Don't Quit Your Day Job…

Credit cards get a bad rap – one that is not entirely deserved. I’ve got this working theory that it has to do with their name – the term ‘credit’ may mean ‘ability to obtain resources based on a future payoff’, but the card is named entirely wrong: If the only purpose of your credit cards is to purchase things on credit you are doing things completely wrong. The true beauty of credit cards is that they are a liquidity tool; credit cards allow you constant access to funding… whenever you need it.  So, let’s look at the perfect strategy for turning your credit cards into liquidity cards!

This guest post is contributed by Hope Nardini, who writes about frugal travel and personal finance on Money Crashers. Check them out when you’re done with the article!

I paid my rent for the month online as I always do, and since my roommate owed me half, she dug out her checkbook from the bottom of her desk drawer. She grabbed a pen, and then looked at me blankly. “How do I do this again?” she asked, laughing.

We’re slowly forgetting how to write and cash checks, and the once-crucial habit of balancing a checkbook is practically becoming a thing of the past. With the increasing popularity of credit cards, online bill payment, and PayPal, will paper checks soon become obsolete?

Here’s an interesting move on the part of Bank of America… account holders who use their debit card at any time during a month will be expected to pony up $5.00 at the end. The fee doesn’t apply if you use your debit card at ATMs, just when you use it to make purchases. It’s just the latest of the big banks to make waves with debit card fees – and, with the fee scheduled to roll out to Bank of America account holders next year, it’s the largest of the debit card fee programs. Wells Fargo and JP Morgan Chase are also toying with the idea to tack on monthly debit card fees.

… is higher than credit card debt in our country (hat tip: Wall Street Journal). How can this be?, you may ask, when the number of news stories on credit cards seem to vastly outweigh the corresponding reports on student loans. Well, yes, credit card stories seem to outnumber student loan stories by a ratio of about 15 to 1, according to StudentLoanJustice.org. How did this happen?

Like I mentioned in my article yesterday, this week ushers in the new credit card laws. On Monday, the provisions of the Credit CARD Act of 2009 took effect, to the joy of consumers everywhere. Well, not all consumers. Confused? Don’t be. The new credit laws will increase the cost of credit for people with worse credit scores.

Even though I lifted the moniker from this article on CNN Money, the scare quotes are appropriate. I’ve written about the Credit Card Act of 2009 and its unintended consequences. Lucky for you, the law is starting to bear fruit. We’ve seen issuers who offer cards with 79.9% interest rates, at least this article features a few cards with redeeming qualities. Anyway, you can tell the title is a bit tongue in cheek, but let’s tackle the features in the three cards shown.

Merry Christmas Eve to all my Christian readers, I’ve got a gift for you a day early. What if you could take your credit card now, make it so you can’t run a balance, and add an annual fee? Sound like something you might be interested in? Me neither. However, that’s exactly how a charge card compares to a traditional credit card.

Carnivals and featured links for the week.

Yes, the title has a double meaning. New credit card rules to be enacted with the Credit Card Act of 2009 will shake up the agreements you have with your credit card company. Because of new rules which will make it harder to increase fees and APRs after cards are issued, issuing companies will be forced to make terms more onerous up front. How far will you let companies go before you cancel?

There’s nothing worse than having something taken from you that you once had. As Alexis de Tocqueville remarks so elegantly in Democracy in America, “The heart of man is not so much caught by the undisturbed possession of anything valuable as by the desire, as yet imperfectly satisfied, of possessing it, and by the incessant dread of losing it.” Citi Cards stared down the rule makers, and unfortunately for their responsible customers, they blinked first. Maybe I’m being too melodramatic, but what I’ll illustrate in this article is merely symptomatic of the sweeping changes you may see in the credit card industry in the near future.