The Ridiculousness of Credit Card and Loan Offers!
To be perfectly upfront about it, I am not much of a fan of credit cards and debt. I do recognize that in this modern world of ours we often have to have a credit card if we want to do things like reserve hotel rooms or rent cars... at least in some part of the world.
I suppose that debt is okay in some situations like getting a mortgage because you need to borrow money to buy a house. After all, most people don't have the sort of cash laying around that's required to buy a home.
Because I have largely paid with cash for a long time — following a bankruptcy in 1997 — I don't didn't have much of a credit history. Here in the good ole US of A, having a credit history and a good credit score is pretty much everything. Well, at least for a lot of people it is.
Knowing that Mrs. Denmarkguy and I are likely going to be moving to a smaller house in another 5-6 years or so, it's also realistic too suppose that we will be borrowing money to buy this new house so we can move into it, and then sell the old one and invest any money we get out of it to give ourselves some investment income.
To that end, I've been trying to build up my more or less non-existent credit history so that we will at least appear creditworthy when the time comes to do the house transaction deals.
Here Come the Offers!
Of course the interesting thing is that the moment you start showing any interest in such things as credit cards and personal loans, every loan shark on the planet descends on you like a flock of vultures!
I suppose that is simply to be expected when you live in a consumer economy. However, what I was really not aware of is the absolute extortionist rates and offers that companies are allowed to make. And these are not actually just finance companies they are large commercial banks!
I just tore up an offering... I pretty much laughed at it because the bank was offering me a credit card with $1,000 credit limit, 34.9% interest rate on purchases, and annual fee of $49 and a monthly service charge of $12.50.
If you crunch the numbers on that, you're effectively paying 20% of the amount you could potentially borrow just in fees, in order to just have the account open, and then another 34.9% on anything you actually charge to the card?
I started this process of rebuilding my credit about three years ago, and over the past couple of years I have seen some of the most ridiculous things you can imagine!
The worst of them was some private Finance Company that was offering an unsecured personal loan for what essentially — after all the fees and everything was taken into consideration — amounted to a 24-month loan at 234% interest! I didn't even think that was legal!
But apparently it is, or it probably wouldn't have ended up in my mailbox.
There was even a very small "warning," buried in the fine print to the effect that "this is an expensive form of credit." Yeah... no shit, Sheerluck!
This process of building a reasonable credit record is turning out to be more difficult than I could have imagined. And more expensive than I could have imagined and yet it is one of those things that it's very difficult to get by without, at least if you want to ever make any kind of large purchase like a house.
So far, I have been very discerning and what I have managed to pick up, and the rates have not been too ridiculous, but certainly not cheap, either. But sincerely decent offers are few and far between for those who are trying to build credit, or that don't already have stellar credit.
Thanks for stopping by, and have a great remainder of your weekend!
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Created at 2024-02-11 01:44 PST
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Having a good credit score really takes time and in my country it comes with a price, which is the interest on it
Pretty much the same holds true here. To get your score up, it's not enough to just get credit cards, you have to use them...
Hello good morning @denmarkguy
I have the healthy habit instilled by my parents not to have debts and buy only what I can afford, but in this society if we do not have debts we can not borrow as you point out.
I live in Venezuela and one of the good things we have is the culture of paying and zero debts despite the economic crisis and hyperinflation, of all Latin Americans, Venezuelans are the ones with the best credit rating.
Years ago I had a credit card that I almost didn't use, now the bank credits have been reactivated and for the reasons that you tell us I will have to assume some debts. Good luck in the purchase of your new home.
The credit industry is rigged against us. Best of luck getting things in order so that you can prepare for a life of downsizing and retirement. Stupid game we must play. 34+% is NUTS.
Makes me wish I were "independently wealthy" enough to just buy a smaller house with cash, while still living in the old house... but no such luck!
A rather unsettling, yet apt description. I wonder if they do those appalling deals purely because they know how important it is for people to build up their credit scores.
It's not something you even think about much unless you're in the situation of requiring a loan, but recently someone pointed out to me that a mistake by our old phone and internet provider that took us months to sort and at one point ended up with me getting a letter from debt collectors for a debt I didn't have (I was actually due a refund) would go against my credit score. Not something that bothers me at the moment, but it could if I face the same situation as yourself. I believe I'd probably need to pay money to see my credit score and get that mistake removed as well, despite it being the company's mess up, not mine.
Oh, I can relate to that! I have a "ding" on my credit report for an alleged unpaid cable bill that arose because a defective cable modem was replaced by a technician, but the new serial number not recorded. So when I returned the modem we had and got a receipt it did not match the serial number in the system, so a $300 invoice was generated. Even though the cable company told me to ignore the invoice, it still got reported to the credit bureaus as delinquent and haunted me for 7 years.
You can legitimately get your credit report for free from all three agencies via annualcreditreport.com.
They sure like to make things complicated for you as long as they can ignore it themselves.
One would hope credit were related to things like paying bills on time and holding a steady job, not how much of a sucker for debt you are. Our fiscal environment is upside-down.
Our fiscal environment is totally screwed. In order to have a decent credit score for something like a mortgage, you first have to subject yourself to "stupid debt" to get your number up. Unless you have enough cash sitting around for the price of a house...