Citibank, I look forward to parting ways!
I recently heard that Citibank, in preparation of the upcoming consumer credit protection bill being enacted in February, raised rates significantly, to 30%, for some of its customers. Yet another reason I’m glad to be closing my account with them!
You’ll remember my post last winter, when they sent me a notice of increasing rates. I could choose to opt out, but they would close my card at the date of expiration and I would have to pay off the balance at that time. As a long-time customer of 18 years, I did open it in college after all and it was my first credit card, this is how they repay my loyalty? Well screw them, I said at the time. This just makes me extra glad that I’m going to get rid of the card next year.
Oh, I plan on closing it myself iin advance of that date, which will be much better for my credit score. But it makes my poor, little consumer heart glad to give them the old heave-ho. I don’t carry a balance, and always pay them in full 100% and have for the last year.
I can’t wait until my debts are paid off. I can tell you I don’t plan on using credit cards much anymore!!
$1000 free on BoA credit card & blog updates!!!
You will not believe this story. I haven’t heard anything like it yet. I was chatting with the small coffee shop owner down the street from where I work today about business, money, the economy, and credit cards (we were talking about AmEx mostly). He mentioned that he has $3,000 on a bank of america credit card. They told him that if he paid off $2000, they would clear the card. In other words, pay $2K and they will eat $1K. I guess they just want some money right now, very very badly. Is it the Merril Lynch purchase?
Egads, I wish *my* bank would do that for me!!!!!!!
Now, let me mention that I was there dropping off post cards for my upcoming art show next week. I haven’t been buying coffee at all anywhere lately, but I couldn’t go in, drop off some post cards for my upcoming art show without at least buying a coffee, so I did. I am still under my coffee budget this month; I’ve been doing quite well and am proud of myself (the eating out budget however, is a much different story, grr).
Sorry for the lack of posts lately; I haven’t been much inspired and I no longer have internet access at home (the router that we were borrowing had its password changed).
I did recently pay $400 towards my debt - I couldn’t help it that I couldn’t wait until my March 5th paycheck. I already knew I’d have enough. I still have an extra $800 leftover too. Debt stats are updated, and my EF is chugging along. Hopefully more to say tomorrow. I have to unexpectedly go in to work for 4 hours of overtime on Saturday, which will give me some internet time to catch up.
Don’t you all wish you had BoA debts right now???? Anyone else with a similar story?
A quick update about this month’s debt payments
It’s January 31 and I haven’t yet made any debt payments. I think I may be able to pay $100-200, but I’m going to wait until I get paid on the 5th. There are a couple reasons I haven’t been able to make any payments this month, and am not planning on making any significant dents.
The first main reason is that this is the month that the piper’s payment is due: I have to pay for my new laptop purchased right after xmas, which I paid for on my citibank credit card. $580+tax. I then realized I had to use up my FSA account, and bought a $300 trauma first aid kit. WIth a few other expenses, that came out to a $1065 amount which I paid in full with my ginormous recent paycheck (luckily it was large or Iwould have had to carry a balance, shudder). On one hand, it’s nice to know I’m not going further into debt for the computer, but on the other, it sucks that I can’t pay down the principal on debt I’m paying interest for.
Now, I am will be getting that $300 back from the FSA claim, any day now. As soon as I do, it will go straight towards debt payment!
At least I increased my savings. It feels good to do that! I’ll be posting my budget results shortly (hey, it’s not the end of the month yet!).
New 0% interest cards: how many, how often?
I just recently applied for a 0% Discover card at end of November/early December 2008. I was approved for a $5000 limit. I know I have good credit, and no credit limits have been reduced by anyone recently, nor have any cards been cancelled due to inactivity.
So should I try and get additional 0% interest rate cards? My question is how often one should apply, or how long to wait before going for an additional one. I heard from the credit card company whenI applied that a credit report request doesn’t count on the date it is requested, so I take that to mean that I can apply for a bunch at the same time, and see what comes back? Not sure if this is true or not. Regardless, it’s 2 months later, so that no longer applies.
Does anyone have any advice or places I can try and find out? I can always try and apply again and either be accepted or rejected. Honestly I have little care how this will affect my credit score. I’m not planning on needing additional credit, nor buy a house in the foreseeable future.
I hear that Chase has some good rates – I just have to find other good low interest or no interest cards that have at least 6 month or longer for that low rate or it probably isn’t worth my time. I also just read that Chase has been raising fees and interest rates, and dropping credit balances. It sounds like some a company that is stretched a bit too thin and I don’t even know if they’re still accepting balance transfers! Maybe after all I should just not worry about it. 10% is high for the line of credit, but I can handle it. I think after all, with this uncertain credit market, I should just hunker down, pay it off, and not try the balance transfer game. I don’t want to get too many cards with too many minimum payments (especially as the amount due is doubling and getting higher for so many of them). I don’t want to extend myself too thin; 3 debts are probably enough.
Recent expenses
I just purchased a new laptop last month, and well, I just got my credit card statement. The credit card that I hadn’t planned on using (and definitely NEVER planned on ever carrying a balance on, EVER AGAIN). The amount due is $1,000. Why so high? My computer was only $600. I also realized at the end of 2008 that I had to use up my FSA deductions which was $500 for the year. I ended up buying a $300 first response trauma kit (with free shipping!). I bought it online, so I definitely wanted to use my credit card and NOT the debit card. So now I’m getting hit for the damage.
My recent paycheck was very very good due to 120 hours for 2 weeks and alot of that being over and doubletime. So I just wrote a check for the full payment, and I won’t have any interest charges on my card. Whoo hoo! But the down side of that means I have a lot less for the rest of the month’s budgetted expenses and even less for debt payment.
I still have enough for some debt and savings payments, so I’m put $100 towards savings (bringing my emergency fund to $625). I think I can pay money towards debt, but I am making myself wait until I get my next paycheck to make sure I don’t have any shortfalls.
I did just submit a claim for the first aid kit. I’m not sure how long it will take to get the check, but I expect it will be about 2 weeks. As soon as I do, I will put it 100% towards the line of credit principal. I still think I’ll have at least $2-300 additional to put towards debt. I had a $400 starting balance in my checking account which is partly why I’m able to afford both the new computer and my expended large debt payment this month.
So even with such a huge credit card statement, I still feel like I’m on track. I just hope I won’t have any more big unexpected purchases for a while (note that the laptop was expected, but a bit earlier than I had planned for).
Changes to debt sidebar (Discover card added)
I’ve added an additional credit card to my list of debts, but don’t worry, I’m not planning on spending more! This is a new card I got for the 0% interest rate. I had a $5000 limit, so I transferred $4,800. With their 3% transfer fee, that adds $144, for a $4,944 total “new” debt.
This resulted in a large payoff on the Line of Credit – It’s now at $8,988 due! That also drops my interest payments from $115 to $75. I’ve estimated that it will save me over $300 to do the transfer, so I’m not that concerned over the $144 charge.
I do know that my minimum payments will be 4%, so I’m going to revise my budget to reflect a decreased minimum Line of Credit payment plus an addition of $200 for the Discover Card. I will pay the minimum on the Discover card, and apply all extra debt payments to the Line of Credit. I have 0% interest through the end of the year. After that, I’ll transfer all remaining balance BACK to the Line of Credit, which has a 10% interest rate.
It always seems a shame when paying interest that you pay more than you actually pay off (ie, the privilege of having credit). I wish I could include that extra payment, but it kindof doesn’t count. In the same spirit of paying interest rates, I’m not going to raise my debt total, nor decrease my amount “paid off” on the total debt by that $144 transfer fee charge. I’ll chalk that up to payment that doesn’t count and isn’t tracked in the totals.
The privilege of credit
There’s a bunch of debt calculators out there. You plug in your balance, the interest rate, and how much the minimum payment is. It calculates how long it takes to pay it off (which is usually a depressingly long time). Increase the payments and it becomes a great tool to find out how long it will take you to be debt free. There are several that help you figure out how much in interest you pay per year. I wish I could post some of these links here, but unfortunately, I can’t include them, since the link is on my old computer, and I’m now on my new computer! I’ll have to post it later as a comment.
For $45K of debt, I’ve been paying $3,300 every year for the privilege of having debt. What would you do if you had an extra $3,300 lying around??
I’ve gotten over the guilt and upset of losing so much money on interest rates. Now I’m just chugging away at paying it off. I feel like a turtle that’s pulled into its shell and all I can see is that point 5-6 years down the road when it’s all gone.
How much do you spend on interest a year? What would you do with the extra money if you didn’t have to send it to a credit card company or a bank?
Jan 9 update: Here’s the link to some good debt calculators. The Actual Cost of Debt Calculator is what you’ll want to check on how much interest you pay per year for your card.
The State of the Economy & Credit Rates
I mentioned in a recent post that my personal line of credit went up 1.25% last month (Wells Fargo Bank). I could “opt out” by closing the account and paying it off immediately. I can’t do that, since I don’t have $14K+ on hand lying around.
My one and only credit card, Citibank, just sent me a notice that they are raising lots of fees: default rate, cash advances, and foreign transactions. I could opt out, but then they’ll cancel the card and I have to pay it off completely by the end of the year or the card’s expiration date, whichever is later. It’s a shame, I’ve had this card for more than a dozen years and this is how they reward me. I decided to opt out on principal. I probalby would have kept the card except for a deceitful charge on my most recent statement.
I have heard before that banks and credit cards charge you for things in the hopes that you won’t notice or read your statement. Since starting this whole debt repayment process, I’ve been vigilant about keeping up on my balances and statements. Last month I finally paid off my balance in full. I did have some large charges due to car expenses that I charged before I decided to stop using this credit card, but I figured, no big deal, I’ll just pay it off and I won’t have any interest charges. WRONG! They put a finance charge of $21+ on my balance of $550, and it was all new! When I called to complain, they said it was a “bank error.” Scammers, the lot of them. Yes, credit cards are evil, and after I got the fee raising notice I was done with this card. They suck.
Don’t you love it? 700 billion for a bailout of financial institutions, and then they turn around and raise rates across the board indiscriminately.
Why didn’t I start this journey sooner?????
Credit Card Spending Habits
How do you spend your money? I decided last month when I began the debt repayment process to NOT use cash (since I would probably spend more, or potentially lose it), but my debit card exclusively (so that I can look up my spending and enter it into my budget). However, there are certain expenses that I will ONLY put on my credit cards.
This brings up internet spending. I refuse to use my debit card on the internet. There are less safeguards if the card number is stolen; a real credit card has a $50 cap on the liability you face if someone mis-uses your card and spends money that you do not. I don’t want to take that chance with my bank account. So there are a few expenses that I have every month that are credit based:
Netflix – my one and only remaining entertainment expense. At $15 (give or take), that’s a bargain. I couldn’t survive without it. I don’t have TV, I don’t rent videos, I don’t go to the movies.
Clearwire – the only interenet I could get. However, I recently completely my year contract and decided to give it up. That’s $35/month I’m no longer spending. But if I still had it, it would go on the credit card.
Internet hosting fees – I have 3 domains (not this free blog) that I maintain, and they are beyond the basic HTML. They charge me yearly $246, and again, since it’s “on file” I’ve given them this card. I get dinged once a year in July.
I think there are a few other yearly “on file” fees I pay that I use my citibank credit card for. I think as long as I don’t do my normal daily disposal income spending on the credit card I’ll be fine.
The only other time I would use it would be for emergencies when my bank account is empty (and right before I get my next paycheck). But if I do that, I have to promise myself to pay it back 100% on the next billing period. After thinking it through I’m thinking it more and more necessary to have an emergency savings fund for those big last minute purchases so that I don’t end up using the credit card… Yes, that’s what I’ll do! More on how much I’ll make it and how I’ll build it up later.
