Tuesday, July 12, 2005

Credit Card Monte

Perhaps, I shall simply present the facts and skip, for once, the kicker.

The facts: Last fall my wife and I took my mother-in-law to Scandinavia for a month. We did not have the cash in hand to pay for the trip. Alternatives included: putting it on a credit card and paying it off at high interest; getting a personal loan at moderate interest; getting a home equity loan at what would have been pretty good interest, around six percent with a nice tax deduction.

But I got a letter offering a pre-approved no-fee credit card, one of its benefits being a cash advance that would accrue no interest until June of this year. That seemed unduly generous, but I called and checked and a nice young man -- a kind of East Coast young man with a certain amount of pizzazz -- assured me all I had to pay was a one-time transfer fee of $60.

I signed up and asked for the maximum advance: $13,200. The bills began to arrive. The bank charged no interest. First month we paid a thousand. Next month and the next we paid the minimum. In December another offer arrived for a pre-approved no-fee credit card offering a cash advance with no transfer fee and no interest charged until June 2006. It was clear we weren't going to get the first card paid off in time. (By the way, it goes without saying we weren't using the card we got in August. We were using our regular credit card and paying off the monthly balance as we always do.)

Last December I applied for the card with the cash advance on which no interest would be charged until June 2006. I got a cash advance of $11,500 and paid off the balance on what I will call the August 2004 card -- and no fee for the advance.

There was, however, a slight catch. Hidden in the small print was the requirement that I use the new card at least once or, after six months, interest would be charged on the December 2004 cash advance. Of course, during month three of the new card I made my monthly charge one day late. (Yes, interest was charged on these required purchases, but the total amount was so small it was only a few dollars.)

I checked with the December 2005 credit card. A rather tart young lady confirmed that this month interest would begin to accrue on my cash advance.

Woe woe.

But the more credit cards I collected, the more pre-approved no-fee credit cards I was offered, many of them offering CASH ADVANCES ON WHICH NO INTEREST WOULD BE CHARGED UNTIL *NEXT* SUMMER.

Yes, last month at the last minute I applied for yet another credit card and for no charge got a cash advance of $7,000 sent directly to the December 2005 credit card, paying it off.

No interest will be charged on that cash advance until June 2006. Six hundred a month will pay it off in time. We should be able to handle that. A nice young lady called -- no East Coast pizzazz at all; rather embarrassed at calling -- and offered me disability insurance on the cash advance for a mere 69 cents per hundred dollars of credit card debt. If I get sick and can't pay, I don't have to!

For less than $50 a month.

I feel fine. I said no.

No comment, please, step back and let Mr. Robertson through....

Hah. Of course, I'll comment! If you give people a credit holiday, it would seem the crack actuaries and statisticians at the top of the credit card game have calculated that most of us will simply run up additional credit card debts until -- no matter how fast we skip from card to card and offer to offer -- finally on some card some day we will have to start paying interest, probably quite a lot. That has to be their calculation

I guess. Otherwise, Santa has given up on chimneys and is going the mail box route, instead.

Oh yeah.

1 comment:

B. Wieder said...

It seems like a fairly clever dodge, true, but all that shifting and switching of credit cards and financial broken field running, jeez, it just seems so distracting and exhausting. That's why I just stuck mom in a home.