StopBuyingCrap.com

Lately, I’ve been thinking of getting a new credit card — specifically the SimplyCash Business Card from American Express, for its kick-ass 5% cash-back on gas and automatic cash-back credit to statement (anyone can apply for a business card).

“But Cap, you have a gazillion credit cards, why do you need more?”

That’s none of your business!!

Okay… okay. I’m sorry, I shouldn’t have yelled. Its the stress at work, you know? Look, listen — I’m sorry. How about we go out for dinner next Tuesday night? That’s right. Just the two of us.

…

The problem with applying for a credit card is that many times, you won’t know whether you’ll be approved or denied credit. Rejection isn’t fun, but to add insult to injury, you’re not only denied credit, your credit score will take a few dings due to the hard inquiry imposed on your credit history when you apply for the credit card.

Thankfully with the help of other credit-rejection-fearing Internet denizens, there are resources you can access on the web that allows you to see if your credit score and history can qualify you for the credit card in question.

Step One: Know Your Credit Score and History

If you know your real FICO credit score, credit history, and is positive that it hasn’t changed recently, you can skip this step. If not, head over to myFICO.com and buy all three of your FICO score. [discount code]

Unfortunately purchasing your FICO score can get a bit pricey, as even with the discount, all three FICO scores will cost you about $38. An alternative is if you know your recent credit history well, you can try the free FICO score estimator. This will give you a ballpark ranges of where your scores may be at. You can always get your credit reports for free at AnnualCreditReport.com to help in answering the FICO score estimator’s questions.

Step Two: Check Credit Pulls Databases

When you apply for a credit card, the issuer pulls one (or more) of your credit report to help determine your credit worthiness. Knowing which credit reporting agency the card issuer in question uses will help you narrow down the credit card you should or shouldn’t apply for.

For example, if you have a delinquency on your Experian credit report, but not your TransUnion credit report, you should avoid credit card issuers that pulls Experian, and try to apply for card issuers that pulls TransUnion.

Here’s two credit pulls database:

• Credit Pulls Database from Creditboards.com (requires registration and login)
• Who Gave Me Credit (has slightly less data and may not be as accurate)

By using the credit pulls database from Creditboards, you can search for the credit card issuer you’re interested in applying for, and see a result of approved or denied credit profiles. Here’s a snapshot to give you an idea:

click to enlarge

As you can see from the picture above, most of the credit pulls for the American Express SimplyCash card was on Experian, with a few on Equifax. Most approved scores are in the 700+ ranges, and those with lower scores generally got a lower credit limit upon approval.

Whenever a credit card company denies you credit, they are required by law to state the reasons for the denial of credit. You’ll also often see these reasons noted in the comment field from the credit pulls search results.

Knowing these types of information can help you in the decision process of whether or not if you should attempt to apply for a certain card. If you see a credit pull result with many higher credit scores than yours getting denied credit, or a large number of seemingly random rejection, you may want to think twice before you apply for the credit card in question.

Step Three: Apply and Rejoice at Approval or Rage at Rejection

Now that you know where your credit is being pulled from, and have confirmed that your score and profile is indeed much better than others on the listed result, should you apply immediately and expect instant approval?

Not quite.

Although these credit pull database can certainly help narrow down your chances, at the end, credit approval goes beyond credit scores and income level. Your past history, the mix of your credit profile, your usage pattern, your utilization ratio and many other factors all comes into play. No one can know for sure what type of criteria a certain issuer may have for certain cards.

What these databases can do, however, is to supplement you with more information, so you can go from “I have no idea if I’ll get approved” to “I think I’ll get approved… maybe if the stars aligned favorably tonight.”

top photo credit: orphanjones

You know how it goes.

You rush home at 12:45 PM from your lunch break; not because you’re a savvy frugal person that bags their own lunch, but more so because you ate too many donuts this morning and you really have to use the restroom (for whatever reason, a tidy and clean washroom is always the last priority at your office building).

You pull into the garage, hop out of your car, unzip your pants, flung the keys onto the sofa and dash toward the downstairs restroom (because let’s face it, you won’t make it upstairs safely) — all of a sudden, a call on your home phone.

“Oh crap, is work calling?” you thought to yourself, “is lunch already over?”

A split second decision, you grab the phone and continue on towards the restroom.

“Hi, this is James from Region X Bank, Baker, Missouri Branch,” says the scripted voice, “Please don’t hang up on me as this is my—”

*click*

No time to be angry. This is going to be one of those replay finish. You kick the door down, turned around and sat right down — only to fall right into the toilet and touch the toilet water (yummy). Your insensitive significant other has forgot to put the toilet seat down.

Oh, the rage.

And who’s fault is this? Of course, the ill-timed telemarketer from Region X Bank (and maybe your upcoming ex-husband). Had they not called you, you would not have been distracted and you might have noticed that the toilet seat was left up.

So how does a savvy consumer keep what’s left of their consumer privacy? How do you reduce unsolicited telemarketing calls, junk mails, and general annoyance from people with products you just don’t care about?

Head Straight to the Offending Source

Most reputable (or nation-wide) financial institutions will have a clear privacy policy. When you apply for their service (such as a credit card or bank account), you will always receive the privacy policy set forth by the specific company. When these privacy policy have been changed or updated, by law, you will also receive an updated version of the same copy.

Most people don’t read these little privacy fold outs (as pictured above). What most people don’t realize is, many of these leaflets contain information on how to avoid direct marketing from the specific company and how the company shares your information.

You will generally have a few options:

1. Yes/No: Sharing of your information and direct marketing within said company
2. Yes/No: Sharing of your information and indirect marketing with other companies
3. Remove name from telemarketing and/or mailing list.

Here are some privacy policy information from national banks, with steps you can take to choose your preferences:

Bank of America:

• Privacy Policy Site - You can read the policy here and set your preferences online.
• Call 1-888-341-5000 (recommend using the site instead)
• Some marketing programs are already in progress, so even if you opt-out, it may take up to 12 weeks for the opt-out to be fully effective. When you opt-out of direct marketing programs via postal mail or telephone, your opt-out will last for five years.

Citibank:

• Privacy Policy Site - Only option is a mail in form, available in PDF.
• You have four choices. Limit personal information to non-affiliates. Limit personal information to affiliates. Remove name from mailing lists. Remove name from telemarketing lists.

Chase:

• Privacy Policy Site - You can read the policy here and set your preferences online.
• Call 1-888-868-8618, or for the hearing impaired assistance, dial 7-1-1, then 1-888-868-8618 and wait for operator assistance.
• Old fashion snail mail: P.O. Box 260185, Baton Rouge, LA 70826-0185
• Chase has two simple choice: Yes/No to sharing information with others; Yes/No to sharing information within family of companies.

American Express:

• Privacy Policy Site - One of the better ones. You can also set your preferences online.
• Call 1-800-297-8378 or mail to: P.O. Box 299836 Ft. Lauderdale, FL 33329-9836
• Four choices, much like others. Yes/No to other companies or affiliates. Yes/No to mail offers or phone offers.

Opt-Out of Everything Because You’re Sick of It

Specific companies not spicy enough for you? Opt-out (or for the different ones, opt-in) to all credit card and insurance offers! You can visit the official consumer credit reporting industry website to either opt-in or opt-out. Your choices are fairly simple, opt-in to all the goodies (and have enough paper to shred for a lifetime), opt-out for five years, or for the more extreme — opt-out permanently! When you opt-out permanently, you’re required to print and mail an opt-out form.

• OptOutPrescreen.com - The ultimate up yours to credit card offers.
• Call 1-888-567-8688 to opt-out or opt-in.
• There is an amusing 56 page report on why you should opt-in by the Feds (PDF).
• Consider: Why You Shouldn’t Opt-Out of Credit Card Solicitation.

Utilize Some National Resources, kthx

Visit the National Do Not Call Registry and sign up the telephone numbers to avoid telemarketers. Most telemarketers should not call the submitted number once it has been on the registry for 31 days, but you may still receive some calls — and calls from businesses where you are already a customer.

• National Do Not Call Registry - Fear the enforcement of the FCC & FTC (heh).
• Call 1-888-382-1222 to register via phone.
• You can also file a complain if a telemarketer cease to make calls even after you’ve been registered for over 31 days.
• The more concise, specific, and complete a complaint, the more chance you’ll have for it to be acted on. Avoid long, pointless story such as the introduction to this post.

California and Vermont Residents, Rejoice!

Because our state legislatures (or consumer advocacy lobby groups) actually cares about us, California and Vermont residents have more privacy protection within the state laws compare to other states (although Vermont residents have a bit more protection).

If you’re a resident at either California or Vermont, you will usually have an automatic opt-out choice to sharing of your information with non-affiliated companies (basically, other companies you might not be doing business with). For Vermont residents, you will also be automatically opt-out of the sharing of information within the specific company’s affiliates.

You should note however that both of these automatic privacy choices don’t include the choice of removal from telemarketing list or mailing list, so if you want to opt-out of those too, you should still contact the specific company and specify those choices.

Related Links & Resources:

• Privacy Survival Guide from Privacy Rights Clearing House
• Financial Privacy Resources from Privacy Rights Clearing House
• Truth About Cell Phones and Do Not Call Registry

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Here it is kids, the guide in helping you say “up yours” to Madison Avenue. The post was suppose to be finished before the holiday shopping season, but uh, oh well.

Yes, Even You Might Pick Up a Thing or Two

No matter if you’re a seasoned consumer who knows exactly what they want and at what price they want it — or an impulsive buyer who grabs those $10 DVD at the check-out aisle — you can probably pick up a thing or two from reading this guide.

If not, be comforted on the fact that you’ll only waste about 18 minutes or so of your life (depending upon your reading speed and tolerance for grammatically lacking writing).

One Man’s Crap is Another Man’s Han-Solo-Frozen-in-Carbonite

Spending $4,900 on a movie prop replica may seem like a ridiculous idea to most people, but try saying that to the 2,000 or so hardcore Star Wars fan that bought the limited production Han Solo in Carbonite replica.

Measuring at around 6 feet 8 inches long and weighing in at about 100 pounds, the Han Solo in Carbonite replica is one of the ultimate decorations for geeks across the globe (and a constant eyesore for their partner — if any).

As you can tell, what’s important to one person may be a complete waste of money to another person. In order to “stop buying crap,” you must first figure out what is of value to you — that is, what’s crap and what’s not.

Perhaps you have a love for fine china? Or maybe you can’t get enough of your collectible lunch box? Whatever it may be, as long as it is important to you, it is not “crap.”

Stop Buying Crap rule #22: It is perfectly acceptable to spend money on things that are important to you, as long as you can afford it.

It’s Not about Being Cheap, its about Being Sensible

If this is your first visit to the blog, you might get a wrong impression of the blog’s underlying message. You might even assume that the blog owner is a cheap person, with a deficient IQ, a questionable genital size, and thus enjoys making fun of people that spend money.

If that was the case, you would be 90% wrong. This isn’t about being cheap at all. This isn’t about hording up all your money so you can swim in it Scrooge McDuck style. This is about understanding your unlimited wants and how you may fulfill it with your limited resources. It’s about what you can and can’t afford, what’s realistic and what’s unrealistic.

Just because traveling around the globe is an important goal to you doesn’t mean you should max out your credit card to fulfill that particular need. Sure, you may be a hardcore Star Wars fan, but will it be practical for you to spend 90% of your income on Star Wars collectibles? Probably not.

Fitting the Non-Crap into the Budget

Creating a budget is the basic foundation of personal finance. It might be a bit boring but it’s one of the most important steps in gaining control of your finances and the quickest way to know where you stand financially.

If you have never created a budget before, you are strongly encouraged to spend a few minutes right now and write out a rough estimate of your budget. It is surprisingly easy to do; the gist of it involves you figuring out how much you make per month and how much you spend per month. Subtract the total income from the total expense and you’ll figure out where you stand. Yup, that’s pretty much it!

To find out how to create a budget, check out “How to Budget & Save” from the Federal Reserve Bank of Chicago. There is a simple worksheet available that you can follow to better determine between fixed expenses and variable expenses.

Once you have figured out your budget, you can then figure out how much crap you can or can’t afford. This may sound entirely stupid and obvious, but one of the reasons why people spend more money than they have is because they don’t know how much money they really have.

Here’s an example. What’s easier to do: Spend $2,400 on a brand new TV when you know fully well that you only have an extra $200 to spend per month (thereby putting you $2,200 in debt), or spend $2,400 on a brand new TV because you think you can afford the new TV?

It is a lot easier to spend responsibly when you understand where you stand financially and know the numbers involved.

Delay Gratification is Your Friend

In the $2,400 TV scenario, if you only have an extra $200 to a month to spend, what can you do to get that TV?

Option #1: Save up $200 per month and buy the TV after a year.

Option #2: Charge it on a credit card at the current average interest rate of 14.79% APR and pay it off by a monthly payment of $200. Actual cost via this method? About $2,800.

An extra $400 because you couldn’t wait. Is it worthwhile? *shrug* Sensible? Probably not.

Avoiding Those Wacky Impulses

One of the quickest ways to trash a budget is to spend money impulsively. In order for you to buy the crap you really care about, you must avoid the impulsive purchase of crap you don’t need. Mastering delay gratification and avoiding impulsive purchase are both acquirable skills!

If you have a habit with impulsive purchase, it will be worthwhile to examine the cause more carefully. Do you spend without thought because it’s easy to do? If so, perhaps cutting up the credit card may make it harder for you to spend. Try the often-tout method of switching to cash or debit/check card. It works!

Have trouble not buying unnecessary things during a shopping trip? Find out exactly what you need and limit yourself with cash to that amount before you head into the store will help you against impulsive purchases.

Understanding Marketing Influences

It’s not that marketers are evil brainwasher bent on tricking you into buying their products, it’s just, marketers are brainwasher bent on influencing you to buy their crap. Hah.

Alright, to be more fair, you should be aware that many companies spend millions of dollar so that they can have a better chance to earn or sway your spending dollars. Because you most likely don’t have the same millions to spend, it’s important for you to choose the right crap to buy on the first try — especially if said crap is an expensive item.

A savvy consumer should know if a brand of a product matters or not and spend the extra time to distinguish actual product differences from marketed differences. With the wealth of information available online, everything you want to know about that toilet seat cover can be a few mouse click away.

Obviously, spending hours reading up on mundane things such as toilet paper may not be the most productive use of your time, so apply product research at your discretion.

Don’t Forget the Big Picture

Alright, so you’ve figured out what’s important to you, know how much you can spend on it and how much you can afford, tme to buy whatever the heck you want?

Nope. Even if you can afford it now, even if it won’t put you into debt — you will still need to be sensible about your purchase, because every dollar you spend today is a few dollars less you have to spend in the future.

Most of us will want to retire in comfort, or maybe even pay for our children’s education. In order to do either of these things, you will need to be mindful of how your current spending impact your future spending.

Summing It All Up

1. Understand what’s important to you
2. Know your budget
3. Be patient and save
4. Don’t let some jerk tell you what to buy (and what not to buy)
5. Spend sensibly and don’t spend like there’s no tomorrow

Have your own stop buying crap method? Sharing is caring.

Every since I got tricked by the former Sultan of Nigeriascam, I have begun to treat all emails with an extra dose of suspicion.

“Hi Cap, I have some question on personal finance…” an email would read.

To which I’ll write back, “Nice try Mr. Ex-Sultan, I hope you rot in hell.”

Phishing: A social engineering technique that attempts to fraudulently acquire your sensitive information. These days, they are mostly found in the form of fake email and websites.

Spotting phishing email doesn’t require every day paranoia, but a red flag should always go up when you notice these things in an email:

Note: A matching link & URL in status bar doesn’t necessary mean it’s a legitimate email. URL in a status bar can easily be spoofed. Sender’s address can also be spoofed.

The above email is a rather obvious phishing email, but was shown to point out some common trend in phishing email:

1. A sense of urgency: You better take action fast or your sh*t out of luck!
2. Threat: Do it or your account will be closed (or some other penalty)!
3. A Link: Directs you to a spoofed website that looks legitimate.
4. Requires you to either enter or confirm your personal information.
5. Poor grammar. They spell and write like Cap of Stop Buying Crap.

Here are some things you should consider when you receive a suspicious email:

1. Do you do business with the bank or retailer?
2. Is the email to you or is there a generic greeting? (e.g., Dear XXX Customer)
3. Do they offer an alternate form of contact such as a phone number?
4. Does it contain information the company should know? (e.g., last 4 digit of your account #, your user name, etc.)

The trick is that even if all those questions above pan out, it doesn’t necessary mean you’re receiving a legitimate email.

This brings us to Targeted Phishing:

A targeted phishing email may contain your real name, and may be from a bank or retailer that you actually do business with. These phishing email will usually reference to a very specific transaction.

Example:

1. A confirmation email thanking you for your purchase.
2. An email notifying you of a specific transaction on your account.
3. An email from “eBay” giving you a second chance to your recent failed bid.

Distinguishing a legitimate email from targeted email can be difficult, so when you’re in doubt, you should always contact the company directly yourself via a different method than those mentioned in the email.

If the email was regarding your credit card account, call the number on the back of your card. If the email is regarding your bank, find your bank number on your statement and give them a call.

Targeted phishing works especially well because they are often from a familiar source aimed at a specific group of people. These type of emails may not necessary be seeking for your entire personal information, but merely asking for a certain information (such as user name or password) in order to obtain the rest on their own.

When you belong to a social networking site, you should also be wary of emails from the supposed organization asking for any of your information. What may look to be a harmless survey may be an identity thief seeking further information.

Targeted phishing becomes Spear Phishing when they are highly targeted. These are generally aimed at a employees of a specific organization or company. The email may appear to be from a colleague or executive, asking you to either download an attachment or furnish them with certain information.

Just as a regular targeted phishing attack, spear phishing attacks are difficult to spot on a first glance basis, especially when they are highly customized. When in doubt, always contact the the supposed sender via a different channel.

Some General Guideline in Avoiding Phishing:

1. Do not reply to any emails asking for your personal or financial information. Remember, legitimate companies don’t ask for sensitive information in an email.
2. Do not download attachment from suspicious or unfamiliar emails.
3. When in doubt, contact the company yourself directly through familiar channels.
4. Do not click on links from suspicious email. If you need to login to your account, open a new browser window and type in the URL.
5. Check the security certificate of the website before you enter any personal information. (Look for the yellow lock icon on the bottom right of your browser and double click on it).

Related Links and Resources

• FTC - How Not to Get Hooked by a Phishing Scam
• MailFrontier Field Guide to Phishing (PDF, 1.38 MB)

Chances are, you have more than ten financial accounts. Keeping track of them is probably hectic, unless you have photographic memory; in which case, remember that time you opened the door while your parents thought you weren’t home?

Anyhow, lot’s of financial accounts, too much hassle to keep track of them individually.

What do you do?

In comes Yodlee, an online banking account aggregation service, which also happens to be utilize by many major financial institutions. Yodlee is free to sign-up and use, and the only reason why you don’t hear about them too much is because they do not market their product directly to the consumer.

The gist of it is really simple. You register for an account at Yodlee, add in your financial accounts, click the update button—and bam, all your account informations are updated and you are now in financial organization bliss.

Two Choice of Yodlee

Yodlee MoneyCenter

Yodlee Dashboard

There’s really no difference in features in the type of Yodlee you choose, except for the way the information are presented to you. If you prefer an all-in-one screen view, you should go with Dashboard, if not stick with the single format view from MoneyCenter.

How To Sign-Up With Yodlee

1. Head over to Yodlee’s Financial Application
2. Pick the format you like and click Log Me In
3. Click on the Registration link above the log-in
4. Fill in all your info and click register

Done deal.

Using Yodlee and its Features

Adding accounts is also fairly straight forward. Click on the Add Account Tab and type in your financial institution’s name to search for it, or click on the popular account tab to see if your account is listed there.

Types of accounts you can add:

• Banking Accounts
• Credit Card & Reward Accounts
• Telecommunication Bill Accounts
• Payment Service (PayPal) Accounts
• Investment and Insurance Accounts
• Loan and Mortgage Accounts
• And even web-based E-mail Accounts!

Yodlee contains a BillPay service, where you can make payment to some of the accounts you’ve added, such as credit card bills and cable service bills; pretty handy! Another semi-useful service is the Yodlee Financial Calendar, which allows you to see when the bills are due on a calendar map.

Yodlee BillPay

Yodlee Financial Calendar

Besides the features listed above, there is also a Net Worth tab that shows your net worth in a bar graph format. You can also check out the spending report, although it isn’t too accurate unless you actively manage the categories for each specific transaction. You’ll find that many of Yodlee’s features are similar to those of MS Money and Inuit Quicken.

Even More Yodlee Choices

With their recent update, Yodlee has been noted to be slow to access for some user. As you can tell from the above pictures, some of the sample accounts I added were having trouble updating. For those with significant access problem with Yodlee, you can try their service from various other financial institutions:

• CompassBank MyCompass (Yodlee 5.0)
• Harris TotalLook (Yodlee 5.0)
• National City My Accounts (Yodlee 4.0)

Of course, signing up service in these other institution will require you to trust your information with their database and security. If you’re a HSBC or Bank of America customer, you should check out HSBC EasyView and Bank of America’s My Portfolio.

Update: Mint.com is another upcoming provider to free online account aggregation that utilizes Yodlee.

Paranoid Users Beware

The problem with an financial account aggregation is that all your password and information for each of these financial accounts are stored in one central location. Not a good thing if you don’t trust Yodlee’s security capability.

There are a couple of things you should know about Yodlee though. First, many of the largest financial institution utilize Yodlee technology for their online account services. If you’re banking at Bank of America, Citi Bank, or HSBC—you’re already using Yodlee services. In fact, those respective banks probably offer a similar account aggregation service on your online account, powered by Yodlee.

Second, under federal banking regulations, you have quite a few rights when it comes to electronic fraud. As long as you’re up top of things and notify fraudulent activities fast (within two days), you’re only liable for up to $50. Within sixty days, the cap rise to $500. Anytime over that though and you’re sorta SOL.

Still Pretty Damn Convenient

Fact of the matter is, an online financial aggregator is flippin’ convenient. For me and many others, it’s well worth the small risk. There really shouldn’t be any big problem if you take basic precaution with your private information and be proactive about the security of your computer.

Without online aggregator service like Yodlee, life can be hectic. Let’s face it, no body likes logging into sixty different accounts everyday just to make sure their significant other didn’t blow all their money on Texas hold’em.

Related Links and Resources

• Why I Use Yodlee Account Aggregation from MyMoneyBlog.com
• My Second Love Affair With a Web Application
• Q&A on Yodlee from Fatwallet Finance Forum

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Applying for credit cards without reading the card’s terms and condition, is like selling your soul to the devil for a mystery bag. Not a smart thing to do.

In a quest to save more souls, here’s the kick-ass guide to understanding credit card terms & condition, all for your benefit. Let’s use the Best Credit Card Offer Ever as our reference!

FACT: Under federal law, all credit card solicitation or applications must contain certain key information. This key information is usually inserted in a disclosure box, as seen below:

I. A Closer Look at the Disclosure Box

To get a better understanding of the disclosure box, or, the actual credit card offer, you’ll need to better understand the actual terms involved. Before we go further, it may help if you click on picture above and leave it open, so you can refer to it as we go over each of the terms and condition.

Annual Percentage Rate (APR) for Purchases: This is the annual rate you’ll be charged if you carry a balance from month to month. In a credit card offer with an introductory rate, this is where you’ll also see it listed. For our example, the APR for purchases is 9.99%.

Other APRs: This is where other annual percentage rates for other types of transaction are listed. Take our example, it’s balance transfer APR is 9.99% and it’s special opening cash advance is also 9.99%; however, it’s regular cash advance is 19.99%–a hefty interest rate. The delinquency APR is an even higher 23.99%.

Variable-Rate Information: In this box, you’ll see how your variable rate is determined. Generally, the purchases APR will be a variable rate, such as 3% + the Prime Rate, while the balance transfer APR will be a fixed rate. There’s generally also a footnote with an explanation on how prime rate is determined—usually by the highest prime rate published in The Wall Street Journal on the last business day of the month.

In our “Best Credit Card Offer” example, ALL the rates (purchase, cash advance, and balance transfer) are variable! Through your February 2007 cycle, the rates are 1.99% + prime rate, but it will never be lower than 9.99%, even if the prime rate is at a miraculous 1.00%. After 2/07, the rates will increase to a 4.99% + prime rate. Yay! The Prime Rate for our example is also determined a bit differently, but it is still based upon the WSJ.

Grace Period for Purchases: This is the amount of days you have to pay your bill in full before incurring finance charges. It’s 25 days in our example, which means if you start the current billing cycle without a balance, and you bought a brand new Ionic Breeze Air Purifier (for the awesome price of $399) you’ll have 25 days to pay off the charge before interest starts to accrue. Grace period rocks! You should also note that grace period usually applies only to purchases, and not to balance transfer or cash advance, which accumulates interest right away!

Balance Calculation Method: This box will determine how you get screwed over. Specifically, this is the method in which interest on balance are calculated. Similar to our example, most cards these days are calculated by the average daily balance method including new purchases. There are other types of method, such as the funky two-cycle average daily balance method; the better (but rarely seen) average daily balance method excluding new purchases; the adjusted balance method and the previous balance method.

Annual Fees: Straight forward enough. The annual fees associated with the card. They can either be none, like our example and many other credit cards, or $75 to $100, like many airline mileage credit cards. For your benefit, you should probably go with a card without an annual fee, unless you really do take advantage of a card’s benefit.

Minimum Finance Charge: This is the funny box, where they state the minimum amount of finance charge you’ll receive if you carry over a balance. Example, if you carry over a balance of $0.20, you’ll receive the finance charge of $1.00, even though actual interest on that balance is only about $0.02.

Specific Transaction Fees: Most credit cards will have a section that explains the fees associated with a certain type of transaction (e.g., cash advance, balance transfer). In our lovely example, the fees for cash advance and balance transfer is 3% of the amount of each cash advance, but not less than $5 nor more than $50 (fee waived for transaction in connection with accounting opening). This means that if you initiate a balance transfer of $5,000 after you opened the account, the balance transfer fees would be $50. 3% of $5,000 = $150, but fees won’t exceed $50 as stated in the terms. Watch out for credit card offers with high maximum fees, or NO maximum fees!

Late Payment Fee & Overlimit Fee: This is rather self explanatory. According to our example, if you pay late because you’re busy watching Battlestar Galactica, you get a nice $35 late fee. If you went over your limit because you’re horrible at arithmetic, you also get an awesome $35 overlimit fee.

II. Footnotes That You Really Should Read

What’s a credit card offer without asterisk and footnotes? Some of the most important terms and condition are within the vary footnotes of the card’s terms and condition. The very solicitation itself requires a footnote, as many Pre-approved offers are rather like a craps shot. Example of footnotes below:

Here are some more important terms that you should look out for:

Other Fees: Yes, more of them. Return Check Fee, Returned Payment Fee, Stop Payment Fee, Copy Fee, you name it, they probably have it. For our specific “Best Credit Card Offer,” if you pay off your balance transfer early, there’s a cool Early Pay-Down Fee of $600! Before you apply for a credit card, you should always check for all types of possible fees associated with the usage of the card.

Pre-Qualified Status: In these explanation footnotes, the terms spell out exactly what it means to be Pre-qualified for an offer. Usually, a credit card company receives information about you from a credit reporting agency—based on that information, the card company has determined that you may qualify for the credit card offered. Problem is, the information they received from the credit reporting agency may be out of date, or your credit history may have changed since, which might result in your credit application being denied. Just because they say you’re Pre-approved or Pre-qualified, doesn’t really mean you are!

Cash Advance Definition: Some credit card offers will specifically lay out what a cash advance is. Cash advance is the most expensive type of credit card transaction, as most cash advance have no grace period—the interest starts accumulating the second you initiate the transaction! In our example, cash advance is basically any transactions that are directly converted to cash. This includes purchase of gaming chip and gaming transaction! So the next time you’re thinking of using your credit card to pay for your chips at the casino, you better make sure your credit card doesn’t consider that as a cash advance.

Delinquency/Default APR: This is the fixed, foobar rate. It is usually the highest rate within a credit card terms. If you pay your credit card late too many times, you may be in danger of having your rates changed to the default (penalty) rate. Most credit cards offer will explain the default APR more clearly when you’re actually approved, however our pre-qualified offer here actually spells it out quite nicely. Basically, if you pay in two consecutive months, or two times in any six months period, you get hit with the default APR. To get out of the high APR, you simply need to make six consecutive timely payments.

III. Other Things That You Really Should Know

Credit Limit: Although usually not mentioned specifically in a credit card offer, the credit limit of a credit card determines the maximum amount you may charge on your credit card. This includes regular purchases, balance transfers, cash advance, fees and finance charges. If you go over this limit, well, you know what happens.

Cash Limit: The cash limit is the maximum amount you can utilize of cash advance. This is generally a specific dollar amount (such as $1,000) or a percentage of your total credit limit (e.g., 50% of your credit limit).

Type of Credit Card: Are you applying for a secured credit card or a regular, non-secured credit card? There’s a big difference here. Secured credit cards are generally for those with poor or no-credit, requiring a security deposit to open an account. Generally, the larger the security deposit you make, the larger your credit limit. Non-secure credit cards are of course the ones that do not require a security deposit; these are the regular cards that you see most of the time.

IV. Is That All You’ll Need To Know?

You wish. This is a brief glimpse into the basic terms and condition that you’ll find on a credit card offer. When you actually apply for the card and you’re approved, the real terms and condition sent to you can be an even more confusing read.

Still, the gist of things and the important terms you should know about are all above. Because credit card terms and condition are always changing (and usually not in your favor), you should definitely pay attention to the modified terms and condition sent to you by your credit card companies. After all, it would be awfully silly to pay for fees that you didn’t even know existed.

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The government can be a wealthy source for information. Problem is, finding those information through public channels can feel like a trip through the DMV (aka Satan’s backyard).

If the information was the product, and distribution of these info is part of the service, then it’s a good thing the entire U.S. government isn’t a business—because they’ll totally get outcompete. And out of business. And bankrupted. Really bankrupted.

Uh, so regardless of the government’s acutal financial situation, they’re still a great source for financial information. Seriously.

Say Hi to Mymoney.gov

Brought to you by the U.S. Financial Literacy and Education Comission, Mymoney.gov is a big o’ index site that points you towards various information on finances from many different U.S. government agencies and departments. Topics indexed ranges from bugeting, taxes, home ownership, to savings and investing. It’s basically an attempt to gather up all those useful information that you can’t find.

While visiting the site, you will notice that you can order a FREE “My Money” Tool Kit, a package of helpful publications dealing with savings, investing, protecting and getting the most from your money. Since I love free stuff, I ordered one.

The “My Money” Tool Kit

 

Let’s see what this package from Uncle Sam consist of, eh?

 

Brouchers and leaflets on personal finances. Yawn?

That was my first impression when I received the package a few months ago. After actually reading the materials, I realized that there are plenty of useful information within these booklets—albeit the small packages they came in. I’ve also found their ebook counterparts in pdf formats, so feel free to download them.

Here are some noteworthy ones in the package:

Saving Fitness: A Guide to Your Money and Your Financial Future [download] 3.12 Mb

Provided by the Department of Labor, and partnered with the Certified Financial Planner Board of Standards Inc., this 16 page booklet discusses basic steps to take for a healthy financial picture, with an emphasis on retirement planning.

Social Security: Understanding the Benefits [download] 902 Kb

Nevermind that it may not even be there in a couple of years from now—-it’s still important to learn about Social Security. Brought to you by the Social Security Administration (dur), this 24 page booklet provides a good basic understanding on Social Security: how to apply, qualify, and types of benefits provided. A useful read.

Get the Facts on Saving and Investing [download] 5.7 Mb

From the US Securities and Exchange Comission (where else?), this 34 page booklet gives you a quick lowdown on the differences and importances of saving and investing. Emphasis on investing, covers some basic types of investment and things to consider when choosing to invest. A nice read with plenty of good information.

Ten Questions to Ask When Choosing a Financial Planner [download] 347 Kb

Here’s a recommended read. A straight-forward 14 page broucher from the Certified Financial Planners on 10 questions you should ask when you look for a financial planner—an important decision that should be accompanied by important questions.

The following weren’t in the package but they’re worth a mention:

Taking Control of Your Finances [download] 1.31 Mb

From the FDIC, this 12 page guide is geared towards young adults, with useful advice such as “Don’t get a credit card just so you can get a free t-shirt.”

66 Ways To Save Money [download] 79 Kb

From the Consumer Literacy Consortium (whatever that is). Straight forward and diverse in its applications; from insurance to housing, there are quite a few practical tips in there.

Noteworthy Sites Indexed on Mymoney.gov

All in all, the “My Money” Tool Kit was pretty decent, even if they just threw in a bunch of different booklets from different agencies. You can order your own free kit here. The free package isn’t all that Mymoney.gov has to offer—the real goods are the indexed sites:

• FTC’s website on Credit - Everything you should know about consumer credits.
• The Fed on Choosing a Credit Card - A VERY good read on things to consider when choosing a credit card. Was going to write an post just like this one, but why bother when the Fed’s got it covered!
• US Treasury on Identity Theft - A pretty nice, if not well organized page with plenty of information on identity theft. Do’s and don’ts, what to do to prevent, and what to do if you are a victim of identity theft.
• FTC’s website on Identity Theft - Another resource on identity theft from the boys that receive the complaints. Much better organized and an easier read.
• SEC Guide on Avoiding Securities Fraud - A very nice index guide on the many, many different types of securities frauds you should watch for when investing.
• Department of Housing on Buying a Home - Nine steps to buying a home. The steps are pretty watered down, but there are plenty of links to many other resources.
• FTC on HELOCs - A good page that describes home equity line of credits and the important questions that you should ask yourself before applying for one.
• US Treasury on IRA (476 KB, PDF) - A 104 page publication on everything you want and don’t want to know about Individual Retirement Accounts.
• Step-by-Step Retirement Planner - Straight from the fun folks at the Social Security Administration, a good guide on steps to take when you’re near retirement (focuses on social security).

Actually Read Everything?

If you’ve seriously, and I mean seriously read through all those information above—I will guaranteed that you would have learned a bit more about finances. The next time you’re looking for general financial information, check out Mymoney.gov or a do a search on Consumer.gov, you may be plesantly surprise on what you tax dollars can produce.