Student Credit Card and Credit Education Blog

In order to further spread some holiday cheer, the chairwoman of the House Financial Services Committee’s consumer credit subcommittee - Rep. Carolyn Maloney - has been passing around a bill that would eliminate some troublesome credit card practices that hurt pocketbooks the most.

The bill would no longer allow “universal default”, which allows card companies to raise rates if they’re late on any payment to anyone, or if their credit score falls for any reason. It would also increase the minimum notice period that companies have to tell consumers about changes in their card policy. It’s currently 15 days; Maloney’s bill would increase it to 45.

In addition, it would ban two cycle average daily balance billing, which allows card issuers to calculate interest over two billing periods. I talked more about this practice a few months ago.

A draft of this bill is currently being passed around to the card companies as well as consumer groups. It will most likely be introduced in 2008, along with a series of debates on the subject.

More info on the bill (and a draft of it) can be found at American Banker (free registration)

I usually restrict my writing to the Student Credit Forum (http://forum.studentplatinum.com) but since I felt this latest post was both timely and important I convinced Platinum Stud to give me some space. So here goes.

According to the National Retail Federation, it is expected that Americans will spend about $475 billion during the holiday period this year and that much of that will be bought with credit cards. It’s also expected that the difficulty paying off these holiday debts will very likely spur on a recession. With higher minimum payments now required and banks tightening up on loans and low interest balance transfer options people will be paying more money towards credit card payments than ever before. This means they will be spending much less on retail goods further increasing the odds of the economy spiraling.

If you’re one of the millions of consumers who will be carrying a holiday credit card balance or any credit card balances for that matter this is a very serious thing. You have a job to do and it has to start now or 2008 could be a very bad year for you. With this in mind here are 3 important tips I would like people to note.

1. Know your own financial details inside and out. Ignorance is the first thing that’s going to zap you. You should know exactly what your balances, interest rates (APR), minimum payments and due dates are.

2. Have a budget. If you don’t watch exactly where your money is going and the economy tightens up you will very quickly find yourself in a bind. We have provided a free interactive student budget for you here: http://www.studentplatinum.com/budget-template/index.php

3. Have a plan. I hear time and time again from people who are paying more than their minimum payments and still having trouble keeping up. We recommend as do most other experts that you select one card to pay off and pay all extra cash on that card while paying only the minimum payments on all the others. There are two different strategies for this called the “snowball” and “high interest first” strategies. We have a free plan for you which will describe in detail how to employ both to get you on the road to recovery and freedom from credit card debt. Read our free plan here: http://www.studentplatinum.com/credit-card-education/student-credit-card-debt-reduction-plan.php

- The Credit Card Guy

For next week’s holiday. I thought I’d offer an option for the classic yuletide drink of egg nog.

NOTE: If you’re underage or simply don’t want liquor, just keep it out of the recipe!

6 eggs
1/2 cup rum
2 cups heavy cream
1/2 cup brandy
1 cup milk
1/2 cup whisky
3/4 - 1 cup sugar
1 tbsp nutmeg

Separate the eggs (yolk and white) Set the white aside. Mix yolks well, gradually adding the cream, milk, and sugar. Get back to the egg white - WHIP IT (whip it good!) until “soft peaks” form. Fold the white into the rest. Gradually add the alcohol. Either add nutmeg right away, or sprinkle on top later. Age for at least 2 hours in refrigerator, uncovered.

If you’ve had some extreme sessions of credit card purchases or need plastic in an emergency, you might be in a situation where you’ve got an unwieldy amount of credit card debt across multiple cards. In situations like this, options such as debt consolidation may come into your mind (or mailbox).

These services take all of your debt - or whichever debt you’d like to include - and combine it into one loan. One popular company that offers this is Bank of America.

What this type of service does is it combines all of your credit card debt into one loan. The bank (or whoever your work with) provides you with an “introductory” APR and then a set of monthly payments, over a period of time that you feel comfortable with. If you make these payments, you’ve paid off your card. Sound good? Well, things aren’t as rosy as they look.

First, you need to read the fine print of any debt consolidation service. The aforementioned from Bank of America begins with a discussion of your APR:

“All payment amounts and terms are estimates based on an APR of 8.99%. Your APR may be higher. We will set your APR between 8.99% and 24.99% based on creditworthiness.”

and even further down the page.

“We reserve the right to change your APR, fees or other credit terms at our discretion.”

So, that initial introductory rate can be as high as 24.99%, or it may start low and gradually increase. It’s “at their discretion.” Also, you probably won’t have the same luck lowering your APR as you do with phoning credit card companies.

Another issue with using this service is that if you want to add to your debt, it’ll cost you an additional 3% of the amount you add. Not to mention, it will force them to revise your payment schedule which will give them an additional opportunity to revisit your APR, and possibly increase it. Not good.

All in all, if your credit cards are so overwhelming and your working with APRs above 25%, then debt consolidation may be a good option. Otherwise, create a spreadsheet of each card, what you owe, and what your APRs are. Then, get on the horn, and see if they can help you out. Alternatively, you may wish to look into a credit counseling service, who can contact the credit cards on your behalf to get a payment plan in place, and/or lower your APRs. You might get a ding on your credit report, but that would be better than filing for bankruptcy and totally destroying your credit.

Sure, everyone is familiar with the credit cards found in most wallets and purses. You’ve got your AMEX, airline cards, and something from your favorite hotel. Of course, you’d also see names like Chase, Citibank, Capital One, Discover, MBNA, etc. These are all well and good, and I’m sure these people are perfectly happy with their cards (or as happy as they can be!)

But, what about those credit cards that are much less common? Those that might even be downright rare? I took a gander around and found a few cards with unique concepts, and that are borderline humorous. Let’s take a look:

World of Warcraft Visa
For those that aren’t familiar with World of Warcraft (or “WOW”) it’s an online roleplaying computer game, that has taken over the lives of many of its players. At $15/month, it’s not cheap and the 4.5 million players have made quite a bit for Blizzard, the game’s creator. So, what does the credit card get you? Rack up 1,500 points (i.e., spend $1,500) and you get a free month of play. If you WOW regularly, this might be the card for you.

Pier 1 Rewards Mastercard
As per the name, this one gives you certificates towards shopping at Pier 1, and the points accumulate four times faster if the card is used at a Pier 1. These are fairly standard store-specific rewards. The interesting thing I find about this card is just that Pier 1 is a very expensive store, so unless you run a great deal through your card, the rewards you earn won’t get you very far.  I think a Gap Visa or something similar would make more sense for most card users.

Chase +1 Student MasterCard
At first glance, this appears to be a standard rewards card for students. However, it has two characteristics to differentiate. First, you are rewarded for purchases with “karma points”, which work just like other reards programs but have a pleasant Yanni-like feel. Secondly, you can earn bonus points if you post messages on Facebook - a very clever idea and truly situates this card towards the student population.

Enjoy the weekend and keep that holiday spending in check!

Most people will be doing at least a bit of shopping online this Xmas/Hanukkah/Kwanza season.  There are no lines and you can easily save a few dollars over the brick-and-mortars. Most of these online sites are perfectly safe to shop at. You’ve got your Amazon, Buy.com, Overstock, Blue Nile - they’ve all been around almost 10 years and are virtually household names.  But,  you do need to be careful out there, particularly with the smaller sites that you’d come across randomly, usually in a Google search. These little guys may not be as legit as they appear and there are some that you should flat out avoid. Here are some tips:

Are there any reviews?
When you use shopping search engines (like PriceGrabber or Shopping.com), you’ll find reviews of each of the online stores  they include. And eBay Stores are tracked by their feedback rating. Check to see if the site you’re on is listed in either of those  or in a site like Resellerratings.com.

Are they secure?
Put something in your shopping cart and head to the checkout. Is the site in secure mode? In other words, if you look at your browser URL bar, does it begin with “https”? That’s key. Also, look for a Better Business Bureau or Verisign logo. Sketchy sites won’t have those. You can also try a program like McAfee SiteAdvisor, which can alert you to problematic online stores.

Do they have a physical address?
Check out the “Contact Us” or “About Us” page and look for an address and phone number. Be wary if all they have is some generic text and an info@xxx.com email address.

Did you check your credit card bill?
If you do buy from the questionable site, be sure to check out your bill soon after. Are the charges exactly what your email receipt contains? If not, don’t be afraid to call up your credit card’s customer service and dispute the charges!

Online shopping is great for many people. It eliminates frustration and can help you plan better for your gift shopping. Just be wary who you shop with and you’ll have a great time!

Recently (actually, just yesterday)  we added a new section to the Student Platinum website. In order to more efficiently answer your questions about anything and everything related to student credit, we set up the Student Platinum Forum.  Questions about a student card? Interested in improving your credit? Maybe you aren’t sure what to do with some extra cash you have laying around? It’ll all be covered. There will be two moderators checking out what’s being talked about on a regular basis and adding their own $0.02.

So, take a look at the Student Platinum Forum and feel free to read over what’s there and inquire about recommendations for your personal situation.

Since my fan club is continually increasing in membership and I’m now regularly getting stopped on the street, I guess I should offer a top eight list of things you didn’t know about the Platinum Stud:

1. I live in Cambridge, but still root for my Yankees.
2. The two best concerts I’ve been to were Snoop Dogg and Huey Lewis.
3. I went to college in St. Louis.
4. My dad is a member of triplets (fraternal).
5. My sister plays bassoon for two local bands/organizations.
6. I’ve been an eBay seller for over five years and have over 600 feedback.
7. I was on my high school chess team (yes, varsity).
8. And finally, I enjoy discussing student credit and personal finance for college kids.