Hard Lesson in the Land of Credit Cards

Credit card companies are amazing at legally winning.

I’m not about to rescind my months of preaching about the amazingness of free flights. Oh hell naw.

I’m just want to reinforce what I’ve said many times:

The thousands of free flights handed out by credit card companies are paid for by the people who become pawns of the system.

Basically everyone. And recently, I almost got sucked in!.

The Story:

I was waiting for someone who’d helped me meet my minimum spend (by putting her spending on my card) to pay me back. When I ask people to help me meet minimum spends, I accept that I may end up floating their debt for a short while. Given the free plane ticket I’m getting out of the deal, and the fact that I couldn’t get it without their help because of my austere life, I’m okay with this.

My credit card came due, and there was $100 that I could either 1) put off until next billing cycle, or 2) go down to the bank and get my account’s daily minimum balance lowered, which I’d been meaning to do.  Obviously I picked the easier of the two… essentially “do nothing.”  So, to avoid a bank fee for (barely!) dropping below my “average minimum daily balance,” I carried a balance of $100 on the card that I’d  pay off next month. Interest on $100 wouldn’t be a big deal. “Less than Well’s Fargo’s $12 fee, that’s for sure!” I thought.

NEWSFLASH: if you don’t pay your card in full, they don’t charge interest based on the amount you still need to pay.
They charge you interest based on your average daily balance for the entire billing cycle!

Say what?!

I’ve never in my life carried a balance, am always admonishing others to never carry a balance, and look what happens when I fail to take my own advice!

I pay the stupid $20-ish dollars, curse my foolishness and the tricky rules, and move on with my life.

Then I get my next statement and see another interest charge.

Okay. That’s it. I’m mad.

I call up, throw the company a WTF, and get another lesson in the tricky labyrinth laid out to produce the kind of profits it takes to walk around handing out free plane tickets. Once you start carrying a balance, they keep charging you interest on your average daily balance until the next statement is paid in full. So essentially, once you skip paying even a tiny bit – even fifty freaking cents – of a bill, you have to pay interest in the average daily balance for the next two bills. ARGH!

So, not paying a measly hundred dollars to avoid paying $12 (which I could have avoided just by going down to the bank and taking care of a financial chore I’ve been putting off for months) cost me $40 in the end. F. That.

Please learn from my foolishness and continue paying your credit card in full, every single month, come hell or high water.

And for goodness sake, if your credit card use isn’t earning you at least two free plane tickets – do something about it!

I deeply regret all the plane tickets I’ve wasted my money on when I could have been flying for free. Obviously, I am great at finding cheap flights (here’s what three different sets of RTW flights cost me), but cheap isn’t FREE.

Getting on the free flights bandwagon is a gift to yourself. And if you do it right (which you will, because you are just that kind of awesome, right?), it won’t cost you a dime.

Okay – I can’t shut up. This is my favorite soap box. Either go get your free flights or get back to work! 😉