2001-2004 Kelvin P. Ringold Ramblings and Kel-Kwips

Issue# 09 - Credit Where Credit is ... Due ?! September 3, 2004

Good day !

I know it's been a while. You're probably feeling *really* neglected right now, saying..."where's all those wild and crazy Ramblings from that Kelvin guy? Where forth art the free flowing babble we have come to love ? Why doth he so neglect us?" . . . or something like that, I'm sure.

Well, you know the old saying..."If you want something done, give it to a busy person!" HA! I can tell you *right* now, that is *not* the mantra of a busy person... TRUST me. Yet and still... busy or not, more busy follows and then...well.. .there I am, neglecting my loyal readers. Hopefully you'll accept my apology and continue to be a loyal reader.

I generally try to wait until I have something to write that inspires *me*. After all, if it's not ringing *my* bell, why would you possibly want to read it? So, my goal is to become more inspired, more often. Such is this particular moment... Here's something very practical, this time.

As luck -- and the meticulous bill paying habits of my ex-wife -- would have it, the credit bureaus and card companies seem to think I'm an okay kinda guy. I get GREAT credit card offers ALL the time, and I especially like those pre-approved ones. If I took the combined total of the offers they heap upon me, it would certainly bury me beneath a mountain of debt from which I could NEVER escape. So common sense -- and history -- has taught me not to get too excited by all those offers. Still, every once in a while I take one up and check it out, just to see how they plan to make my life easier (cough).

Have you ever read the fine print on those things? Some of them are very sneaky. "NO INTEREST UNTIL JUNE 2005! *** Fine print: "*** applies only to purchases..." So, you may feel free to make all the cash advances you want to ! (also known as balance transfers), but they are not part of the no interest deal. And for those helpful balance transfers, it *might* be "no interest" on the amount you transfer, but... you have to look at the *really* fine print to find out that there IS (usually)a transaction fee for making that "balance transfer" -- that's just another name for "cash advance".

But the coolest, most insidious trick of the credit card companies isn't that particular game. The coolest and most insidious, money making trick of the credit card world is... the one where they encourage you to use your card for purchases AND balance transfers. And here's why that's such a money maker for them -- in case you didn't realize it.

First of all... we're clear, right? A balance transfer IS a cash advance. Secondly, ALL credit cards handle cash advances and purchases as TWO DIFFERENT ACCOUNTS, even though they're on the same card. And... most of the time, the interest rate for the cash advance balance is higher than the interest rate for your purchases. But 100% of the time, when you read all the fine print, you'll find that when you have both cash advances and purchases on the same card, the cash advance balance IS NOT TOUCHED AT ALL, until AFTER the purchases are completely paid for :-) SO... that means that when you get a balance transfer (a.k.a. cash advance) of say.. $1500 and then you make a purchase of say $500 for clothes... your minimum monthly payment ( if that's all you pay) is going towards paying down the PURCHASES only, and interest will continue to accrue on the cash part...without that balance diminishing by even one cent. Once you pay off the $500 purchases, then your money will apply to the cash balance remaining -- unless you make another PURCHASE :-) And, depending on how slowly you pay down that purchase, the cash balance will be MUCH LARGER than it was when you first made the transaction. AND... you still got stuck with all those transfer fees UP FRONT, so your effective interest rate is really higher than you thought. IS THAT BRILLIANT? OR WHAT? Where can *I* sign up for that program?

And millions... and millions and millions of people fall for that one every single day, and can't understand why that credit card balance isn't doesn't go down, even when they keep making those payments. Don't believe me? Check it out for yourself. Read your credit card agreement.

So the answer is ... if you have credit card, and you *must* use it, if you're not going to pay the balance off every month, then EITHER use it strictly for purchases, OR use it strictly for cash advances (balance transfers). Do not put both types of transactions on the same credit card, or trying to pay that puppy off will be like trying to nail jello to a tree.

Is that exciting or what? Now, lest you think I'm a genius...you can find that information and lots more for FREE on this handy dandy web site called The Motley Fool (http://www.fool.com) It's an awesome web site. They also have a paid subscription, but the amount of free information and advice is absolutely astounding, so check it out and stop letting the credit card bandits rob you.

That's just about all I have to say for now; thanks for listening.

Now, on a more fun note, I've been thinking about a few things and in next newsletter, I'm going to be offering a couple of prizes, I think. You'll remember that one of my goals for 2004 was to have at least 500 subscribers to this newsletter by the end of the year and, well.... I'm not there yet. So next newsletter, I'm going to have a contest! and give you an opportunity to win something. I don't have it fully defined yet but... I'll tell you this much. Start thinking about a list of people (who have email address) that might enjoy listening to some occasional K-babble. Just jot them down, and hold on to them until my next newsletter and then I'll tell you what to do with them. Sound good?

Thanks for reading. I look forward to hearing from you -- your comments, thoughts or even ideas for future newsletters. If you like what I had to say, consider passing it on (but don't ask them to subscribe yet) :-)

Until next time, have an AWESOME day!


"Successful people do the things that unsuccessful people
are unwilling to do." (author unknown)

1. Practicing what I preach.
2. Don't ever "settle for" . . . again
Kelvin ( http://www.ringold.net )

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