NB: This post is about credit cards and how they can screw you. It offers some practical tips. You might not care and I'm okay with that.
Like a lot of people, I could stand to play closer attention to my finances. But I've been quite smug and gleeful about the fact that, since our big gay wedding last year, I've been (slowly but consistently) paying down debt instead of going into more.
Paying a lot of interest chaps my ass, so most of my debt is on my line of credit. But recently Katr and I were looking to move some debt around and that's when I got one of those fancy balance transfer options in the mail from my trusty MBNA York University MasterCard. The interest rate gave me a tingle. I was intrigued.
I was also leery about taking advantage of this extremely good offer. I knew there must be some catch. I really wanted to make a measured decision so that I wouldn't end up getting screwed, so I made sure to read all the fine print. After much careful deliberation, I decided to go for some hot balance transfer action.
So here are the two things to watch out for:
1. The balance transfer fee.
Mine was 1% of the total. It was a big total, so the balance transfer fee ended up being more than the monthly interest I would have paid if I'd left the money where it was. Also, I still had to pay the interest. So already, in the first month, I'm actually $50 poorer than I would have been.
Like I said, I did read the fine print before going ahead. I don't know if I missed this information, or if I saw it and didn't do the math properly. Regardless - my learning is now yours. Rejoice!
2. Credit insurance.
Did you fall for that credit insurance scam years ago like and then forget because you're a dingus? Well, I did. Turns out my credit insurance is $.99 per every $100. I have been paying this for YEARS. YEARS, people. What's wrong with me?
Unfortunately, I didn't notice my giant credit insurance charge when I got my first month's bill, because I'd ended up having to use my card for my business trip and I thought it was a hotel charge. So it wasn't until this month that I saw the amount and went "Waaaaaaaaaaaaaaaait a minute - what's this action here?"
It turns out that my credit insurance costs as much the monthly interest I would have paid if I'd left the money where it was. Also, I still had to pay the interest. Also, I didn't notice this charge last month, so I paid it, which now, two months in, makes me almost $350 poorer than I would have been had I not done a balance transfer at all.
Naturally, I've since opted out of the insurance. It was relatively painless.
Surprisingly, I'll still come out on top on this deal - it's just that good. But I would have been much farther ahead and also felt less fucked around had I been aware of items 1 and 2.
Obviously I need to take responsibility for not paying enough attention to these things. I can't find the original balance transfer offer, to verify that they mentioned the transfer fee - it certainly wasn't mentioned anywhere prominent. And I dimly remember signing up for credit insurance years ago, before I was over my fear of telemarketers - but in my defence, I signed up when my credit limit was so low that it would have cost me pennies. Not anymore.
So anyway, my point is that balance transferring CAN be awesome - just make sure you're aware of the extra fees.
As for the card itself...I don't need to bitch about the MBNA York University MasterCard - I'm sure that many other credit cards suck just as bad. But I'm tired of feeling like I'm being screwed AND not getting any benefit out of it. At least when other cards screw you, you're also getting Aeroplan miles or gas incentives or donating money to environmental causes. As far as I can tell, my MasterCard isn't even giving back to my old alma mater, so what's the point? Come April, when my sexy interest rate leaves me for a richer debt, the card and the scissors and I may need to have a talk.
