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Credit Card Companies Are Raising Your APR – Here’s Why & What You Can Do

05.19.2009 by Matt Jabs //

Isn’t it always a blessing to come home, check the mail, and be greeted by a handful of bills!  Don’t you just love that?

The Problem

Today I had the pleasure of getting an extra special treat from Capital One; one of my ever so thoughtful credit card providers.  Here is the letter I received from them:

apr

According to the literature, Capital One is raising my APR by nearly 7% due to “the challenging economic environment”.  This is an incredibly steep increase in interest that has been implemented in order to pass the brunt of these tough economic times from the shoulders of a credit card company over to my shoulders!  I suppose they assume I have broad, strong, healthy, able shoulders!

I Tried Negotiating

Of course being the extremely frugal chap that I am, I called the powers that be and not only attempted to halt the increase, but actually tried to have my rate lowered from the original amount of 16.24%.  In order to be successful I knew I was going to have to strategically maneuver my way through the carefully constructed deterrents of the CC company’s convoluted phone system before finally getting connected with a “customer service rep” who could “help” me.  Enter Melissa.  Melissa was a charming young lady who most likely has a couple credit cards of her own.  My wife & I tried to imagine what Melissa was like outside of the scope of her CSR job.  Here are some of the things we came up with:

  • She probably brings in around $7-$10/hour to sit on the phone all day and field calls from disgruntle Capital One “customers” such as myself all while worrying about her 6 kids and whether her 1989 Chevy Suburban would break down on the way home from work today.
  • For this measly pay she takes the brunt of the grief for the corporate policy setters a.k.a. “leaders” who are doing one of two things:
    • Sipping brandy and smoking fine cigars on their yachts – or –
    • Finalizing the terms of their corporate “bailout” program compliments of the Federal Government

I digress…

In reality, as expected Melissa did have a script she was expected to follow, so I immediately switched into CSR communication guy and worked to create a distinction between the CSR and the company in an attempt to get her on my side and perhaps increase the chances of getting my rate lowered.  It didn’t work this time.  Melissa was thoroughly unable to help me lower my APR.  The only thing she could offer me was a Balance Transfer at 0% APR for six months, but even that would have cost me 3% of the transfer with a $50 minimum, so I graciously passed.

When I directly asked her why Capital One was raising my Annual Percentage Rate by a total of 7%, she only had this answer:  “Capital One is doing this as a benefit to our customers.  During these tough economic times we need to raise our rates so we can continue to be around and serve our you our customers.”

What??  Uhghh, yack, che heh heh uhhhal…

Sorry I just threw up in my mouth a little there.  If you’re going to blatantly raise my rates from 16% to 23%, at least have the decency to elude to the fact that I’m getting screwed over.  Don’t condescend me or insult my intelligence!  **RANT OVER**

So What’s The Answer?

There are only two options we have at this point:

  • “You can choose to decline the changes to your rates and close your account.” – As stated in the wonderful mailing I received.  Going this route will terminate the card and forfeit any rewards you had accumulated.  Another potential negative is the effect this could have on your credit score.  Normally if you pay down the balance of a credit card to zero, it is in your best interest to leave that card open which will help boost your score.  If the card is closed, you are not provided that opportunity.
  • If possible just pay off any remaining balance on the card before the rate goes up. This is the option I will be pursuing.  Because I am able to eliminate my existing balance within the next 2 months, I will pursue this route which will end up having a positive effect on my credit score.  The bible advises us to, “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”  Romans 13:8 –  This is good advice and we would be wise to heed and follow it.

APR_Decline

There you have it folks, one more reason we should be doing all we can to eliminate our debt and spend less than we earn, thus granting us freedom from the likes of companies and situations like this!

DFA is passionately dedicated to helping others break the bondage of debt using biblical principles.

Categories // Counsel, Debt, Expenses, Spending Tags // apr, cards, credit, credit cards, interest, rates

The Importance of Financial Mentoring

05.18.2009 by Matt Jabs //

Recently, while reading and commenting on an EarlyRetirementExtreme post entitled “Which blogs do you read?“ I strongly realized that the more I focus on securing my personal finances, the more I understand that I cannot, should not, and will not go it alone!

“Give a Man a Fish, Feed Him For a Day. Teach a Man to Fish, Feed Him For a Lifetime”

– Lao Tzu

To get to where I want to be I need to surround myself with the experience and tutaledge of others, but also need to be ready and willing to reciprocate the favor when & where the need arises.  Though I mainly submit myself to the financial principles & wisdom of the bible, today I would like to specifically address the important role others play in my journey to become financially free.

My role as both mentee and mentor

While charting my course of financial responsibility toward freedom from debt, two specific things have become crystal clear:

  1. I will seek the counsel of men & women who reside where I desire to be. Not residing in a physical sense, but a financial one.  I need to find these like minded people, cultivate a relationship with them, study their experience, and apply it to the benefit of my own situation.  These people are my financial mentors.
  2. This Debt Free Adventure is as much yours as it is mine. While I have caught some flak for being too transparent with my identity and my finances, both in the real world and in the virtual realm, I stand firm in my resolve to compile this information for both my benefit and for yours.  I faithfully believe these pages exist for the greater good of serving God and my fellow man.  Helping me to become a better steward of the money God has trusted me with, and providing guidance for others who find themselves with a similar desire to live the debt free life.

“We make a living by what we get, we make a life by what we give”

– Winston Churchill

As a mentee we need to:

  • Define our goals
  • Find others who have succeeded in reaching those goals
  • Work to secure those individuals as our mentors

As a mentor we need to:

  • Be faithful to guide others according to the wisdom and principles of scripture
  • Be willing to help others when they are in need
  • Be patient with others as they are coming along

yoda

My Financial Mentors…

Though they may not officially know it – yet – I have inadvertently adopted several personal finance gurus as my “financial mentors”; so far they include:

  • FMF at FreeMoneyFinance – FMF has put together such a well-rounded site that has a ton of information on every portion of personal finance and is written from a strong Christian perspective.  FMF has been very helpful and patient in answering all the ignorant questions I throw at him.  He also lives only an hour away and has offered to buy me lunch if I ever get off my duff and schedule it with him!
  • Nickel at FiveCentNickel – I read Nickel’s blog and take his advice because he has such a vast amount of experience. As I mentioned before, I am a strong believer in establishing mentors who have already achieved what I am setting out to accomplish, and Nickel has been at the personal finance game for longer than most, so make sure you check out his material.  He has also personally answered every email I have ever sent him.  Did I mention the fact that he publishes an article by *yours truly* every Thursday morning on his website??!!
  • Matt Pryor at SoundMindInvesting – Matt has always made himself very available, and has been utterly generous in answering any financial question I may pose.  I, in turn have been able to help Matt with technical questions he may have about anything ranging from blogging to Tip’d to Twitter.  We seem to have a very useful and symbiotic relationship that is a help to both of us.
  • Pete at BibleMoneyMatters – Pete was probably the first PF blogger to present  himself as a ready source of help to me.  Though Pete is married, works full-time, runs a number of other blogs, has a successful side business, and has a hefty Twitter following and RSS subscriber count, he always seems to treat you as if he has all the time in the world.  Pete was also the first PF blogger to let me write a guest post on his website.
  • Bob at ChristianPersonalFinance – Bob has an excellent Christian finance website and has been a great help to me to date.  When I first began writing Debt Free Adventure, it seemed like every time I did a search for anything realted to Christian finances, his blog was returned at the top of all the search results.  Despite Bob’s success he too has always made time for my questions.

Some other blogs that I read that are jam-packed with great advice, but I do not necessarily have a personal relationship with the author are:

  • Jacob at EarlyRetirementExtreme – The newest addition to my frequent reads is your blog. The reason I read it now is because you think outside the box greater than 95% of any other personal finance blogger I have read to date, and I appreciate that SO MUCH! I am also a nontraditional thinker and am moving toward a highly sacrificial lifestyle to pay down my debt as soon as possible. Just the other day my wife agreed to put the house up for sale & move into a $500/month condo, saving us $900/month!
  • JD at GetRichSlowly – I read this site because JD Roth has such a large amount of resources available to him because of his popularity, yet still manages to keep his focus on helping people financially. “Don’t be fooled by the rock that he got!” 😉
  • Trent at TheSimpleDollar – For many of the same reasons as JD, Trent has a great blog that is packed full of great articles and is very popular.  In the beginning I could draw more traffic to DFA by a simple comment on TSD than by any other source.  Most recently I used Trent’s site to learn how to make my own laundry detergent!
  • Frugal Dad at FrugalDad – FD seems to be very down to earth, and I hope to get to know him better soon.  I always see him leaving comments that echo my exact thoughts on posts that reek of obvious common sense, yet that common sense is not commonly practiced.  The content of FD is also superb & equivilent to the great content of the other sites mentioned above.

In Conclusion…

Looking back over the list, I see that each of the writers indeed have already achieved things I am currently working to accomplish so I am happy to surround myself with their successful advice, and you should be too.

Remember to both seek out a mentor who encourages you and to give back to others who you can help!

“Do not wait for leaders; do it alone, person to person.”

– Mother Teresa

DFA is passionately dedicated to helping others break the bondage of debt using biblical principles.

Categories // Counsel, Giving Tags // help, mentee, mentor, wisdom

Manually Report Utility Meter Readings To Avoid Being Overcharged

05.17.2009 by Matt Jabs //

I strongly urge you to read this post.  It will help you avoid being overcharged as I was.

Last month I wrote a post titled Automatic Bill Pay Concerns that urged readers to closely monitor any auto-drafts they set up for monthly bills.  To summarize the article:

If you use automatic bill paying features, MAKE SURE you check each & every bill for accuracy.  Though it may not happen every month, you may be surprised how many times there is a Monopoly type “money error in your favor”.  Pass go, collect $200!

Today I felt the need to be more specific and beseech you to start reporting manual meter readings for you natural gas and/or electric provider immediately to avoid being errantly overcharged!  It happened to me the last two consecutive months.  To manually report your natural gas and/or electric meter reading, simply contact your utility provider by phone or visit their website for specific & detailed instructions.  In my experience I just read the gas meter and called it in to a customer service rep.

How To Read Your Natural Gas Meter

Here’s how much my manual reading saved me…

April 2009 – Gas & Electric Bill

My original bill on 4/13/2009 was for $319.14.  I suspected the amount to be unusually high and called to ensure a correct reading had been taken and to report my manual reading.  After a few minutes the customer service rep delivered the good news that their initial meter reading was indeed incorrect & my new bill amount was $202.46.  A total savings of $116.68 for the month of April!

May 2009 – Gas & Electric Bill

Late last week I logged into my online billing to see the original amount of $194.87.  I thought about it for a minute, figured the amount could be high (especially after what happened a month prior) and decided I would call in my reading again to see if there was any error.  Once again, after a few minutes the CSR informed me their reading was once again incorrect and that my new bill amount was $151.42.  A savings of $43.45 for the month of May.

To Summarize…

By calling in and reporting my gas & electric (I have one provider for both services) meter readings manually for two straight months I was able to reclaim a total of $160.13 of errant charges.  Was this happenstance, or is my utility company using this practice on many of its customers to pad its bottom line in rough economic times?  What do you think?

Categories // Counsel, Expenses Tags // Add new tag, electric, gas, reduce, utilities

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