Legal Extortion

[Steve Sanderson]

1). Only charge/buy what you can afford.
2). Pay off your balance every month, and it doesn't matter what percentage rate they charge.
I've been doing this since I got my first AE charge card at the age of 19. I've continued doing this
with my Visa and Mastercard after dropping AE because of their annual fees.
In 36+ years of having a credit card I have never made, or paid a monthly credit charge.
I've also collected Air Miles and cashed them in for merchandise that I normally would have bought.
I use cash for small purchases...I don't even have a bank machine card or a line of credit.

[tuned]

I was curious about MNBA because my brother raves about them. He also deals with CitiBank who also offer very low rates on credit cards. All I could find online was that they are very aggressive with people that don't make their monthly payments. Not surprising when they are charging a third of the interest of the major banks. Even though the credit card business appears lucrative with 20%+ interest rates, the cost of doing business is high. About half of credit card customers pay their bill in full every month and are referred to in the banking industry as "deadbeats". In the eyes of the bank you are a "deadbeat" because they aren't making much if any money from you. Banks also have to provide a large infrastructure to facilitate credit cards. Credit card debt is unsecured and many people run up big bills and never pay up. How many people? Here's a report from September of last year...I'm sure things have gotten even worse since then.

"Moody’s said the so-called charge-off rate hit a new high of 4.8 per cent in the second quarter, a 57 per cent increase from 3.07 per cent for the second quarter last year.
“The intensity of the current recession has led to charge-offs that have exceeded previous cyclical highs by a relatively wide margin,” states the quarterly Moody’s Canadian Credit Card Index.
A charge off is when credit card balances are written off an uncollectable. An account has to be written off after 180 days of delinquency"

Having 5% of what you are owed going up in smoke is hard for any business to absorb, especially when the margins in the credit card business are fairly tight. It's not like radio where you are making 40%.

[groundskeeper willy]

After working in the credit card division at a bank years ago, two things became painfully apparent: the public's lack of financial knowledge; and the card company's desire to keep clients dumb and passive.

All of our inbound customer calls were recorded ("for training or security purposes") and we'd get monitored to ensure we were compliant with the security protocols, as well as meeting expectations for customer service ("Is there anything else I can help you with today?"). On our monthly one-to-one sit-downs with the unit manager, where we'd go over the monitored calls (much like an air-check sessions with the PD), I'd always get rapped for providing too much "education" to the clients. If they didn't understand how interest, billing cycles or credit limits worked, I'd take the time to explain it to them. But the unit manager always disagreed and I'd get points knocked off on my evaluations. As far as management was concerned, the client had been provided with a printed copy of the service agreement when they took possession of their card, and if they didn't understand it, tough.

So, what's something the card company's don't want you to know about?

Most credit cards will allow you to switch to a different card style at least once a year without any problems. But few people do because they think it's not allowed, or that it's too time-consuming or difficult to do. As an example, let's say you have a no-fee, high interest card (20%+) that you use for small purchases and you pay the balance off on time every month. You're planning on running up a huge purchase ($15,000, well within your credit limit) but find you'll need to carry the balance for six months or so, and the thought of those interest charges are making you queasy. Solution? Simply call the card company and have them switch your card style to an annual-fee, low interest card (prime + X%) before making the purchase -- the savings on the interest will far outweigh the annual fee. Once you've paid off the large purchase, give them another call and switch your card back to the no-fee style. Depending on the issuing institution, the annual fees may be pro-rated, so they might even refund some of of it. You don't have to worry about your Equifax/TransUnion credit score being impacted because you aren't applying for a new card, you're simply transferring to a different card style. And because you're actively using your credit line and paying it off, the risk tolerance score on your account will benefit, potentially resulting in an automatic increase to your current credit limit. Just using this example, you could save hundreds in interest, and it's all done with just a simple phone call.

[hagopian]

I wish I had time and space to give you a summation of where we are 'financially' in the Western World - but I don't have room....nor is this a Financial site - but the above post is but another example (well explained) about how 'naive' people are about 'money'.
Debt used to be a four letter word.
Now people only seem to care about 'the monthly payment' - and to heck with the mountain of debt.
I will borrow the term 'the entitlement generation'. We all are 'entitled' to a new car every two years, trips to Maui and big dinners and houses full of big screen TV's, and granite counter tops and spiffy new Brick Furniture (*on don't pay til 2011 scheme - a sucker bet).
The drama that has started in Greece, will enfold into something called "A Sovereign Debt Collapse". Many Countries are totally flat broke, and only keeping the cracks papered over, by printing money as fast as they can.
Watch what happens here in BC over the next few years, and you will see what DEBT will do to people's standard of living.
It now takes a two income household to maintain a lifestyle that only needed one income in 1972.
The United States is totally bankrupt - evidence can be seen on the phenomenal 22% rise in the value of the CAD versus the Greenback in just the last 8 months.
What's coming at us is a Day of Reckoning that will show how Goldman Sachs and multinational banks have destroyed the living standards of most of the Western World. At the height of the Weimar Republic, in Germany, in 1923 - inflation was running at over 6,000 percent. I know that seems unreal - but it is true.
This kind of event is coming, it's only a matter of time.
The 'spend and to hell with it' era of Governments will ensure our demise.
Unions are OVER, and will be dragged under by howling mobs of broke and desperate unemployed, distraught at losing their 'lives' and 'homes', and seeing poverty first hand, while Unions try and justify their huge salaries and benefits.
I won't even bother talking about how 78 million Baby Boomers in the USA and Canada, will bankrupt Social Services. The young and unemployed can't pay into the system, and it will fold.
The real Unemployment numbers - are actually over 20% and approaching 1930's levels of over 25% in California, Nevada, New Jersey, Illinois, Arizona, New York, Michigan, and New York.
$600 TRILLION worth of worthless pieces of Bank paper called "Derivatives" have choked the credit system, and by the end of 2010, you won't be able to get a loan even if you have an 800 FICO score.
My dear friends, please be aware that it will be up to YOU, not the local Government hacks, to protect your Family.
If you want to eat - better get a garden - because you won't be buying California lettuce much longer.
Oh and one more cheery note: the rise in the Canadian dollar is killing the BC Film Industry....and the job losses are mounting, as all those folks that thought they would be making 75 K a year working on some direct to DVD Movie or TV show, will soon be on the dole.
I know this is NOT what you want to read - but taking a look at the above post - there are a lot of people that might want to take it to heart and make some plans now. Get out of debt- and if you have a home, sell and get that money out of RE. The crash has started. No one from CREA or surely not Ozzie the cheerleader are going to tell you that - but it has.
Be careful. It's going to be neither pretty, nor short.
No, the World has changed.
Now, back to our regular programming.

[Mike Cleaver]

No one in this country has ever talked about what percentage of it is now owned by the Chinese and Japanese and Big Oil.
In the US, a BBC program found that those two countries and the multi-nationals owned a very large chunk, approaching IIRC, half of the country's worth.
Long ago and far away, my mother and father, who survived the Great Depression, said to the three of us: Never gamble (and that includes the stock market) unless you can afford to lose the money.
Buy land.
Don't borrow money from anyone but family.
And make sure you repay it promptly with interest.
Working in the always unreliable radio and tv business, I've been close to bankruptcy twice, both times because of house mortgages and economies that went south for political and economic reasons.
Anyone remember 21% bank interest rates in the early '80's?
If it hadn't been for Lougheed's Heritage and Trust Fund, which subsidized mortgages down to 11%, Alberta would have been a ghost-town.
As it was, hundreds of thousands of people lost their homes.
Hagopian is correct.
We don't need 5 thousand sqare foot homes, two or three late model vehicles, luxury vacations, triple digit dollar dinners and blowing hundreds of dollars on children's recreation and clothing and electronic gizmos.
When I started working at 14, I paid room and board to my mother, bought my own clothes, two new cars and a motorcycle and took a month long motor trip to San Diego and back, all without borrowing a cent.
Now, everyone wants everything, items to be discarded when the "next big thing" comes along.
I've been cutting back recently.
Back to basic cable.
Land line telephone service only for Internet.
Led bulbs to cut down on the electricity bills along with induction cookers instead of the stove.
My cell phone is five years old and still takes video and pictures and holds many mp3 songs.
It also makes and receives phone calls!!!
We have become consumers of crap and tons of stuff we don't need.
And many of us do it on credit at 20 per cent interest per month.
No one seems to want to take responsibility any more.
It's time for you to think responsibly about your own financial future rather then further enriching the fat cats at the big banks.

[Jack Bennest]

jon tell me more about the cash back option on aeropoints. I think you said you paid
for the credit card but got back cash credit. What type of card?

[groundskeeper willy]

Y'know, years ago I would have said that Hagopian and Cleaver were part of the lunatic fringe, a couple of delusional paranoids who should be buying a heavier grade of tin-foil when making stylish headwear. But now I'd have to say they're saner than most of the population. The average person appears to have abdicated responsibility for their personal financial well-being, almost to the same extent that the corporate and government sectors have.

So many have bought into that whole "mortgage-tomorrow-so-you-can-party-like-a-rock-star-today" concept, living so far beyond their means, with no concern for the fact that their lifestyle is unsustainable. And with no desire to make the necessary changes while they still can.

As Hagopian mentioned before, the combination of changing demographics, massive debt-load and a fragile economy teetering on the edge should make everybody scared as hell. Think things are bad now? Hold on tight, because this thrill-ride hasn't even started yet.

[Mike Cleaver]

My real wake up call as to financial risk came when I was working at CFRA in Ottawa.
Almost everyone there had put their life savings, RRSP funds and whatever into Nortel.
They watched it climb with glee to over a hundred dollars a share and said I was stupid not to buy into it as they had.
Guess what?
The bottom fell out and some of these people lost everything, including money borrowed on credit cards to get into the feeding frenzy.
Some who had been contemplating retirement years before now still are at it, slaving away at the daily grind, attempting to recover after their savings disappeared into that deep pit called the stock market.