The answer depends on if your name is Saddam Hussein, although proponents would say no proof was ever found! You hear so many stories of consumers up to their eyeballs in credit card debt, and I’m just wondering WHY? Credit card debt is the most expensive debt out there, second only to usurious rates of loan sharks.
Perhaps the reason why is because credit cards are ubiquitous. According to the US Census Bureau, there were 173 million credit cardholders in the US in 2006, using 1.5 billion credit cards? That’s right, the ratio is almost 10 credit cards to every one user, with transaction volumes of over $2 trillion a year! No wonder the US consumer gets in trouble, and why credit cards are such big business!
My view on credit cards is quite simple: Use credit cards only to your advantage, and never let them take advantage of you! Whenever you see your credit card misbehaving, you should think to yourself “Bad boy! Bad, BAD!” I think my wife tells me this sometimes, but I try and tune it out.
Joel is hosting a $500 American Express giveaway, and gosh darnit, I’m entering to give myself a chance to win. In “You’re Rejected! How I Use Rejection To Motivate Me Every Single Day,” we discuss how success is a numbers game. The more you put yourself out there, the higher the chance you have to succeed. Here’s my attempt to win and use the proceeds to buy toys and clothing for underprivileged children this winter in San Francisco. The program is called “Toys 4 Tots.”
TWO MISSLES IN MY WALLET
My first card is the American Express Corporate Card necessary for business bookkeeping purposes. You see, all client expenses must be paid for by my Corporate AMEX card so the company can match costs with profits. Makes, sense. Too bad I have to pay the bill every month, and then get reimbursed, thereby creating unnecessary delays, negative working capital, and occasional late fees. There was a time when having an AMEX Corporate Card was very cool (your early 20’s), but it soon gets old. At least their service is solid.
The second card is my personal Citibank Home Rebate card which gives me a 1% rebate on all purchases to pay off the principal of my primary residence. I’ve had the card for six years, and the card has paid off more than $1,700 worth of principal already. What’s more interesting to note is that based off a 5-6% mortgage interest rate, the real savings is thousands and thousands more because of interest saved over time.
Of course, nothing is perfect. I woke up one day to find my 6.99% Citibank Home Rebate Credit Card rate jump to 14.99% duringthe height of the recession last year. Funny, because the 10-yr yield was still in the low 3%-range, and the Fed Funds rate was below 1%. This pissed me off, and I immediately called them to lower the rate. Again, don’t let credit card companies and banks take advantage of you.
PACKING AN A-BOMB
If someone were to kidnap my pet rabbit and force me to sign-up for another credit card to save his life, I would have to pick the Visa Black Card. The selection of credit cards Joel provides is impressive, but only the Visa Black Card is well, black. In addition, the description says “Membership limited to only 1% of US residents!” Don’t you want to feel special if you pack a new financial weapon of mass……… joy?
WEAPONS FOR PEACE
A credit card is a wonderful financial tool if used properly. I put everything on my personal credit card because 1) It helps record all my transactions which are divided into different categories I can review every month, 2) The 1% home rebate saves me money, but is not the primary reason for use, 3) I don’t like carrying over $100 in cash, and 4) A credit card provides consumer protection against fraud and defects.
But I must ask again, why on earth would you EVER not pay off your bill in full every month? Not doing so is akin to pulling the grenade pin and not letting go! Did you know that if you paid off $999 of your $1,000 balance, most credit cards will charge you interest on the full $1,000 balance? Credit Card companies are marketing geniuses. Make sure you’re Albert Einstein.
The credit card companies already make a small commission off the vendor every time you use the card, don’t let them charge you interest as well! Credit cards are not weapons of mass financial distraction if used properly. Instead, they are a necessary part of day-to-day transactions, and there seems to be no turning back.
OTHER HANDY USES FOR CREDIT CARDS:
1) Spatula when there’s a hole in the wall to fill with caulk.
2) Ninja star when I’m in a dark alley and someone is coming after me.
3) Babe magnets at a bar when I tell the bartender to “leave it open.”
4) Lock pick when I leave my keys in the house.
5) Tooth pick after a good ‘ol San Francisco crab feast.
Barclaycard® Ring MasterCard® – 1% Back on Balance Transfers – This great card has the lowest APR I’ve seen in the market today at 8% compared to the average credit card interest rate is 15%. You get 1% back on all balance transfers made in the first 60 days of opening an account and there is no annual fee or balance transfer fee. There’s a fantastic social community of Ring MasterCard holders once you join to interact with and save money.
The Hawaiian Airlines® World Elite MasterCard® – Hawaiian Airlines is hands down the best airlines in America. Their service is impeccable, they provide food, snacks, and drinks included in your air fare, and each seat comes with a USB charger. This Hawaiian Airlines card gives 35,000 bonus miles if you spend $1,000 within the first 90 days, gives you one complimentary bag to check-in, and a one-time 50% off discount off your companion’s air fare! Round-trip ticket prices range from $450 – $1,200, so that’s a $225 – $600 savings right there to paradise! You also get $100 off a companion tick for roundtrip coach travel between Hawaii and North America each year, 1 point for every $1 spent, and 5,000 annual bonus miles after $10,000 in annual spend. The annual fee is only $89. Oahu is my home state and it is the most beautiful place to vacation!
Check Your Credit Score: Take a moment to check your free TransUnion credit score through GoFreeCredit.com, a company I trust. 30% of credit reports have errors, which could put a serious hamper on your refinancing or new loan borrowing abilities. I had a $8 late payment I didn’t even know I owed crush my score by 100 points come up during my last refinance. The average credit score for rejected mortgage borrowers has risen to 729 due to more stringent lending requirements. Do you know what your score is?
Updated as of 11/27/2014
Financial Samurai – “Slicing Through Money’s Mysteries”