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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.

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

 

Tags: smartypig   •  credit card   •  jon stewart   • 

1 Comment | |

February 15, 2010 • Posted by Michael Ferrari

Credit Card Use Plummeting: Common Sense Soaring!

Call them old fashioned if you wish, but the number of people who just say "no" to credit cards has taken off, leaving in its wake new credit card data that suggests people are either smarter, more afraid or banks are still shying away from extending credit. Whatever the case, whatever is happening is working.

In a recent article about the slowing of credit card usage, USA Today shows us that "Revolving credit - largely made up of credit card debt - fell by nearly 20% in November, and that through October, the number of new credit card accounts was down 46% from the same period in 2008. Those numbers are staggeringly strong. What gives? People simply aren't up for the abuse at the hands of big banks anymore who will jack up rates at customers' most vulnerable points.

Sandra Block, the reporter for USA Today spoke to young people who are anti-credit card. What they had to say was as educated as it was eye opening. Why the drop in card usage: It's a "hassle." It leads to "huge debt." It's not a "rite of passage into adulthood." It's "not worth it." And what do they get in return for keeping the faith and staying true to themselves: "Fewer bills, headaches and fears."

We here at SmartyPig believe credit cards should be avoided for now, that people should save up of the things they want, take the same route their grandparents did and sock money away - especially in such a troubling economy, and not just for a rainy day. Vacations, electronics, new clothes, necessities, all can be done smartly and without risk.

While credit cards can be useful to build credit, we think people, especially younger people, should probably wait. After all, the difference between bad credit now and good credit later might be as easy as saying no to credit cards until you're ready. Or as the young Block interviewee Emily Maddox says: "I've known people who have had credit cards, and I've seen what can happen if you get behind and how hard it is to get out of debt. I don't like owing people money."

Mike Ferrari, SmartyPig co-founder
@mferrari

 

Tags: smartypig   •  credit card   •  usa today

6 Comments | |

January 15, 2010 • Posted by Michael Ferrari

A One-Sided Relationship

Envision opening your monthly statement from your credit card company and seeing they just charged you $50 because you didn't use the card to spend $2,400 over the course of the year, or, even worse, being charged for paying off your balance every month? Credit card companies are preying on people at the worst possible time. And even with the Credit Card Act going into effect next month, credit card companies continue to slap you with additional fees and charges. "Since fees represent such a cash cow for issuers, expect aggressive increases in existing fees, as well as some brand new fees on your credit cards in 2010," says Bill Hardekopf, CEO of lowcards.com (Wall Street Journal, Banks Roll Out New Check, Card Fees).

Credit card issuers collected $22.9 billion in penalty fees in 2009. You got nickeled. You got dimed. You got the screws put to you in a variety of new and painful ways. We all did. And sadly enough, Beltway "bulldogs" seem to be little match to bailed-out bankers hungry for a cash infusion now that the game has changed. "Issuers are trying to find ways to change the dynamic of the credit card market. They want to 'mainstream' annual fees," says Hardekopf. Put another way: they want to give you the shaft in a more acceptable manner to you, the shaftee. Make sense? Didn't think so. And the only way to combat it is to break up with your credit cards, save up for the things you want and buy only what you can afford (LowCards.com, Credir Card Predictions for 2010).

As credit card companies continue to exploit this so-called relationship with you by increasing fees and watering down perks, we here at SmartyPig offer real cash boosts of up to 12% from best-in-class retailers like Amazon.com, Macy's and Travelocity, and one of the highest interest rates in the country at 2.01% for the dollars you are saving for your goals. We pay you to save your money then we pay you even more when it's time to spend it. Your credit card company, on the other hand, enables you to buy more than you need, charges you an arm and leg for doing so, and then hammers you with outlandish fees when times get hardest.

Would you take this abuse from anyone else?

The SmartyPig Team
@smartypig
facebook/SmartyPig

 

Tags: smartypig   •  credit card   •  wall street journal   •  bill hardekopf   •  amazon.com   •  macy's   •  travelocity

6 Comments | |