I had my 341 meeting Feb. 12, 2010. I checked my Sears credit card account online today and it appears that it has not been closed, I did not owe them any money when I filed for Bankruptcy. Should I try to use this card and continue to make regular monthly payments in an attempt to rebuild my credit or do you think they will close the account. If they did close my account and I had a balance on it could they raise the intrest rate or do something else that could create a problem for me.
Thanks

Mr. alan poyer

Answers – Mr Poyer, if you did not include the Sears credit card in your bankruptcy, then technically, it should still be open. Whether they will close it after their regular scanning of your credit reports remains to be seen.

The key to rebuilding your credit after bankruptcy is simply responsible use of credit. I would suggest that you do not even consider carrying a balance on any credit card. Instead, use it as a tool to rebuild your credit. Only charge what you can pay in full every month. Pay it off on time and in full. That way, in the event that they ever decide to cancel your card, all you have to do is to pay it off in fully and be done with it.

If that ever happens, just apply for a secured credit card and you can continue your journey of rebuilding your credit.

And also, please keep us updated as to whether they keep your card open.

One of the criticisms of the CARD act is that it doesn’t do enough to prevent banks from coming up with all new tricks and traps.    The long term solution is  the proposed financial product safety commission.   This would be to financial products what the consumer products safety commission is to physical products.    Until that is passed, we will be on the lookout for new tricks and traps.

Is This A New One?

With my radar set to maximum in an attempt to discover new and devious fine print that banks are creating to separate you from your money, I came across this article in The Consumerist.    The reader purports to have found a $2 charge on his Macy’s charge card for something called “Educational Interest”.     The story is a bit confusing, and I could find no further information on this charge on the Internets.    Furthermore, I have asked a Macy’s cardholder that I know to be on the lookout for this charge and to let me know if she sees such an item.

More Good Stuff From Starwood

Regular readers know that my favorite travel and rewards card is the Starwood American Express.    One of the fringe benefits of the card is a certificate they give you every year called an SPG50.    In theory the SPG50 is supposed to give you %50 off the rack rate of any Starwood hotel.    In reality, the rack rates are often, but not always, more double the best available price out there.

On the other hand, there is an entire thread over at FlyerTalk where they attempt to ferret out the hotels where this certificate brings you some value.    The best part about the Starwood forum at FlyerTalk, is that the people at Starwood actually read the comments there, post official responses, and offer to assist people.    If every hotel did this, it would be great.   If any airline actually did this, I think I would have a heart attack!

Anyways, it turns out that my SPG50 certificate will, in fact, result in a few hundred dollars in savings, by my parents, when they stay with us at the Starwood in St. John.    Furthermore, I have figured out the value I will be getting from the Starpoints that I will be using for my stay.   Sadly, it is only about 2 cents a point.    I came up with that figure when I realized that the other, non-Starwood accommodations we will be utilizing are costing us about $250 a night.     I have to use that number for the amount I would have paid if I had not had any Starpoints to redeem.     I also have to figure  in the $40 a night mandatory “resort fee” that we will reluctantly be paying to use our reward stays.   In the end, it works out to just over 2 cents a point when compared to our other hotel.

The other way of looking at it, is that the Starwood is nicer, and would have been much more expensive had we paid cash.    If you look at what we are saving based on the best available rate, we are looking at about 4 cents per point.    If you factor in the SPG50 rate, we go down to 3.5 cents per point.

Why Do I Stick With Starwood?

If I am really only getting 2 cents per dollar spent, what’s the point?   Why shouldn’t I just go with a 2% cash back card?    I am asking myself that, but in the end, I have concluded that he flexibility of the Starwood card makes up for it.   If I find myself short of a few miles here or there, I value the ability to transfer miles from Starwood to other programs.    It is that feature that has allowed me to take advantages of big promotions when they have come up in the past.

Finally, I value Starwoods exemplary customer service, a rarity in the travel industry these days.   For example, my SPG50 coupon happens to be expired, but I have found out that they will send you a new one on request.     That is customer service, and that is why they keep my business.

Here is a question that I got recently from a reader.

I made the mistake of purchasing online what turned out to be a trial for a product. The way they had it worded was only pay shipping. They neglected to say (other than obviously in fine print) you will continue to be shipped product. I returned original item, second shipment and refused shipment on third delivary. Finally had to cancel card because they would not stop shipping. Credit card company refused charge back and wants their return policy procedures from me. In the interim finally heard from Vendor (smoke51.com) and they sent me a charge back authorization form and e-mail stating to contact credit card company and have them put chargeback through saying they were having difficulty doing this. I have done this but credit card company still even with copies of e-mail from vendor of chargeback authoriasation and e-mail telling me to have credit card company issue chargeback.Credit company still wants me to supply smoke51.com return polic y and copies of return paperwork. Shouldn’t credit card company be satisfied with vendors own paperwork accepting chargeback.What recourse do I have? This is with a Sears master card.

susan yaz

Answer – Susna, when I got your email, I called the 800 number for Sears Customer Service and to be honest, there was nobody who really could answer this. It did not help that I was not a card member.

If there is any one of you out there who has encountered this and actually resolved it, please help us by commenting below.

I had the pleasure of interviewing Ryan from www.plantingdollars.com yesterday. Our relationship started when I first wrote a post about why I thought there was no such thing as passive income. Ryan made a few comments and I subsequently clarified my position here.

This interview is totally unscripted and really was a nice way to find out more about him and his views on personal finance. Ryan has moved to Hawaii to pursue his interest in diving and is also starting a new website about Waikiki. Grab a cup of coffee and enjoy the interview.

There is a lot of scary stuff out there regarding credit cards and credit scores.   And why not?   Credit scores are determined in about the most consumer unfriendly way.    There is a secret formula out there that determines your FICO score, and the Fair Isaac corporation that refuses to disclose how they come up with it.   It gets even more confusing when you realize that all of the other credit scores out there that you can pay to see are not FICO scores, but some other formulation.   Finally, FICO itself is a moving target, as the only thing that is disclosed about the secret formula is that it changes all the time.

Credit Score Urban Legends

Over at the Mint, there is a helpful article that seeks to debunk some of the misinformation that is out there.    They cover some really good subjects out there and it is worth a read.   Many people are surprised to know that a credit guru like myself is not checking my credit score all of the time.     I don’t check my credit score every day for the same reason I don’t check my blood pressure.    I always pay my bills on time and I know that my finances, like my body, are healthy.     Yes, I do check my credit report from time to time for errors, but I am not obsessed with it.    I think the Urban Legends article shows that too many people are worried about the details around the edges of their credit report.    I focus on the most important aspects of financial health; paying my bills on time, not using all of my available credit, and keeping a good credit history.    Do those things, and you shouldn’t stay up at night worrying if closing an unused account damaged your credit.

Fear Of A Chargeback

The chargeback is one of the most powerful tools that a credit card holder has.     It is this power, above others that separates credit cards from the far more impotent resources available to debit card users.  I have written about how merchants live in fear of a chargeback, as a successful chargeback can increase the transaction fees on all future sales.

What Are Chargebacks For?

Chargebacks are a privilege given to credit card users that allows them to dispute charges for goods and services not provided or delivered as promised.

To be sure, I am rarely forced to use a chargeback, for the same reason police officers rarely discharge their firearms.    In almost all instances, the threat of a chargeback is the fastest way to get a merchant to do the right thing.    Once the merchant realizes that you are not going to go away, but you area going to fight them with your most powerful weapon, the typically cave.     I have used this threat several times with airlines.  In one instance, United decided to charge me some random fee that they did not disclose.    They suggested that I accept a voucher for future travel, while I suggested they refund me the excess amount or I would issue a chargeback.    It would be like a thief taking money from your wallet, getting caught, and then giving you a coupon to make up for it.    I threatened a chargeback as I did not authorize the charge, and United sent me a check that week.

In another instance, AirTran sold me an upgraded seat that I never got to sit in due to my flight being canceled, and me being put on standby for another flight.    Again, the airline offered me coupons, and I threatened a chargeback and insisted on cash.   Airtran credited my card immediately.

Should The Card Holder Fear A Chargeback?

According to this article at Walletpop, merchants are starting to blackball people who do chargebacks.    I can understand the frustration a merchant feels when a person abuses chargebacks by fraudulently claiming merchandise was not received.    It would be very easy to get away with such fraud the first few times, but I would imagine a credit card company would catch on soon enough.

On the other hand, this article claims that just one chargeback is enough to get you on the black list of BadCustomer.com, and worse, they would charge you $99 to get off it.     I am highly skeptical of such claims.   First, I find it incredible that issuing a legitimate chargeback might lead one to be on such a black list.   Second, I would probably eat my computer before I paid someone $99 to take me off some list that I was erroneously put on.  In addition, I would gladly take my business elsewhere if a merchant accused me of potentially defrauding them.   Even, for the sake of argument, if an actual faudster was put on the list, this article seems to imply that paying $99 will get them off, so what’s the point?

Their may be a place for black lists that target repeated fraudsters, although I would prefer they simply be prosecuted.    That said, I would not take the author’s advice seriously when he says; “And for a legitimate customer thinking of doing a chargeback? Contact the company first for a refund. It’s a lot easier than paying $99 to get off a blacklist.”    Yes, you should contact the merchant first if you are not getting what you paid for, but don’t be afraid to threaten a chargeback when you know you are in the right.

We just got this email from a reader, which unfortunately I cannot help. Has anyone faced something similar and resolved it. Your help and comments would be most appreciated.

Hi,

Does anyone else have problems with MLB ExtraBases Rewards?

They are not honoring their points and do not reply to inquiries about backorder status. When you call, you only reach a call center who take your name and info. You are then told that the “sports rewards manager” will get back to you within a week. I’ve been told this numerous times since December and they have never returned a call.

Can you advise me on who to report them to?

Bank of America is similarly useless in investigating if I will ever receive merchandise for the points I redeemed in November.

Brian Cawley

Most of my credit cards do not have an annual fee.   A select few are so worthwhile that I am willing to put up with an annual fee.     Just because I am willing to pay an annual fee, it doesn’t mean that I really have to.     Every year when the annual fee comes up, I call and ask for it to be waived.     Remember, the worst that they can do is say no.

The Worst Happens

Last year, I got hit with the annual fee and I called to have it removed.   I was told that they couldn’t do that, but they could give me some reward points to make it worth my while.    This year, I called again, and they wouldn’t even budget.   No fee waivers, no extra points, just a lecture from a script on how wonderful the card is.    Just don’t think that this experience will keep me from trying again next year.

Does This Reward Make Sense?

Speaking of reward cards, the time has been coming where I feel like I can cash in on my Starpoints that I have been earning from my Starwood Card.     While I usually use my points for transfers to airlines, I have been saving these points for a major hotel redemption.    I just booked a reservation a the Westin in St. John, U.S. Virgin Islands.    I have five days their for 48,000 points, which works out to 4 nights  @ 12,000 points with the fifth night free.     The best rate I could find for the property at that time was about $400 a night, but I was able to find $329 a night using my Starwood Preferred Guest 50% off coupon, which will be used by the other party on our trip.     So I am looking at a value of just over 4 cents per point for my Starpoints when compared to the regular stay, and just under 4 cents when compared to the discounted stay.

4 Cents Per Point Is Good

Since all my Starpoints are resulted from my use of the Amex Starwood Card, I might say that I am getting 4 cents per dollar spent.   On the other hand, I would never really spend $400 a night on a hotel.   Since my reservation is cancellation for another couple months, I might just see if we can find anything cheaper elsewhere, like a vacation rental or something.    I figure that 48,000 Starpoints are worth 58,000 miles on virtually any airline, as there is a 5000 Starpoint bonus when with each 20,000 miles you redeem.     That said, it doubtful that I get 2,000 in value from 58,000 miles on any airline.

how can my wife restart her credit worthiness after a bankruptcy?? my wife just went through a bankruptcy about a year ago. Please advise as to how we can get her credit back on its feet.

Thanks,
Mr. Oscar Alcantar

Answer – Mr Alcantar, here is what I would do.

1. Get a secured credit card – The first step to rebuilding your wife’s credit is to get credit, make your payments on time and start the rebuilding process. You could also add her as a joint account holder on your credit card to help your credit score. Make sure she pays all her bills on time and fully.

2. Check Your Credit Report – Go to www.annualcreditreport.com and get copies of your three credit reports. Check for errors. After, bankruptcy, there are bound to be errors in your credit report. Debts that should have been discharged could still appear on your report. You have to dispute those errors.

3. Enroll in a credit monitoring service for a couple of years – I would not recommend folks enroll in such a service but for those who are just out of bankruptcy, this is a good thing because errors tend to show up. Collectors may have bought your wife’s debt from somewhere and not told that it has been discharged and still show up in your report. This could still go on for a couple of years. Enrolling in such a service would be very helpful for a couple of years and will speed up the process of her credit recovery.

That really are the basics of recovering from a bankruptcy. If your credit score is good and you get her as a joint account holder in your credit cards or auto loan, that would help even more.

Hi Mr. Credit Card,

My question is about one of my curent cards. I have a Chase Platinum Visa, which formerly used to be Washington Mutual, which formerly used to be Providian. It is my oldest account. My apr when it was Providian was 13.9%. My apr when it was wamu was the same. When wamu went under it Chase took over it went to $29.99%!!! What should I do? I called asked for a lower rate they said nothing they could do. Don’t want to close because it’s oldest account. Do you have any suggestions?

MR. Joe Annonymous

Answer – Joe – I’ve received too many similar emails from Wamu cardholders. Here’s my thoughts. You should try to keep the account open. But to avoid paying the 29% fee, here’s what I think you do.

1. If you do not carry a balance – If you do not carry a balance, then it would not be an issue. Just make sure you charge something to the card every month and pay it off in full. Or charge your utility on it and set up autopay. That way, they can never accuse you of not using the card, charge you an annual fee and close your card subsequently.

2. If you presently have a balance – If you presently have a balance on your card, I suggest you transfer your balance to a card that offers a 0% introductory APR. Obviously, if your credit is good, that should not be a problem. Once you have done that, just make sure you use your old card and pay it off in full every month just to keep your card active.

If your credit is bad, then you just have to keep paying your bills and make an effort to pay it off sooner than later.

For those frequent fliers at Delta’s hubs, Atlanta, Detroit, Cincinnati, Salt Lake City, Memphis, and Minneapolis, obtaining Delta Medallion status may be your perpetual mission in life.  Those who are sent overseas on business every couple weeks need not worry to hard about reaching the new Diamond Medallion level. The rest of you will be constantly trying to maintain your status every year.

Credit Cards Can Help

You probably already know about the Medallion Qualifying Miles (MQMs) available through Delta’s American Express credit card partners. While the Platinum Card offers 10,000 MQMs when you spend $25,000 and $50,000, the Reserve card is the big daddy, offering 15,000 MQMs at $30,000 and $60,000 annual spend.     It is therefore possible to receive 30,000 MQMs and make Silver Medallion without ever taking to the skies, although you will have to be a big spender to do so.

A New Offer For MQMs as a sign up bonus

Now, Delta is offering a initial sign up bonus of 5,000 and 10,000 MQMs for the Platinum Personal and Business cards respectively.     While savvy credit card holders might already have a personal card, I would think that the 10,000 MQMs as a sign up bonus for the business card would be irresistible to certain people I know.   You know who you are!

There is an annual fee of $150, which is really peanuts in the Medallion game.    If you can sign up for this card and make the next level, that fee will pay for itself in upgrades and bonus miles, if not for the actual miles themselves, which are worth something around $150 alone.

What If You Are Not A Delta Fan?

Let’s say you live in or travel to a certain southern city, but don’t really want to fly Delta enough to earn or take advantage of Medallion status?    Perhaps, like me, Airtran is more your style.      In that case, hang on to your American Express OPEN cards, as they are now offering 5% cash back on all Airtran purchases. I know that 5% isn’t going to make the difference between taking a great vacation and staying home, but it should make the difference in using your Amex open versus another card, as there really are few rewards as valuable as 5% cash back.

The Best Of Both Worlds?

Ironically, the Delta American Express cards are also part of the OPEN savings programs, and therefore accrue the 5% cash back when used to purchase tickets on their aforementioned rival Airtran.

Strategies For Maintaining Medallion

Now that Delta has implemented rollover miles, maintaining your status has gotten easier, if a bit more complicated.       When the end of the year approaches, it might even be desirable not to accrue enough mileage to make the next level, in order to have more rollover miles for the next year.     Ways to avoid accruing mileage include flying with frequent flier tickets, or just postponing travel until after the new year.

In theory, one could avoid earning MQMs by using the “pay with miles” option for a small portion of their ticket, yet on my last trip with Delta, I found that I had, in fact, earned MQMs!     I was happy to earn them, however I can only imagine the puzzled reaction I would get if I called Delta to complain about earning too many miles!

Traveling Together?

Another strategy is good for people who travel together.    So long as one of them has Medallion status, the benefits generally apply to both when traveling together.     In that case, only one person should sign up for such a credit card and get the MQM bonus.    Since these sign up bonuses can generally only be earned once every few years, let the other person wait until such a time when their status is in doubt before signing up for a card that includes a one time MQM bonus.

For this former Delta Medallion, I am happy to be out of the status circus, but for those who are still willing to jump through hoops to stay in Delta’s good graces, you now have a new ring to shoot for.