Applying for financing on a new bike...

Message

flynrider · Wed Nov 29, 2006 7:41 am

CNF2002 wrote: I heard recently about a top rate that anyone can charge interest on a loan of any kind. But credit cards found a loophole allowing them to charge 20-30%, by housing their offices in some specific cities that exempt the law. Something like that

The gist of it was that I can be charged 20% interest by my credit card company, but if I give a loan to my neighbor its illegal for me to charge him 20%.

A Supreme Court decision in the late 70s allowed maximum credit card rates to be charged according to the laws of the state where the lender's credit decisions were made. In short, if a CC company was based in a state with no usury laws, the sky was the limit.

Citibank caught on to this and persuaded South Dakota to get rid of their usury laws, in return for basing their credit card operations in their state. Other banks and other states (namely Delaware) caught on to this trend, and unlimited credit card interest was born.

Candy750 · #32 Unread post by **Candy750** » Wed Nov 29, 2006 7:56 am

Thank you! I recalled SD and DE as the two states, but the reason slipped out of my memory.

Who remembers back in the day when credit card interest could be taken as a tax dedution?

Prior to this change, almost no body would even think of a home equity loan!!

CNF2002 · #33 Unread post by **CNF2002** » Wed Nov 29, 2006 8:53 am

Candy, I have a Providian card. I no longer use it, but do not cancel it because it is good to have open credit on my report. However I used to use it regularly and often would carry over a monthly balance. A couple of years ago my wife and I decided to eliminate all our credit card debt from that point on, so we began rapidly paying it off. Shortly before reaching our goal, I noticed our interest had jumped to 27%! We were never late, never over limit, perfect customers. What happened? I called and they said they changed my rate due to a "sudden change in card activity".

In other words, I stopped charging and began rapidly paying off the balance, so they jacked up my rate to get as much money out of me as they could before I brought the balance to zero.

Even if you are good with your credit cards, they will punish you in the interest of making money. Consumers simply have no choice anymore. Never carry a balance.

flynrider · Wed Nov 29, 2006 9:33 am

CNF2002 wrote: In other words, I stopped charging and began rapidly paying off the balance, so they jacked up my rate to get as much money out of me as they could before I brought the balance to zero.

That's the other credit card evil. Without reading the fine print, most people don't realize that the CC company can arbitrarily change the interest rate with only a 30 day notice. Even the cards that say they "guarantee" a particular low interest rate for a certain period of time can easily wriggle out of that commitment. Their agreements (always in fine print

) always leave enough holes for them to ride an elephant through.

That's the main reason you wouldn't want to use a CC to finance anything long term.

Zagnut · #35 Unread post by **Zagnut** » Wed Nov 29, 2006 9:44 am

In other words, I stopped charging and began rapidly paying off the balance, so they jacked up my rate to get as much money out of me as they could before I brought the balance to zero.

That's when it's time to transfer your balance. The competition is always offering low or no interest on balance transfers or sending checks with little or no insterest for 6 months or whatever... I have about three or four cards and I can generally time it to where one of them is making these offers to woo me away from using the others....Pit those greedy bastards against each other instead of having them trying to milk you.

CNF2002 · #36 Unread post by **CNF2002** » Wed Nov 29, 2006 10:38 am

Zagnut wrote:
In other words, I stopped charging and began rapidly paying off the balance, so they jacked up my rate to get as much money out of me as they could before I brought the balance to zero.
That's when it's time to transfer your balance. The competition is always offering low or no interest on balance transfers or sending checks with little or no insterest for 6 months or whatever... I have about three or four cards and I can generally time it to where one of them is making these offers to woo me away from using the others....Pit those greedy bastards against each other instead of having them trying to milk you.

No, thats why I stopped buying worthless junk and living with credit card debt. I have zero card debt, and what I do put on my card is for online purchases where I would be uncomfortable giving numbers to my checking account (as well as for automatic services such as server billings). But I never, ever carry a balance (and since my main CC is with my bank, I just transfer any charge from my checking the moment it appears online, I don't wait for my statements - especially since I hear horror stories of statements arriving late, or not at all).

Its not time to transfer balances and 'play the credit card game', its time to quit using cards and live below your means (thats right, below your means, leaving you room for that crazy "saving" thing).

Zagnut · #37 Unread post by **Zagnut** » Wed Nov 29, 2006 12:06 pm

Its not time to transfer balances and 'play the credit card game', its time to quit using cards and live below your means (thats right, below your means, leaving you room for that crazy "saving" thing).

Dude... It's the American way..

Seriously though, carrying a balance and being repsonsible about it is the best way to build your credit. It's not really an issue for me anymore, but that's how I got the good credit I have now.

There's nothing wrong with carrying a balance from time to time. I was just assuming that being financially responsible, saving, and living within your means was just understood... I guess maybe it's not, though.

With good enough credit, you shouldn't be paying high interest rates anyways. Usually just a call to the card provider telling them to lower it is enough.

flynrider · Wed Nov 29, 2006 12:37 pm

Zagnut wrote: Dude... It's the American way..

Seriously though, carrying a balance and being repsonsible about it is the best way to build your credit. It's not really an issue for me anymore, but that's how I got the good credit I have now.

You don't have to carry a balance to do that. Just make consistent payments (of the full amount) and your credit will reflect it nicely. I haven't taken out loans or carried a balance since the early 90s, but I have paid off my cards every month. My score is.... well, lets say anyone would be proud to have it.

Candy750 · #39 Unread post by **Candy750** » Thu Nov 30, 2006 5:55 am

Yes it is the american way! I heard results of a study that said something like 70% of americans live paycheck to paycheck.

I have only very recently been able to save some $. I admit, I have 3 expensive hobbies - my bike, my sled, and my 3 dogs....

CNF2002 · #40 Unread post by **CNF2002** » Thu Nov 30, 2006 6:11 am

Candy750 wrote:Yes it is the american way! I heard results of a study that said something like 70% of americans live paycheck to paycheck.

I have only very recently been able to save some $. I admit, I have 3 expensive hobbies - my bike, my sled, and my 3 dogs....

Indeed. I'm not very financially stable yet, since I'm only a couple of years out of college. But 10% of all my income goes directly to savings. Plus other savings and investments. Its not hard at all "pay yourself less" and live off a slightly smaller income to make way for a solid savings vehicle.

I wonder if the savings rate in America is in the red again this year.