In God We Trust

Teaching You How to Get OUT of Debt and Live Debt-Free

Archive for the ‘Credit Cards’ Category


Sometimes it takes a few hits to your backside to get your attention. It did mine, that’s for sure.

The Setting

The other month, I signed up for a credit card from somebody – for the purpose of saving 15% or getting Free Shipping or some other some-such benefit. Gotta save where you can, right? Seems like the charge was $10 bucks or so.

The bill arrived in due time, and I put it in my Bill Place. (Keeping your bills all in one place sure makes the bill-paying process so much easier.) Somehow, that month, I got a bit pre-occupied, and didn’t sit down with my bills on schedule, and let it slip a week or so – probably more on the “or so” side…

The Hit

To my dismay, the Due Date for the new card was a few days earlier than my Bill-paying session… Arrrrrrgggghhhhhhhh!!!!!!

I sent the check anyway.

The next month – you knew this was coming – I got a new bill that included a $39 Late Fee charge. Thirty-Nine Bucks! And, a $1.50 Minimum Service Charge Fee…

Oh yeah! I’m the Financial Wizard, I am…

The Lesson

So, the lesson is two-fold.

1. Don’t sign up for credit cards just to “earn” some sort of Reward.

2. Pay Your Bills On Time.


If you have and use a credit card, it seems reasonable that there should be some Rewards for using it – right? I mean points to use for travel or gifts, cash back, lower interest rate on other accounts with the same outfit.. Things like that.

That way, whenever you use the card, you are being a Good Steward and getting double-duty from it.

The trouble is that these rewards will become a primary decision point between using the card or cash. They will also tend to cause you to spend a bit more on something than you should. “It isn’t on sale – BUT! I’m getting points…!”

Ignore the points when you go to use your cards. Think, “Can I pay for this?”

Paying Bills On Time

The major lesson is that paying bills late costs plenty. Well, you already know that, I’m sure. But how to get out of the whirlpool of increasing debt – THAT’s the question…

Obviously, paying your bills on time will eliminate those horrendous Late Fees. So, paying bills with a system makes it easier to avoid these fees.

The Envelope System

One of the ways to pay on time is to handle the bill once. Open it when it arrives. Write the check for whatever payment you have planned for that account. Put it in the envelope, stamp it, and put the “Mail Date” in a corner of the envelope. File the envelope in a convenient place. Enter the amounts in your budget tracker.

Every day, look at your bills and put the envelopes due that day in the mail… Done.

Two troubles with this method. First, You are constantly reviewing your bills. I guess this is actually a benefit early in getting control. But, it can be stressful.

Second, you really don’t have as much control of your finances as you think. You can’t take the time to review your budget and progress every day that a bill arrives. You might have something else planned, so you put off handling the bill – Ooops. Late again…

The Pay When Paid System

I preferred this system when I was working. I got paid twice a month with one company, and every 2 weeks with another. I made it my habit to sit down with the bills a couple of days after payday and paid upcoming bills.

The advantage here is that I’m only dealing with my finances a couple times a month. I can concentrate on the task at hand. It is a planned activity. I can also get all my due bills off at once.

Who cares if they have my money for a few days longer than they could? The benefit to me would be fractions of pennies, while the benefit of having it gone is that it is PAID on time.

The Automatic Payment System

I’m finally a convert to online banking. It took me plenty of time to get used to it. But, now it is the best thing since MP3 Players…

On all my credit cards, I have arranged the monthly bill to be paid in full and on time. This takes that bill out of my hands – sure, If I need to, however, I can modify how they handle This month as my finances dictate. So, though it is an automatic withdrawal from my bank account, I am still in charge.

And, I avoid those stupid Late Fees.


Late Fees cost Americans Billions. These Billions go to the banks and financial institutions – as they should. However, by avoiding them, Consumers can better choose to spend those dollars in ways that benefit the family, not the banks.

Pay On Time…


This day, President Barack Obama signed legislation limiting how Credit Card companies can charge or change fees and conditions. It is hailed as a boon to the roughly half of Americans who hold $2.5 Trillion in Credit Card Debt…

I vote for the consumer.

Yahoo News reported:

Obama made clear that he didn’t champion the changes with the intention of helping those who buy more than they can afford through “reckless spending or wishful thinking.”

“Some get in over their heads by not using their heads,” the president said. “I want to be clear: We do not excuse or condone folks who’ve acted irresponsibly.”

And yet, he said, for many of the millions of Americans, trying to get out of debt has been made difficult and bewildering by their credit card companies.

As good as it is to have Credit Card companies exhibit a bit of restraint on squeezing their captive market, it is better that their market abandon them.

By this, I mean that you should rejoice that it will be easier to get out of debt – and then do it. Get Out of Debt. The only way to beat the house is to get out of the game. Get out of debt.

Let me know if I can help.

John L

Factors contributing to someone's credit score...
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I am not a proponent of paying a lot of attention to my FICO Scores or Credit Reports. Since our goal is for you to get Out of Debt and to live Debt-free, spending too much time fretting over scores seems unproductive.

That said, they are a great tool to use for status checks.

There are 3 companies whose only business is to compile and report on the credit history of consumers. The 3 are Experian, Equifax, and TransUnion. They rely on a credit granter to send them regular reports on total balance, minimum payments, if late and by how much, and total credit available. They then compile this info and send it to member merchants if you should need credit from them.

Congress Did a Good Thing

The House Financial Services committee meets. ...
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Yes, I can admit that the US Congress isn’t totally inept. A couple of years ago, they forced open the secret world of Credit Reports, and gave us all a peek at our own records.

Credit Granters, or merchants, could always pay a fee to any of the 3 Credit Reporting agencies and get your various credit history results so they could decide whether and how much credit to grant you. In order for you to get a peek, you had to pay a fee, too. One exception – if you got turned down for credit, you could request a free report.

I used to review those reports, and they were a pain to read. It took a special concentration to get the rhythm of the entries and what they meant. And they used to cost a pretty penny. And corrections??? What a pain.

So, to help consumers have it easier to make corrections in the notoriously erroneous reports, Congress made each of the reporting agencies provide consumers one free report each year. But, you have to ask for it.

Get Your Report

Don’t go to the reporting site. You’ll be able to get a report, but you’ll be enrolled for a fee in a program of frequent monitoring. You don’t need that.

Instead, go to

There, you enter your State, and then select which company’s report you want.

We recommend that you get one at a time, and get another one in about 4 months. That way, you will be able to track your status fairly regularly without cost.

Get one for each of you – there might be differences. Print them out.

Now What?

Once you get your report, take a few minutes to get the lay of the land. See what they are keeping track of. Look at the accounts they are tracking. Some are open, some closed, some negative, most positive (we hope).

If you note any glaring errors, you have the right to have them corrected. Each company has their own process. Be sure to initiate the process to get those errors corrected.

Otherwise, Staple the report together and file it away for comparison with the next one.


Go ahead and get your reports, and be sure they are correct. However, don’t obsess over them.

Pay attention to getting out of debt. The credit reports will eventually take care of themselves.

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