there was money in the debit account to pay it) and then "forgot" to issue the direct debit. Of course the system started charging me interest and penalty fees for _their_ stuff up. They very flatly told me it was my fault and continued on down the same track, including not cancelling my card when I asked.

Your only course of action is to formally request cancellation of your account and demand they issue a formal statement of cancellation within 14 days. When they don't cancel the account call the police and report them for fraud. That was the only way I got them to close my account. When the police became involved it was a very quick matter of "we're terribly sorry about the hassle sir, here's a cheque for all the interest + fees + some token gesture amount now please call off the dogs".

Re:They're all a bunch of bastards

[nulldaemon]

IANAL but... Don't pay anything. Without accepting a credit contract, you are not liable for any fees. You may also cancel a credit card at any time, as long as you have never used it, and the bank must reverse all fees & interest. http://www.creditcode.gov.au/display.asp?file=/content/consumer_faqs.htm Is a good start for the protections afforded to you in Australia.

Re:They're all a bunch of bastards

[Anonymous Coward]

It's not AmEx, my experience with them has been all good (we use them as corporate cards), yeh I've already contacted the police in an informal manner (I've got friends there from my time in the academy) and they have said as the card is run via a Australian registered branch to go through the ombudsman first then, if that fails, come back and go through the paperwork with them.
I don't think this is fraud, or at least if it is it's opportunistic, more likely bad record keeping or poor business practices as I have formally requested, in writing, that this card gets cancelled but 6 months later it's still being billed with fees.

Re:They're all a bunch of bastards

[dubbreak]

Exactly. Call a lawyer. I'm sure you can get some consultation for free and it holds you to nothing with that lawyer.

IANAL, but what they have done sounds like intermeddling. They "provide a service" which you haven't requested and then try to charge for it (like a kid mowing your law at random then claiming you owe him money).

Also it appears you have no contract with this new company. You never accepted the new terms of contract by accepting, and they can't say you are bound by the old contract to agree to new policies and rate. Without your acceptance of their new offer there is no contract and you owe nothing to them. But of course contact a lawyer. The laws in my country are similar to your country, and to me it sounds like it could be covered under simple contract law. I sure there would be many other ways to attack it as well such as consumer laws etc, but ask a local lawyer. Who knows, you may be able to get some kind of special or punitive damages in order to "make and example" of the company in question (corporations are more difficult to punish than individuals).

Re:They're all a bunch of bastards

[lena_10326]

First, it sounds like you cancelled the card, not the account. The account will remain active even if there's no active card, particularly if there was a small balance, say a monthly service fee for the first month of activation. I'm in the US and there really isn't any way to get them off your back without sending registered letters and notifying them their records are in error. If they ignore those requests and follow through to damage our credit report, we can then sue them for damages if we can show we were denied credit elsewhere. The prospect of paying those damages is what usually keeps them at bay.

Also, did you send the cancellation with a registered letter? You needed that to prove you sent a cancellation. Doing it on the phone gives you no proof.

Virtual Account Numbers

[RootWind]

Like the article mentioned, virtual account numbers are great for online purchases. It's one of the first features I look for. Citibank and Bank of America's virtual card services are both pretty nice, allowing you to set a spending limit for each number, as well as expiration dates. I believe Citibank also locks the number to the first merchant who charges to the virtual account.

Re:Virtual Account Numbers

[Anonymous Coward]

You do realize that this article discusses a scam run by the bank or credit card company itself, right ? A simple way they charge your card for some "credit protection" scheme, even if you didn't want the card and never activated it ? That is, they could offer you as many virtual numbers with that card as they wanted, and as long as they abused their position to charge you for something you didn't buy, it would still work . . . they could even use a virtual number for that charge . . . I mean, you did read the article before posting, right ?

The sad thing is, the amount of work you were willing to do to read the article is close to the amount of work you were willing to do when confronted with the fine print of a credit application. I'm sure a similarly glib quip popped to mind as you threw down your John Hannock and your financial security.

Re:Virtual Account Numbers

[Jah-Wren Ryel]

Like the article mentioned, virtual account numbers are great for online purchases. It's one of the first features I look for. Citibank and Bank of America's virtual card services are both pretty nice, allowing you to set a spending limit for each number, as well as expiration dates. I believe Citibank also locks the number to the first merchant who charges to the virtual account. I've been using those numbers with MBNA, now BoA, for almost a decade. So far the biggest problem is their fraud department. MBNA actually made a public statement a few years back that they have never had a single case of fraud involving the virtual numbers. Yet their fraud department has been, and as of this sunday, still remains completely ignorant of them.

For those who don't know, you have to log in to a flash application using the same username/password that you use for access to your online statement. Once logged in you can generate a virtual aka disposable account number with a set limit and set expiration date. If you are using a VISA then BoA's system is also hooked into "Verified by VISA" which some merchants use at point of sale to have the user provide username/password to validate the charge.

But BoA/MBNA's fraud detection system doesn't take any of that into account. You make a charge that it doesn't like, it blocks the charge and deactivates your REAL account until you call them or they call you and validate you. Except the numbnuts doing the validate ask you a bunch of questions that anyone with the username and password that you just used to generate the disposable account number with could answer - e.g. a list of recent charges, your billing address, the method of your most recent payment (online, check, etc).

So, all they succeed in doing is screwing you up if you try to make a big or extraordinary purchase and they don't actually validate anything that a potential crook doesn't already know. It makes me think these fools are taking security lessons from the idiots at the TSA.

Re:Virtual Account Numbers

[teslatug]

The only reason why I still use my MBNA (now Bank of America) credit card is due to their ShopSafe functionality similar to the one you mention. I don't know why more CC companies don't do this. I have two Citi CCs and neither is eligible for this functionality. It just boggles my mind as I'd be more likely to use them (and probably ditch the MBNA one).

Re:Virtual Account Numbers

[Anonymous Coward]

You do realize there were two articles, right? With different subject matter? And the first one was about how third party outfits make deals with online vendors to do cross-selling, which involves extracting your credit card information from the http session and using it to bill you for stuff you don't want and didn't (intentionally) agree to pay for (damn that one point font anyway).

Re:Virtual Account Numbers

[Moridin42]

I have a BoA card. when it was an MBNA card, I used it. Now I don't. Fortunately, my Citi card has a better rewards program, a less irritating account management page, and I still have the one use numbers. I do find it curious that Citi would permit some of their cards to use virtual numbers but not others.

Card Activation is not necessary

[cmeans]

Sears may have just been lying to me, but I had a card, reissued after they changed over to a new card processing company, that was never activated. Somehow, some nefarious types were able to put charges onto my account (card was sitting unactivated in a draw in my home)...it took months to get Sears to finally take responsibility for the fradulent charges. It mattered not-one-whit to them that I had not activated the card, they still continued to claim the purchases were my responsibility. I'm not sure why they eventually caved-in...maybe they were hoping to pressure me into paying just to protect my credit, but I wasn't willing to budge.

Re:Card Activation is not necessary

[Ardipithecus]

The Sears card is now run by the Organized Crime Division of Citibank. Better to use AMEX, they'll take care of any problems immediately; I learned the hard way also.

Re:Card Activation is not necessary

[cmeans]

Yes, AmEx does seem to go to bat for you...I recommend highly recommend them, and love the Membership Rewards Points...managed to fly my whole family (just 3 of us) to Hawaii...and back :). But it was annoying to have to pay all the fees both AmEx and Continental (I think) charged for transfering the points into miles. It's not a perfect world...but the Rewards Points with AmEx do appear to be a better value than DiscoverCard's cash back program.

Re:Card Activation is not necessary

[Anonymous Coward]

Sears may have just been lying to me, but I had a card, reissued after they changed over to a new card processing company, that was never activated. Somehow, some nefarious types were able to put charges onto my account (card was sitting unactivated in a draw in my home)

Yeah, a friend of mine got a "free" card somewhere that he never activated or used. Two years later the bank calls him to give him 7 days to arrange a payment plan for the thousands he "owes" for his gambling habit or they'll take him to court. He got a friend who was a lawyer to send the bank a letter saying that they'd be happy to appear in court. First they'd want more details on the transactions than just "$5,000 to casino.mafia.ru", and second they'd want to question the bank employee who authorized nearly $10,000 in withdrawals on a card with a $3,000 limit. A couple of weeks later the bank agreed to drop everything if he'd sign a statement saying he wouldn't talk about it. (Which is why I've fudged a few details.)

These days, I don't have *anything* financial that I'm not actively using. I consider all bank accounts, credit cards to be holes in my financial security, in the same way as open ports in my network firewalls. They are necessary to get things done, but I minimize their use as much as possible.

Re:Card Activation is not necessary

[Anonymous Coward]

Yes, AmEx does seem to go to bat for you...

They should, their discount rate is around 1% greater than most other cards. On a sales ticket of $50, then a merchant who is a good customer of the card system typically gets $49, but for AmEx the same merchant gets only $48.50. When you use AmEx then you increase the "plastic tax" which everybody pays. Obviously the merchant inflates all prices to cover the discount, and is not permitted by the card system to discriminate based on method of payment (which card, etc.)

Activation is just loss-prevention

[redelm]

Once upon a time (10+ years ago), credit cards were sent through the mail "active", and no calling in was necessary. I received many this way.

Legally, I believe the account is open when the paperwork is signed. It has to be closed using appropriate measures.

"Activation" procedures are just added by the issuers to reduce fraud and other losses. "CC protection" may be expensive, but it's not fraud. Activation only applies to the card sent, not to the account.

Nothingto see here, move along.

Not a scam

[AsmordeanX]

While I agree that it is somewhat dirty, that isn't a scam. The credit card company isn't looking to scam people out of money who never activated. They are looking for payment for the activation process which, while has negligible cost, still cost them money.

The easiest way for them to recover this is by applying the fee to the credit card. It's the stupid consumer's fault for not reading the contract and destroying the second, third, etc notices. From the sound of it, the company did everything they could to inform the client that there were costs to be paid with interest but the client wrongly chose to ignore it.

If you sign a contract you are obligated to keep your end of the agreement. Too bad for you that you didn't bother to read that there would be a $29 fee subject to late fees and interest. I bet that in the wall of text on the other side of the form it said exactly that. If you really want the card, take the form home and actually read it. I went through three different credit card applications before I found one that I felt was fair and it took me several house of reading.

Re:Not a scam

[moderatorrater]

Charging an un-activated card could easily be considered unethical, and the definition of "scam" is using an unethical method to get money out of a consumer. However, you're absolutely correct that anyone ignoring their letter that long is stupid. Not noticing that their card has been run up to $1500 indicates that they would have lost that money somehow, if not in this scam then in another.

Re:Not a scam

[pla]

The credit card company isn't looking to scam people out of money

Riiiiight... Can I have some of that Kool-Aid, my friend?



They are looking for payment for the activation process which, while has negligible cost, still cost them money.

And I should care about this why? If they don't want people to sign up then immediately cancel, stop forcing minimum-wage-slaves who have more to worry about than losing their jobs over meeting "store" CC quotas to push the sponsorship-of-the-week on us.

Yeah, this has an associated expense - I don't care. The issuing bank (or the store itself that chose to nag me) can eat that expense as the cost of annoying me, thankyouverymuch. Hint - If you don't have ID on you, they'll almost never cancel the application process, and will give "you" your 10% discount. Get creative; when this starts costing them far more than it makes them, they'll stop harassing us.



If you sign a contract you are obligated to keep your end of the agreement.

Most people do not consider an "application" a "contract". The law may differ here, in which case the law needs to change. Yes, the "wall of text" probably mentioned fees; how well does your poor old granny read 4pt fonts consisting of dense legalese?

Great Utility for Finding CCs

[Anonymous Coward]

http://filebox.vt.edu/users/rtilley/public/find_ccns/

Search files for CCs... on *any* computer system... OpenBSD to Windows Vista.

The "separate department" scam

[Anonymous Coward]

There is another scam, which I've seen twice, which involves companies that separate the credit-card charging part of the org from the regular part which administers the service you purchase.

The way this scam works is that if you let the account slide, they eventually delete the account and all your info from the main accounts database -- but the CC charging section still hits your card regularly, for YEARS.

Spot the charge and call them up, they have no record of you! They can't do anything about it -- they eventually tell you that the CC charge comes from a completely separate dept they cannot send you to, no number etc. The only thing they can do is give you a fax number which you are supposed to fax your CC# to, blindly -- something no CC company wants you doing.

The scam works by relying on you to give up the who knows how many charges they got you for before you noticed the problem -- and on the fact that you *did* give consent at some point. They know they'll get at least a few, because you were clearly inattentive enough to let the original service lapse!

The solution -- *never use recurring charges!* Use your bank's online bill pay or mail checks -- make every payment at your initiative, not theirs.

ShopSafe vs Progressive/Populist politics

[MonkeyBoyo]

In the earlier article, Caveat Emptor - Use of Credit Cards On-Line, 12 angry men recommend using a bank-tied-service (like Bank of America's ShopSafe)to go online to your bank to get a new credit card number for each transaction so as to prevent fraud. Most of America is either Progressive and/or Populist (downside: Progressives tend toward elitism while Populists tend toward racism). But both are against letting corporations running unchecked. However the Bush administration has been entirely on the side of freeing Capitalism from any bounds. Thus there have been lots more business scams recently which it is against the Bush philosophy to investigate and prosecute. (just consider the mortgage scams). While a service like ShopSafe might be useful in avoiding a situation where I have to spend a lot of time refuting charges and cleaning up my credit record, I really wish that Bush's DOJ was less concerned about politics and more about aggressively pursuing business crime. The phone do-not-call list was a triumph of Progressives/Populists over business interests. I would much rather have legislation and law enforcement that can quickly track down and identity theft and credit card scams than having to carry around electronics so that I can interact with my bank for every credit card usage.

My rules of thumb....

[lena_10326]

• Get on the OPTOUT list to stop preapproved offers.
• Don't accept a card with a yearly fee, unless there are travel or purchase rewards that you're sure you will use.
• If you have good credit, ignore all offers above 10-12% (excepting rewards cards). I have a 7.9% national city card.
• Don't open new credit card accounts if you're about to buy a house or car.
• Reject offers at the register. There's no possible way you can read the fine print at the checkout.
• Only consider accepting an offer at the register if the discount is at least $50. 10% of $500+. Deactivate the card after a few weeks or so.
• Don't ignore a bill sent to you on a deactivated card. It won't go away on its own.
• Don't signup for insurance through your credit card company. Buy insurance directly from an insurance company.
• Don't transfer debt onto a new card unless its free. No percent fee and no minimum fixed fee.
• A free transfer to a low or zero interest card is not a bad thing, so long as the introductory rate is long enough to be worth it, such as 9-12 months, and the non-introductory rate is fair.
• Don't use convenience checks tied to the credit card. After the temporary rate expires, they nearly always apply as a cash advance (which is much higher rate).
• When not traveling, don't use ATMs outside the bank's network.
• Use a debit card for cash advances and groceries. Use a credit card for travel, online purchases, shipping, and other purchases.
• Occasionally check your online statement history for unexplained purchases. I do this at least 3-4+ times a month, usually at work as an excuse to goof off for a moment.
• Setup a minimum fee payment schedule on all your credit cards within each respective card company even if you rarely carry balances. Don't use a 3rd party bill-pay for credit cards. If the bill-pay is down, you'll be held responsible if you're late. You have a stronger case for dropping late fees if it's your own credit card company's fault.

I pretty much stay out of trouble following those rules.

Re:My rules of thumb....

[porcupine8]

I can't believe that there are people out there who DON'T follow some of these rules. Who gets a bill and ignores it? If I got a bill or a statement from a company I didn't think should be charging me for anything, I'd be all over it. And who takes credit cards with annual fees unless your credit is SO bad you can't get ANYTHING else, or you know for sure you'll get tons more than that back in rewards that you couldn't get on a free card? Sometimes I really think that personal finance needs to be a high school requirement.

Re:My rules of thumb....

[canadian_right]

and always pay off the WHOLE bill each month. Unless you have a horrible credit rating you can always get cheaper money than a credit card. But really, if you can't pay it off at the end of the month you really shouldn't buy it. Except for your mortgage, and maybe a car loan, you should avoid debt. Saving isn't that hard.

Re:My rules of thumb....

[Red Flayer]

Occasionally check your online statement history for unexplained purchases. I do this at least 3-4+ times a month, usually at work as an excuse to goof off for a moment.

When slashdot gets boring? :)

Seriously, though, in addition to your frequent spot-checks, you should reconcile your bill every time you pay it.

Make sure not only that all the charges are valid, but that each charge is exactly the amount you signed for. I've caught restaurant charges "mysteriously" having a higher tip written in -- a $7 tip becomes a $17 tip sometimes... I have never had a problem getting this reversed immediately. On the plus side, this helps me keep within my budgets, since I force myself to review each of my transactions together every month; I'm much more likely to recognize exactly how my spending occurs.

Re:My rules of thumb....

[Anonymous Coward]

Your question of "who gets a bill and ignores it?" brings up an interesting story: I was recently scammed by the bank whose name begins with "W" and ends with "ellsfargo" - here's how they did it:

I went to the local branch to set up auto-pay for a mortgage. They told me that it would be active by the next billing cycle. I believed them, and I didn't check to see if the funds were actually withdrawn, as the checking account in question has a lot of money in it, so I don't pay close attention to it. Several months later, I opened a letter from them saying that I'm several months behind and owe them lots of late fees. I then went back to the branch and they tell me that the teller who told me that the autopay would start with the next billing cycle was wrong, and that when the auto-pay didn't happen the first time, the account was "behind" and therefore the auto-pay never kicked in at all (apparently this is a trick they use to generate late fees.)

The best part was that they had sent me bills in the meantime, but they didn't have the name of the bank on them and were disguised as the most worthless kind of junk mail (dark manilla-colored envelopes with a fake rubber-stamp image on the front saying something pseudo-official like "the contents of this envelope conform to all postal regulations" and a return address that was some anonymous P.O. box.) Basically, they wanted to keep me from finding out that the auto-pay hadn't kicked in until they had racked up some late fees.

So what I learned from this experience is (1) don't trust anything someone from a scummy bank tells you in person - get it in writing and double-check after the fact to see if what was supposed to have happened really happened, and (2) open every piece of junk mail, no matter how obviously bogus it seems, because it might be something sinister in postal-spam camouflage. I never would have ignored a real obvious bill saying my mortgage was behind because the auto-pay hadn't happened, but they managed to slip these past me.

Re:My rules of thumb....

[porcupine8]

Wow, that is really shitty, making the bills look like junk mail. But honestly, I can't imagine not checking on an account that's supposed to have payments going out of it, no matter how much money is in it. But I've had a couple experiences (a student loan whose bill was going to an address I'd never lived at, a hospital who sent my account to collections before insurance even paid on it) that have led me to be extra-anal about watching every direction money could go in or out of. I'm also too paranoid to use auto-pay for anything that doesn't require it, because of the possibility of glitches like that one. At least if I forget to pay something, it's only going to happen one month. I'll catch it when I go to pay the next month and the bill is higher. (If I forget to pay a bill two months in a row, there is something very wrong.)

Re:My rules of thumb....

[Joe Jay Bee]

I find my card (Capital One Visa, i.e. "you have no credit history, here's one for you", with a £100 limit) to be quite handy. I can pay off the whole bill three times over each month without suffering too much, and if I'm REALLY desperate for cash I can handle the withdrawal fees (you pay for the convenience I suppose).

I would disagree with the part about not buying something if you can't pay it off; that only becomes a trap when you're intent on making the minimum payment rather than paying off as much of the balance as you can reasonably afford each month. If you do the latter, you'll be alright, and it's where credit cards come into their own (i.e. short term credit).

Now overdrafts on the other hand...

Re:My rules of thumb....

[NereusRen]

Good list of advice. I want to suggest an alternative to one of them:

Don't use a 3rd party bill-pay for credit cards. If the bill-pay is down, you'll be held responsible if you're late. You have a stronger case for dropping late fees if it's your own credit card company's fault. Or find an online bill payment system that explicitly gives you protection against that. For example, mine says "Payment late? [billpay-company-name] will bear the responsibility for any late-payment-related charges (up to $50) should a payment arrive after its due date as long as you scheduled the transaction in accordance with the service's terms and conditions."

Late payments don't go on your credit history until they are at least 30 days overdue, so you generally have time to catch this sort of error while the late fee they cover is still the only penalty.

Re:My rules of thumb....

[lena_10326]

Late payments don't go on your credit history until they are at least 30 days overdue, so you generally have time to catch this sort of error while the late fee they cover is still the only penalty.

Problem is 18-24% interest kicks in until you catch the problem and pay the past due amount. Some cards will even keep you at 18-24% until you pay down to ZERO! Royally fucking you over.

Last thing, some people "set and forget" bill payments so they may not notice it within 30 days, so it would ding their credit report for those cases.

you won't be a 'quiet millionaire' with that mind

[Anonymous Coward]

Dude, I *am* a 'quiet millionaire' (or at least I was until last year when I stopped being as quiet about it), was *raised by* 'quiet millionaires' (who became such after having lost almost everything when I was still an infant) and I can tell you -- if you refuse to take an easy, reliable >4% return on an amount as large as those involved with a mortgage you will not become of one us (hint even if your tax rate is currently so low that the tax advantages accompanying the mortgage interest do not boost your marginal return above the 4% difference you cited, your tax rate will go up in time to add that bonus).

The fundamental risk in owning a house lies in the ownership itself, not whether you have a mortgage. If you live in a state where you can be forced to join a "homeowner's" association even after buying your house, then your house is at risk. If you aren't providing your own water and sewage service, then your house is at risk. Hell, if anybody else ever sets foot on your property (with or without your permission), then your house is at risk. Having a fixed-rate mortgage on your house does not risk your house in ways different from those. The currently-fashionable term for that 4% you're stupidly passing up is 'carry trade', btw. Yes, a few years ago the mortgage officer reacted like I was a three-headed alien when I insisted on a 30-year, fixed-rate, no-prepayment-penalty mortgage but that's the difference between 'safe risks' and 'Alan Greenspan risks'.

If you think buying your car outright means that you can budget the $300/mo that would have been a car payment for repairs instead of considering that money as not-yet-spent funds to purchase the car that will replace the one you're currently driving -- you will not become one of us. Financially, the difference between buying your car for 'cash' vs. on credit is that you save the interest costs and (if you did it right) had benefited from the returns made on the not-yet-spent funds but you still need to include that 'car payment' in your budget *every* month rather than just the months after your current car dies.

That said, you'd have to have rocks in your head to believe you will be able to average 10% investment returns over (roughly) the next two years.

Cash Users Subsidize Credit Users

[mechsoph]

Believe me, you have more than paid for those perks.

In the form of higher prices due to interchange fees, higher prices I'd pay even if I used cash. Using a credit card is a no-brainer. Take the 30-day interest free loan and a refund of 1-5% of the interchange fee. Of course, actually carrying a balance is equally a no-brainer; don't do it.

Re:Cash Users Subsidize Credit Users

[Fozzyuw]

Of course, actually carrying a balance is equally a no-brainer; don't do it.

Ironically, CC companies call those people "Dead-Beats". However, as a commuter, I can safely say that I will continue to use my gas credit card to continue to save 5% on all my gas purchases. A cost that I'd have to pay independent of using a debt or credit card.

Cheers,
Fozzy

One big tick for ANZ

[ribman]

Different scam, but here's one that just happened last 24h. (AU)
Last night, wife ordered some kids' name stickers from a company that the kindy had a flyer for on the bulliten board - paid $30 for it over the internet by credit card.
She then went browsing for antique books and visited a number of such sites locally and internationally, no payment forms started on any.
Wife is lovely by all measures, bar tech-savvy.
Phone call next morning from our bank - ANZ - "we believe you have been scammed".
Yep, sometime in the small hours two transactions ran up on her card. $1100 and $700 from western EU country locations.
ANZ detected it, called us, cancelled the card and the bad transactions, and issued new cards. Hence the plug.
Still thinking about how the card details got swiped. Maybe the site had an unencrypted form for cc details? Maybe through the IE browser session not being closed between paying on a weak site and then visiting a trick site? Maybe the sticker co's banking plug-in is working some cheat? Maybe the w2k pc is compromised with a keystroke swiper?
Have quarantined the pc, yet to work it over.

Re:One big tick for ANZ

[lena_10326]

Last night, wife ordered some kids' name stickers from a company that the kindy had a flyer for on the bulliten board - paid $30 for it over the internet by credit card.

Phone call next morning from our bank - ANZ - "we believe you have been scammed". Yep, sometime in the small hours two transactions ran up on her card. $1100 and $700 from western EU country locations.

Still thinking about how the card details got swiped. Maybe the site had an unencrypted form for cc details? Maybe through the IE browser session not being closed between paying on a weak site and then visiting a trick site? Maybe the sticker co's banking plug-in is working some cheat? Maybe the w2k pc is compromised with a keystroke swiper?

Why bother with a trojan when putting up sticker site is a lot easier? The sticker site was a front. Whether there are stickers or not and whether you receive them or not doesn't matter. The site exists to collect your credit card information for sale on the black market. Organized crime has been putting up fake web store fronts for a while now. For that reason, I generally don't purchase on sites I don't recognize. I stick to the ones I know: Amazon, Barnes&Noble, Gap, Walmart, Target, etc.

By the way, the spam on the bulletin board should have clued you in. They don't advertise via normal (traceable) ad publishers.

Re:One big tick for ANZ

[ribman]

Thanks for the tips.

"the spam on the bulletin board should have clued you in." ... refer back to "Last night, wife ordered ... paid $30 for it over the internet by credit card. Wife is lovely by all measures, bar tech-savvy."

My absence was pivotal to the moment. Such advice has since been reemphasised. :)

Re:One big tick for ANZ

[lena_10326]

My absence was pivotal to the moment. Such advice has since been reemphasised. :)

s/you/she/g

Re:One big tick for ANZ

[ribman]

<regret cause="Should have thought to use regex myself">
<applause duration="3s"/>
</regret>

why no credit gouging laws?

[MonkeyBoyo]

Yes you might be able to stay out of trouble by following some of your rules-of-thumb guides.

But the current Bush DOJ rules approach is to favor businesses over citizens, and to favor lenders over citizens.

Unless there is some political way to prevent this process, lenders will bleed most of Americans dry and then people will wake up to the fact that China is the largest American lender and essentially controls all lender activity in the US. .

Re:why no credit gouging laws?

[lena_10326]

lenders will bleed most of Americans dry

Lending is a consensual act between two adults. Your panicking isn't justified unless that changed.

Re:why no credit gouging laws?

[dubbreak]

Lending is a consensual act between two adults. Your panicking isn't justified unless that changed.

What if that adult has the intelligence of a child?

Before I get modded down into oblivion hear me out. I came home to the significant other watching Oprah, which wasn't surprising. What was surprising is that it caught my ear and I sat down to watch. It was on people with credit "issues". It blew my mind how many people have no idea about anything financial.

I can't believe people don't know what compound interest is. Seriously, how did you get out of high school without learning that? Not on the show, but I know someone that didn't understand that their minimum monthly payment wasn't even paying her monthly interest. She thought she was "good" just paying the minimum payment!!!

On the "O" show I heard the following question: "What should I pay off first: the credit card with the highest balance or lowest rate?"

WTF? I would have thought they slipped up and meant, "..highest balance or highest rate" but they seemed pretty certain about it.

The "expert" didn't even comment on the question directly, but did properly recommend consolidating at a lower rate. She should have told them to cut up their cards after doing that. I can't believe that people allow a credit card to hold a debt when in most situations they could get credit from another source at a much better rate.

Anyhow, my point is: maybe there should be more protection for borrowers as it seems many lenders are often taking advantage of the insufficient sophistication of their clients.

Re:why no credit gouging laws?

[lena_10326]

I have always been a proponent of dumping high school gym class and study hall in favor of adding a finance class. No one graduates high school knowing anything anymore because they're spending all their time learning 1001 ways in which America and white people are bad.

Finance topics would be economics, accounting, investing, and personal finance. One for each year: freshman to senior class.

Re:why no credit gouging laws?

[cheros]

Lending is a consensual act between two adults, one of which is not financially astute and the other one is very likely to be on the wrong side of gray in their business practises.

Sorry, there IS reason to be very alert because there is enough margin in regulations for people to scam the crap out of the average Joe. And remember, going to court costs money - the money they just took.

There are ways to make money ethically, it just appears more and more that few bother.

Re:why no credit gouging laws?

[dubbreak]

Those topics were vaguely covered in my "Career and Personal Planning" class in highschool. Fondly referred to as CraPP due to its lack of substance. I would have gladly taken a economics or accounting class in school, I had a spare that was wasted playing billiards downtown or just "hanging out". The issue being the school I went to didn't offer any other courses I was interested in or saw intellectual value in (I had all the requirements for entry to engineering, and I sure as hell wasn't going to waste time on courses that would not count as credit in a university that were dull and pointless).

Of course if everyone knew finances well, then there wouldn't be a market for businesses such as paycheque advances...

Re:why no credit gouging laws?

[lena_10326]

My school had an economics elective but that was it. Nothing else. I remember it being pretty content filled, on par with a college economics course I took later.

I just consider finance and business to be very core topics that we humans ought to know. For some reason nobody considers them important nor even acknowledges them. Finance affects your life in far more ways than science or history does.

Re:you won't be a 'quiet millionaire' with that mi

[Firethorn]

First, I suggest not posting AC, you deserve to be heard. I hope to hear from you again.

if you refuse to take an easy, reliable >4% return on an amount as large as those involved with a mortgage you will not become of one us (hint even if your tax rate is currently so low that the tax advantages accompanying the mortgage interest do not boost your marginal return above the 4% difference you cited, your tax rate will go up in time to add that bonus).

Your acceptance of risk is higher than mine. I'm a bit scarred in that I first started investing just before 9/11. Lost half my initial investment. On paper, I didn't pull it out, and it eventually recovered. Now, I will admit that I'm paying the minimum on my mortgage and investing instead. Then again, I got a sweetheart interest rate, much better than the 6% I could otherwise get. Still, I'm building equity in the house - which I want. Worst case I can still make it - it's just going to take a bit longer.

Having a fixed-rate mortgage on your house does not risk your house in ways different from those.

I have insurance for the other events. Home Owner's association? I could practically set up a firing range in my yard and the neighbors are more likely to come over and shoot with me than call the cops. As for fixed rate mortgage what I was really talking about was manipulating loans such that you have zero equity most of the time - think 'interest only loan'.

This way I still own my house if the stock markets crash and I lose my job.

If you think buying your car outright means that you can budget the $300/mo that would have been a car payment for repairs instead of considering that money as not-yet-spent funds to purchase the car that will replace the one you're currently driving -- you will not become one of us.

I think you misread me - the $300 payment that represented my car payment when I was still paying it off. What I'm doing now is placing that money into investments each month earmarked 'car'. It's a little more bookkeeping to keep track of the number of shares for that purpose, but whatever. It's a somewhat nebulous fund that's meant to pay for major vehicle expenses - not including gas or routine maintenance, but including buying a new car. Basically, I know that some major maintenance will probably be required between now and 10 years. That $300/month will more than cover that. If the maintenance is too bad, or the car no longer meets my needs, then the fund goes towards a new car; ideally buying it 100% cash. The 10 year point is merely a goal, not a end point. If I still like the car, I could drive it for 12. It's just that I figure after 5 I'll have plenty of money, even assuming some repairs, to buy a new car. The way I look at it - if I end up spending $900 in year 8 to get to year 10 I'm still ahead of the game.

Financially, the difference between buying your car for 'cash' vs. on credit is that you save the interest costs and (if you did it right) had benefited from the returns made on the not-yet-spent funds but you still need to include that 'car payment' in your budget *every* month rather than just the months after your current car dies.

That's what I meant. $300 monthly payment ceased going into GM's pocket and into my portfolio, earmarked 'car'. I just don't feel the need to mark it exclusively for 'new car', instead choosing to allow it to also be used for sane repairs on my existing vehicle - after all, I'm still ahead as long as it's costing less than $300/month to keep running in a suitable condition. Heck, if it reached $100/month to keep going, I'd be car shopping.

I'm firmly on my way to a somewhat early retirement - I'll have the $1million, after starting with essentially 0 as a teen. I could do it faster, but I do like some luxuries, like my $1200 gaming machine(built myself to save money). Of course, my last gaming computer was four years old when I replaced it, so it ends up being a lot cheaper than drinking at a bar.

I was cross-scammed on my VISA Debit card

[HW_Hack]

I had been doing a lot of small purchases of new and used books and such thru Amazons array of little privately owned shops - a month or so lated I start seeing charges 2 or 3 times a month for $5.95 from some web service - this over about 2 months --- I go to me credit union and they handled it just fine - but I had to get a new Visa card number so that was a hassle

Scam's been going on for years, decades even

[Anonymous Coward]

My friend's husband, who isn't fully literate, signed up for a credit card with a $200 limit a few years ago in an attempt to rebuild his bad credit. It was one of those joker companies that advertises on TV.

The first time they tried to use the card to rent a car for the weekend, the transaction wouldn't go through at the car-rental counter. The agency was only requesting a $100 deposit on their credit card, and they were paying for the actual car rental in cash.

When they called the credit card company, they found out about the $300 in account fees/activation fees/etc. that the bank was charging for the privilege of having a credit card with a $200 limit. Before they even had a chance to use the card for anything, it was already run up $100 over the limit with all kinds of junk fees.

He told the bank either you waive all of your bogus fees, or you can go fuck yourself, because he wasn't going to pay them a single penny. Surprisingly, the bank agreed and after that I don't think they had any more problems with the company, although it was the first card that her husband cut up and cancelled after he was able to establish real credit with a legitimate bank.

This was years ago, so this may be a case of a scam that's been pulled for years on people who aren't rocket scientists, and it's only now coming to the attention of everyone else. Not everyone is sophisticated or college-educated; this guy manages the shopping cart corral at Wal-Mart, but that doesn't mean he has any less of a right to be treated fairly by the credit card companies.

Re:you won't be a 'quiet millionaire' with that mi

[Colin Smith]

That said, you'd have to have rocks in your head to believe you will be able to average 10% investment returns over (roughly) the next two years. Well.. The money supply here is barely increasing as of last month and some banks are offering 12% on a 1 year notice account. Clearly they're desperate for deposits.

irrelevant

[m2943]

The guy is complaining that a bank can post charges to an "unactivated card". Well, whether you activate a card or not is irrelevant: if you signed the application form, you have a card and are responsible for any charges you signed up for, whether you activate it or not. If you don't want it anymore, you need to cancel it. Activation is just an extra protection mechanism. By analogy, if you buy a car and throw away the keys, you still bought the car.

Re:irrelevant

[Anonymous Coward]

if you signed the application form, you have a card and are responsible for any charges you signed up for, whether you activate it or not.

I must have applied to 50 jobs last time I was looking for work, where are all my paychecks?

If I apply to McDonalds and agree to buy my uniforms, and they decide not to hire me, am I still responsible for paying for the uniform I don't use?

Maybe the problem is that the "application" you speak of isn't an application at all, it's a one sided contract that the bank is under no obligation to honor, but that you are.

Re:irrelevant

[m2943]

I must have applied to 50 jobs last time I was looking for work, where are all my paychecks?

Job "applications" aren't credit card "applications".

Maybe the problem is that the "application" you speak of isn't an application at all, it's a one sided contract that the bank is under no obligation to honor, but that you are.

You're absolutely right that it's a contract. There's nothing "one-sided" about it as a contract: both sides are bound by it once agreed upon. And as with all other contracts, one side signs first, then the other. With credit card companies, you happen to be the first one.

With jobs, the employment contract is customarily signed by the company first, and then you sign it second--or not.

you must never travel

[peter303]

Very difficult to buy airplane tix or rent car w/o one.
I supposed thats OK if you stay in Moms basement.

In the UK, likewise

[igb]

Fraudulent transactions are in theory void, but as the parent says, it's a great deal easier for you to refuse to pay than it is for you to reclaim your money.

The Consumer Credit Act 1974, section 75, makes credit card companies jointly liable for the supply of goods and services for purchases between £100 and £30K. Purchasing goods on a debit card is a mugs' game, because a credit card company is jointly liable under the Sale of Goods Act if the actual vendor goes bankrupt.

There's a theory that debit cards linked to accounts with overdraft facilities might fall into the ambit of the CCA. Do you want to be a test case? I thought not.

ian

Article incorrect on technical details

[Isao]

While I can't speak to the integrity of the vendors in question, the technical details described do not hold up to examination.

First, cookies will not be available to a third-party site - the browser only returns them to the same URL that left them. If the scam site is able to run their code through the main site, then they can get the cookie.

Next, cookies are always written to disk.

Third, if the cookie is SSL encrypted, it's done at the main site's server and then sent over the http (or https) connection. Usually the cookie is a hash of some kind. Let's assume for a moment that it IS encrypted (and so that was done at the main site's server). The evil site would not have access to the main server's back-end (assumption - if they do, I'd say they're in collusion), and so would not have access to the symmetric key described. Basically, they couldn't use the cookie even if they could read it.

This all begs the question of what really happened in this transaction. Something appears to have happened, but it wasn't what was described.

"structured investment vehicles (SIVs)"

[Anonymous Coward]

http://www.bankrate.com/brm/news/investing/20071116_SIVs_money_market_funds_a1.asp/

"Too often people pick a money market fund based on convenience or yield instead of taking a look at the underlying investments. Many money market funds have sought higher-yielding investments such as subprime mortgage-backed securities."

It used to be I would have said don't count on that account being kept open the full timer period (I still remember the sweet 10-year, 10% CD I took from a bank in 1985 -- they closed that puppy out after only about 2 years) but these days I would warn you to be careful whether you will even receive back the full amount you gave the bank. In all the instances I've researched so far the banks offering those seemingly-awesome rates are doing so based on investing them in SIVs ... which are based on investing in Collateralized Debt Obligations (CDOs) ... which are based on investing in subprime mortgages. Even if you haven't heard of the growing problems among SIVs or CDOs I'm willing to bet you have heard of the growing (seemingly by billions every week) defaults among subprime mortgages.

As those of us who remember the S&L turmoil (as well as earlier, similar occurrences) know, don't assume that investing with a financial institution that also handles deposit accounts means that a particular "account" they offer you has *any* of the same protections given to deposit accounts. RTFM before handing over your money.

Must notify in writing

[Anonymous Coward]

If you'll read the fine print, it is because you must notify them in writing

Yes, you can conveniently ring them up, but the official notification of cancellation is in writing.

So send them a cancellation letter.

Re:you won't be a 'quiet millionaire' with that mi

[thrull1]

The funny thing is that ten years down the road, you'd be better off leaving your money in the bank and buying last year's model for 1.9% or 0% whatever (if you're careful, you can get this rate for the whole term) and then you get an 8-10% marginal return better than where you would be if you had taken the money out of the bank and bought the car outright! Basically this is twice as good as doing the same on your house.

Re:Bank of America is a big SOB

[vertinox]

Bank of America gave this guy a big credit limit at a "fixed" rate of 6.9%.

I used to be a BoA customer for about 4 years just as a casual card holder. Last year I had some unexpected expenses that basically maxed the card at at about 2 months of my income which over all isn't critical to me. Then about a month later I get a letter saying my interest rate is going from 7% to 20%.

I called them up and asked why in the world was my interest rate being increased since I have never had a late payment in my life and the actual interest rate had been cut by the feds. They said it was my credit score and at time I freaked and thought I had just been a victim of identity theft and had equifax do a credit check and I had a clean and awesome score. I called them back a second time and demanded why my rate was increased especially since my credit score was damn fine!

They said they couldn't do anything even with me threatening to cancel my account for a lower rate and all I could do was send a letter that said I disagreed with the rate change which basically froze the account. Since I was never using them again I did... And they didn't raise the rate.

Then a month or two later then send another notification of a rate increase.

Enough was enough, so I used my savings (which I loathe to not have cash around) to pay the whole thing off out of spite.

Bank of America is run by bastards who think they can rip off everyone.

Re:you won't be a 'quiet millionaire' with that mi

[Firethorn]

And I might do this, however you have to remember about dealing. Frequently if you get into the fine print of the offers it's something like '0% interest OR $2k rebate'.

In which case, on a ~$20k car, you can save a bunch of money paying cash.

I will admit that I have a bias against owing money though.

Plenty of smaller stores

[Sycraft-fu]

I mean let's say you have an online shop and you just aren't making any money. You are doing the best you know how and you aren't totally failing, but when the end of the year comes around, you profits are near zero. You can't figure out how to increase business, you can't figure out how to cut costs, what to do? Well if someone asked you to do something like this, you probably jump at it. Here's a way to finally start making money.

Also they probable don't sell it as "We screw your customers in to shit they don't want," it is probably more along the lines of "We offer a valuable services relevant to what your customers need. Our research(*) indicated that customers enjoy these additional value added services and are more likely to shop there in the future." So if you aren't that savvy you think that not only are you making more money, but also making customers happier.

(*) Which was produced by pulling it out of our own assholes.

I would add

[Sycraft-fu]

To make sure you have ENOUGH credit. Not too much or too little. I don't know any way of figuring out what enough is, other than watching your credit score. Some people might thing that the minimum number of cards possible is the best, that as you get more your risk increases. At the high levels that's true, but not actually at the low levels. I found that out when I got an airlines visa. I had a couple cards, and had no real care to get more. I figured that a couple backup is more than enough. So when I got my miles card I planned to deactivate one of my old cards... Except that my FICO score jumped from about 750 to over 800 immediately and stayed there.

Did a little digging and it turns out I didn't have enough credit for a really good score. There's a balance between having too much credit, which lowers your score because you are at risk of overspending, and too little, which lowers your score because it doesn't show enough responsibility. Stupid? Sure, but rather than bitch just learn the rules of the game and play it.

I'm not sure what the ideal amount of cards is, I imagine it varies based on income and such. In my case it seems to be 4, as there's little room for score to go up, and it was lower with 3.

PLEASE NOTE: This all assumes that you are responsible with your cards. I am not saying get 4 cards and carry a balance. Of those 4 cards, only 2 see any use at all, and 1 sees 95% of the use, and I don't carry a balance. The idea is you have a good amount of credit, but don't use it. You show that you can have a good amount of leverage and be responsible with it.

This also doesn't mean you should run out and get a bunch of new cards right away, as seeking new credit lowers your score (temporarily). What it means is you should learn about how this stuff works, monitor your score (a good way is to get a card like a Washington Mutual card that will let you know what it is) and try to maximize it. Sometimes one of the things you need to do is get some more credit.

Re:I would add

[jandrese]

One more tip: it's actually better to spread your credit around. Your credit score takes a hit if any card is anywhere close to the limit. If you have a ridiculous limit and pay it off every month it probably won't matter (I did this for awhile and discovered that if I just used my main card it wouldn't ever get close enough to matter), but if you have several cards with small limits it's better to spread the love.

The big advantage of only using one card is that you only have one bill to pay each month, which is easier to remember.

Re:I would add

[vivtho]

Absolutely true... all other things being the same, the same amount of debt spread over various cards will result in a higher credit score. However, the total number of creditors should not be excessive. Creditors includes everybody to whom you owe money ... credit cards, mortgages, personal loans, overdue phone bills ....

I'd also like to add that WRT your last point, even if you use just one credit card, take the few minutes every month to glance at the other card's statements and ensure that there are no charges. The number one reason why people get charged late fees on unused cards is that they miss a payment on annual/membership fees.

Old fashioned

[jeremyp]

You Americans make me laugh with your old fashioned credit card scams. Here in the UK we have streamlined the whole process.

Our government just gives out everybody's personal details.

Re:Old fashioned

[Anonymous Coward]

i will say that being from the states i was totally shocked the first time i tried to use my Credit Card in the UK, i always write See ID on the back of my cards. Well in England i found that no one wants to see your id, they just want to make sure your signature matches, so i had to sign my card right next to see id in big bold letters in front of the clerk so that i he could verify that my signature on the slip was the same as on my credit card... surprise they matched what do you expect, i guess i am just silly in thinking that i would rather have them ask for id than just look at the signature on the card

Not really

[Sycraft-fu]

I guess if you consider the narrow definition of debt as "owning someone money" then ok. But then, in that case to stay out of debt you can never eat at a restaurant. Why? As soon as they serve you food, you are in debt to them. You owe them the money for the meal. However, when you have the cash in your pocket, you certainly don't consider yourself in debt.

Well, same with a credit card. Just because you charge $1000 on it doesn't mean you are in debt, if you have $1000 in an account earmarked to pay that off. Sure I'm technically in debt all the time on my credit card, because it almost always has something charged to it. However the amount on it is always less than the amount in my checking account by a significant amount. I can, at any time I wish, zero the balance simply by telling the bank to transfer from one to the other.

All I am really doing is deferring payment. If I use my debit card, the money is immediately removed from checking. If I use my credit card, the money doesn't come out until I specify it does.

So it is "debt" in the narrow sense, but not in the overall sense of balance. That's the only real useful way to define debt, otherwise you are always in debt to some one or another simply because there's a lag time in settling accounts.

And sometimes it's almost necessary

[phorm]

I'm moving across the country. I don't get my final pay-out (which, including my banked holidays pay, is around $5000), until Friday. Moving costs are about $3000 to ship my stuff, payable now. Pulling that directly from my bank (along with all the other costs that moving has accumulated) would dip my balance into the unpleasant area where my bank racks up the service fees.

So I put it on my card today, and on Friday my card gets paid off. No interest, and it actually saves me a whole lot of hassle and some cash too in regards to service fees etc.

Credit cards don't create bad debt, not paying off debt creates bad debt

Re:Bank of America is a big SOB

[The_mad_linguist]

>I used my savings (which I loathe to not have cash around) to pay the whole thing off out of spite.

Wow, paying them money! What an extreme action! That'll show them they can't profit off you.

You need another rule.

[Jaywalk]

None of those rules (except maybe checking your statements carefully) will help with the problem the article described. His wife was "shown" a page that obscured the opt-out of an offer, then charged for it. You might catch it if you go over your statements every month, but he observed that they deliberately keep the payments low so they can slip in under the radar. Basically, they're "selling" you something without your knowing it, using the cached credit card information from your previous transaction. I suggest you add one of his suggestions to your list:

• After you complete the transaction (the page will say this) and BEFORE YOU DO ANYTHING ELSE, close the browser. Kill it -- and the session data. Then open a new browser to continue whatever you want to do. Never navigate away from a completed transaction page.

I think the easiest way to do this would be using Firefox tabs. When you click on "go to checkout", use a right click and select "Open Link in New Tab". As soon as you have the confirmation from the thing you wanted to buy, close the tab without clicking anything else. That way, any browsing history still works so you could go back and look at something else and only the information associated with the transaction itself is killed.

As a side note, I noticed that the scammers showed up in the blog protesting their innocence. Out of curiosity I went to the Webloyalty web site to see what they were selling. But the pitch is targeted solely at web site operators based on the commissions that Webloyalty will give them. You have to follow a couple links in before you find out that what they "sell" is a list of garbage services nobody in their right mind would actually pay for. Curiously, it's mostly some form of "protection" (travel protection, elite entertainment protection, identity theft protection, et cetera).

I guess that makes it the new protection racket.

Re:Bank of America is a big SOB

[Dogtanian]

Wow, paying them money! What an extreme action! That'll show them they can't profit off you. You're suggesting that he could have got away with *not* paying them?!

Re:you won't be a 'quiet millionaire' with that mi

[heck]

if you refuse to take an easy, reliable >4% return on an amount as large as those involved with a mortgage you will not become of one us (hint even if your tax rate is currently so low that the tax advantages accompanying the mortgage interest do not boost your marginal return above the 4% difference you cited, your tax rate will go up in time to add that bonus).

Both work; one way you net more, but must come up with a 14,000 a year to service the debt. The other way you have to come up with 14,000 a year to invest but have no debt.

Take out a $200000 dollar loan at 6% interest, paying roughly 1200 a month, and you pay roughly $180000 in interest over the lifetime of the loan. You invest that $200000, earning 10% compounded (I did annually) and you have roughly 2.4 million in the account. But you also have to come up with 14,400 a month to pay your loan, and you've had to pay the 6% interest. Because for the next calculation I want the 14,400 to invest, I'm not going to withdraw 14k a year; I'll just say investment - interest paid = 2.4 million - 180,000 = 2.2 million. Nice.

Pay off the $200,000 - and then take that 1200 a month (14000 a year) and earn 10% a year on it. You end with around 1.7 million or 1.8 million depending on how you do the numbers. Millionaire either way.

Depends on what you like. For me - since I have a wife and kids - I prefer to pay off debt and then invest. Right now, if I get hit by a bus (or have to go on disability), the family still has the house AND has enough to pay taxes and live off of. Won't be as extravagant as if I was still earning income, but will work. The other way, yes, if I get hit by a bus, they can pay off all of the debt and be further ahead due to the additional interest we may have earned - but they have to liquidate assets to do so. Potentially liquidating at a loss considering what the market has done to some of my investments (net over 30 years the investments should be ahead) If the market performs worse than 6%, I come out ahead; if my investments do better than 10%, I lose.

Moral: the point is to manage your debt and financial planning. Manage your finances, and you can be a quiet millionaire.

Re:Bank of America is a big SOB

[Saxerman]

You're just scratching the surface of the evil that lays beneath the surface of every credit institution, so don't think this is merely limited to BoA.

Here in the US, a good chunk of your credit score (maintained by the real axis of evil) is a measure of the percentage (not the amount!) of available credit you have available to you. Opening a credit card you won't use will increase your credit score. And if you carry any debt, canceling an unused credit card will decrease your credit score. The sad truth is that your credit score isn't really designed to measure your 'credit risk' to potential lenders. It's almost entirely designed to measure how dependant you are on debt. The thinking being that those who need debt more, can be safely charged more interest since they have less places to turn to finance their debt.

Citibank problems

[Anonymous Coward]

I got offered a card by Citibank with an offer for 2.9% on any transferred debt to the card, which seemed like a good deal.

The card was advertised as a 'No fees' card too. So I took up the offer, and transferred a few thousand dollars of debt over to the card.

After a few months I got charged with a 'You haven't used your card' administration fee (I can't remember the exact name of the fee) of around $150. The fee was only charged to customers, who hadn't used their card.

This fee was attracting the full interest rate, and you couldn't pay off the fee until you paid off all the transferred debt.

- How can a bank have a 'No fee' card, and then be legally allowed to charge a fee for 'Not using the card' ? None of this was disclosed in the initial card terms & conditions. Can a bank or credit card charge a fee whenever it wants and for whatever amount it wants ($150 is not a small fee)? They also seem to be able to change the terms & conditions on any card at any time, so what was initially a good deal on the a card can be a terrible deal after the terms have been changed.