Today’s question is: How do you manage your credit cards? Mine strategy is pretty simple, and has been ever since I stopped living paycheck-to-paycheck: Most months, I pay them off in full. If I can’t pay them off, I pay them as quickly as possible. The longest I’ve carried a balance in recent years is about six months, maybe seven.
Like most moderates, I walk the middle of the road on plastic. Let me see the hands of anyone who wants to return to the days when, if your washing machine broke and you didn’t have liquid savings to replace it, you used a laundromat until you could scrape together a few hundred bucks? Didn’t think so. On the other hand, the last time I used a 90-days-same-as-cash financing option — to buy a new mattress after the old one sprung a leak and started poking me in the ass with a spring — the first mailing I got from the finance company was to spread that $300 over two years for an absurdly low monthly payment, etc. So I see how people become hard-liners.
I see plastic as an ally in navigating modern life, but as a treacherous one that must be watched at all times. Money — or rather, credit — is a powerful drug, and I’ve seen too many people end up in rehab. My sister has a friend who at one point owed a five-figure sum to MasterCard and Visa equal to half her annual salary. (She told me she knew the mortgage industry was crooked when someone offered this woman a 100 percent loan to buy a house, with enough extra cash thrown in to pay off all her cards, which at the time was something like 40 grand.) I’ve gotten in over my head a time or two, but was always able to recover quickly — maybe $2,000? On one card? Sounds about right.
Over the years, I’ve heard plastic horror stories from both sides of the fence, not just the in-over-your-head spenders, but also the gamers, the people who claimed to be harnessing the power of their cards, using the frequent-flyer miles and cash-advance perks to their advantage, and it’s fair to say I trusted them only incrementally more than the deadbeats. “I write two checks a month,” a friend told me once. “The mortgage, and MasterCard.” Everything — groceries, restaurants, utility bills, clothing — went on the card, which accrued frequent-flyer miles at the rate of $1=1 mile. He paid it off in full every month. After a year it had earned him a free ticket to Paris. He’s not the liar sort, so I guess I believed him, but part of me…didn’t.
Gaming plastic just sounds like something too good to be true. There’s got to be a catch. There’s always a catch.
Turns out, there’s a catch:
Credit cards have long been a very good deal for people who pay their bills on time and in full. Even as card companies imposed punitive fees and penalties on those late with their payments, the best customers racked up cash-back rewards, frequent-flier miles and other perks in recent years.
Now Congress is moving to limit the penalties on riskier borrowers, who have become a prime source of billions of dollars in fee revenue for the industry. And to make up for lost income, the card companies are going after those people with sterling credit.
Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups.
I did a story on credit a few years back, for a financial magazine. You know what the industry calls people who pay off in full every month? Deadbeats. Ha ha.
I have one card now, a Discover. I use it for newspaper subscriptions, which are set up as monthly bills, my iTunes account, and anything I order online, mainly because I can remember the number and expiration date and don’t have to dig up my debit card. I pay it off every month and have currently accrued cash-back rewards equal to a moderately priced piece of software. If they think I’m going back to the annual-fee days, they are, um, mistaken. I’ll go back to writing checks.
Why is money such a taboo in our culture? If I ruled the world, I’d institute a class in high school — say, sophomore year — called Practical Finance, and it would be all about using money in the adult world. Half the year would be spent studying credit. I think it’s at least as important as sex education, and maybe more.
Quick bloggage, because I went to a city council meeting last night that featured tears and cries of embezzlement, and I want to get the story written p.d.q.
Matt Yglesias takes apart another stupid George Will column. Ably. I’m not even a total believer in light rail, but this is about facts.
Since the first year of George W. Bush’s presidency in 2001, the Republican Party has maintained its support only among frequent churchgoers, with conservatives and senior citizens showing minimal decline.
In other words, the party of Palin and Plumber. Good luck with the rehab.
One of those Sara-Jane-Olson-but-not stories — prison escapee builds new life on the outside, only to see it come crashing down decades later — concluded here today. Susan LeFevre was released today and, surprise, said something dumb:
“Prison is a very tragic – it’s a very hard place,” she said. “People really do suffer. Beneath the laughter and the veneer, there’s suffering.”
You don’t say.
I say: Time to write that council story. And do it justice.