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Photo Credit:  The Consumerist

Ramit from I Will Teach You To Be Rich posted this photo with comments on ridiculous credit card offers. I decided to look into it and the two credit cards Wal-Mart offers:

Here’s the fine print:

Benefits for the Wal-Mart® Discover® are only for cards issued by GE Money Bank. Cardholders may not be eligible for benefits offered by other Discover® Network Issuers. ¹Rewards apply only to net card purchases - not to balance transfers, cash advances, quick cash advances or fees and finance charges. The reward percentages will depend on your total spending during a calendar year and will be .25% on total purchases up to $1,500, .50% on total purchases from $1,500.01 to $3,000 and 1% on total purchases over $3,000. A rebate check will be issued each time you accrue $10 in rewards. All cash rewards are provided by GE Money Bank. See “How to Earn Cash Rewards” terms in your Credit Card Agreement for details. ²Available at participating gas stations. Not available in Puerto Rico. Look for the 3¢ Discount Sign at the pump to see if the gas station in your area is participating. 3¢ off per gallon offer applies to the regular street price. ³Get up to $100 cash back when you make a purchase with your Wal-Mart Discover® or get $60 cash back when you make a purchase with your Wal-Mart Credit Card at Wal-Mart owned registers in Wal-Mart stores. Limit of one per day. This cash advance will appear on your monthly billing statement like a purchase. Subject to credit approval.

Out of these two the Discover looks to be the “better deal” (air quotes because I’m being sarcastic).The interest rates according to them are:

As of 5/07, variable APRs for the cards offering the promotion are: 12.37%, 18.37%, 21.37%, or 22.37%. Variable delinquency APR is 27.49%. Variable Cure APRs are 21.37%; 22.37%. Minimum Finance Charge $1.00.

For less than $8 I can personalize my debt trap so I can feel better when looking at my bill! I like shopping at Wal-Mart (just did my monthly groceries today), but I’m not a fan of these credit cards and the incentives.

It’s possible to overcome debt, but you have to be diliigent. Try to make a commitment to yourself to get high interest debt out of your life as soon as possible.  Here’s a basic 5 step plan to get your started.

1. 1.Hide your credit cards. Some people suggest cutting up cards to avoid using them, but if you do that, try to keep one intact. Another one is freezing your credit cards, same effect, but no permenent destruction. The goal if this step is to get you to stop digging a deeper hole. All the other steps are invalid unless you do this one.

2. 2.Have an emergency fund. Try to get one month’s expeneses saved. This will be a cushion to keep you from going back to credit cards if something comes up.

3. 3. Tier Your Debt. Look at your debts and examine both interest rates and balances. Usually student loans and mortagages have the lowest rates, so just pay your regular payments. Decide if your going for psychological wins by attacking the smallest balance or if you’re looking for a finanical win by attacking the one with the highest interest. I kind of did a 50/50 with a tax refund and paid a small debt off and put the rest toward a high interest debt. It gave me peace of mind with is worth more than a few extra dollars saved.

4. Lower your interest rates. Call your credit card company or bank and see if you can get a lower rate. If possible, move them to a card with 0% transfer balance. Keep making payments on these cards as you try to get the balance as low as possible at 0%.

5. Keep jabbing and throw in a hook. My husband told me and I love the philosphy behind it. Just keep working at paying your debt month to month and once in awhile put a big chunk down to keep the momentum (like a tax refund semester refund).

Photo Credit:  hendimion / • puntodivergente.com

Photo Credit: The Consumerist

My weekend was eventful: we had a great time celebrating our friends’ 3 year anniversary on Friday, Saturday we joined in on another friend’s baby shower (her first child!), and Sunday we went over to another friend’s house for an intense game night. I hope everyone had a great time this weekend.

Anyways, my brother asked for some advice and help with his budgeting. He’d like to set it up where he deposits his check (no direct deposit at his job) and the account automatically pays his bills. He’s your typical 19 years old, he wants things easy. I don’t blame him. Having online bill pay is a time saver and it reduced a lot of fees for payments. He gave me his credit card bill for the month and I saw that he needs some help to get his finances in order.

Now credit cards are a part of our American culture. I carry some cash in my wallet, but use my debit card (use ‘credit’ feature to avoid transactions fees) for most of my purchases. My brother had a great introductory offer with this credit card, but now the interest rate jump to 26.74%. He’s now committed to paying this off as soon as possible. He didn’t realize it could jump so quickly.

Thinking about how many people are in the same boat, I thought I’d give a few pointers on keeping credit card debt at bay.

Read the box that comes with credit offers and updates.

The complete disclosure about fees is long and verbose. Some lawyers can’t even completely understand it. My advice is to check the box that gives the basic information like:

• Introductory Rate
• ‘Regular Rate’
• Annual Fees (if any)
• Over the limit fee
• Late Fees

Companies are required by law to have that. If there is an annual fee for your card, I’d get another card or negotiate that off. Why should you be charged a fee to be a cardholder? Most student credit cards don’t have rewards or low interest rates, so I don’t see the benefit of having an annual fee on a card. Check your bills to see if they changed any of the rates or fees, since they can do this at any time.

Calculate the Real Interest Rate (on a $1000 balance, approx. $200-$280/year).

Many credit cards for students today fall within the 20%-28% interest rate range. Many students don’t check after their introductory rate ends. If you pay off your balance every month, this isn’t a big issue. If you carry a balance, try getting a lower rate. Bankrate.com is a good place to start, but remember to see if they are transfer fees and introductory rate’s rules (how long and what could end it prematurely).

Avoid Fees (Save approximately $936/year).

Credit cards are notorious for charging their customers $39 for later charges and $39 for going over the limit. That can be $78/month added to the balance not including the interest. Do yourself the favor and pay on time and keep it under the limit. Another way credit card companies make their money is by charging you $15 to make a payment over the phone. I can’t think of another provider that charges you for paying them over the phone. Try to mail/send your payments a week early, but if you have to pay $15 to avoid $39 or higher, then suck it up and pay the fee. Here’s the real sucker punch, if you are late on any card for another company, some credit card companies charge you on their card even if you paid on time!

Using a credit card responsibly can help your credit history, but having bad habits can quickly destroy it. Remember it’s easier to lower your credit score than raise it. Do yourself a huge favor and be reasonable with your credit card. If you don’t have the money, then don’t spend should be a general rule of thumb. It sounds pretty basic, but if people followed this advice then credit card companies wouldn’t be as rich as they are now and people would now be in as much debt as they are in now.

How do you handle credit cards?Pay in full each other or carry a balance?

Related articles:

• Pay Off Debt First or Start Savings (Chicken or the Egg)
• How to Fix your Credit Card Problems in 5 Steps
• Debt Repayment

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