Interest rates and Sears card ripoff

[paddlenbike]

Last month I needed to make a large purchase (a new refrigerator for my home) and decided to get a Sears card to get an additional 5% off my purchase. I didn't care about interest rates because I had planned to pay off the card immediately. Flash forward to today and due to other expenses this month I will need to leave a balance on the card. I was shocked to find out that Sears charges 25.99% interest on their Sears cards. Money is as cheap as ever right now--my "high interest" savings account that was pulling 5.05% interest is now at 0.35%, my regular savings account is at 0.2% and home interest rates are around 5%, how can Sears justify ripping people off to this degree?

I will be paying off my Sears card this month and leaving a balance on my regular credit card since it is "only" 13.99% interest and cancelling my Sears card. What a ripoff.

What do you home owners do for temporary credit when you unexpectedly need to buy something expensive? Does Home Depot charge interest rates that high for temporary lines of credit?

[corax]

What do you home owners do for temporary credit when you unexpectedly need to buy something expensive?


the unsecured line of credit through my bank is right around 11% . . .

[4x4mike]

You should have bought a Kardashian credit card when you could.

[Seanz0rz]

i am paying 27% on one of my cards, and have no way of getting rid of the rather large balance. multiple calls to the company yielded nothing. i pay more than the minimum payment every month, but it will take me years to ever get it paid off at this rate. i have returned to a cash only lifestyle as a result. may all the credit card companies burn in hell.

[paddlenbike]

At those rates I would check into a personal loan like corax is referring to. But yes, those rates are completely ridiculous.

[Seanz0rz]

yeah, a 10k loan for a student with school loans who doesnt have a real 9-5 job. they laughed at me.

now, both of my bank accounts are charging monthly fees (both used to be free), so one will have to go, and im afraid its the one that forces me to exit my vehicle to withdraw cash. i am so fed up with the financial system, but alas, nothing you can do about it.

[4x4mike]

yeah, a 10k loan for a student with school loans who doesnt have a real 9-5 job. they laughed at me.

now, both of my bank accounts are charging monthly fees (both used to be free), so one will have to go, and im afraid its the one that forces me to exit my vehicle to withdraw cash. i am so fed up with the financial system, but alas, nothing you can do about it.


Getting out of vehicle, come on (now I sound like an old man). I use BofA for checking and like them and have no problems with them, unlike every person I ever talk to. A couple of months ago they had an online promotion that I know several took advantage of. All you had to do is open a checking account online, with $100. No fees, no direct deposit, no minimum balance and you can get the overdraft protection in form of a savings account if you wanted. My parents did this because they bank with several institutions. They both had existing BofA accounts and cancelled them after opening the free version of what they already had. They get some kind of bonus by having their pay checks directly deposited in the credit union so they do that now. After the first of the month they go online move money if they need to and all their bills are paid with bill pay.

Might be worth while to call around or check for banks that do the no minimum balance thing as fees can kill you. My wife and I have a CC but I use it more for picking stuff out of my teeth than I do to make purchases. I grew up that way and I'm glad it was one of the things that stuck.

[garrett]

My wife and I have a CC but I use it more for picking stuff out of my teeth than I do to make purchases. I grew up that way and I'm glad it was one of the things that stuck.


i'm probably in the minority here, but i was taught the opposite. my parents (and now I) always use a Discover CC for every purchase/bill payment possible because you get some certain % cash back. As long as you make the full payment each month, you can't go wrong...

it also helps me keep my spending in check since you have to pay it all off at once. it's a lot easier for me to see how much money I am spending each month when I see 1 big number as opposed to using a debit card which subtracts little by litte, and especially cash which i just forget about.

[paddlenbike]

^^^ That is exactly what I do each month as well, although I will end up carrying a balance this month due to the refrigerator purchase. I currently have an REI card that gets me dividends but I'm now looking for a card that does either straight cash back or an Alaska Airlines airmiles card since I fly with them annually. Does Discover charge an annual fee?

[4x4mike]

My wife and I have a CC but I use it more for picking stuff out of my teeth than I do to make purchases. I grew up that way and I'm glad it was one of the things that stuck.


i'm probably in the minority here, but i was taught the opposite. my parents (and now I) always use a Discover CC for every purchase/bill payment possible because you get some certain % cash back. As long as you make the full payment each month, you can't go wrong...

it also helps me keep my spending in check since you have to pay it all off at once. it's a lot easier for me to see how much money I am spending each month when I see 1 big number as opposed to using a debit card which subtracts little by litte, and especially cash which i just forget about.


My wife spends enough to get us dividends with our CC. None really pay enough to make it worthwhile in our home, I've run numbers and handled all the accounts for a while.

Bills get paid in full every month and we're smart with the cash. She likes to use the CC so she does. I don't like to use it so I don't. Don't get me wrong we do budget and know exactly what comes and goes and have developed our own system.

I know many people who do what you do. Heck I know 2 guys who don't even have bank accounts yet have bills and mortgages figured out.

[Crinale]

^^^ That is exactly what I do each month as well, although I will end up carrying a balance this month due to the refrigerator purchase. I currently have an REI card that gets me dividends but I'm now looking for a card that does either straight cash back or an Alaska Airlines airmiles card since I fly with them annually. Does Discover charge an annual fee?


I believe Discover has an annual fee.. I personally have a Chase Rewards Visa and i can chose what to spend my rewards on, either cash, gift cards, or miles (i usually choose to put my rewards onto my card to help pay down my balance)

[Good Times]

I have both Discover and AmEx (several diff ones from them) and all of them have no fees. They do offer cards w/ fees but the ones I have are no fees and all come with their perks like cash back rewards etc. One of the my AmEx cards is the Costco Business Card and I know that one has rewards on it.

Chase often and Bank One often has promos with no interest for 12 months so you might want to look into them as well although I don't think you can roll over your cc's into their balance.

[CJM]

Precisely the reason I just canceled a credit card. One time, JUST ONE TIME I wrote the check out and transposed the numbers, not even the full amount just the sense. They killed me from a 9% interest to 22% for a measly less than a dollar that I didnt pay. This was citibank. Not to mention my card got stolen multiple times and I didnt even use it anywhere and they took forever to reverse the fees and didnt even call me or anything either about the charges.

I have a chase MC and ive beenhappy with them, I hardly use it but when they noticed fraudulent charges they called me and had a new card sent asap.

I really HATE credit cards, I hardly use them if possible.

Why not try a balance transfer where the interest is lower, often other credit cards LOVE doing that to reel you in. Plus side is you get a lower rate.

[paddlenbike]

I found some pretty worthy options out there:

Chase Freedom Visa--1% cash back on all purchases, 5% on certain product categories that rotate throughout the year and if you charge $500 in the first three months (which I definitely will) you get an additional $100 back. It sounds like you guys are happy with Chase, so this one is sounding good.

Bank of America has a 1.25% card but in a two year period I spent more time at the bank fixing problems they created that I won't go back for anything. I switched to Golden1 Credit Union in 2000 and have not had a single problem.

Fidelity Investment Rewards Visa--2% cash back on all purchases. It didn't make #1 in the review I was reading because it requires you open a Fidelity Brokerage account, which I happen to already have. [EDIT--2% is for the American Express card, which doesn't seem to work well as a primary card. The Visa offers 1.5% cash back, which still isn't bad.]

I kind of hate to walk away from my REI/U.S. Bank Visa because the customer service has been outstanding but straight cashback would be nice. I contacted my mortgage company and they will not allow me to put the mortgage on a credit card...understandable but a bummer nevertheless.

[Okie81]

Good deals, especially if you have a Fidelity account.

[garrett]

Discover is simliar to how you describe chase freedom visa - no fee, 1% cash back on everything, 5% cash back on different categories which rotate throught the year, and up to 20% cash back at certain online retailers.

[paddlenbike]

I was in the process of signing up for a Discover card last night. After a little research I realized it is not part of the Visa/Mastercard network and therefore its uses are a little more limited. For example, it generally only works in the U.S., so I would have to own a second credit card for international travel. Speaking of which, the Capitol One card offers a 1% rebate for the first $6,000 spent, then 3% for gas and groceries after that. And it carries no foreign transaction fees--I paid $80 last year in Italy on foreign fees alone. I need to stop doing mail order brides and drug shipments from Nicaragua.

What I need is a 1-2% cash back Home Depot card since that's where all my money goes anyway.

[garrett]

Yeah i actually meant to include that in my earlier post is that 1 downside to discover is that it is not accepted as many places as a visa/mastercard. this hasnt affected me yet but obviously something you have to consider.

i have the visa 'americard' from BofA as a backup but hardly ever have to use it. i hear a lot of bad things about BofA but I have had checking/credit/savings accounts there for ~4 years and fortunately have not had any trouble... (knock on wood)

[Whitey]

What do you home owners do for temporary credit when you unexpectedly need to buy something expensive? Does Home Depot charge interest rates that high for temporary lines of credit?


Do you keep an emergency fund for stuff the house may need?

[paddlenbike]

Do you keep an emergency fund for stuff the house may need?


As a new home owner that emergency fund never really got the chance to get itself started. Actually the emergency fund money is being used as I earn it to fix those first year home repairs. I do have savings, but not specifically for the house.

The goal here isn't to find a low interest rate credit card and rack up debt but rather to continue to run things through a credit card, pay it off every month and collect cash-back rewards while I do-so. With the exception of my home mortage, I have no debt. But I also don't live a fancy lifestyle and never purchased a new car.

That said I will have a credit card balance this month. I could pull money out of savings to cover it but leaving the balance the $11 in interest I have to pay will be nothing compared to the amount I save this month because I'M CHEAP and freak out about the cc balance, thereby saving money in the process, haha.

[Whitey]

I could pull money out of savings to cover it but leaving the balance the $11 in interest I have to pay will be nothing compared to the amount I save this month because I'M CHEAP and freak out about the cc balance, thereby saving money in the process, haha.


I'm not being a wise-guy, but I'm not following you in this sentence. Are you saying if you used your savings to get the refrigerator you'd only have $11 left or the $11 is the interest you'll pay on the card?

I'm not going to tell you what to do, but just know that the technique you are using very rarely works out in favor of the consumer.
If you were charging and paying off $10,000/month then I'd consider it, but for basic living expenses, the math doesn't work out.

If everything you charge netted you 5% back, you'd earn maybe $30-$40/month.

Then watch what happens if you carry a balance just one time in the next 12 months. All of the sudden your 5% cash back benefit turns into a 25% interest charge and all the work you did to beat the credit card company is gone.

[paddlenbike]

My "logic" often makes no sense to people, so you're not the first. :) To keep things simple, I do payoff my credit card every month. I'm going to accrue $11 in interest this month, one time only. Credit card interest rate is irrelevent to me for this reason...I usually make $200-300 per year in rewards from using the credit card and most years pay $0 in interest. This year I will pay $11 in interest, no biggie.

[Scuba]

Haven't read the rest of the replies.. but most of the credit cards these days have interest free (or very low interest) for the first year. Its all special promotions just to suck you in. However, if you read the fine print you'll see that that if you miss a payment the interest rate will skyrocket like a bitch.

After all the debt my parents got themselves in I'm just way to0 scared to even get a credit card. I trust myself somewhat but, at the same time I don't.

[Whitey]

My "logic" often makes no sense to people, so you're not the first. :) To keep things simple, I do payoff my credit card every month. I'm going to accrue $11 in interest this month, one time only. Credit card interest rate is irrelevent to me for this reason...I usually make $200-300 per year in rewards from using the credit card and most years pay $0 in interest. This year I will pay $11 in interest, no biggie.


Again, not being argumentative, just making conversation.

You are the perfect example of why this logic is flawed. You are guaranteeing me that you will NOT pay a single penny in interest to credit cards moving forward.

BUT, the whole point of this thread is that you got caught with an unexpected expense and needed to charge the refrigerator. Some other things came up and here you are carrying a balance. Now you are guaranteeing that nothing will come up next month and the cards will be paid off. It just doesn't work.

You are a new home owner. You have no way of anticipating something going wrong with the house, no one does. It's imperative that you have funds set aside for these surprises. If not, you can expect to pay interest on whatever service or appliance that needs replacing.

No one is going to care if someone has granite counter tops or a new bathroom if their hot water heater doesn't work.

[Whitey]

Haven't read the rest of the replies.. but most of the credit cards these days have interest free (or very low interest) for the first year. Its all special promotions just to suck you in. However, if you read the fine print you'll see that that if you miss a payment the interest rate will skyrocket like a *******.

After all the debt my parents got themselves in I'm just way to0 scared to even get a credit card. I trust myself somewhat but, at the same time I don't.





Smart kid.

[paddlenbike]

You are a new home owner. You have no way of anticipating something going wrong with the house, no one does. It's imperative that you have funds set aside for these surprises. If not, you can expect to pay interest on whatever service or appliance that needs replacing.



Whitey, I agree with you whole-heartedly. I am not interested in talking about my finances here in front of my friends, but I can assure you I have savings and an excellent financial planner and I am simply looking for a better vehicle for my daily expenses. My last credit card probably cost me $20 in interest for the seven years I've had it and I have net several hundred dollars each year in rewards just for using the card. It's a great way to itemize spending and I have also used past statements as proof of payment when I otherwise did not have a receipt for a warranty claim. I am not trying to sound snarky, I love the fact that you hate credit cards probably more than I do, but I have found that it works to my benefit in lieu of paying cash or using an ATM check card, which, if stolen/compromised, pulls directly from your account rather than through the buffer that is the credit card company. I think our school system should hire you to teach our children some financial planning.

[4x4mike]

All I heard was "better vehicle," "several hundred dollars" and "works to my benefit."

1992 Oldsmobile (http://www.youtube.com/watch?v=LxS7L26Af7s#)


The description says it's for sale. Use this years cash back and flyer miles to go pick it up, done.

[paddlenbike]

Better yet Mike, I'll pay double what he's asking and be sure to put it on my 25.99% interest Sears card. :tapedshut:

[Whitey]

I am not trying to sound snarky, I love the fact that you hate credit cards probably more than I do, but I have found that it works to my benefit in lieu of paying cash or using an ATM check card, which, if stolen/compromised, pulls directly from your account rather than through the buffer that is the credit card company. I think our school system should hire you to teach our children some financial planning.




Your not coming off as snarky, and I definately don't want to sound like I'm preaching.

I've made many financial mistakes and abused the hell out of credit cards in the past. You name it, I've done it from charging college classes to getting cash advances at 30% interest. So I've definately walked the walk. Im 32 now and it's been maybe 5 years since I've used a CC.