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Home    SmartyPig Blog   Card Act Balancing Act And Why You Still Lose Using Plastic

The SmartyPig Blog

February 25, 2010 • Posted by Michael Ferrari

Card Act Balancing Act And Why You Still Lose Using Plastic

Thanks to our friends in Washington, credit card companies have a new rulebook that restricts them from raising interest rates while having to disclose the amount of time it will take to pay off debt if consumers only make the minimum payments. Too bad the pundits forgot to take ridiculous fee hikes off the table when it came time to create reform, and the sharks are circling.

SmartyPig: Jon Stewart

In this hilarious piece on how the industry works, comedian Jon Stewart explains why we at SmartyPig feel the way we do about young people getting on the wrong track with plastic. Writes Gawker TV: “Stewart first explained that the problem with American consumers is that they not only desire a Champagne lifestyle on a Busch Light budget, but will take any opportunity to act on that appetite – even when painfully aware of the consequences of doing so. If you let them, they will spend, whether they have the money or not.”

SmartyPig’s stance on fiscal responsibility and the overall evil tactics used by big banks in the form of credit cards has not changed since day one. And we truly feel that Americans are waking up. In a recent blog, we shared some encouraging numbers regarding younger people turning away from credit cards, saving up first, using products that won’t get them in a near-impossible hole to dig out of. Building up good credit is certainly a must at some point. But getting paid a great rate to save and then paid even more to spend that money when you’ve reached your goal is the best way to get started as you begin your financial journey.

Mike Ferrari, SmartyPig co-founder
@mferrari

  • Chris

    That was great! I laughed so hard! Of course I can laugh, I know I won’t be caught by these tactics.

    I only hope that people are really getting the message and the new increased saving and avoiding debit will not just be for the short term.

  • Christina

    I wanted to tell you that this inspired me to just now, cut up 2 of my credit cards. (My other 2 are at home but I will be chopping them to bits tonight, too). Right now, I have one SmartyPig account open but I cannot wait to open more and never use my credit cards again. Thank you!

  • Cecilia

    @ Christina – That’s actually not a good idea in terms of building good credit! Instead of chopping them up, you should keep them but only charge a small amount each month on each card. Your credit rating is greatly affected by the length of your credit history, and when you close your credit accounts, it can significantly reduce the average length of your credit history. Also, it reduces the total amount of credit available to you – your credit rating is also determined by the ratio of debt to available credit.

    One great way is to schedule automatic payments on those cards and hide them away so you’re never tempted to use them. For example, set up your phone bill so that it’s automatically paid each month by one card. Then set it up so that your checking account pays off that one card automatically each month. Thus, you have low debt to total credit ratio, no interest is being charged monthly since you’re paying off the entire amount, and you’re building a longer credit history!

  • Nichole

    I don’t think she meant she is closing them, just that she will no longer use them. If you go cash you don’t really have to worry about your credit score. It’s not going to go down too much by not using them because she will still have that amount available.

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