Posts Tagged ‘Credit Cards’

Numberscruncher: Angels, Demons, and Debt

200548456-003In the summer of 1998, Harper’s Magazine published one of its most talked-about stories, Vince Passaro’s narrative of how his family accumulated $63,000 in credit card debt. He and his wife had academic jobs bringing in a combined $100,000 per year as well as a rent-controlled apartment in New York City, but they also had three children in private school. Passaro attracted opprobrium back then, and the story remains one of the key works of the personal finance confessional genre.

Until Sunday, that is. Edmund Andrews, who covers economics for the New York Times, wrote a story for the magazine about how he dug more than $500,000 into debt because he wanted to buy a nice house for his new blended family, even though much of his $120,000 annual salary was claimed by his ex-wife for alimony and child support. 

I’m the kind of person who clips coupons and rides the Megabus. While printing presses all over this great land were rolling out Edmund Andrews’s tale of woe, I was at the grocery store loading my cart with $0.88 packs of cream cheese and $2.00 boxes of raisin bran. Then I swung past the Junior League’s annual second-hand clothing sale, where I bought some shirts for my husband and me, just $3.00 each, some still with tags on them. I want to smack Passaro and Andrews around, then pack them into my nine-year old-car and show them what a thrift shop looks like. I want to teach them to make their own pizza dough and mend socks and use tie-dying to turn stained school uniform shirts into fun playclothes. (more…)

Credit Where Credit’s Due

200459962-001This month, Thomas Geoghegan has an article in Harpers about how debt changed working-class America. Barack Obama sat down with bailed-out banks to discuss their credit card practices. I paid a bunch of ridiculous fees, actually usury, because I accidentally used my credit card instead of my ATM card at a cash station. Citibank announced a new Facebook program; for every friend you convince to get deeper into debt, Citi will give $50 to charity. And, a friend showed me a letter he had received from his bank. It was an offer to refinance his house at 105% of value, with no credit check or income verification required. Credit crisis? What credit crisis?

In my case, I called Chase as soon as I received the bill and asked that the cash advance feature be removed from my account. The first person I talked to told me that he couldn’t change it until I paid off my $140 cash-advance balance and all associated interest and fees (there is no grace period on cash advances). The second person I talked to said that the cash advance feature could not be removed unless I closed the account. The third person told me that the cash advance feature could not be removed, but the ATM PIN could be disabled so that I would not make the same mistake again. Now, if no one at Chase understands the fine print on the account enough to give me a straight answer, how am I supposed to understand it?

Interest rates are supposed to reflect the costs of borrowing money: inflation rates, the opportunity cost, and the default risk. But anymore, they are simply what the bank can get away with. Chase holds the mortgage and home equity line on our house, which are significantly more than the $140 cash advance I took by mistake. For that matter, my credit card limit is $20,000. I could use the card to fly first class to Paris and go on a spree at Le Bon Marche yet pay no interest if I paid it off in full the first month it was due. But take $140 from an ATM and hold the balance for 20 days or so, and the total fees and interest work out to about $24, an annual interest rate of 208%. (more…)

Pop Politico: “Debt Nation”

When I was growing up, I remember my father used to keep a credit card hidden in the back of his closet.  It was one of those “In case of emergency” things that he rarely used.  If he did use it, he paid it off at the end of the month.  So, I had it embedded in my mind that if I ever got a credit card, that I had, had, had to pay it off at the end of the month if I ever made a charge.  And for the most part, that’s what I did.

I was surprised when I got a my first credit card.  It was a department store card that came in the mail weeks after I filled out an application at a table in the quad during my first year of college. I had a part-time job that paid minimum wage, and I put down what I earned at the job figuring I’d never get approved for credit.  After all, I didn’t make much money, so why would a credit card company take the risk?  Ha!  Macy’s looked at the “financial me” that was on the paper application, and stamped out a card with my name on it. A few days after it arrived, I went to the mall and bought some socks and a shirt, and felt some unease when I presented my card.  “Will they accept this from such a fresh-faced kid?” I thought.  Yes they did.  And then I did something naive:  I ran upstairs and paid my credit card bill because I thought it was the responsible thing to do. The woman at the credit department had a good laugh when I pulled cash out of my wallet to pay for the credit charge I just made.

She just worked there as an hourly employee, but I’m sure somewhere in the thicket of the billing department, some salaried analyst cringed.  Why?  Well, my behavior marked me as a deadbeat. (more…)