Give me some Credit

Hooker boots are typically found in pay-by the hour "ho"tels.

Let’s get down to the dirtiest kind of debt – credit cards. Credit cards can be a very helpful tool to help you buy the things you want right now. It’s all very necessary to book flights, rent a car or a hotel room. And let’s face it, any airline, car rental, or hotel that takes cash only is either sketchy, ready to break down, or has “by the hour” hotel rooms – yes I’m talking about hookers (another way to waste your money).  I’ve been receiving a number of emails and phone calls from people telling me that my credit card balance is too high and my general response has been “no $hit.” Here’s some helpful info about credit cards I’ve learned and the steps I’ve taken to getting my credit card debt paid down.

Everyone hates telemarketers

Little do my friends and readers know that I used to work for a credit card company as a telemarketer. I think it’s in the top 3 for worst jobs I’ve ever had.  While there I learned a number of things about credit cards. The first one is that, if you think your credit card debt is high, it’s no where near what some people carry. I had one client want to do a $100,000 total balance transfer from their 7 credit cards. Talk about a nightmare! I felt like I was committing some kind of crime by signing this person for their 8^th credit card. This leads me to the next thing I learned about credit cards; the more credit you apply for, the worse your credit history gets.

If you’re one of those people who are constantly applying for every credit card out there to receive a free hat, beer mug, or whatever else they are offering and know that you’re going to be rejected, I’m warning you that this probably isn’t a good idea and if you’re applying to get more credit to pay of your credit, you’re a flocking idiot. 

Each time you apply, you’re allowing someone to search your credit history which can raise a few eyebrows to creditors. They start asking why you’re trying to accumulate so much credit and the more you’re able to dig yourself into a debt pit, the more of a risk you are to them. Keep your credit card number down to one, maybe two in the event that they don’t accept the kind of card you have but this is rare and you should be paying in cash anyway. The other thing I learned from working as a credit card salesman is that credit card companies are sneaky ba$tards.

Credit card companies care – about your money and their profits. When you’re paying interest rates like 19.5% on a $10,000 balance you might as well be walking over to your credit card company’s office with a box of condoms (safety first) and some Crisco and let them have their way with you. You are the consumer people! Don’t just settle for the first letter you get from some bank saying “you’re preapproved” because it’s all bull-hooey. I talked to all sorts of “pre-approved” people who made jack $hit for cash and had debt out the ying yang and I can guarantee that these people did not get approved even though the golden ticket they received in the mail said so.  

How do you choose a credit card you ask, well here are some general tips I can give about which cards to choose.

1. Department store cards are garbage.
2. Paying anything above 10% interest is ridiculous.
3. Almost all cards come with rewards, your card should too.
4. Reward cards are only worth it if you actually use the rewards.
5. Always read the fine print. Did you know that if you miss a payment some cards will boost your interest rate from 9.5% to 19.5%? Holy $hit, right?
6. You should not have to pay an annual fee to have a good credit card.
7. Don’t let them raise your credit limit by more than $5000. You shouldn’t need to spend any more than that at one time on your card and if your credit card is “for emergencies” you’re delusional. Start an emergency fund instead and have the bank pay YOU interest, not the other way around.

I used to have 3 credit cards, an AMEX, a department store card, and my MasterCard. I got rid of the department store card because they took me to a collection agency (to my credit they never sent me a bill so I forgot about paying it). This was a good thing since the interest rape (not a typo) was somewhere in the 20th percentile. The other card I got rid of was my AMEX because it had a zero balance. You can only cancel a credit card when it has a zero balance. I should have kept it because the interest rate was only 9%. The card I did keep is my MasterCard. I’m currently carrying a $14,247.57 balance on it. Yes, I am constantly in the process of being gangbanged by MasterCard. My MasterCard had an interest rate of 19.5% which means that every month, I was paying $236.95 in interest!!

Now, if you’re like me and carry a lot of credit card debt, you would be wise to transfer your balance and consolidate your debt into a lower interest line of credit so that you can pay down your principle balance faster (which will save you a ton of money). This however wasn’t the case for me. I tried to do this and the bank said “no.” I carry way too much debt for the bank to be interested in giving me more credit. Desperate times call for desperate measures. Since I can’t get rid of my credit card debt by consolidating it, I got my interest rate reduced from 19.5% to 12.5%! Doing this is surprisingly easy to do. I used the following script (brilliantly provided by the NDP):

“Hello, my name is YOUR NAME.

I have been a good customer of yours and would really like to stay with CREDIT CARD NAME.

I’d like to talk with someone about lowering my current credit card interest rate. Can you help me with this?”

It was THAT simple. For more information on this, check out this website.  By having my interest rate lowered to 12.5%, I am instantly saving almost $100 per month interest. Talk about amazing. 

Another dumb thing I was doing was paying for balance insurance on my credit card. This was probably the stupidest thing I’ve ever let the bank talk me into. I paid an additional $60 per month to insure my balance in the event that I die. That boosted my interest rate up into the 20% range! If you get offered this “feature” – decline it! It’s not worth it at all.  And yes you can cancel it at any time.

If you can maintain your good spending habits for 6 months, go back to your bank and they might actually start considering consolidating your debt. Talk to your friends and see what kinds of credit cards they have and shop around for the best one for you! Credit card debt is a nightmare, but if you can learn to take your card, throw it behind the fridge, not use it, and pay that mother trucker off, you can be quickly on the road to financial freedom like me.

Love,

John