This has to do with credit cards and the new one I'm about to receive. I will explain why I got this card as opposed to my current card and what the benefits are for me.
If you would like to skip my personal story, and go right to the graphic towards the bottom, and read about the new card I'm going to get, feel free - I will not be offended. :)
When I first started college, sometime around 2000, I saw one of those credit card offers they place in colleges with increasing frequency. I must have been about 18 or 19 and decided hell, better now than never.
So I picked up one of those applications, read through all the rules and regulations, made sure I understood them, and then caleld the company to request a card.
The conversation was very brief. I was asked about my domicile status, my income, if I had any other credit cards (I didn't, this was my first) etc, and within a few minutes, I was approved. I was pretty sieked. But there was something that I didn't understand then, that I do now.
Anyhow, in a week roughly I got my first credit card, an Associates National Bank Student Visa, with a credit limit of like $500 and an interest rate somewhere @ 21.9%. Yeah, I know, that's a really high interest rate but it was my first card.
I was very smart with my card, making minimal purchases, and full balance payments every month. The nice thing about the card was that there was no yearly or monthly fee to keep the card. If I had a zero balance, and didn't use the card for that billing cycle, I wouldn't owe any money. I could never use the card again and I would owe NO money.
Well...somehow I got it in my head, and I probably got this from my parents and tv and such, that credit card companies don't like when you don't keep a balance. It certainly won't help me increase my credit limit or anything. So I started to stop making a full balance payment. I would carry a small balance from month to month so that they could make a little money off of me and in return, expected they would do something nice for me.
Mind you, I was financially sound and at any time, was fully able to pay off the balance with the flick of a pen and the tear of a check.
So after I started carrying a balance, I got a cash back offer from my credit card company. Sign up for this, and I would cash on all the purchases I made. This was always a small amount, but every three months or so, I would get a check from my credit card company in the amount of a few dollars. Nothing to really help me improve my situation, but hey...it's a nice gesture. Then I started getting notices that my credit limit was being increased. First from $500, to $750. Then to $1000. It kept going up. But my interest rate stayed the same, somewher around 20-something percent. So I decided to call one day and ask about my credit status, if my account was in good standing, my credit score, etc.
Turned out I had a 900-something credit rating. Wow! Me, just a 21-yr old kid or so, with a 900-something credit rating. Well...I asked them if I was eligible of, instead of getting another credit line increase, if I could get an interest rate decrease. Sure they said. Whatever you want.
Long story short, in a matter of two or three years, I want from a crd initialyl having a $500...no, a $300 credit limit and a 21.9% interest rate to a card with a $4000 credit limit and an interest rate somewhere down in the single digits, possibly as low as 6%. Then the unthinkable happened.
I got into a car accident and wasn't able to work for almost 9 months. I had just moved to another state and was living off my savings. Those quickly washed out and then I was living off my credit card. Food, bills, clothing, transportation, rent. Everything, you name it. My parents were helping me out and before I knew it, I was cashing in savings bonds to keep my head above water. It was a very tough time for me, and very scary as well.
In time, I got a job. First it was working for a temp agency, and then, through the help of family and friends, I got a job in a restaurant/bar, It was a steady, stable job, and I was applying some of my income to my credit card balance, which now was in the area of $2500-$3000. Then it happened.
How many of you pay your bills online, either from your credit card company's website, or through your bank's website? Well...that's how I always payed my bills. I would go to my credit card website, and submit an electronic payment. Then, I would watch over my account for the electronic withdrawal to make sure it went through, and then when my card statement came in the mail, I would check that as well. And it was always there.
Visa - $50 online payment - Thank you.
That's how the detail payment always showed up. Just like that. For three years, that's what told me my payment had been successfully received. But out of nowhere, the bank that financed my card changed, and the detail payment information changed from the above to:
ANB College Online Payment
The first time I saw that, I thought to my self "What the heck is that? What's ANB college? I'm not in school right now?
The first thing I did was call my bank and ask who it was. For some reason, they could not tell me who had initiated the electronic deduction. They couldn't tell me it was my Visa card. So after some pissed off hollering at their incompetence, I stopped payment on it and got my money back. I told them I didn't know who that was and that I also did not want them ever taking money out of my account. I said "Make it so" and they said "Ok."
I forgot to check my credit card statement.
That detail statement showed up three months in a row, and each time I stopped payment on it. Eventually, my credit card company finally caleld me to find out what was going on and why I hadn't made a payment in three months and why I stopped payment three times in a row. I was perplexed. I didn't stop any payments to my credit card - who would do a thing like that?
Eventually, the person on the phone with me and I, both at the same time, understood what had happened. We realized I had become confused when they changed banks and the detail changed. The person on the phone said I should've gotten a notice about it in the mail a few months back and I swore up and down I didn't. They said even they got notices. I stuck to my guns and repeated i didn't get one. Oh well.
I spoke with the person on the phone for some time. I told them I certainly recognize the debt as my own, that it was correct in the amount, and that I had every intention of paying it back. My account wsa about to be cancelled unless I made a payment. How much?, I asked.
They wanted something like $600 or $700 dollars. It was the accumulation of missed minimum payments, late fees, penalties, late charges. All sorts of stuff. Reactivation fees, processing charges, you name it. $6-$700 dollars. And better yet, they needed it by the very next morning.
YIKES
I did not have that much money in savings. I told them I needed either some more time, or that I needed to set up a payment plan. Oh sure, we can do a payment plan - after you make that big initial payment.
They wouldn't work with me and eventually I went into collections. All in all, when I finally had saved up the money to completely close the account, it was somewhere in the area of $4500-$5000. Not to mention the cost of totally destroyed credit. That has stayed with me for years now.
TODAY'S SITUATION
So I'm a number of years from that mess. I'm 26 and last year I got probably the first credit card offer in the mail since that time period. It was a Visa card, with a high interest rate, a low credit rating, and a monthly maintenace fee of $10/mo. I figured - the only way I'm going to get my credit back is to pay for it, hence the monthly maintenance fee and my general acceptance of those types of stipulations.
I got my card abuot 8 months ago. I have been very, very careful with it. I think maybe I bought over $100 worth of stuff with it, and every month I pay off the balance. EVERY SINGLE MONTH, PAYMENT IN FULL. Just this weekend, I got two credit card offers, and this was ironic because on Friday, I called in to make my payment over the phone via check, and decided to ask - "Since I've made all my payments ontime, and in full, am I eligible for any customer perks, like a credit line increase or an interest rate decrease?" The guy on the phone said an offer had just been sent out to me for a credit line increase and that he would tell me about it.
In his own words, and with a hesitancy that only an employee of a credit card company could have, he somewhat whispered to me "It's a $250.00 credit limit increase, but it requires you to pay $100, which will be applied to you balance, for you to get it. He said it in such a tone that even he wouldn't go for it. I told him flat out it was bullshit to pay for it and given all their other outrageous charges, I would decline the offer and that if something better came my way, they would be the first people I call to cancel my account with them.
Back to my two credit card offers that just came in the mail. Both are from Bank of America. One was a USAirways Visa card with one of those Bonus Miles offers, with up to a $3000-something credit limit, but with 17% interest and a $90 yearly fee.
The other was a BOA Platinum Card, with a Generous Credit Line of up to $8,975 and here are the rates:
The biggest thing I wanted in a card was one with no monthly or yearly fees, and this has none. Also, the interest rate is 0% for a year, and then 11.49% afterwards. So I decided I'd take the plunge, yet again, apply online with their quick and fast and easy approval in 10 seconds catch and see what happened. I don't often apply for credit on things as A: My credit was shot and B: to rebuild it, one thing you don't want to do is keep applying for credit, be it a credit card, a loan, cellphone - you name it. So it'd been a while since I had applied for any credit and decided to do it.
In 10 seconds, I got my answer. I was approved. But get this - given my credit, or in my eyes, MY credit, I was approved for $3500 worth of credit. $3500!!! Like....what the fuck? I had shitty ass credit because of my first card, my second card, the one I have now has just a $500 credit limit plus in insane amount of interest, AND a monthly fee - and you're going to give me this?
Either someone thinks I've learned my lesson, have learned responsibility, and are no longer the credit risk I was, or.....THEY JUST DON'T CARE AND THINK I AM AN OPPORTUNITY FOR THEM JUST WAITING TO BE EXPLOITED!
HAHAHAHAHAHAHAH! I THINK NOT , SIR! I have learned my lesson and I am no longer a credit risk in the ways I was before. I no longer purchase things that I do not have the cash on hand to pay back. I no longer use my card as a free bank account or as free money. I know this is not my money and I know that I have to pay it back. So you stupid fuckers just gave me a whole bunch of money that I'm not going to use.
Now some of you may say - and I've heard others in similar shoes say - why did you take a card with that high a credit limit? Why? Because there's no monthly charges. If I never use the card, I won't have to worry about a bill. And that's one less bill I might forget about until the day it's due, or worse, the day after it's due.
The New Usury??
Take a look at those charges. And this is where the title of my diary comes into play. USURY. Look at the PENALTY CHARGE. 29.49% 29%??? I thought usury was like 25%, or I'm just misinformed. And perhaps it has to do with the new changes to bankruptcy and such but I have never seen a rate Soooooo high as 29%. And for those that can't read the small print, here it is and how it comes into effect:
If at any time during any rolling consecutive twelve billing cycle period you fail to make two Minimum Payments on a timely basis or exceed your Credit Limit twice we may elect to increase your Purchase, Cash Advance and/or Balance Transfer APRs to the Penalty APRs. All Penalty APRs will remain in effect until, in a subsequent rolling consecutive six billing cycle period, you do not exceed your Credit Limit at any time and you make all of your required Minimum Payments on a timely basis when, in your next billing cycle, all Penalty APRs will no longer apply.
So it seems if I fuck up with this card, that I'm going to be paying 29.49% for six consecutive biling cycles.
The first thing I'm going to do when I get this card is read through the literature and rates that come with it. I will compare it to the material I got with the offer and look for any changes or discrepancies. If I notice something fishy, I will repost it either here, or in another diary, call the company, and if it's too good to be true, I will cancel the card immediately. Bottom line, I really don't need a credit card at all.
But I have a baby on the way. Due date @ December 18th or so. There's always emergencies but even more important, I want to rebuild my credit so that one day I might be able to buy a small home to live my days out in. :)
I hope you enjoyed my story and I hope to hear some of yours. Or not. Whichever you choose to do.