Free From Broke

A Personal Finance Blog for Regular Folks

Glen Craig

7 Credit Card Tips From ING Direct

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I was just on the ING Direct site checking out my savings accounts and decided to check out their tips. They list seven great credit card tips. Check them out (descriptions are mine):

  • Make your payments on time – Very important! Late fees can be very expensive on credit cards and can negatively affect your credit score. If you have problems with the due date you may be able to change your credit card due date.
  • Try to pay off the full balance every month – Pay off the full balance to avoid any interest charges.
  • Avoid cash advances – Cash advances on your credit card have different rates than normal credit. Yeah, it’s gonna be more expensive than if you just charged it.
  • Shop around – Compare rates and services from different credit card companies to get the best credit card offers.  Find one that fits your spending habits.  Make sure to read the fine print as well.
  • Use savings to pay off the cards – It’s great that ING Direct exists offering high interest rates on savings but that high rate doesn’t compare with the interest on your credit card (unless you have a low introductory rate).
  • If you’d like a better rate, just ask – If you have been a good customer you can call the credit card company and ask for a better rate. Try telling them that you received an offer from another company with a better credit card rate; odds are they can lower it for you. Make sure you understand what the new rate is though. It may only apply to new purchases not your outstanding balance.
  • Don’t be left holding all the cards – If you have a lot of cards it means you can do a lot of spending damage. This is bad for both you wallet and your credit score. Get rid of credit cards you hardly use or ask that the credits limits be lowered (a high credit limit can hurt you for some credit card companies).

Of course you should also watch your spending as well.  Don’t abuse your card and know what you can really afford.

Do you have any credit card tips to share?

American Girl – Not Frugal At All (Or What’s A Smile Worth)

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Last weekend we went to the American Girl store in Manhattan to buy my daughter a doll.

Have you heard of this place?

It’s a doll store that specializes in making the doll purchase a full experience for your child. Among the doll choices you have is their Just Like You collection where you pick out a doll that has features similar to your own (or my daughter in this case; I would make one ugly doll).

From the site:

Just Like You dolls help girls share their stories with the world. Every girl can find a doll to match her spirit and look—inside and out. The hair and eye color, skin tone, and outfits and accessories help bring their story, and friendship, to life. These 18-inch dolls are for ages 8 and up.

Sounds wonderful, doesn’t it?

Each comes with a story book and a music CD. You can buy girl clothes that match the dolls’; there’s a theater; a cafe; a hair salon; even a doll hospital! Yes, you can already imagine it isn’t cheap! The doll we bought (left) was $90!!

Let me go back a sec and explain how we got here.

Last Spring my daughter went to the American Girl store with her Girl Scout troop. They were able to get a doll’s hair made up and had lunch at the cafe. If you didn’t own a doll they gave you a loaner.

Well, my daughter immediately wanted one of her own!

It wasn’t too hard to say no to her since the dolls are so expensive. But we did strike a deal with her: If she behaved (as best she could) and tried hard in school we would get her one for her birthday. She agreed. Keep in mind we didn’t go overboard for the holidays knowing we would be getting this doll for her birthday. Also, besides the party at home, this would be her only gift from us.

Did I mention the place has like three floors?!?

I went in with strong resolve, vowing to buy only the doll! But man do I have ADD when I walk into a store. They have accessories and dolls everywhere. It wasn’t long before I was asking my wife if we she get another outfit or an accessory too. We came real close but my wife, having more sense than me, said we came only for the doll and that’s what we’re getting!

Yes, it was expensive for what is essentially a trumped up Cabbage Patch kid.

But did my daughter smile when we got home!

I took a picture with her and the doll and it’s one of the most joyful smiles of her I’ve gotten on film. I know this is no excuse to spend money. I don’t think we’re spoiling her since she waited so long for it and we made sure to explain to her that this is an extra special gift, the likes of which she shouldn’t always expect.

Here’s a few justifications for buying it:

  1. We made her wait a while before buying it to make sure she not only deserved it but would still want it and take care of it.
  2. It was the only major gift she’s getting from us for her birthday. We got her small gifts for the holidays but nothing expensive.
  3. Our son is turning one two days before her birthday. Although we do our best to give equal attention to both of our children it’s inevitable that the little guy gets a bit more attention since he’s a baby. The doll is a special present for her for being so great with him this past year.
  4. We had the money in savings and will not be in debt because of it.

If your daughter has friends that own an American Girl doll now might be the time to explain to her she can no longer be friends with them. Unless you want to buy her one too. (Just kidding of course).

What do you think? Are we spoiling her? Are we guilty of “keeping up with the Joneses?”

Interesting Credit Card Marketing From AAA and Bank Of America

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My wife paid her credit card a couple of days late.

Between work and taking care of the kids (that includes me too) she forgot the exact due date.  It isn’t a card that’s used often.

It happens.

Unfortunately we got hit with a no payment fee (about $30) and an interest fee (a couple of bucks). There were no other late payments on the card so I decided to call the company and ask if they can drop the fees. We’ve been good customers and have been paying in full every month.

So I called the number on the back of the credit card.

I go through all of the phone hoops and get to an account person. He asks who I am. I give him my name and tell him I’m calling on behalf of my wife (this is a credit card she had before we were married). The account rep then says he sees my account. My account? This is my wife’s card! It seems that Bank of America is the issuer of the AAA card and since we have a banking account there he could see my account.

So I tell him our situation, that we never pay late and always pay in full, could you drop the late fees? He tells me since I’m not on the account he can’t authorize it. My wife has to tell the rep to put me on her account. So now I give her the phone which kind of defeated the purpose of me calling since she was taking care of the kids, and she gives him permission to add me to the account. Took two minutes maybe. Easy process. I get the phone back and go back to the original question of removing the fees. He looks at the account and says he can remove the no payment penalty but there’s nothing he can do about the interest fee. I press on the interest but he won’t budge. It was a couple of bucks and it was our fault so OK we’ll pay that. At least we got the no payment fee taken off! The whole process was a bit annoying but in 15 minutes we were able to eliminate a $30 charge.

Fast forward a week or so and we get a package in the mail.

Two new credit cards for the account. We didn’t ask for a new card. Since they added me to the account they assumed that I too would need one of their cards.

Hmm…interesting. I guess they want me to start charging on the account too! Now they double the chance of a late payment or interest charges (not really for us but hypothetically)! What they did wasn’t wrong from what I can tell but it annoys me that they automatically sent out another card assuming I wanted it. Very aggressive marketing on Bank of America’s behalf.

This gets me thinking though.

What cards do we have between us? Should we consolidate some accounts with both of us on the accounts? Until now it hasn’t even been a thought. We’re both responsible with our spending and very open with our spending habits. I like the idea of one separate card between us so we can buy gifts for each other without the cost popping up on a shared statement. How can this affect our credit scores? I need to do some research on this.

P.S. To prevent future late payments we signed up for email alerts from the bank that tell us the payment is due in a few days.

Do you think Bank of America was sneaky in sending us another card?

For those married folks out there – How do you handle credit cards between you and your spouse? I’m interested in hearing your stories.

Family – Can’t Live With ‘Em…Unless It Helps Debt

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I was in the hole for thousands over a few credit cards.

I was getting better at paying on time and I was managing to pay more than the minimum due. I was also transferring balances to lower and zero interest rate cards (which had it’s ups and downs). The totals were chipping away but it still felt like it would take forever to pay my credit debt off. At the time I was living on my own supporting myself with a full-time job. What I could save I did.

Then something interesting happened – I lost my apartment.

Seems my landlord wasn’t really supposed to be renting his basement out to tenants. Some funny NYC law that said he wasn’t zoned for it. Great. I had a few dollars saved but really I was still living paycheck to paycheck. If I went and found a new apartment, which would be more expensive and involve moving costs, real estate fees, etc…, I would be completely tapped out and would have to add more to my credit cards to get by.

Fortunately my parents came to the rescue.

They still had an extra room and they were ok with me moving back in with them. Now understand, I love my parents and they were great in helping me out but the last thing I wanted to do was move back into my parents’ place. But I didn’t really have many better options either. So I managed to cram all of my stuff back at their place. My original idea was to stay as long as needed to save up enough to move to a new apartment (I wasn’t paying rent now so I should have enough in a few months or so). It was not fun being back at the ‘rents. All the freedom I had grown accustomed to were gone. But I needed time to save.

After the first month I realized something – by not paying rent or electricity I was able to save a lot more than I had been. By the end of the second month, seeing how my bank account had grown, I decided to put a new apartment on the back burner. I was gonna suck it up and stay at my folks until my debt was gone!

What was the point of moving back out and being in the same debt situation?

With my new resolution I started to pay much more than the minimum on my credit cards.

Soon one card was paid off. Then another. One day I was finally able to get rid of all of my credit card debt! I felt like a slave that had just been freed!! No more of that debt monkey on my back. I was able to look at all of my bills and accounts and finally say that I had a positive net worth! This was not just a financial victory but a huge psychological victory!

I started to save for real. Not saving to pay debt but saving for me. As tough as it was living with my parents I realized what freedom really was. Sure I couldn’t live the same way under my parents’ roof as I did on my own, but freedom meant being free from debt (or free from broke)! It took me being thrown out of my apartment and moving back with my parents to realize that.

Do you have a debt story? Let me know in the comments

Loose Change Gets Us Free Meals On Vacation

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So we usually go on vacation in the Summer.

Every time we get free meals from loose change!

Let me explain – We have two change jars in the house: one for quarters and one for all other change. This gets filled up whenever we come home for the day with change in our pockets. The quarters are for laundry so those get used pretty quick and isn’t part of our free meals. The other jar though slowly fills up over the course of the year and is usually filled to the brim by the Summer.

All year we watch the jar fill up higher and higher. It almost becomes a calendar for us to tell when it’s time for vacation! The week before our trip my wife and daughter will go to the local Commerce Online bank (yeah, it says online but they have a ton of brick and mortar locations where I live) and use their coin counting machine which is free for anyone! [This is better than Coinstar since Coinstar charges 8.9% to count your change (though if you convert your change to a gift card or eCertificate the counting is free)].

Now with cash in hand we’re ready to go on vacation.

We can usually get anywhere from $60-$100 depending on the change that’s in the jar. Maybe this only covers one special dinner or maybe this covers the first few meals for us. Either way we look at the meals as being free, paid for by change that accumulated in our pockets over the year.

Of course we understand that the meals aren’t really free.

What’s important is this is another small, disciplined way for us to save some money that we get to use on vacation. What’s more is it’s fun to watch the change grow and fun for our daughter to pour the change in the counting machine (extra bonus here is that she gets to see how saving small amounts can turn into large amounts in time).

What small tricks do you use to save money? Let me know!