December 24, 2009
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Surviving the 2010 CC Crunch, Pt.3
Be selective with your accounts.One last tidbit of note on paying ahead is a nice benefit coming out of Senator Dodd's CCARDA effort. After February; amounts paid on a credit card over the minimum must be applied to the highest APR in your bundle. Right now, if you owe $3,000 on a credit card in purchases with a 5% APR and you've made the mistake of cashing one of the pesky checks that keep coming with your statements every month with a 25% APR for $1,000, the 24% APR will eat you alive. Worse, you can't even pay it down by a penny. Not till you've paid the $3,000 @ 5% off to the penny. After February, every penny you pay on a credit card above the minimum must be applied toward the highest-interest portion you have
Tip# 3 -- Be very careful opening new credit card accounts:
There are many reasons for this warning. Perhaps, foremost, is to warn you away from doing business with HSBC. Having grown huge and then turning into scoundrels, this 'AKA' floater likes to play in disguise with many different names to escape the bad reputation which always arrives as they become implanted. Expect them to use more reputable monikers like GE Card Services and others who've worked hard to build good report only to be scarfed up by HSBC and then go on using the yet-unblemished name. You can be sure it you're 1 minute late paying off a $5 balance, they be quick to nail you for a $19.95 late penalty. If your postman walks slow, you won't be able to avoid this. HSBC only gives you a one-day notice if they can time it right. Many have complained to Congress already because they were already late before receiving their bill in the mail. This practice is supposed to be punishable by mid-February and so HSBC is getting every jab in now before time runs out. I recommend closing all HSBC credit card accounts ASAP.
That said, expect the lousy credit card offers to be the greatest in number and easiest to get. Not good for you. Hold off, if possible. If you accept that lousy offer now and a good one follows, you'll be disqualified. You'll get an lame explanation stating "You already have a {Discover}* account open and are sufficiently obligated. This offer is declined."
* Replace 'Discover' with whatever type is your choice.