22 May 2008

Credit Cards and (online) Savings Accounts

You want it quick and dirty? Fine:

Savings: ING Direct (always a good rate, easy to start and use, no wacky restrictions, $25 bonus for starting plus $10 for the person who referred you - email me for one if you already know my email) or Alliant Credit Union (great rates, some restrictions like paying a $25 fee to be a member unless you have a local branch, and credit unions are amazing).

Credit Cards: depends on your credit and needs, but plan on carrying ZERO BALANCE and getting a CASH rewards card with NO FEE (careful, some start with no fee but charge a fee after 12 months). Visa and Mastercard are taken everywhere but offer lower rewards, American Express (AmEx) and Discover are accepted in far fewer places but offer better rewards (because they charge stores a higher fee when their cards are used). I like the Chase Freedom Cash Rewards card (3% back on most used spending categories, 1% on everything else) and AmEx from Costco for acceptable rewards and limited fees and no general screwiness. The Capital One Cash Rewards is okay (1% back on everything) if your credit is not good enough to qualify for the Chase Freedom.

There are places to compare credit cards, most of them are crap for one reason or another (they don't show you some of the best offers, they focus on cards that give higher referral bonuses, they're poorly constructed and rarely updated, etc); however, if you must use one, the most common seems to be Credit Card Offers which ignores the limitations of Discovery and AmEx cards. The reality is that many of the better reward cards get there by charging you or the shop that runs the card a higher rate (high APR), some fee (like $50 annually), or screws you with weird/high fees for being late. Alternatively, many don't charge a fee for a year but then hit you with an annual fee that you probably won't notice. That's why I suggest the Capital One (1% back but no weird or annual fees) or the Costco AmEx (accepted in way fewer places, but higher reward of 1-3% and no weird or annual fees other than being a member of Costco).

App-o-Rama: a little crazy
Some people push their debt from 0% card to 0% card hoping to get card after card that also does not charge a transfer fee. This can work pretty well (but rarely does according to "Suze" who I have no idea about - she may be crazy, she may be smart, I'm just unfamiliar) if you have a limited debt (less than $10,000) and a shit load of time on your hands to screw with all the changing and fees that should not have been charged or that you didn't know about. But you're much better off just getting a loan from your Credit Union at a reasonable rate (7% or less) and just eating that interest and making reasonable payments - otherwise you (1) get hit hard by fees, (2) get a worse credit score from continuing to open a bunch of cards that you don't pay balances on, and/or (3) end up not being able to make another 0% card with free balance transfer so you get stuck paying the crazy interest on the card that had 6 months interest free but is not 17.9% and charging you fees for your failure to pay the big minimum balance that has run up.

Not saying it can't be done, but it's rare, otherwise the credit card companies wouldn't be making money hand over fist by making these offers. It means most people are getting taken for a ride most of the time, and it's a long shitty ride in the back seat and you have to pee (really bad) and the car smells like baby farts and your friend's dog won't stop jumping on you to get to the window because he smells the baby farts so much more strongly than you but the window on his side is broken because your friend is too poor to fix it because he got some shitty credit card offer then got screwed!

Oh yeah, and some people like Mint.com for keeping track of their spending habits and account amounts (before you ask, yes, I think it's safe, and no, it's not possible for "hackers" to get your passwords from it).

Can you tell I'm thinking about money?

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