How to Piss Off a Credit Card Company

Make no mistake about it, credit card companies ARE out to get you. No if's, and's, or butt's about it. They are out to rape you completely, and they are legally allowed to do it. Horray for lobbyists.

Consider Miss Jane Doe, a not-so-young woman collecting Social Security disability. She cut up her Discover card and (obviously) stopped using it when she hit her $1,900 limit. Over the next six years she made $3,492 in payments, and still had a balance of $5,564.

In 2003, the card company sued Doe, asserting that she had breached the contract she had with them. The judge tossed the case and reduced her debt to zero, saying she had been prey to "the plaintiff's unreasonable, unconscionable, and unjust business practices."

And yet it is still legal for these card companies to do exactly the types of things they did to Jane Doe. Not only that, but some card companies are working to place even stricter regulations in their contracts. Over limit fees, late fees, shorter grace periods, universal default clauses, as well as a slew of other sneaky practices leave cardholders bewildered and in a worse state of debt than at any time in American history.

But there is a ray of sunshine. There is a way to beat the banks at their own game, and let me tell you that they will hate you for it. You see, the only reason that their practices are legal is because they have to provide a loophole. They must provide a way for customers to avoid all of the predatory finance charges associated with their cards. And lucky for you, I'm going to tell you how!

Lesson One: Shop Around

Credit cards are like anything else, you can and must shop around for the best deal. All card companies are evil, but some are better than others. Also, many card companies offer incentives that might fit your needs.

Click here to visit Credit Land, a wonderful place where you can compare credit cards, apply for them, and even read their terms. Keep the following things in mind when searching for a credit card.

1) Don't sweat the APR. You'll see tons of cards that advertise "0% Introductory APR!". The introductory period generally lasts for a year, and then it's over. Most of those cards will tell you that once the intro period is over the rate will jump to a very modest 10.5% Don't pay attention to any of this for two reasons. First, if you're using your new card correctly, it won't matter (see the next section). Second, most cards these days have a "universal default clause" written in the fine print. What that means is that if you are late on any payment to any creditor or any utility, you will trigger an interest rate hike. As you will notice if you go to the site, some of the resulting APR's are absolutely horrendous...29% - 34% in many cases.

2) Look for the longest grace periods possible. The "grace period" is the amount of time, in days, from the statement date, during which there is no interest charged. Generally the due date is the end of the grace period, but that isn't always the case. You want to be looking for grace periods of at least 20 days, preferably 25.

3) Look for cards with no annual fees. This is self explanatory. Why pay fees when you don't have to?

4) Look for cards with incentive programs. Some offer flyer miles, some offer cash back on certain items, some offer points that can be redeemed for gifts certificates and the like. I found a card on there that had a flat 1% cash back on all purchases, and a 5% cash back on all gasoline and auto repair purchases. Not a bad deal for someone who drives a gas guzzler or an older vehicle that requires regular maintenance.

Lesson Two: Manage Your Cards

Not only is it possible to avoid ALL of the fees associated with credit cards, it is possible to actually make them pay you!! This is important enough to be worth repeating; ALL CREDIT CARD FEES ARE AVOIDABLE!!

It can be difficult to manage your cards effectively, especially when things get rough and you need to rely on them just to survive. However, if you can manage to stick to the following basic guidelines, you'll be just fine.

1) Whenever possible, pay the entire balance of your credit cards within the grace period. Doing this will avoid any interest you may have had to pay. Keep in mind, though, that this is where the phrase "a day late and a dollar short" originates. They won't be lenient with you, and if you come up short by one day or one dollar, they will charge you interest on the entire balance for that period. Not only that, but if the due date was the end of the grace period, you'll get slapped with a late fee also.
2) If you cannot pay the full balance during any one grace period, pay at least twice the minimum payment. Paying twice the minimum saves 95% of the interest you would pay if you paid just the minimum.
3) Try to keep all of your card balances at 30% of the limit or less. Not only does this keep your balance to a reasonable level, but it will also prevent undue damage to your credit score (which I will discuss in another post).

If you take the time to do all of these things, you will pay NO fees, NO interest, and you might even get up to 5% of your purchases back due to incentives. That's my ultimate goal...to go at least 6 full months where the credit card company pays me!!

Happy financing!