0 percent credit cards…I give up.
Posted on January 8th, 2009 – 2:25 PMBy Kara McGuire
As I’ve written before, Mr. Kablog and I have an absurd amount of credit credit cards with credit limits that far exceed our gross income. They were collected over several years.
I opened the cards, which have actually improved our credit score, because I’ve been tempted by juicy rewards, or transferred balances to take advantage of 0 percent interest rate offers. We always had the money to pay off the zero percent cards, but figured if Chase wants to give us free money, we might as well save ours and earn 5 percent interest in a savings account.
But after yet another stupid mistake, I’m throwing in the credit card arbitrage towel.
Around Christmas, I sent in a minimum payment of $50 when the minimum required by the card company was $66! Duh! The boo-boo would have cost me $69 in fees and interest had the guy on the phone not been understanding. And the interest rate jumped from 0 percent to 7.99 to reward my stupidity.
To reset the interest rate to zero, Mr. Kablog, the primary cardholder, would have had to call in to ask about reversing the rate increase….which I knew he’d be loathe to do.
I admitted defeat instead and dug into our emergency savings account to pay the $3,300 balance. It’s not like my money was earning a nice interest rate in savings anyway.
But I’m serving myself up as an example. If you try to get too cute with credit, you are bound to eventually make a mistake, even if you think you are organized and have everything under control.
Resolution for 2009: Pare down my credit cards even more.
9 Responses to "0 percent credit cards…I give up."
Kara,
I have to say, it’s refreshing to read your blog and here the honesty. Reading about the types of things we’ve all run into regarding credit and how people handle or solve their problems is helpful. I think it’s smart to have paid off the balance!
I always considered the approach you took to credit cards (new cards - tranferring balances)to not be worth the effort. Based on the time you spent doing this and monitoring this, what was your hourly wage? Some things, even though they save money, are not worth your time. (This from a person who will still bend over and pick up a penny on the sidewalk!)
For those who cannot pay off a balance transferring to a new low rate or no rate card makes sense.
Peter: You’re right. It’s one of the most irrational things I do regarding money!
Kara,
We have had the same problem with credit cards, tempted by offers and then eventually they sit with $0 balance when we move on to the next one. What do you suggest with all these cards with $0 balance - does it at all hurt our credit score to request that they be closed? I’m hoping that I can close a bunch so I don’t have to monitor them for fraud each month…
I agree with Peter (and yourself), not worth the hourly wage.
And where are you getting 5% interest?!?!? Even my ING account is down to maybe 3.
Those 0% offers sure are tempting. You just have to make sure you’re able to keep on top of them all, make the right payments to whichever one, and on time! If you can handle that, they’re not a bad deal at all, until the 0% offer runs out.
Congrats!!!!!!!!!!!!!!!!!
Britta- Be careful if wanting to close all of your cards. This can aversely effect your credit as well. I work for a credit card company and people call all the time, saying they want to close their account to “improve their credit score.” It’s not a conversation we can really get into with them to dispel the myth, but you may want to check with someone first…
I agree with the overall response, its not worth your time and effort. Same question as LDH, where are you getting 5% interest??? On a similar note, do you know of a good online source to compare rates? It seems just as I open an account and move funds, they drop the rates.
