Credit Cards

[beamMEup]

All you Macy's cardholders out there are probably used to seeing this, but I just got my first statement.  It states:

 "A FINANCE CHARGE in the amount of $2.00 will be added to your Revolving account balance if you choose to pay less than the full balance by your due date.  If that happens, the actual ANNUAL PERCENTAGE RATE charged on that account is 76.32%"

That's on a balance of $150 - which I wanted to have reported but have PIF'd. 

Holy moly.  A great reminder that credit cards are tools and not even remotely related to cash to be spent.  Gives me the heebie-jeebies.

[creditwherecreditisdue]

---

utah2009 wrote:

All you Macy's cardholders out there are probably used to seeing this, but I just got my first statement.  It states:

 "A FINANCE CHARGE in the amount of $2.00 will be added to your Revolving account balance if you choose to pay less than the full balance by your due date.  If that happens, the actual ANNUAL PERCENTAGE RATE charged on that account is 76.32%"

That's on a balance of $150 - which I wanted to have reported but have PIF'd. 

Holy moly.  A great reminder that credit cards are tools and not even remotely related to cash to be spent.  Gives me the heebie-jeebies.

---

I recently posted here in several different threads about the effect of a minimum finance charge on your actual APR. While it works out to a very large percentage it is actually not much money.

[beamMEup]

Hmmm.  Good point!  Haven't seen those posts - I'll hunt for them.  Still an additional $48 on a $150 purchase gives one pause.  If I had a $1500 purchase, $48 wouldn't seem so bad, but I would be paying the lovely 23.99% on that - so.  Still have heebie-jeebies.  Kind of like when I see a snake........

[creditwherecreditisdue]

Once you drop the balance down to the point where the $2 kicks in you're going to want to kill it off. Yuck!

Message Edited by creditwherecreditisdue on 07-23-2009 02:17 AM

[Revike]

If the total finance charge for the billing cycle is $2.00, then that 76.32% APR would be based on an average balance of $31.xx. The $150 purchase must have been made late in the cycle.

A similar thing happens when a BT fee is applied - the first month's statement shows an unusually high APR.

Regulations require them to display the "effective" APR on the statement for each billing period. It looks dramatic, but it just means there was a particularly low average balance in relation to the total finance charge for that specific month ...

[scorerise]

---

utah2009 wrote:

Still an additional $48 on a $150 purchase gives one pause. 

---

It is still the same $2, it is NOT $48. APR is annual.

[AMJMA]

so just pay the minimum or pay it off, then go get a $4 starbucks coffee

[txjohn]

---

utah2009 wrote:

All you Macy's cardholders out there are probably used to seeing this, but I just got my first statement.  It states:

 "A FINANCE CHARGE in the amount of $2.00 will be added to your Revolving account balance if you choose to pay less than the full balance by your due date.  If that happens, the actual ANNUAL PERCENTAGE RATE charged on that account is 76.32%"

That's on a balance of $150 - which I wanted to have reported but have PIF'd. 

Holy moly.  A great reminder that credit cards are tools and not even remotely related to cash to be spent.  Gives me the heebie-jeebies.

---

Yes, it's 76%, but it's only $2.  Do you ever drink Starbucks, RedBull or snacks at the movie theater?

CCC's charge a "minimum" finance rate.  But, if having this reported balance is something helpful to your FICO and CR and you need this help to shop credit, then it is worth the small price.....just skip a single Starbucks and you actually came out ahead

However, you may want to look at your CC's and see which has the lowest cost or possibly no cost and then use it for your small reported balance.  Some CCC's have a 50 cent minimum.

[beamMEup]

Great comments and insights - thanks everyone.  It's great fun to hear a balanced group of opinions - keeps us all well-rounded AND grounded. 

For right now, I'll keep my balances on cards that don't have a finance charge.  Evidently I shouldn't do math late at night, as my morning brain says that $2 charged monthly over a year's time is $24, not $48.  Still, I don't carry large balances (certainly not on 23% cards!).  Absolutely not the best place to park any balance.  I (like everyone else, I'm guessing) show a score pop when I report a balance on one card - it just won't be Macy's.  (I just love them for their perks and am really glad to have this card - my favorite right now - without a balance ).  Absolutely a PIF card for me.  Hmmmm....yep.....it's time for my morning workout, yummy breakfast, no Starbucks for me, and then how about some shopping.......

I'm reminded of a friend who shops Macy's and then pays the bill for that day's shopping excursion before she leaves the store.  Keeps the card going strong, and zero balance always.  Smart girl!  And thanks to all the smart posters on these threads - it's a pleasure to learn from all of you!