Posts
Sunday, February 22, 2009
New use for this site
I have decide to restore usage of this blog, but to differentiate it from my WordPress blog. While I will continue to do one-offs there, I will be doing postings on specific topics here. Feel free to send me an email with any feedback or ideas.
Saturday, November 29, 2008
Moving
More credit card surprises
Sunday's Star had another excellent column by Ellen Roseman. This was the last in a series dealing with credit cards. Its title was "Some final thoughts on credit cards." (It is available online at http://www.thestar.com/Business/article/541945".)
Among the lesser documented features of credit cards she addressed:
-The holds various merchants will put on your credit card. Most people are aware that there is a hold when they charge a hotel room or a rental car, but might be surprised to learn that if you pay at the pump for your gasoline with a credit card, there may well have been a hold of $100 put on your card. The difference between your purchase and that $100 may not be removed from your account for a couple of days. (This isn't the way she put it, but I think is what she meant to say.)
-Such a charge (or series of charges) could put you close to your credit limit. If the hold hasn't been removed by the time the next charge is processed, you could face a fee for going over your limit, or for having had a charge refused. (These fees range from $10 to $35.)
-If you have a credit balance on your credit card (for some reason, you have given them more money than you owe), you may be charged a fee. She lists five issuers (including Scotiabank) that will charge you from $5 to $10 for this situation. (Sears MasterCard, meanwhile, will ding you $25 for an inactive balance.)
-And one set of charges that I have been unable to summarize, so I will quote her:
"Beware of new charges for purchases of wire transfers, money orders, traveller's cheques, bets, lottery tickets and casino gaming chips.
"Some card issuers treat these transactions as cash advances, charging interest from the first day until they're paid off.
"Some treat them as purchases, but add fees ranging from $2.50 in Canada and $5 outside Canada at CIBC and RBC to 1 per cent of the amount at MBNA (with a minimum of $7.50 and no maximum)."
It's hard to play a game if you don't know the rules. Look for further postings as I come across more instances of articles addressing these issues.
Also, I have a free report available addressing 11 other things your credit card issuer would just as soon you didn't know. If you are interested in a copy, let me know.
Among the lesser documented features of credit cards she addressed:
-The holds various merchants will put on your credit card. Most people are aware that there is a hold when they charge a hotel room or a rental car, but might be surprised to learn that if you pay at the pump for your gasoline with a credit card, there may well have been a hold of $100 put on your card. The difference between your purchase and that $100 may not be removed from your account for a couple of days. (This isn't the way she put it, but I think is what she meant to say.)
-Such a charge (or series of charges) could put you close to your credit limit. If the hold hasn't been removed by the time the next charge is processed, you could face a fee for going over your limit, or for having had a charge refused. (These fees range from $10 to $35.)
-If you have a credit balance on your credit card (for some reason, you have given them more money than you owe), you may be charged a fee. She lists five issuers (including Scotiabank) that will charge you from $5 to $10 for this situation. (Sears MasterCard, meanwhile, will ding you $25 for an inactive balance.)
-And one set of charges that I have been unable to summarize, so I will quote her:
"Beware of new charges for purchases of wire transfers, money orders, traveller's cheques, bets, lottery tickets and casino gaming chips.
"Some card issuers treat these transactions as cash advances, charging interest from the first day until they're paid off.
"Some treat them as purchases, but add fees ranging from $2.50 in Canada and $5 outside Canada at CIBC and RBC to 1 per cent of the amount at MBNA (with a minimum of $7.50 and no maximum)."
It's hard to play a game if you don't know the rules. Look for further postings as I come across more instances of articles addressing these issues.
Also, I have a free report available addressing 11 other things your credit card issuer would just as soon you didn't know. If you are interested in a copy, let me know.
Friday, November 21, 2008
A circumstance to be avoided
In cleaning out some old newspapers, I came across entry in the Sunday Star from June 22nd. It has a weekly feature on "The Week's Best Invented Words," which included this one credited to the Washington Post:
CASHRTATION, n.: "the act of buying a house, which renders the subject financially impotent for an indefinite period."
(As a licensed mortgage professional, I can assist in avoiding this condition.)
CASHRTATION, n.: "the act of buying a house, which renders the subject financially impotent for an indefinite period."
(As a licensed mortgage professional, I can assist in avoiding this condition.)
Wednesday, November 19, 2008
Another credit crunch nugget
This is also from the Washington Post article mentioned 2 posts ago:
"Gonzalez of American Express said that in a typical year, fewer than 20 percent of its customers have their [credit] lines [a/k/a/ credit limits] adjusted. Of that proportion, 80 percent usually have credit increases, while 20 percent have decreases. In mid-2007, that shifted to a 50-50 ratio."
"Gonzalez of American Express said that in a typical year, fewer than 20 percent of its customers have their [credit] lines [a/k/a/ credit limits] adjusted. Of that proportion, 80 percent usually have credit increases, while 20 percent have decreases. In mid-2007, that shifted to a 50-50 ratio."
Some good news from the credit crunch
In checking out the Washington Post version of the story mentioned in the previous post, I came across this paragraph:
"Fewer consumers are now getting courted. According to Mintel Comperemedia, a marketing research firm, 1.34 billion credit card direct mail offers were sent out in the third quarter, down 13 percent from the previous quarter and 28 percent from a year earlier."
Those figures are for the States, but it is a tell-tale sign of the changes. (The previous paragraph mentioned that credit-score cutoffs for direct-mail offers have been raised.)
"Fewer consumers are now getting courted. According to Mintel Comperemedia, a marketing research firm, 1.34 billion credit card direct mail offers were sent out in the third quarter, down 13 percent from the previous quarter and 28 percent from a year earlier."
Those figures are for the States, but it is a tell-tale sign of the changes. (The previous paragraph mentioned that credit-score cutoffs for direct-mail offers have been raised.)
Another article on credit card changes
Yesterday, the Star reprinted (in part) an article from the Washington Post detailing some of the consequences of the credit crunch on credit card users in the U.S. While some of the details are probably U.S.-specific (at least at this point), there are consequences that many people overlook.
Before I get to those consequences, among the steps the article set out as being followed by U.S. credit card issuers:
$ - credit limits being cut (in one case with the explanation, "your total debt is too high relative to your payment history with us and other creditors.")
$ - rates and fees being raised. (One example given: average late fees on all cards have gone up by about 10% in the last year. Elsewhere, I have seen mention that being late twice will see your fate go up to 24.9% from 18.9%. While this looks like a 6 % increase, it is actually an increase of 6 percentage points. If you do the math, you will see that 24.9 is 131.8 % of 18.9. And don't forget, you are paying your credit card with after-tax dollars, so you've had to earn $1.40 or so to have the $1 to pay to the credit card company.)
$ - suspending zero-per-cent balance transfer offers
$ - shutting down inactive accounts.
Sadly, one of the people who had seen her credit limit lowered and rates raised had been in good standing until she withheld payment due to a dispute with a merchant. (Of course, the article only gave her side of the situation, but I have spoken to consumers here who have similar tales of woe.)
Now, I mentioned consequences earlier. To quote from the article (in the Post): "Reducing credit lines, in particular, has wreaked havoc on many consumers by affecting their debt utilization ratio, which is the percentage of available credit they are using. A high debt utilization can lower a credit score, which then makes it tougher to get credit or at least get credit under favorable terms." If you owe $2000 on a $5000 credit card, you are utilizing 40% of that card's available credit. If for whatever reason that credit limit were reduced to $2500, the utilization is now 80%, and you will see your credit score suffer. (Actually, in the U.S., there is now a credit-score-hit at 20% utilization. See earlier posting.)
The bottom line: it's now more important than ever to handle your credit responsibly.
(For those who wish to read the article, it's available at the Star website: http://www.thestar.com/article/538612. The original article is available at the Washington Post, which requires free registration: http://www.washingtonpost.com/wp-dyn/content/article/2008/11/15/AR2008111500216.html. If you have time, read the original version -- some of what the Star cut is quite interesting.)
Before I get to those consequences, among the steps the article set out as being followed by U.S. credit card issuers:
$ - credit limits being cut (in one case with the explanation, "your total debt is too high relative to your payment history with us and other creditors.")
$ - rates and fees being raised. (One example given: average late fees on all cards have gone up by about 10% in the last year. Elsewhere, I have seen mention that being late twice will see your fate go up to 24.9% from 18.9%. While this looks like a 6 % increase, it is actually an increase of 6 percentage points. If you do the math, you will see that 24.9 is 131.8 % of 18.9. And don't forget, you are paying your credit card with after-tax dollars, so you've had to earn $1.40 or so to have the $1 to pay to the credit card company.)
$ - suspending zero-per-cent balance transfer offers
$ - shutting down inactive accounts.
Sadly, one of the people who had seen her credit limit lowered and rates raised had been in good standing until she withheld payment due to a dispute with a merchant. (Of course, the article only gave her side of the situation, but I have spoken to consumers here who have similar tales of woe.)
Now, I mentioned consequences earlier. To quote from the article (in the Post): "Reducing credit lines, in particular, has wreaked havoc on many consumers by affecting their debt utilization ratio, which is the percentage of available credit they are using. A high debt utilization can lower a credit score, which then makes it tougher to get credit or at least get credit under favorable terms." If you owe $2000 on a $5000 credit card, you are utilizing 40% of that card's available credit. If for whatever reason that credit limit were reduced to $2500, the utilization is now 80%, and you will see your credit score suffer. (Actually, in the U.S., there is now a credit-score-hit at 20% utilization. See earlier posting.)
The bottom line: it's now more important than ever to handle your credit responsibly.
(For those who wish to read the article, it's available at the Star website: http://www.thestar.com/article/538612. The original article is available at the Washington Post, which requires free registration: http://www.washingtonpost.com/wp-dyn/content/article/2008/11/15/AR2008111500216.html. If you have time, read the original version -- some of what the Star cut is quite interesting.)
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