February 23, 2007

Credit cards

Credit cards can be helpful, they can be very bad. We all know the stories, racking up credit cards, paying minimum payments, ending up paying double the principle in accumulated interest. Check out according to the calculator. That stuff is old news. Personally, I pay off my cards almost each and every month. I hate paying interest. They are useful to me -- they help me see where my spending is going, and they give me cash back and plane tickets, and at least 30 extra days to pay for something.

What is news to a lot of people is how much you can accomplish just by asking. The credit card companies need your business -- you are worth it to them, especially if you're a good customer. If you meet or exceed your minimum payment each month on time, they see you as a good credit risk, not very likely to default on your debt, especially if your credit score is good. If you need something, just ask.

Just this past month, I had a slightly larger than normal bill, due to some traveling and toys I bought myself. It definitely wasn't a problem, but it was just a bit more than I had in checking. However, my paycheck was coming in the day after the due date of the bill. I call up and get a friendly customer service rep. I ask if it's possible to move the due date back one day. The reply is negative, it's impossible. I briefly try reason, after all, I'm a good customer, yada yada yada. I ask for the supervisor, and the CSR says sure, but it won't do any good. The operator picks up the phone and agrees, it's impossible to change the due date once the bill is issued, but she can make it so that a payment a day late shows up as on time. A second of pondering confirms to me that, indeed, it is the same thing. I can pay my bill a day after due date. I confirm with her -- no late fee? No interest? Duly satisfied, I take down her name and note the time of the call.

I set up the online-payment to pay a day after the due date. When I got this months bill, indeed I find that it comes with no fees and no charges. They actually did right by me. Chase is good, if you know how to ask for what you want.

A list of other things to ask for from your credit card:
    Cancel late charges. No brainer. If you miss a payment (only on occasion, no more than once per year) for whatever reason, call them up and promise not to do it again. A charge of at least $20 and sometimes up to $39 can get wiped off in an instant.

    Drop the annual fee. Sometimes they might, sometimes not, depending on the card and your credit situation.

    A break on the interest rate. They might temporarily give you their introductory rates, or permanently drop your rate. This is useful if you carry a balance, but you need to have a history of on-time payments to get this one. Interest is what you pay the credit card company to take the risk of you defaulting. If you are a high risk, you'll pay more.

    Credit limit. If you're looking to make a big purchase, and you have a mileage or rewards card, ask for the credit limit to be bumped up. Then, pay it off at the end of the month. For instance, if you are paying cash for a car, or as the down payment, put it on your card. Ask for an increase in your limit, or even send some money into the credit card company ahead of time, creating a negative balance. For instance, if you have a $5,000 limit and are trying to buy a $10,000 car, send a check of $5,000 to your credit card. So, when you buy a car, you can put $10,000 on the card and get that many miles. Just make sure you pay it off at the end of the month -- you will be paying hundreds of dollars a year in interest if you don't.

Really, whatever you need from your credit card company, it never hurts to ask. The worst that will happen is that they will turn you down. Of course, it is necessary to be a good customer -- always pay your bill on time!

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