This is just a short note to apologize for the posting delay; I’m suffering from a medical condition that most days leaves me only able to use one hand. (If you’re curious, I go into more detail on my personal blog.) What typing I’ve done has been for two guest posts I promised; they’ll air in August.
I’ll be back to Pocketmint as soon as I can … think me up some cooler weather, ’kay?
As I mentioned in part one, for the last two years Jak and I have been using a single credit-card account, a Costco Amex card with cash-back rewards, for all our credit-card needs. (When a merchant doesn’t take American Express, we use the debit MasterCard for our joint checking account.)
This makes record-keeping easy. At the nadir of our debt we had nine or ten cards between us, which makes for a lot of due dates to track every month. As you might expect, we missed several deadlines over the years.
Now I only have to monitor the balances of two accounts, and worry about one monthly due date. We pay the full balance on the Amex card every month, so never incur fees or interest charges.
I’m very happy with this system. Except for one thing: it’s trashed my credit score.
I confess that once I’d paid everything off I stopped even tracking how many lines of credit I had open. I used to know them by bank, so there would be the Providian card, the First USA card, the Citibank card, etc. But those darned banks keep eating other banks, and the names wouldn’t stay the same. We started out with one Chase account each; four years later we had six (or maybe seven?) different Chase cards, which I could no longer tell apart. J.P. Borgan Chase!
To make matters worse, I’ve never been very happy with Chase, after a couple of predatory ‘gotcha!’ stunts like moving our due date up by a week without warning. I had no intention of using any of those cards ever again, but I left them alone because I knew that closing lines of credit can drop your credit score.
Then in the spring of this year Jak and I began to receive notices that one card or another had been closed due to inactivity. At first it was a surprise; in nearly twenty years I’ve never before had a bank close an account because I wasn’t using it. Previously they’ve just tried to woo me back by sending more ‘convenience checks’ and offering temporary low interest rates. The Wall Street Journal explains this shift in strategy: “As credit-card delinquencies rise, closing inactive accounts helps companies reduce their exposure to risky credit holders. Issuers close credit lines … if the card holder is deemed unprofitable, which is essentially the case when the card goes unused.”
I hated the idea of juggling purchases across multiple cards again, and decided not to change my behavior in hopes of stopping any other closures. It was a partially emotional decision rather than a strictly logical one, but for me the potential score drop wasn’t worth the effort and increased risk of screwing up.
When I got the termination letter from Discover, however, I had a sharp pang of regret. That was the first credit card I got in college; when it closed my ‘credit history length’ dropped from 19 years to just 2. I don’t have clear before-and-after credit scores, but since history length accounts for roughly 15% of your score, I figure that had to hurt.
I called Discover to find out if the account could be reopened. No dice; I was offered a new account, but of course that would do nothing for my ‘length of credit history’ number. They wouldn’t budge on reopening the one I’d had for nearly two decades.
This week I pulled credit reports and took stock. Jak still has three Borgified Chase accounts active (my guess is that Chase realizes that he’s still employed full-time and I’m not); I have just the one Amex card open.
Honestly, I prefer it this way. Despite my brief worry that I’d done the wrong thing by not saving the Discover account, I feel relieved to be done with all the extra cards. I have a sense of freedom and control that was missing before.
Still, it was not without cost. If we ever apply for another mortgage, the credit score will matter. It might even be making a difference right now in our car insurance rates, or in job applications.
If you’re concerned about having the highest possible credit score, you should pick the one or two cards that you’ve had the longest and make sure to put a purchase on them every few months. There’s no guarantee that they won’t be closed anyway — issuers can close an account at any time for any reason — but it improves your odds.
The bad news is that making purchases on your credit cards carries a whole other set of risks — sort of a ‘damned if you do, damned if you don’t’ scenario. I’ll cover those in part three.
(Photos by Andres Rueda and jessemoya.)
I’ve just about had it with credit cards.
Like most people of my generation, I got my first card in college. Then, and for the next twenty years, getting credit was deceptively easy. I used it in all the typical foolish ways: to pay bills during periods of unemployment, to finance an unsustainable small business, to live beyond my means.
In early 2007, after more than a year of concerted effort and lifestyle changes both major and minor, my partner and I paid off the last of our credit cards. (We still have the original mortgages on our house, but have never rolled outside debt into that loan.) I swore then that I would never carry a balance on a credit card ever again. And I haven’t.
But I do still find it useful to charge purchases to a single card, paid in full each month. Here’s why:
The problem? Now that I’ve mended my profligate ways, the credit card companies no longer consider me useful.
Credit cards (and indeed the entire banking industry) work via cross-subsidies. Some of the people (a recent article quoting ‘industry lobbyists’ put it at roughly 40%) are the sort of credit user I am now, taking advantage of the benefits above without actually generating income for the issuing bank. The rest are the sort of user I used to be — carrying large balances at high interest rates, occasionally missing a payment and generating large fees and even higher interest rates. The income from that 60% has been enough to not just cover the other 40% but generate enormous profits for the banks as well.
Then along comes the worldwide credit crisis and — salt in the wound! — an act of Congress that finally puts limits on the bank’s ability to gouge their customers.
If you’re one of the 40% of responsible (aka ‘non-profitable’, from the bank’s perspective) credit users, be warned; they’re coming for you. They may have already begun. I’ll explain the first big change in part two.
(Photos by zingersb and jc.westbrook.)
Considering travel insurance? Make certain that you get terms in writing before you pay — terms that prominently include the word ‘refund’.
That’s the takeaway message from the latest ‘Haggler’ column in the New York Times, where journalist David Segal goes to bat on behalf of beleaguered consumers. I was particularly appalled by the story of a cruise agency which markets its ‘protection plan’ to vacationing seniors for a 10% upcharge:
The plan is described this way: “In essence, should you have to cancel your cruise for a covered medical reason — anytime prior to departure — you need not worry about forfeiting the cost.”
If you read these words without appreciating that the world is a dark and cynical place, you might think “protection” amounts to a money-back guarantee. But the world is dark and cynical. The verbiage here implies “refund” without saying so.
What does the protection plan really offer? A voucher for future travel — not so much use in this case, since one of the vacationing seniors suffered a heart-attack and died, and presumably his widow is Not in the Mood to be trolling online dating sites for a replacement travel partner.
The writing, by the way, elevates this from a merely useful column to a thoroughly delightful one:
“… one of the more entertainingly combative lawyers the Haggler has encountered. Mr. Nashawaty, bless his contentious heart, howled at the unfairness of a universe in which the Ms. Bendors of the world can badger the likes of Vantage Travel.”
I really enjoy Segal’s cynical, biting style and will be watching for future columns. “The Haggler” appears in the Sunday New York Times every other week.
(Photo by ecstaticist.)
I love fresh homemade bread. Once, in my early twenties, I made a loaf by hand. I had picked up the classic Tassajara Bread Book from a remainder table, and one afternoon I went at it for several hours, kneading and punching away. It made a glorious loaf which we happily devoured straight out of the oven, but the effort-to-results ratio was just too high, and I couldn’t imagine going through that ever again.
Many years later, I bought a bread maker. Aside from an annoyingly difficult-to-clean paddle, the process was vastly simplified, and the results also quite good. That bread maker is still in a box in our garage, but our current kitchen (which we are likely to have for quite a few more years) is too small to make single-use appliances very practical — there’s no place to store something so large either on the counter or in the cabinets.
So I’d given up on homemade bread for the foreseeable future, until sometime last year when I started running across references online to ‘no-knead bread.’ I was skeptical, but positive reports abounded. Last weekend I finally decided to try this miracle for myself.
At his last annual checkup, Jak tripped the alarms for ‘pre-diabetic’ levels of blood sugar, and as a result I’ve made an extra effort to stick to whole grains and low-glycemic foods. Which is why I ignored the very attractive white-flour no-knead options and went straight for the whole wheat ‘bread brick’ introduced by New York Times food writer Mark Bittman.
It worked like a charm. It takes about six hours start to finish, but total active time is only about ten minutes. You need five items: one large mixing bowl, one non-stick loaf pan, a teaspoon, a measuring cup, and a brush for the oil. No expensive appliances, and cleanup is a breeze. It’s so easy that I’m going to use the next loaf to teach our ten-year-old how. (Edit: The kidlet did great; that’s the one she helped with in the photo above. Next time she’ll be ready to do it on her own.)
Here’s the recipe; the only adjustment I made was to use extra wheat flour in place of the rye I didn’t have. It’s arguably not the most beautiful loaf ever, but it sure is yummy.
I worked out the cost per loaf to be around 80¢ at regular price; by watching for sales on flour and yeast I can probably bring that down by a dime or two. The dense whole-grain bread I’ve been buying for Jak at Costco is something over $2 per loaf, though the loaves are slightly larger. Still, at a conservative estimate, switching to the homemade bread should save us $1.20 a week, or about $60 per year.
Frankly, though, homemade bread is so much better than anything storebought that I’d do it even if it didn’t save a penny!
