Credit Card | Wheatworks Blog: Financial Matters

Credit Cards and the School of Hard Knocks

8/6/2008, 7:36 pm

School is about to start again and college students will face a wall of credit card offers when they arrive on campus. At first it doesn’t make sense. Why would credit card companies want to give accounts to a group of people who are usually unemployed, low on funds, and have little hope of making their monthly payments?

It’s the debt trap. Credit card companies don’t make money from people who pay their balance each month. Credit card companies make billions from late payment fees and outrageous interest rates. College students are the perfect target audience.

And schools are in collusion with credit card companies! Many universities and alumni associations make money by referring students to apply for credit cards and even debit/student ID cards! The primary education students who fall for these offers being pushed by schools will probably come from the school of hard knocks.

We’re sacrificing a generation to the god of Greed. Capitalism is not a good system when it sucks the life out of a young person’s future.

Read about it in “Parents face a perfect storm: college kids and plastic“.

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The Schumer Box

8/4/2008, 9:44 pm

Credit card companies are the target of a lot of consumer angst. Between raising interest rates at will and making a killing off of fees, credit card companies seem to have all the power in the lender-borrower relationship they have with credit card customers. While most of what one reads in the news about credit card company behavior seems excessively one-sided (welcome to capitalism), credit card companies are required to declare an account’s rates, fees, billing practices and what triggers an increase in rate or fee.

This information is provided in what the credit card industry calls the “Schumer Box”, named for Senator Charles Schumer (NY) who sponsored the 1988 law that requires credit card companies to declare certain information in a simple format in every credit card application in the “Schumer Box”.

CNN and Money.com offer a great article that explains how to use the information in the Schumer Box to determine if a credit card offer is a good deal or a rip-off. The article is easy to read and understand and works through each of the Schumer Box numbers. Read “How to spot a credit-card rip-off” for more information.

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Tags: Consumer Credit, credit card, schumer box
Category: Consumer Credit | Comment

The FICO Game

7/2/2008, 5:06 am

“Credit cleanup: Higher scores sought as lenders get more selective” by Eleanor Laise is about the movement among lenders to require higher FICO scores for borrowers who want to receive the best interest rates on loans.

It also explains how many are tweaking the system to improve their FICO scores. And for some consumers, raising their FICO score is a game they play to join the “700″ club, the group of consumers who have FICO’s of 700 or above.

The takeaway is that one’s FICO is a result of one’s financial behavior which can be changed to impact one’s FICO score for the better. The higher one’s FICO, the less one pays in interest when he or she borrows money. Enjoy the article!

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