Another Reason Why Credit Cards Stink

Still want to use credit cards?

Do you really think it is worth it to spend more to get frequent flier miles that are limited more and more?  If so, then get ready for the terms to change whenever it is convenient for the issuer to make a buck.

Stay away from the plastic!

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Fed Plans To Revise Credit Card Rules

Finally, some good news out of Washington! It looks like the rules on credit cards are going to be revised to make them more consumer friendly!

An exerpt:

The new rules would require companies to tell customers 45 days before terms of a credit card contract are changed, compared with 15 days now. And the rules would expand the list of changes requiring advance notice to include those involving penalty interest rates, which often range above 30 percent. Today, most consumers learn only after opening their monthly bills that they have been penalized with significantly higher interest rates because of paying late, going over their credit limits or falling behind with another lender.

Also:

Companies would also be required to spell out that low rates on balances transferred from another credit card apply only to that balance, not to new purchases. And it would require companies to apply payments to the debt carrying the highest interest rate. Many companies now apply payments to the least costly debt, thus forcing customers to pay more in interest.

These measures will definitely help people in getting out of debt. Still, it is shocking that consumers can be treated so badly by an industry without any public scorn. These changes still don’t make credit cards a good method of payment, but they at least start to even the playing field.

Nothing Wrong With Student Loans (Part 2)

Here are some updates to my previous article

  1. Robert Reich wrote about the real problem with student loans, that the average consumer is being ripped off by finance companies and underserved by the government.
  2. The Washington Post exposes how student loan companies abuse your privacy in order to try and make a buck.

Now, do you still think that these people are the ones we want our children to do business with starting at 18?

Nothing Wrong With Student Loans?

The prevailing logic in our culture is that student loans are a good thing, or at least a necessary evil that is required in order to get an education. In reality they sap both our individual and collective futures. We take the people with the most energy, the most enthusiasm, and the most potential and saddle them with long-term financial commitments at exactly the wrong time.

Student loans are a student loans are a multi-billion dollar industry , in some ways a shady one. With hundreds of millions of dollars going through major universities there is a significant conflict of interest, establishing a relationship that will enrich an institution at the expense of its students. The New York Times published an article detailing the tangled relationship between Citibank and several universities. While no wrongdoing was admitted on anyones part, both parties agreed to pay restitution and to abide to a new code of conduct for student loan processing. That sure sounds like wrongdoing to me!

MasterCard Makes Identity Theft Easier!

I just saw a commercial that really struck a nerve. It is from MasterCard (I believe) and is touting the new proximity cards that don’t require a signature.

The ad is a story about a sick zookeeper who has his animals steal his card, then go to the store and get him chicken soup, a blanket, and other soothing things. Then the animals swipe the card and are able to buy the items without a signature or a second look from the merchant.

I thought this was an excellent commercial, at least from my point of view, as it showed how insecure these tools really are. It tells the world, any mammal can steal your identity!

Week 9 Homework

This lesson is titled ‘Buyer Beware’, and discussed debt marketing and the use of sales techniques and gimmicks to influence your buying behavior.

The homework for this week is:

  1. Read Chapter 5 in Financial Peace Revisited.
  2. Fill out the 3rd column of the Financial Snapshot form. A copy came in your materials, or you can do it at the FPU Member Resource Center. If you do it online, you are entered in a drawing to win an iPod.

Also , this week we would like to check our progress as a group. Take a moment to look at the questions and send your answer either via email or in person at our next class.

Lastly, we have some additional reading on this subject, if you are interested.

Buying Used

I was browsing through MSN Money and found a great article titled “10 Things You Should Never Buy New“. There is some great practical advice here, definitely worth a read. Our culture is so focused on consumption and the marketing messages are so strong that it seems positively radical to settle for something other than the latest and greatest new thing. Buying used can be a fantastic way to stretch your resources and truly have your cake and eat it too.

An example … this weekend I took my 3 and 6 year olds shopping and we got bought a soccer ball, a toy helicopter, a model, a board game, and some action figures. Plus, we stopped at the restaurant of their choice and got lunch. Sound expensive? It certainly could have been! However, on Saturday our church had a very large garage sale, and everything they bought was used. The grand total of their purchases was $5, and the soccer ball only cost a nickel. Lunch consisted of a hot dog, chips, and a soda from the card table out front, which cost $2 each, for a total of $9. Now, this was money that they earned (through commissions, not allowance) and they were thrilled with their purchases. Doing this at a toy store and a chain restaurant could have easily cost us a hundred dollars or more.

At the same time, this week the entire family is going to go to see The Lion King on the stage, a big deal for us. The tickets are very expensive, several hundred dollars for all of us. Normally we could not have afforded both a shopping spree and a night on the town. However, we were able to do both by buying used.

Give it a try!