A couple weeks ago I promised you the low down on the worst kind of Christmas cards you could get this time of year.
Low Introductory Offer Cards.
They’re everywhere. While you’re shopping, the cashiers are trained, even incentivized, to get credit applications (when I worked retail in a past life, I was paid $1 for every completed application. Since minimum wage was around $3.65 at that time, I really pushed those credit cards!)
They’ll ask this magical question, “Would you like to apply for an instant credit account and save 10% off of your purchase today.”
I’ve actually heard people say… “Yes, and if I get the card will I be able to buy more today for 10% off?”
Now you may be thinking…what’s wrong with saving 10%. Well, nothing. And these kinds of cards can really be a savings to you if you use them correctly. And there’s the rub.
With an introductory credit card, you’re focused on the 10% off. You don’t ask about the interest rate, the terms…none of that is important to you when you apply. Next think you know, you’ve gone on a shopping spree with a credit card that has a 29% interest rate.
Most of the credit cards you get from a retail store have tremendously high interest rates.
So what’s the right way to use these cards?
1. Apply for them. Heck, it’s 10% off of stuff you were already buying.
2. Don’t be lured into buying more if you weren’t planning on it.
3. When you get the bill, either pay it in full, or transfer the balance to a credit card with 0% interest on balance transfers (or low interest)
4. Pay the minimum payment for the length of the 0% balance, using your debt repayment funds to pay your debts with higher interest rates. Never pay late.
5. At the end of the 0% period, either transfer the balance again, pay the balance in full, or call the card and ask for a lower interest rate.
This will ensure that your Christmas Credit Cards, and the Ghost of Christmas Past Due, don’t come back to haunt you.
It’s that time of year again, where the spirit of the season can easily set us up for a visit from the ghost of Christas Past Due. Yep, I mean the bills that pile in every January, the lingering effect of very well intentioned activity around the holidays.
In the US, the day after Thansgiving is known as “Black Friday”. This day signifies the traditional start of the shopping season. I’m not sure, but I think this dates back to a practice started by Macy’s with their Thanksgiving Day parade. The last float in the parade was always Santa Claus, thus ushering in the holiday season.
Of course, now retailers start putting the holiday decorations out weeks (even months) before hand.
Black Friday is a term that’s based on the theory that retail shops operate at a financial loss for most of the year, and Black Friday, the start of the holiday season, is the first day the shop is profitable. It’s a reference to a standard accounting proceedure where losses are written in red ink and profits are signified by black inked entries.
For me, Black Friday signifies the credit card offers. I seem to get a tremendous amount of “interest free” and “no payments until the new millennium” offers in the mail.
And it’s compounded by the television commercials. “No interest and no payments for a year” usually means that the payment hit you next year, right in the middle of the shopping season.  But it gets worse. Usually these offers mean that there are no interest payments for the year, but the interest will accrue. And, if you don’t pay the balance in full before the first payment hits, the interest is compounded.
Albert Einstein called compound interest “the most powerful force in the universe”.
Stay tuned for the worst kind of Christmas Credit Cards…
