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.

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:

[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:

[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:

[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]

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:

[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:

[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:

[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:

[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:

[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:

[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:

[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:

[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:

[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:

[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:

[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...

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.

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

[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.

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

[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).

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.

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....

[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.

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.

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: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: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.

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.

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.