by Julie McDonald
My credit card companies keep sending me a group of blank checks to use anytime I want at my discretion. They come sometimes with suggestions to use them for major purchases where I cannot afford to pay cash. I am sure you have received the same in your mail from your credit card companies. It is a ploy to get you to use them and then charge you exorbitant fees.
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Practically every week I get these offers and it becomes a nuisance. It is tempting but I do not want to pay a finance charge to borrow this money. It is the same as a loan and I know that. However, sometimes an emergency comes and I am really tempted to use them.
Recently, I had just such an emergency. My roof was leaking and I had a roofer come to give me an estimate to repair it. He said my roof was so bad it was leaking along the entire back of the house. He put 40 or more tiles on the roof that day as a good gesture with no charge to help keep it from leaking again.
He told me I needed a brand new roof and patching it would not last nor could he guarantee the roof would not leak again if it were simply patched. I told him I was going to get a few more estimates and would let him know my decision soon.
We were having a lot of rain and snow during this time and my roof continued to leak into the back bedroom. The stains on the ceiling became much worse and I began to panic.
I had been so busy at work and commuting back and forth that I never got around to getting someone else out for another bid. I called a couple of companies but no one responded. So I finally called the roofer back and asked him to come over and see if it would be possible to patch the roof to last for a year until I could get my CD cashed and then I would get a new roof at that time. He said it would end up costing me a lot more money to do it that way and it couldn’t be guaranteed not to leak. I ended up telling him to go ahead and schedule the roof to be replaced and I would get the money.
Well, you guessed it; after the roof was replaced I wrote one of those credit card checks to pay for it. I felt relieved that my roof had been replaced and I would no longer have to deal with roof leaks and ceiling damage. I even felt good about that fact that the credit card check was there and available to use. I had read the small print on the check agreements that showed it would cost 3% to use a cash advance check. I figured it up in my head how much that would be and thought, not a good idea, but at least this would solve an immediate problem. (I found out later it would have been much cheaper to cash in my CD).
Well, a month went by and my statement came in the mail. They charged me $101.40 cash advance fees plus an additional periodic finance charge of $86.68 for the first month. The previous interest rate at the bottom of my statement had been 0%, this month it said 35% interest!
Since this was a credit card issued from my personal bank where my bank accounts are, I had free interest during the first six months of using the account when I transferred over a balance from another high interest credit card account. Now that 0% interest was over, all the money owed on the account would forever be charged a higher interest rate, even the original balance transfer.
I called the bank and found out that there is not a manager in our local conglomerate banks anymore. I also found out that the customer service people cannot even answer your questions about how much you are being charged and why. I spoke with a customer service person from the credit card section of the bank on the phone and she was willing to take off the charge of $101.40 after much discussion, since I had been a long time valued member of this bank. She was not willing to take off the periodic finance charge however, and I told her it would have been cheaper for me to have cashed in my CD and paid the early withdrawal fee than to have used the check. And it would be cheaper for me to cash in my CD even now, than to keep paying this high interest rate every month. She finally offered to lower it, but by that time, I was so mad I told her I would never use this card again and would pay it off today, which I did.
The better way to have handled this situation would have been to keep a money market account available for emergencies. Keep enough money in it to handle a roof or other major purchase and keep earning interest on it until the emergency comes. I have such an account but did not put enough in it to cover this amount, not thinking I would have to deal with a new roof for a long time. Since I cashed in my CD I now have enough to handle emergencies and have paid off the credit card. I will also be changing banks as soon as my other CD’s mature.
I learned a lot from this bitter experience. The conglomerate banks don’t have anybody who knows much of anything working at the local branches anymore. When you call the credit card division of the bank they don’t have managers either. You cannot talk to someone with any clout to help you move a mountain.
Where did all the managers go?
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Copyright © 2006 by Julie McDonald. All rights reserved.