No Balance Transfer Fee Credit Cards

I'd really like to see 0% intro APR, no fee balance transfer credit card return to the U.S. Credit card offers have been improving, but, these days, banks are very keen on charging a fee for all kinds of services, including credit card balance transfers.

I know from experience that the best way to raise your credit score above 800 is to spend plenty of money with credit cards, then pay all that money back. That's what I did during the last decade, as I built my business. As of last month, my TransUnion credit score is still above 800; 804 to be exact.

I very rarely use my personal credit cards these days. I use my business cards for business spending, and for personal stuff I use my personal debit card.

I was thinking of transferring some of my business-credit-card debt to another business credit card that includes an attractive, no fee balance transfer, 0% intro APR deal, but I can't find any. And I can't transfer my business debt to a personal card, since, technically, that would be breaking the rules.

Before the financial crisis of 2008, there were plenty of no fee balance transfer deals out there, with both business and personal cards. Bank of America, Citi, Discover -- they all had at least one no transfer fee 0% card.

So I guess I'll just have to wait and do my best to pay down my business cards, so that I don't get overwhelmed with finance charges.

Used My Citi Personal Card, Just In Case

Last weekend, I decided to use my Citi personal credit card, just to use it.

My Citi card has a credit limit above $30,000. The APR isn't good, but I keep the card as a backup in case of a financial emergency, and to keep my credit score high. Closing a credit-card account that has a zero balance and a high credit limit would almost certainly cause my credit score to drop. As you probably already know, having lots of credit available to you, and not using it, looks very good to credit scoring algorithms.

So I used my Citi card to keep the account active. I don't want Citi to close it due to inactivity.

Spent a little more than $69 on some gas, then paid it off right away via an online payment.

I don't drive anymore (sold my car) but I was riding shotgun in my friend's car on a trip to New York. Trip was mostly benefiting my todo list, so I paid for the gas.

I was very surprised to find that at Sunoco stations, you can't use a credit or debit card more than once in a day. This is true even if you use a credit card to pay for fuel in one state, then try to use it again in another. VERY annoying.

So I found myself with limited cash and a debit card that I can't use to pay for gas. Seemed like the perfect opportunity to dust off my Citi card and send a clear signal to the good folks at Citi that I want to keep this card alive!

Why do I insist on using Sunoco? I like the quality of the fuel, and I also very much like the fact that the company gets not a drop of crude oil from the Middle East. Does all Persian Gulf oil money fund radical Islam? Of course not! But if even $0.01 goes to support terrorism, I'm spending my money elsewhere.

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The Financial Crisis: Blame It On The Government, Of Course!

Found this interest video clip on the WSJ's new Opinion Journal Live:



What I find truly unbelievable is that at one point, half the mortgages in the U.S. were either subprime or ALT-A. Yikes!

I also find it very....err....interesting that the commission places most of the blame for the financial meltdown that led to the Great Recession on institutions that really don't matter anymore, like Fannie Mae and Freddie Mac. IMO, they are letting way too many fraudsters and other super-greedy players off the hook.

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New Credit Card Rules

Consumers are now familiar with the Credit Card Accountability Responsibility and Disclosure Act of 2009 or CARD and how it protects borrowers against unfair interest rate hikes and other exorbitant credit card fees. However, most consumers are not aware that the Federal Reserve enacted new rules for credit card companies on February 22, 2010 to ensure that consumer rights outlined in the CARD Act of 2009 are truly protected. As the regulatory agency of America’s banks, the Federal Reserve has to police the banks to make sure that they don’t try to exploit potential loopholes in legislation and thereby exploit consumers.

The February 2010 regulations enacted by the Federal Reserve provide the following protections to credit card consumers:

Credit card companies must tell you how long it will take to pay off your balance. Now your monthly credit card bill must include a breakdown of how long it will take to pay off your balance if you only make the minimum payments as well as what you would need to pay each month in order to pay off your balance in three years.

No interest rate increases for the first year. Credit card companies can no longer increase your rate for the first 12 months after you open an account, EXCEPT IF:

• Your card has a variable interest rate tied to an index.
• There is an introductory rate, but it must be in place for at least 6 months.
• You are over 60 days late in paying your bill.
• You violate a payment arrangement agreement.

You MUST be notified when they plan to increase your rate or other fees. Your credit card company is now required to give you 45 days written notice before they can

• Increase your interest rate;
• Change fees that apply to your account
• Make any significant changes to the credit contract terms.

If you do not agree to the new terms you now have 45 days to cancel your card before the changes are put into effect. However, if you do choose to cancel your card your credit card company may close your account and increase your monthly payment, with certain limitations.

Your credit card company DOES NOT have to give you 45-day written notice if:

• You have a variable interest rate tied to an index and the index goes up.
• Your introductory rate expires.
• You violate a payment arrangement agreement and you experience a rate increase as a consequence.

Increased interest rates can only be applied to new charges. If after 12 months your interest rate is increased it cannot be applied to a balance accrued before the rate increase itself.

Restrictions on over-the-limit transactions. You must now opt-in to allow transactions above your credit limit to be processed; otherwise the charges must be denied. If you do not opt-in and your credit card company allows your card to be charged above your credit limit, you cannot be charged an over-the-limit fee. Also, if you do go over your limit you can only be charged one over-the-limit fee per billing cycle, and you can opt-out at any time.

Payments must be directed to highest interest balances first. If you make more than the minimum payment, the difference must be applied to the balance with the highest interest rate, with one exception:

When you owe a balance on a deferred interest plan, the credit card company may give you the option to apply payment in excess of the minimum balance to the deferred interest balance before other balances. Otherwise, for two billing cycles prior to the end of the deferred interest period, your entire payment must be applied to the deferred interest-rate balance first.

No double-cycle billing. Interest charges can only be applied on balances in the current billing cycle.

Standard payment dates and times. Your credit card bill must be mailed or delivered at least 21 days before your payment is due. Furthermore,

• Your due date must be the same date each month
• Payments must be accepted until 5 p.m. on the due date.
• If your payment due date falls on a weekend or holiday you will have until the following business day to pay.

New caps on high-fee cards. If a card comes with fees such as an annual fee or application fee, those fees cannot total more than 25% of the credit limit. The 25% cap does not, however, apply to penalty fees.

Protections for underage consumers. Applicants under the age of 21 must prove that they have the income to pay their balances or they must have a cosigner in order to open a credit card account. Also, if an underage cardholder wishes to increase their credit limit and they have a cosigner, the cosigner must agree in writing to the limit increase.

The Fed also announced in October 2010 that it would amend Regulation Z, the regulations implementing the statutes of the Truth In Lending Act, in order to stop certain predatory practices enacted by credit card companies in attempts to maneuver around the CARD Act rules and earlier Federal Reserve regulations. The amendments will clarify matters of compliance for card issuers on the following:

Promotional programs that waive interest charges for a specified period of time. Reduced interest rate promotions are subject to the same protections as promotions that employ a reduced interest rate for a specified period. Credit card companies have recently used a ‘bait and switch’ approach to certain reduced rate offers, not disclosing that the promotion rules would allow them to revoke the benefit at any time.

Fees charged before a credit card account is opened. Application fees and other fees that are paid before a credit card account is opened are covered by the same limitations as fees charged during the 12 months after the account is opened to further avoid predatory lending practices.

Proof of ability to pay must be proven for the cardholder as an individual, not household income. Predatory lenders often issue cards to individuals who do not truly have the ability to maintain their accounts based on household income or other income credits, locking these consumers into a debt trap.

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The Life and Death of A Mortgage-Backed Security

Listened to a great episode of the NPR radio program This American Life earlier today. Truly excellent. The show was about the life and death of a mortgage-backed security (MBS), which was given the innocuous nickname "Toxie."

Basically, a group of Planet Money reporters pooled their money to buy a bond backed by mortgage debt. This is same type of investment that caused the financial crisis of 2008 and the global recession that followed.

5 reporters contributed $200 each, and bought the mortgage bond for $1,000. During the housing boom, that same bond was worth about $75,000! The investment -- essentially a big pile of paper drawn up by lawyers -- actually does OK for a while, producing a stream of income in the form of a monthly check. Eventually, however, the monthly checks dry up, and the MBS dies. In total, the investment returned $449.06, so the MBS ends up losing $550.94. Each of the five reporters gets back $89.80 from their $200 contribution. Ugly!

The reporters decide to invest what they have left in a gold coin. Much smarter, considering how gold has been doing since 2008. Moreover, the Fed just announced a new round of quantitative easing: printing new money out of thin air to buy Treasury securities. These purchases will, among other things, weaken the dollar, and will very likely contribute to gold's rise.

To read more about this episode of This American Life, and to download the free MP3, visit this link. There's also a fascinating interactive timeline here. Highly recommended!

Toxie's Dead from Enkhtulga on Vimeo.

Here's a cartoon we made for NPR's show, Planet Money. It's about Toxie, a personified toxic asset that helped burst the housing bubble. enjoy!

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