The following reader question has been edited for length, spelling, and punctuation.

Greetings Mr Credit Card,
I have had a Bank of America Alaska Airlines credit card for close to 10 years.   In that time I have had marital status change, job changes, life changes, and had contacted BOA regarding the billing cycle and income cycle that were not copacetic with my finances.  It was like talking to a flippen brick wall as they would never work with me and of course when payments came late there were periodic charges and rate increases.  I ceased charging and continued to make payments, sometime not on time but always payments.  They made lots and lots of money on my charges, my credit line was originally only $3,000.  Well this April, I made a $2,000+ payment to clear off my balance, I also stated on my bill that I wanted to close my account.

Well they did close my account but the payment was received 10 days past due and since have been billing me $30 a month as penalty.  I called and was treated like the scum of the earth and given policy crap, passed on the more anal managers and of course I am so flippen mad that I am looking to scream and shout legally and NOT pay this, not only that I want my credit repaired by these guys.

I have another credit card which was actually paid off with zero balance and received a letter from them reducing my credit limit $3,000 to $1,500. Which I am sure is either because my Union Plus MC is either owned or reviewed my credit history with BOA. This tweaks me, not because I want more credit but because they have exercised control that incorrectly portrays my financial responsibility. I am a single mom of 9. I have ALWAYS found a way to cover my debt and raise my family. Now I am looking to start my own business and have this to address. I know these companies have people on staff that are real and understand the loop holes to work with people. This is ridiculous that I have found rude and disrespectful corporate staff who really don”t care what your situation or story is.  Bottom line. I paid my debt, and them some.  I not only want this billing to stop, I want my credit cleaned of their unsavory opinion. How do I do this.  How do I find out who the corporate officers are that I can submit a letter to?  Would it be the Federal Trade Commission that I could also complain to?

-Brenda

There is a lot of emotion here.   You clearly don’t like your former credit card issuer, Bank Of America.     Let me get a few things of my chest before I try to answer your question.    You start by saying that you had that card for 10 years, and it has seen you through a lot of changes.   It seems that you have felt like you had a personal relationship with that bank, and now you are upset that your relationship went bad.    You should really step back and realize that it is now and has always been just business for them.  You should treat them, or any other bank no different.    Fortunately, we live in a country where there are dozens of banks with hundreds, if not thousands, of credit card offerings.    If at any time you do not feel like your business is valued, cancel your card and get another.

That said, there are a few inconsistencies in your story.   On one hand, you admit that you have sometimes made your payments late, yet on the the other hand you insist that you “have ALWAYS found a way to cover my debt and raise my family”.    Congratulations on raising your family, I know that is a very challenging job.   Otherwise, I have to tell you that making your payments late is not covering your debt in the world of business.   It may work with your friends or family, but when you accepted your credit card, you agreed to pay on time.     When you did not, they were in their rights to charge you late fees and interest, as unfair as it may have appeared.   The first time or two, you probably could  have just called them and asked them nicely for the charges to be waived, but now you are way past that point.

Since you have canceled your card, now the bank really has little incentive to bend the rules to retain you as a customer.    If you have proof that you made your final payment on time, then you should be able offer that evidence to them and ask them to waive the fee.   If you do not have proof, and they will not waive the fee, I recommend paying it.   As you found out, they have the ability to damage your credit, and that damage will be worth far more than $30.

Going forward, I strongly recommend that you organize your finances in such a way to ensure that you will never again make a late payment.    You should be using the online bill paying service that is offered free with almost all checking accounts these days.     In this way, the bills are paid on time  and you have proof of the payment should it ever come into question.    This will be important as your rebuild your credit.   Needless to say, you should really pay your balance in full at all times and never carry a balance.

Finally, you are asking to which Federal authority you can complain to.     Certainly it can’t hurt to complain to any number of Federal Agencies and elected officials.   I should tell you that the best case scenario, that the law is changed to make it harder for banks to cheat you, has already happened.   If you haven’t heard the news, President Obama has signed the Credit Card Bill of Rights into law back in May.     On the other hand, informing the Bank that you will be alerting regulators might give you the extra leverage that you need for them to drop that final late fee.

This may be a little outdated, but here are some executive contacts at BOA.   Please be sure to keep your request brief, polite, and well written if you hope to have any effect.

Thanks for the question.

I had the privilege of interviewing Brad Chaffee from Enemy of Debt yesterday. I got to know Brad because we mentioned him in one of our post about whether credit cards were bad or not. Brad happens to hate credit cards and recommends that people do not use them. I obviously have the opposite views. I really enjoyed this show cos we talked about :

1. How Brad got into debt
2. What did he do to reduce his credit card debt?
3. How Brad got a zero down, interest only loan for his mortgage
4. And how he views having a mortgage and same as having credit card debt.

So once again, prepare a drink and enjoy the show. (oh – btw – the first 2 minutes are silent cos I guess we both messed up in terms of calling in).

There are some major don’ts when it comes to credit cards and debit cards.   Fortunately, we have the Consumerist to give us examples of what happens when you run afoul of these rules.

Don’t Get Yourself In A Position Where  You Are Paying Just The Minimum Balance

I have previously compared this practice to sharecropping and indentured servitude.    Once you enter into this type of arrangement, it is very hard to get out.     One of the many, many drawbacks of paying the minimum balance on your credit card, is that they bank can raise the minimum whenever it feels like it.    Apparently,  a lot of banks feel like doing that these days.   Here is the story of someone who got their minimum payment raised dramatically.   Like so many other stories that I have read, the pattern is clear.      The person was paying their balance off, was not paying late, and then seemingly out of the blue, their minimum payment skyrockets.

It appears that the bank is trying to force the person to default, so that they can raise their interest rates.    Actually, they want him to default on his debt to someone else.    People who are paying just the minimum are just barely scraping by.    Like two people being chased by a tiger, neither has to outrun the tiger, they just have to outrun the other person.   In the same way, a bank figures that if they can squeeze as much money out of someone first, then they will be more likely to default on someone else’s debt.   The whole thing stinks, but that is the reality that awaits you when you rack up so much debt that you can only pay the minimum.

Look At The Bright Side

In a perfect world, the minimum payment would be something high enough that you wouldn’t be trapped in debt forever.   The banks would essentially force you to act responsibly.   In the long term, the person will be better off paying a larger minimum every month, however, the likelihood is that that person would not agree.

More Problems With Debit Cards

I promise I have no inherent bias against debit cards.     On the face of it, they can be a more responsible choice, since there is no way to go into debt using them.     People who use debit cards have no choice but to have the money to pay for their purchases on hand, whereas people who use credit cards should, in my opinion, always have the money on hand to pay for their purchases.

The problem I have with debit cards, is that they have no protection.   I recently said it is insecure as giving someone cash, in that there is not much recourse if your goods or services are never delivered.    This case shows that it is actually worse than giving someone cash.    Actually, it is kind of like entrusting your bank account to everyone you make a purchase with.   In this instance, a cab driver decides to keep running the card at will for random amounts of money.    A run around then ensues when the victim tries to sort this out with their bank and the cab company.    With a credit card, this would result in a chargeback, with the burden of proof being placed on the merchant to prove the charge was authorized.     With a debit card, the victim is now asked to find a non-existent receipt and prove they were defrauded.     Really, the victim should report her card stolen and possibly close the account.    Any  other actions are going to be long and difficult.    At this point, it is unclear if the victim will ever get her money back.

The Consumerist concludes that people should keep cash in their pockets in case they ever need a cab.   I say, keep a credit card and an ATM card.      Charge the ride, or withdraw cash, and you will never be in a situation where your debit card is treated like a license to steal.

I recently got this email from a reader:

I would like to obtain a credit card to be used to pay for my child’s college. i figured if i am paying anyways, i might as well receive a reward for using a credit card. i will pay off when bills come. I have excellent credit and not worrying about any transfer amounts.

Your site is easy to read and has a lot of good information.

Reader wants to remain anonymous

However, I felt that I needed more information from Karen to answer her question. So I replied to her email with more questions and I got some answers.

To Anonymous Reader

what type of rewards are you looking for? airline tickets, merchandise, gift cards, cash rebates, online shopping? Does your child drive?

Mr Credit Card

Mr Credit Card

Thank you for replying to me. Most of my travel lately has been driving, with hotel stays. Gas, hotel, and cash rewards would probably be the best for us. I don’t do a lot of online shopping. My daughter has just started driving, but won’t have a car the first year. We want to get her a credit card to help her build her credit also. We are just trying to find the right match.

Thanks,
Anonymous

Answer – Anonymous – In your situation, it is clear that you will be the main cardholder and that your daughter will be an authorized user. Hence, it makes no sense looking for a specific student credit card. Having said that, this is how I will look at this.

Hotel Stays – You do not specifically say if you stays at just one particular hotel. But the tone I get is that you travel by driving and you would stay at a convenient hotel. Based on this, I would be looking for a reward program that allows you to redeem points for hotel stays. Actually most programs do that, so this should be the easy part.

Travel by Driving – You also mention that you travel by driving and that though your daughter has her driving license, she will only get a car next year. In my opinion, you would want a credit card that pays you more than the standard 1 point for every $1 you spend or 1% cash back when you use your card for gasoline.

Looking for cash back – You also mentioned that you were looking also for a card that gives you cash rebate. That in my opinion, will leave out most “regular” reward programs because their cash rebate formula is not good.

So what is the ideal card? Well, based on the above information, I think you can consider the following 2 cards.

The first card I would suggest is the American Express Costco Credit Card. Reason is because you can earn 3% for Annual Gasoline Purchases of Up To $3000 (1% Thereafter), 3% for Restaurants, 2% for Travel, 1% Everywhere Else. The rebate profile seems to suit what Karen is looking for. She will get able to get more than 1% rebates (3% in this case) in gasoline, 2% on travel, 3% for restaurants (important when she and her daughter are eating out). The only caveat to this recommendation is that they have to be costco members ($40 annual fee). The rebates are given once a year and have to be redeemed in costco for either cash or discount coupons.

The second card I would suggest is the Discover® Open Road(SM) Card. Here are the key features:

– Great for Karen

The advantage of the Discover card is that you can redeem your cash rebates once you have earned enough to redeem for any items. It also pays 5% on gasoline and travel (during the first quarter of the year) versus the Costco Card, which pays 3% and 2% respectively.

I would avoid the usual reward programs like Citi’s ThankYou or Capital One’s No Hassle or even Bank of America’s WorldPoints program because they none of their cards allow you to earn more than 1 point for every dollar you spend on gasoline (equal to 1% rebate). Yes, you can redeem points for hotel stays, but their cash rebate formula leaves much to be desired.

Hope that helps.

Frugal Travel Guy Gets Lounge Benefits and a Delta Visa (check card)

Richard Ingersoll, also known as the Frugal Travel Guy has laid out this strategy for attaining lounge access.    Apparently the expensive American Express Platinum card is offering 25,000 Membership Rewards points for new sign ups as well as membership in the business lounges at three or four major airlines.   Those include Delta/Northwest, American, and Continental.

To get the 25,000 Membership Rewards points, you need to use the card for a mere $1,000 in spending over the first three months.     The lounge access comes free.   While one or the other is not worth $450 by itself, together they do make sense for frequent travelers.   I would highly recommend this to travelers who do not live in a hub city, and are forced to change planes to get to their destination.   It is these travelers who are the most likely to make use of the lounge facilities coming and going.

Elsewhere, he also points out that Delta is finally offering a Visa that earns SkyMiles, kind of.    The Suntrust Delta SkyMiles Visa check card can be used at places that do not take American Express, a boon for hard core Delta SkyMiles aficionados.   Since this a check card, I would be loathe to use it any time you are paying for goods or services to be received in the future. This includes air travel, pre-paid hotels, services, or even Internet purchases.   Since you have very little chargeback ability on a check card, you are really just handing them cash electronically.    If the company should fold, or just fail to deliver, you are essentially out of luck this side of a courtroom.    Finally, only people in the states that Suntrust Bank operates are eligible for this card.

American Express Charges You For A Negative Balance?

Here is a story from The Consumerist about someone who claims that American Express is charging them a finance charge on a negative balance.    As with any story in the Consumerist, you have to treat it with some skepticism.    On one hand, never underestimate the powers of a bank’s computer system to make a mistake.    On the other hand, I happen to have a negative balance on one of my American Express cards, as a result of a credit I did not get due to a mistake no less.   I just received the statement with the negative balance and no finance charges applied.

My theory is that the individual carried a balance one month, and then had a net credit the following month.   Since the banks are still allowed to use double cycle billing for the next eight months, that would explain how he could have a finance charge on a negative balance.    The story is also another  good example of why you should always call your credit card company to make reasonable requests.   The customer did that, and got the credit.

A Quick 100 Miles From Continental Airlines

Follow the link from this website and take a quick lesson on all of the Continental OnePass credit cards and you can earn a quick 100 miles.    It is not much, but at the very least, you will extend your mile’s expiration date.

Here are a few benefits they may or may not mention.    Most Continental cards offer the benefit of waived baggage fees.    That feature alone can pay for itself very quickly on a long trip with a lot of luggage.   Also, Continental is joining the Star Alliance, making it another great alternative to earning miles on the infamous United Airlines “Mileage Plus” program.    This is the program that has taken loyalty programs to a new low by actively blocking you from redeeming miles on it’s partners, even when members make awards available to other members of the Alliance.     For the latest update on this absurdity, see the invaluable View from the Wing blog.

Speaking Of The View From The Wing

They have come up with almost a Master’s Thesis worth of information on choosing the best reward card.    I have touched on much of this over time, but it is nice to see it all compiled in a single post.

A reader asks the following question:

I have a business Amex card that I have accumulated over 800,000+ miles on.
In January, I transferred over 400,000 to Delta sky miles. Approximately 1 month ago, I looked at the Delta sky miles account and realized that the miles were never transferred and showed that the transfer was pending on the Amex membership rewards site. The problem now is that our business is in the tanks and our account has been put on a payment plan and is temporarily inactive. I called and told Amex the situation and asked to transfer miles immediately. I have been given the run around and have been told they will not honor the previous points until the card is paid.

I have spent well over two million dollars on this card, not to mention over 15 million through merchant accounts at 3.0% that my business runs through.

Can they legally pull back points that have been paid for and accrued over the last 3 years?

Is there any legal course of action I can take?

Thank you,
JP

JP,

I am sorry to hear of your predicament.   This must be upsetting as 800,000 Membership Rewards Points has substantial value.   Even at the minimum 1 cent per mile value, just the points you attempted to transfer represent about $4,000 dollars worth of travel on Delta, any time, anywhere.

Unfortunately, American Express’s Membership Rewards program is tied directly to your credit card account.   With most other reward cards, the loyalty program is merely an affiliate of the bank, and problems with your credit card have no bearing on your status with the loyalty program.   For example, had you accrued Delta SkyMiles directly through an American Express Delta SkyMiles card, you may not be awarded miles for a particular statement that was delinquent, but previously accrued miles would be untouchable.

With the Membership Rewards program, when you are in default, they reserve the right to freeze your accumulated points for late payment.    Those rules are spelled out here in surprisingly simple terms:

POINT FORFEITURE FOR LATE PAYMENT

1. If the amount due on any Linked charge Card Account is not paid in full within one month of the closing date on the billing statement for that Linked Account, points accrued in the program for that Linked Account for that month may be forfeited.

2. For any Linked Card Account for which points have been forfeited, once the Linked Account returns to good standing, the forfeited points may be reinstated for a $29 fee for each month of points reinstated.

Slightly more complicated are their rules for Point Forfeiture in the event of account cancellation.

What I am missing is the sequence of events.   If your account was in good standing in January, at the time that you  attempted to transfer your Membership Rewards points, Delta and American Express should honor the transaction.    As with any financial transaction worth thousands of dollars, you should have kept adequate records to prove the transaction took place.   If you have a screen shot of the transaction confirmation, or a confirmation email, I have a hard time seeing how Amex can retroactively void the transaction.   This assumes that your account was in good standing at the time you attempted to make the transfer.

Unfortunately, you are in a very bad position to make demands from their customer service department, as your recent problems have made you an undesirable customer to retain, to say the least.    Ultimately, your only resolution may be to take them to small claims court, depending on the limits of claims in your jurisdiction.   If you documented the transfer request, and the fact that your account was in good standing at that time, hopefully the threat of legal action should be sufficient for American Express to fulfill their obligations.

Even if you were not current in January, you may still redeem your points in the future by becoming current.   The rules are vague, but it seems like if your account is reinstated, you may be able to pay a fee to have  those points returned.   Since you say that your account is “temporarily inactive”, the reinstatement of your account might allow you to recover some of those miles.

The key provision here is as follows: “If any Linked Account is not in good standing, your enrollment in the program may be canceled or the points accrued in your program account forfeited.”

Since you seem to have negotiated a payment plan, I would have recommended that your Membership Rewards points be included in that negotiation.    Even now, it may be possible to contact whichever part of American Express you negotiated this payment plan with, and ask if your Membership Rewards points can be reinstated once you have fulfilled your end of the plan.   That person will have an interest in encouraging you to pay off your debt, and may be willing to work with you on the subject of your Membership Rewards balance.

Good Luck!

Here is another reader question that we got:

I am a business owner who just got scammed by a male customer. He gave us a credit card to hold while he pumpled his gas and then drove off. My employee didn’t realize that the card was in a female’s name. The name of the card holder is xyz (not revealing real name obviously), I have her account number but didn’t want to give it out over the internet.

We did try to run the card just to see what would happen and it said to call the merchant service. We knew right then it was a stolen card.

Please call me at xxx-xxx-xxx for more information.

Owner Pam Peeples

My thoughts – Pam, couple of things spring to mind.

1. Have you reported this to the police? You should if you have not.

2. The credit card might have the thief’s fingerprints. I hope that both you and your employee have not smudged it! If there is a fingerprint and the person has a criminal background, then it would be easy for the police to identify the person.

3. Do you have a camera in your gas station (that’s what I presume)? If you do, identifying the guy would be easier. If not, then maybe that is something you would want to consider.

4. Just wondering : but if the card has a female name and the person was a guy, why did you even try to swipe it and charge it?

I would also go further and actually call the credit card company and tell them about this incident and that they should cancel the card, inform the card holder and issue a new card to her. You should report it to the police as well. At the very least, you employee will be able to give the police a description of the guy and a police sketch of the person. The police might just be able to catch the person based on your employee’s description.

Even if you report to the police, there is no guarantee that person will ever be caught. Hence, just be prepared to write this off.

Yesterday, fans of Michael Jackson bemoaned the loss of a great musical icon. But what was more interesting to me was how much debt he had at the time of his passing. Estimates range from $300 million to $600 million. I have done as much search and research about it. So here’s my “Saturday Morning Live” money lessons from the King of Pop.

Invest in “proven” things that pay you a dividend for a long time – One of Michael’s best investment ever was investing $47.5 million in 1985 for the rights to a catalog of music that included 251 Beatles songs. Those rights, as well as concerts, endorsements and music videos, would generate more than $400 million over the next two decades. That is what I call passive income. (hey – much better than rental properties!)

I just had a an interview with the Silicon Valley Blogger and one of the things we talked about was how so many people in Silicon Valley are just looking for “the next big thing”. Well, the next big thing may never come!

Work once – get paid forever – It is estimated that Michael Jackson made over $300mm of sales from his recordings alone in the early 80s. Granted, he has the talent that very few people have. But this only goes to show that when you work on something that produces income for a long time, it pays off handsomely. Contrast this to a 9-to-5 job that most people are in, you can get laid off anytime time, lose your health care (ex-cobra) and you have to hunt for your next job!

Beware of Maintenance Cost – Michael bought a $17 million in 1988 for the 2,800-acre ranch in California that would become Neverland. In it was a theme park – complete with zoo, movie theater and fairground. If all it was was $17 million, that’s all and fine. But no, it cost $5 million a year to maintain.

Most of us will never dream of being able to own a zoo. But this lesson applies to us as well. Many folks buy a second home by the ocean or lake. But only use them one month a year and rent it out for three months. Most of the time, the rent they get and the amount of time they spend would not even justify the cost of maintaining a place that is not occupied for most of the year. Yet, there is mortgage cost, insurance cost and property taxes. Most people will be better off renting a vacation place rather than owning!

Or take another example, a boat. If you own one, make sure you use it. Because maintaining it is very expensive. There is a cost of “park” at the harbor, fuel cost (don’t even get started), a crew!

How often do Ferrari owners really drive their car? I suppose most owners can easily afford it. But still, you need a decent garage. You will probably only drive it once in a while. You still have to pay insurance. Truth to be told, might as well rent a sports car when you need to! (there are places that rent these beauties).

Buying expensive and unnecessary stuff can ruin you – Did Jacko really need a zoo? I mean couldn’t he have flown to San Diego Zoo and get a private tour (well,maybe he can never walk through a zoo in peace). Did he really have to have his own theme park? I mean, he could rented the whole six flags to himself?

A zoo or a theme park may be too far fetched for us.But let’s think about this, do your kids need more toys? Do you really need 4 plasma TVs in your house? Do you really need the super large Viking kitchen grill and cooktop (especially when you are not even a chef!). Do you really need a 20th pair of shoes or handbag? Do you really need this gigantic gas guzzling SUV? You really need to ask yourself if this is something you really need or just something you really want.

Maybe the best way to say this is STOP BUYING CRAP!

Lawsuits Can Make A Serious Dent To Your Wealth – Michael Jackson had to settle for $17 million a child molestation case. If it happened to any mortal soul like us, we would be wiped out. Yet lawsuits remain a fact of life in the good old litigation trigger happy USA. We must always protect ourselves as much as possible. Like registering your start up business, or getting an umbrella policy.

Divorce are expensive matters – Yup, Michael could afford (and he probably did have a pre-nuptual agreement) with Lisa Marie Presley. But to ordinary folks like us, the stress, the kids and the finance are indeed stressful and expensive matters. Choose your spouse carefully and if you are really rich, have a pre-nupt!

Never Use Assets To Sustain Your Lifestyle – Your type of lifestyle should reflect your income and cash flow. Make only $2000 a month, well, then live your life like a person who makes $2,000 a month. Make a $20,000 a month, well, you can obviously afford to live a much better lifestyle.

But look what Jacko did. He was reportedly pulling in income of about $19 million from royalties, and yet he had to sell a 50% stake of his investment in the beatles catalog for $100 million to Sony Records to help sustain his lifestyle. (Think again about using your home equity line of credit to do your renovation or take a vacation?).

Get Your Will Written – Here is Michael’s family situation. Debbie Rowe, a nurse who Jackson married in 1996 and divorced in 1999, is the mother of Prince Michael, 12, and Paris, 11. Prince Michael II (also known as Blanket), 7, was reportedly born to a surrogate mother, whose name has never been released.

At this moment, we do not know if Michael states clearly in his will who will get custody of who? Let’s hope he did.

For the rest of us, get your will done (and think through these difficult issues) and stop asking and wondering if you need a will.

Organize Your Financial and Business Affairs – This isn’t exactly related to Michael Jackson but the reason behind how he could actually get the rights to a large chunk of the Beatles music is an interesting lesson in itself.

To avoid confiscatory British taxes (this occurred in the 60s), Paul McCartney and John Lennon turned their publishing rights over to newly-organized Northern Songs, a publicly-held company in which they owned sizable but apparently not controlling blocks of stock. In 1969 music mogul Lew Grade launched a takeover bid for Northern Songs. He offered seven times the stock’s original offering price. Lennon and McCartney, weren’t exactly on brilliant terms then, were unable to organize an effective defense and the company was sold out from under them. This made them even more fabulously wealthy. But they were not happy because it was a “matter of principals”.

Do not get into debt – Alright, for most of us, we have a mortgage. But isn’t it sad that someone who makes millions a year has to get into debt. Michael actually had his theme park nearly foreclosed because he missed an interest payment. In the end, he was bailed out by Colonial Capital! And he eventually had to sell 50% of his beatles rights to Sony Records!

Spend less than you make – I do not even want to expand on this point. But isn’t it sad that someone who makes so much still does not have enough?

Being Rich Does Not Mean You Can Handle Money – Even the mega wealthy can have debt! Even they can spend beyond their means. Some people may have got rich quickly through events like selling their company. It can even happen when you are young. But having that pot of money is absolutely no guarantee that it will last if you do not know how to manage your new found wealth. Even having a million dollar pay day is no guarantee that you’ll always have money. That is why most folks who win the lottery lose their wealth. Even Mike Tyson (who was worth an estimated $350 million) went bust! Think of the people who lost their entire wealth investing with Bernie Madoff.

At any level, take some course about personal finance. Read about it and use your common sense when it comes to money.

Always Have a Back Up Plan – Michael Jackson had a planned London concert later this year. If that had gone through, it is estimated that he would have netted $100 million. If he had followed that by a world tour, he could have earned possibly $500 million! Perhaps that explains why Michael could get away with not being fully on top of his finances and spending. He had a plan B. And that plan B was that he could always give concert tours. He just had to make sure he was healthy!

Question for you is : Do You Have a Plan B? What if you got laid off? What if Your Spouse Got Laid off? Do you have a plan B?

My final thoughts – I grew up with the 80s music. Michael Jackson was so huge in the early 80s it was unreal. I enjoyed his music but am not really a big fan. I have nothing against him but since I write about credit cards, debt and money, I think I want to add my final two cents to this post.

It is really sad that a person of his talent, “wealth”, stature would pass away with so much debt. Rather than leaving with a few hundred million in debt, could you imagine the good if he had left a couple of hundred million instead to charity? One of the reasons we should get out of debt is so that we can give more. This to me is the greatest tragedy of his passing. We will always have his music, but the wealth they earned could have been put to so much better use (thought this is not to say he was not charitable – am pretty sure he must have made some hefty donations to worthy causes).

Lastly, I also wonder who his financial advisor was because he or she or they ought to be shot!

Here is a question from a reader:

Hi,
I have a credit card which I’ve had for years. When my daughter, at age 17, went to college, I got her a card for emergencies. She didn’t sign for it and we didn’t ask for joint account. She used it a few times but since had paid it off. I went through a financial struggle and used the card myself to the limit and now am in BK13. They shifted the debt to her, changed the name on the account and sent it to collections. It now shows on her credit report and we have never given them her SSN. I don’t understand? Can this be?

Mr Donald Harless Jr

Answer – Donald, though you think it is a joint account, it may well be that your daughter is just an authorized user. But I’ll try to explain the consequences of your situation.

If she is just an authorized user

How to find out if she is just an authorized user or a joint account holder with you?

I suggest you ask your daughter to get a copy of her three credit reports (from Experian, Equifax and TransUnion) and thoroughly comb through them. If she is just an authorized user, it will show up as an “A”. If it is a joint account, then it will show up as “J”.

If she is an authorized user, then this are your action steps

Despite the recent Credit Card Bill of Rights, there are still plenty of “tricks and traps” out there to ensnare you.   Jason Cochran, over at Wallet Pop,  has come up with his list of the six common ones.

Let’s Take A Look

The first one is the floating due date.   Frankly, I don’t recall having a card with a fixed due date,  I always assume that they float.   Actually, I believe that the closing date is fixed, and the due date is a fixed number of days beyond the closing date.   In that way, the payment due date will always be a different day of the month and a different day of the week, often on a weekend or holiday.  I suppose there are people who go places without mail service or the Internet for weeks at a time, but I am not one of them.    For me, I get the statement in the mail and I authorize electronic bill payment through my bank for the full balance to be paid no later than the due date.    If I am out of town, I will check my statements online.   This always works, and I don’t have to pay a week before as they recommend.

The next one is called almost a month. I frankly don’t know what he is talking about here.   I have to assume this month rule has something to do with carrying a balance.   Pay on or before  your due date, and you will never have this problem.

His third trap is buying for rewards.   I have talked about this before.  The idea is that people will buy more, just to get more rewards.    The ultimate satire on this phenomenon was in a movie I once saw where a spoiled teenager was asked if her parents are concerned that she is spending so much on their credit card.   Her response was something along the lines of, “they don’t care, they get frequent flier miles.”    The truth is that people do spend more in some shortsighted attempt to gain rewards.   Keep in mind that he best rewards, if your are lucky, will earn 5 cents on each dollar spent, with 2 cents or less being much more likely.   If you are spending more out of your own pocket to get more rewards, you should cancel your reward card immediately.    On the other hand, if you always volunteer to charge company reimbursed expenses on your card, good for you.

The fourth one is not checking the bill. This is a big one as so many scams these days work by setting up recurring charges on your credit card.    Always look through each charge to see if it is legit.   I actually know people who keep every receipt and match it up with their bill.   I can’t say I actually do that, but every year I find something that shouldn’t be there, just from memory.

The fifth trap is accepting store credit cards.   I have to disagree a little here.  First, he says that opening lots of accounts will hurt your credit.   This is not true.     While too many recent accounts may have a small, short term impact, it is good in the long term to have a low credit utilization ratio.    The way to have that is to have far more available credit than you need.   On the other hand, you should not open up a new store charge every time you buy a pair of socks.   I know a couple who purchased a house with no appliances.    They opened a store charge at The Home Depot in order to save 10% off several thousand dollars worth of purchases.    This was a wise move that saved them hundreds of dollars.   Other valuable merchant charge cards are reward cards at places you shop very often.

The sixth trap is the minimum payment trap.    By now, everyone should know that paying the minimum payment is about as bad as being an indentured servant or a sharecropper; you will always be struggling to gain freedom from your debt.  This is obvious advice, but it can’t be said often enough.

A Reminder Why Credit Cards Are So Usefull

The “registered traveler” program called Clear shut down this week, leaving it’s customers with a useless piece of plastic in their wallet.    Tens of thousands of people had spent $199  for a card that would allow them to bypass the security line at the airport, yet go through pretty much the same screening as everyone else.      As I said in my personal blog, good riddance.

What do you do if you have already paid the fee for the Clear card?    Unless you paid by credit card, you have virtually no recourse other than a bankruptcy judge.    If you charged this expense to your credit card, you will suffer no loss at all.   Just call your company and ask for a chargeback.   They will likely pro-rate the amount, but that is fair.

Another reminder of how the benefits of using a credit card can outweigh the tricks and traps.