Things have, oh, hit the fan. What was supposed to be my last week of summer “vacation” has turned into “the incredibly crazy week where everything happens at once, and all the information I need in order to make decisions is still up in the air.” So while I simultaneously run around like a headless chicken and sit tight waiting for answers, I figured I ought to give you guys at least something to chew on.

So here: a bunch of links that I’ve been meaning to share, but haven’t yet been able to work into any posts. There’s some really great stuff that I’ve just been sitting on! Today’s theme is…

Credit Scores and Reports

Money Saving Tips: Credit Scores, Everything You Need to Know - Originally titled “Credit Scores: Yes, You Should Give a Damn,” this article by my good buddy Cap gives you the straight dope on what a credit score really is, and how to get yourself a good one.

How to Find One’s Credit Report and Credit Score Inexpensively and Safely - There are a lot of websites out there that offer “free” credit scores, when what they really mean is either “fake credit scores” or “take your information and sell it.” This guide will help you find your true credit report and score in the shark infested waters, without spending more that you have to.

FICO Score Estimator - Too broke or lazy to get your credit score? Me too. Well, the broke part, anyway. If you’re just looking out of curiosity, and don’t need the actual score for any reason, this estimator can help you figure out what range your score falls in.

Back in September, I applied for a Citibank student card, and had a terrible time verifying my student status. After a solid month of trying and getting the runaround, I dropped it and ended up getting a different card.

Times may have changed, though. A friend of mine applied for the student version of Citibank’s Driver’s Edge card, and was approved without having to submit any of the insane paperwork that I was asked for. Has anyone else applied for a Citi student card in the last few months? Did they make you verify your status as a student?

If this actually has changed, that changes my opinion on whether Citibank’s student cards are worth it or not!

I had a conversation with a friend the other day, and I’m not exactly sure where I stand on my finances now, because of it. So, I’d like to take a moment to post that conversation (well, more of a dramatization of the conversation, since my memory isn’t quite word-for-word) and ask you guys what you think.

(Written in pseudo-script format because, hey, I paid for those script-writing classes, didn’t I?)

Interior, Classroom, Day

STEPHANIE, a gorgeous, intelligent, awesome, amazing college student [hey, it's my script, I can describe myself however I want] enters the room and sits next to FRIEND, who is completely ambiguous in every way. Stephanie take out her laptop and spends a solid two minutes fiddling with the power cord.

FRIEND: “Uh… Steph? What are you doing?”

STEPH: “My power adapter is… wonky. Broken-like. I’ve gotta wiggle it to make it work.” [Yeah, I really talk like that, in an informal setting]

FRIEND: “Time to buy a new one, maybe?”

STEPH: “Yeah… probably… if I had the money. But I don’t, and wiggling makes it work. Eventually.”

Stephanie’s eyes light up as the indicator light on her laptop lets her know that it is finally receiving power from the cord.

STEPH: “See? Still works!”

FRIEND: “Uh… yeah. Ok. But you should probably get a new adapter, anyway. Don’t you get paid this week?”

STEPH: “True! Except that money is for my insurance. And gas for my car. And, of course, my credit card bill. I’m paying lots and lots to my credit card bill to try and pay it off before November.” [Insert boring explanation of my switch to a 0% APR credit card here]

FRIEND: (waking up from the nap taken while I droned on about credit cards) “That’s great and all, but, won’t you be making more money during the summer? Theoretically? I mean, shouldn’t you pay a little less to your credit card now, buy some stuff you need, and then ramp up your credit card payments in the summer?”

STEPH: “Ok, yes, theoretically, I should be making more this summer, in whatever job I get. But I don’t have that job yet, and I don’t like the idea of relying on ‘future dollars,’ since that’s what got me into this credit card debt in the first place.”

FRIEND: “Yeah, ok, I understand that, but you’re being pretty cheap.”

STEPH: “I think you mean frugal.”

FRIEND: “Nope. Cheap.”

STEPH: “Frugal!”

FRIEND: “CHEAP!”

STEPH: “FRUGAL!”

Stephanie and her friend growl at each other and then suddenly appear in the American Gladiators arena, ready to fight. [That totally happened, I swear.]

So, back to you, readers. Am I being cheap? A power adapter for my laptop isn’t the only item on my list of “Things I Really Ought To Buy” - a year of compacting has left me with a laundry list of purchases that I probably should be making.

I’m still not sure I want to drop down my credit card payments at all, but if I did, it wouldn’t be “drop down to just the minimum payment” or anything. I’m paying $160 a month to my credit card on my current plan, and if I did drop it down, it certainly wouldn’t be to anything less than $100 (for reference, my minimum payment is $17).

So… thoughts?

A few months ago, I managed to get my hands on a new credit card with a 0% introductory rate for 12 months. I transferred the balance from my other credit card, which means that if I can manage to pay it off before the intro period ends, I won’t have to pay a cent more in interest, beyond what I’ve already wracked up.

It’s a bit easier said than done, perhaps.

Just yesterday, I have to plunk an additional $350 on that credit card in order to pay for needed repairs on my car. I would have paid for it in cash, if I could have - I’m not happy with the idea of putting anything on my card, even if it is at 0% interest.

The key to a 0% APR balance transfer is to make a commitment to pay it off before the intro period ends. For me, this means paying more than three times the amount I’ve been paying monthly to the card. It’s going to be tight. It’s going to be painful. But it’s exactly what I need to do to pay off the card.

The other good thing about transferring my balance is that it leaves the original card free and clear, so that I can begin to use it responsibly again. There was a time (circa early 2006) when I only put small purchases on that card, and paid it off every month - never carrying a balance. Now I have a chance to get back to that, and enjoy the float and rewards points that using the card can offer me.

After I’m done paying off my credit card balance, it will be on to the next thing that’s bothering me: paying off the interest on my student loans!

Hi Stephanie,
I love your website and it’s really helped me take initiative of my spending and savings habits. I’m 20 and I have pretty awful credit. I finally got my credit score and it’s 520. I have two credit cards that will be paid off no later than December and I have a few things on my report that I’m disputing?
What can I do now to drastically improve my credit? I now have a job and once everything is paid off I just want to make a big change so I can be on the path to having good credit. Any suggestions?
Thanks,
Corey

Corey, this probably isn’t what you want to hear, but what you’re doing right now is exactly right, and there isn’t a whole lot more you can do. Improving credit is, unfortunately, a rather slow process. But you are on the right path, so don’t lose hope!

Let’s take a quick look at the five elements that make up a credit score, just to see if there’s anything else you might do. From the Wikipedia entry on credit scores:

• 35% ? punctuality of payment in the past (only includes payments later than 30 days past due)
• 30% ? the amount of debt, expressed as the ratio of current revolving debt (credit card balances, etc.) to total available revolving credit (credit limits)
• 15% ? length of credit history
• 10% ? types of credit used (installment, revolving, consumer finance)
• 10% ? recent search for credit and/or amount of credit obtained recently

Punctuality of Payment
This is the largest chunk of your score, so it’s very important. This includes more than just payments on lines of credit - any bill that’s more than 30 days past due can show up here. Be sure to stay on top of your utilities, cell phone, car payments, credit cards… all of it! If you have to pay something late, make sure you don’t let it get to 30 days past due.

Ratio of Debt to Credit
As the second biggest chunk, this is more important than most people think. Once you’ve paid off your credit cards, you’ll probably want to start using them again (without carrying a balance). This will help you establish a series of on-time payments, which is good for the “Punctuality of Payment” chunk above. However, you don’t want to charge too much, or else you’ll throw off this chunk.

Even though you’re going to pay your cards off every month, try not to charge more than 30% of your total credit limit - across all of your cards. Remember that last bit - it’s the total debt on all of your cards out of the total credit limit of all your cards!

Length of Credit History
There’s nothing you can do to boost this, and it’s probably not one of your strong points, since you’re only 20 years old. Thankfully, it’s only 15% of your score, so don’t fret over it. However, there are one thing you can do to make sure you don’t hurt it - that is, don’t cancel your oldest card, if you can help it. Unless it’s an awful card with lots of ridiculous fees just for having it, keep it around for as long as you can.

Types of Credit Used
At only 10%, this isn’t hugely important. You’ll probably eventually end up with a car loan and a mortgage to balance this out, but for now, it’s more important to focus on other aspects.

Recent Credit Inquiries
Yep - just asking for credit hurts you. But not much, and not for long. There isn’t a whole lot you can do here either, except for simply not filling out every credit card application that comes in your mailbox!

You’re doing good by paying off your cards and making a commitment to improve your score. Just focus on keeping your debt-to-credit ratio low and making payments on time, and you’ll see drastic improvement.

Update: The following article was true at the time of writing (October 2007), there is evidence that Citibank may have changed their practices since then.

Jonathan over at My Money Blog did a post about the Best Credit Card for College Students. This isn’t the first time I’ve seen this, since it’s based on a CNN Money article. In fact, not only have I seen this information - I went ahead and applied for the recommended card back in early September.

The card in question, the mtvU Platinum Select Visa Card for College Students by Citibank, does seem like the ultimate credit card for college students. A into 0% APR for balance transfers and purchases (which I was going to take advantage of), 5% back on restaurants, bookstores, record stores, movie theaters and video rental stores. And “bookstores” includes Amazon.com, where you can buy anything you could ever possibly want - and get 5% back.

Not only that, but the card also gives you Thank You Points for getting good grades! A 4.0 could get you a $20 gift card at one of the many, many stores included in the Thank You Network.

Sounds awesome, right? I wish I could give a glowing review of this card, but alas, I cannot. Because instead of actually getting the card, I ended up in application hell.

It started out pretty much daisies and roses. The online application process was exceedingly simple, and didn’t even ask for my household income! (That probably should have tipped me off that this was not actually going to go smoothly.) So I sent the application into cyberspace, and waited.

And waited. And waited. Finally, after about 3-4 weeks, I got a letter from Citibank. There was no indication as to whether I was approved or denied - it just said that they needed more information to verify my enrollment as a student. “Fine,” I thought, “That’s fair, since it’s a student card and all.” Except the “verification” was just the beginning of application hell.

In order to verify that I was a student, they wanted the following:

• A copy of my student ID, front and back, with a current enrollment sticker OR
• A copy of a paid tuition bill for the current semester
• AND a copy of a bill (from the last 90 days) for a land line phone (cannot be cell phone)
• and if the land line phone bill was not under my name, they would ALSO need a copy of one of my bank statements from the last 90 days.

Ugh. This was already starting to get annoying. First of all, my school doesn’t DO “current enrollment stickers” on our IDs, so it was going to have to be a copy of the tuition bill.

Secondly, I can count on one hand the number of college students I know who even have a land line. Luckily, I happen to be one of those - but only because I moved home to live with my parents this year. But, of the college students I know with land line phones - none of them have the bill in their name. Some of them don’t even get a bill, because their phone service is wrapped up in the school’s housing bill.

So, fine. I mailed in the obnoxious amount of paperwork to verify my “studentness,” and waited.

And waited. And waited. About two weeks later, I got a phone call from Citibank, just telling me to call them back (this was an answering machine message). Confused, I called the number, and the lady on the other end of the phone didn’t know why I was calling, either. Since the answering machine message hadn’t given me a reference number, I had to give the customer service agent my social security number in order for her to look up the account.

That’s a major loss of points guys - there are few things I hate as much as giving out my social security number, especially on the phone.

So the lady, who was very nice, actually, looked up my account and said that I needed to resend my tuition bill, because it was printed from a website, but didn’t contain an “http.” This was actually my fault - I don’t have a printer on my computer, so I’d saved the bill page and then took it to another computer to print. So I accepted my responsibility, and asked her was address I should send a properly-printed tuition bill to. (Note this now: nothing else was said about there being any other problems with the paperwork I had sent in.)

So I sent a new tuition bill in, and waited. But this time, I didn’t wait long! Two days later, before they could have possibly received the second tuition bill, I got an email from Citibank. An email saying “You have been denied because we could not verify your student enrollment.”

What?!?

I waited a couple days, to make sure the new tuition bill had time to get to them. And then I called again. This time I had a reference number, but because I couldn’t understand the customer service rep very well because of her accent, I ended up screwing up my “password” and then having to give her my social security number anyway.

It’s like nails on a chalkboard when I have to give out my social security number on the phone.

So she pulled up my account info, and said that there was a problem with my tuition bill. The problem this time was that it didn’t contain my social security number. “Well of course it doesn’t have my social security number on it! My school switched to not using our social security numbers because it’s a security risk!” I said. (Also, couldn’t they have mentioned this the first time I called?)

The women informed me that I would have to send in a copy of my student ID with a current enrollment sticker. I told her my school doesn’t do current enrollment stickers. She told me I would have to get the school to send a fax, on school letter head, with my reference number, my home address, and my social security number to Citibank.

And that’s where I gave up. I have no interest in going down to the Registrar’s office, and giving them all of my information, asking them to type it up and then fax it to Citibank. Nope - not worth my time. 

The long and short of it is, if two or more of the following are true for you, don’t apply for the mtvU Platinum Select Visa Card for College Students:

• Your school doesn’t put “current enrollment stickers” on your ID.
• You tuition bill doesn’t have your social security number plastered on it.
• You don’t have a land line phone in your name.
• You don’t like giving out your social security number as if it were candy.

I can’t believe I let them pull my credit report for this. So lame!

“You spend 15% more when you use a credit or debit card instead of cash.” Have you ever seen this statistic before? Chances are, you have. But here’s a question for you - have you ever seen the study this statistic comes from?

Lots of people quote this statistic, without citing a source. This isn’t limited to small fries in personal finance blogging - the Wall Street Journal has an article titled As Cash Fades, America Becomes a Plastic Nation which says: “When people pay with plastic, they tend to spend more — often more than they have in the bank,” without offering anything to back up that claim. Dave Ramsey also threw the statistic around in his article The Truth About Credit Card Debt - also without citation.

So where did this statistic come from, and is it even true? I started in on an epic quest to try and find some answers.

My Epic Quest (For Answers!)

I had a lot of trouble tracking down whatever study this may be - at least, any study that I could get access to without paying for. And what good is a study that I can’t link to, and let you guys look at yourself?

I did find a few studies that may have the answers. Such as Always Leave Home Without It: A Further Investigation of the Credit-Card Effect on Willingness to Pay. This study looks like exactly what I was looking for, but I couldn’t access it without whipping out my own credit card. However, the abstract for the article was very helpful:

In studies involving genuine transactions of potentially high value we show that willingness-to-pay can be increased when customers are instructed to use a credit card rather than cash. The effect may be large (up to 100%) and it appears unlikely that it arises due solely to liquidity constraints.

In other words, this study shows that people do tend to spend more on credit cards, and it is unlikely that this is just because credit cards offer access to more money.

Still, I was not satisfied; I wanted a study that I could actually read through myself. Luckily, I found The Realities of Spending (PDF), a British study that I could actually access and read. This study examines the psychological reasons why a person might spend more using a credit card.

Some things to be gleaned from The Realities of Spending:

~ Adding a $30 expense too a $637 credit card bill makes the $30 expense seem smaller. Grouping transactions on a credit card bill makes the size of individual expenditures seem smaller, which increases spending.

~ Thinking about the cost of a purchase while consuming or using it can lower the pleasure gained from the purchase. Credit cards block this by disassociating the payment from the consumption - in other words, you don’t feel the pain of paying for something while using it if you use your credit card.

~ This works the other way as well: the pain of paying can be cushioned by thinking about the benefits of the purchase. This is why it’s easier to put “things” on our credit cards instead of “experiences” - while we’re paying off our credit card, we can think of all the enjoyment we’re still getting from our iPods, HD TVs, and that cute little robot vacuum cleaner.

~ Credit cards provide the most “decoupling” of payment and transaction out of all the payment methods. In other words, you buy now and pay later, and so act of buying and paying become “decoupled” in your mind. Credit cards do this in a number of ways:

• The increased period of time between when you make the purchase and when you pay the bill.
• Grouping many different transactions into one bill.
• A great diversity in the types of transactions can also reduce coupling - so if you buy gadgets, food, gas, and a range of other things on your card, it will reduce coupling for all those purchases.
• You don’t see actual money leaving your hand, you just write your signature on a piece of paper or on a little screen.
• People generally have a low recall of what they’ve paid for with their credit card. I know I do - I had to comb through my old statements and make a crazy spreadsheet in order to remember all of the purchases I made with my credit card.

So, Do We Spend More, or Not?

I’ll give you my usual answer: absolutely maybe. It really differs from person to person, especially when we’re talking about whether those psychological effects will occur with a debit card, instead of a credit card.

For example, I find that I tend to spend more with cash. Seriously! Here’s why: almost everything “serious” (bills) that I have to pay for comes out of my checking account, usually through online bill pay or a check. Therefore, in my brain, any money I have in cash can’t be used for “serious” things. It’s “fun money!” because it’s in cash form.

Of course, in the back of my mind, I know that I could easily put that cash into my checking account and turn it into “serious money.” But the part of my brain that makes impulse purchases doesn’t really listen to that other part of my brain.

I’m not the only one like this. Trent of The Simple Dollar has a problem with cash burning a hole in his pocket, as well.

So What Now?

You’ve got to figure out what type of person you are. You might already have an idea of whether you spend more on cash or plastic in your head. Think about how it feels when you pay for something with cash, debit card, and credit card.

But you’ll also probably want to track your spending. I’m a big proponent of doing this anyway - so in addition to writing down what you buy and how much you pay for it, jot down what form of payment you used. Once you’ve got enough data, you’ll figure out what kind of person you are. Then you can figure out which form you can best use to curb impulse spending.

This week, I’ll be helping The Boyfriend move (kinda rounds out the summer of moving, doesn’t it?). In order to help bridge the gap while I’m packing boxes and dodging traffic in a moving truck, Dale Yelich has kindly stepped in with a guest post for PTY. Dale Yelich is a member of Debt Management Talk - a debt management forum that shares its revenue with their members.

A lot of younger people wonder how to build credit when they have none to start with. There are a lot of pre-approved and ?zero credit? credit card scams out there, that need to be avoided at all costs. Many people have gone down those roads and have lived to regret it.

But there are several easy and safe ways to build credit, and here are some of the best.

Step Up
Have a checking and a savings account, and always keep money in both of them. What banks and lenders look for is stability, and to that end, a bank account that has a positive balance, is a good first step.

A steady job is an incredible tool for building credit. Working a fast food place part time, or a cashier, or a shelf stocker, all of these are as good as the next provided you stick with it and show, once again, stability in that job. A paycheck is a paycheck, no matter where it comes from, nor how many hours are on it, and that?s all that any credit institution wants to see.

Those are really the first two most important things to have going for you, and no, good looks and a great singing voice won’t do. The next step is taking the plunge.

Take the Plunge
The easiest people to get credit from are gas stations. Every one has their own dedicated credit card that you are only able to use buying gasoline or anything else they might sell in their store. These are close to being the perfect cards to get for first time card holders, and if you get one, they go a long way to building up a dynamite credit rating.

Generally, if you have a solid work record and a bank account, any gas station will send you a card. Just fill out an application, send it in, and see what happens.

These are the best cards to have for someone just beginning to build credit. You can?t spend all that much on one, so financially it will be hard to get into trouble, and just having to deal with the bill every month will give anyone the feel of what having a credit card is like, and if it is right for you.

If that first gas station credit card suits your fancy, charge on it for a good 6 months time, and keep the statements paid. Paying those statements on time is the key, and a minimum of 6 months will show, once again, how stable you are with employment and paying off financial statements.

Keep It Up
If this works for you, after 6 months, apply for a major card, MasterCard or Visa, and go from there. Always pay your statements on time, and never abuse this privilege that you worked so hard to get.

One of my relatives is incredibly money-savvy. She and I can chat up about credit and retirement accounts all the time, whereas the rest of the family looks at us like we’re nuts. Yesterday she sent me a text message to let me know that her credit score is at 780 - she know I’d appreciate what that meant.

Lambasted as we are day-in and day-out with the idea of credit (”No Credit? No Problem?” “Check your credit score FREE!” “Repair your credit NOW!”), no one is really jumping in our faces about the important part - establishing good credit in the first place. And there’s a reason - no one has any incentive to help you establish good credit except for YOU.

I don’t really have any incentive to help you out, either. But it just so happens that I do things all day long without incentive, so I guess you’re in luck.

How important is good credit, really?
Oh man, do you know how many things they can check your credit for? There’s the obvious: when you apply for a new credit card, car loan, mortgage, or any other type of loan. But it really don’t end there…

• Your credit card company can, and does, check your credit all the time. They can, and probably will, hike up your interest rate if your credit takes a nosedive.
• A landlord can check your credit when you apply for an apartment. If you pay your Visa bill late, they’re going to think you’re pretty likely to pay your rent late, as well.
• An employer can check your credit when you apply for a job. I grabbed an application for Bath and Body Works a couple months ago, and it included a “credit release” form. People who are irresponsible financially also tend to be irresponsible at their jobs.
• Your car insurance premiums can be partially based on your credit score, as well (in some states).

So basically, if you ever want to live anywhere, work anywhere, or drive a car… your credit matters to you.

But don’t some people live without credit?
Yes, they do. And it’s commendable to be able to save up for every purchase, including big ticket items like cars and houses, with cash. But the more ingrained in our society credit becomes, the more difficult life can become for people with no credit history.

The problem is, that when someone looks at your credit history, not having one can look as bad as having a bad credit history. Here’s an analogy: Say you’re going through scholarship applications, looking for a bright high schooler to give a scholarship to. The kid who doesn’t send in a transcript of his grades… how do you feel about him? Apprehensive because you have no data for him? You’re probably not going to give him the scholarship, are you? You want someone with an established history of doing well.

Is it hard to build good credit?
That really depends on you and your level of self-control. In theory, establishing a good credit history is easy as pie. Some people do it by accident! But it’s also easy to mess up and suddenly have a maxed-out credit card dragging down your score (trust me, I know).

FICO, the most common number used to represent your credit score, is all about the percentages. So focus on the following things, in order, and that’s all you have to do. Easy-peasy (in theory).

Payment history: 35% of your score

Make it a priority to never make a late payment, and 35% of your score is in the bag. Don’t freak out if your payment is a couple days late, however - late payments aren’t generally reported to the credit agencies until they’re 30 days late. But since you’ll still get slapped with a late charge if you’re even 10 minutes late with a payment, better stick with Never Make A Late Payment.

Debt ratio: 30% of your score

The percentage of debt you’re carrying, compared to how big your credit line is. This only applies to revolving balances (credit cards and home equity lines of credit). Basic rule of thumb: if you’re using more than 30% of your available credit, then you’re dragging down your score.

Understand that this is calculated across all of your revolving lines of credit. So if you’re using $500 on a credit card that has a $2000 limit, and $1000 on a card that has a $5000 limit, then you’re using $1500 out of your available $7000, or 21%. But if that $2000 card is maxed out, and you still have that $1000 on the other card, then you’re using 43%. Ouch.

This is calculated whether or not you pay off your balances every month. So if you’re going to get a loan/new job/new apartment in the next six months, Don’t Charge A Lot On Your Cards, Even If You Pay The Balance Off Every Month.

Length of credit history: 15% of your score

There’s not much you can do about this if you’re just starting out, except START NOW. Luckily, if you’re a college student and you have taken out student loans, at least you have something on your credit history. But you might want to consider getting a credit card now to help establish a payment history.

Feel like you’d go crazy if you put a credit card in your hand, and get yourself into a heap full of debt? Yeah, been there - done that. Self-control is a difficult thing, and only you know how capable you are with it. You’ll just have to figure this one out for yourself.

Trying to fix a bad credit history? Don’t make the rookie mistake of canceling all your credit cards. Keep the one you’ve had the longest that also has no annual fee. If you cancel your oldest card, you truncate the length of your credit history, and your score could take a nosedive.

Types of credit used: 10% of your score

Variety is the spice of life, and apparently it’s also part of the recipe for a good credit score. Just having a credit card is apparently, not good enough. Ideally, they’d like you to have a credit card, a car loan, student loans, a mortgage, and a home equity line of credit. Which is not to say you should run right out there and get all those things. Since it’s only 10% of your score, don’t worry about this too much, just keep it in mind.

Recent credit inquiries: the final 10%

There are two kinds of credit checks - a “hard pull” and a “soft pull.” A soft pull is when you check your own credit score. Or when a company checks your score to see if they should send you some junk mail. Just about any other kind of credit check is a “hard pull,” and will take a hit out of your credit score. Most of the time, these are unavoidable. Don’t worry about this too much, but understand that it means that if you go out and apply for every credit card on the planet in a two-week time span, your credit will nosedive.

What about piggy-backing?
In the past, a good way to build credit was to have someone with excellent credit list you as an “authorized user” on one of their credit cards. Then, all the good credit history from that card would show up on your report. Sorry, but FICO has decided to stop counting authorized users as of this fall, so this will no longer work. You’ll have to build your own good credit.

So… is it hard or what?
It’s easy to build good credit, but it’s also easy to slip up. Life happens - just ask the $1500 balance sitting on my credit card. The key is to not be discouraged, use your brain, and keep doing the best you can. Nobody’s perfect, but we can aim for great credit scores.

Sources:
Wikipedia - Credit Score
My Money Blog - Future FICO Scores Won’t Consider Authorized Users

I have a fair number of gamer friends, so I often get caught up in conversations about World of Warcraft. Usually I let my eyes glaze over, and try to pretend I’m somewhere else, with friends that don’t play WoW. But lately I’ve been spinning the conversation around, trying to gauge how my gamer friends feel about the new WoW credit card. The response so far as been universally: ”It’s a good card, I was thinking about getting it.”

In my stupor, I forgot to ask them how they define a “good card.” So I figured I’d take a look at the card myself, and give an evaluation.

The Hooks

Pretty! - This credit card has some flashy ways of trying to pull WoW players into getting the card. First of all, they’re offering 13 different designs to choose from - enough that every single player can find one that makes them say “Oooo, pretty!” However, that’s completely irrelevant as to whether it’s a good card or not. My credit card is black with purple glitter! Doesn’t make it awesome.

Rewards - The main pull of the card is the rewards program. The site defines it as “Accrue World of Warcraft gametime at the rate of 1% of every dollar in qualifying purchases.” What that means, in English: For every $1,500 you charge to the card, you get a free month of WoW. You also get one free month just for getting the card and using it once.

A 1% rewards program is pretty pitiful. Also, the points you earn aren’t transferable to anything else, even to another WoW account. So if you decide to stop playing WoW (it could happen!), you can’t get anything else with your accumulated points, and you can’t sell that month of access to anyone else. You’re stuck. Tricksy way to keep you playing WoW? Yeah, I think so.

But if you’re truly gung-ho about the game, and have no plans to ever give it up, then this is a fair reward for you. But just to put it in perspective: if you were to only charge your monthly WoW access on the card (and nothing else), it would take you 100 months (over 8 years) to earn a free month of play.

Introductory 0% APR - This, as far as I can see, is the best feature the card is touting. 0% APR for 12 months on all purchases and balance transfers. Balance transfers still carry a 3% fee, up to $75, but that’s becoming pretty standard. The rates after the intro period are actually pretty good - if your credit is excellent, you’ll get 9.99%, if it’s good, 11.99%, and less than good, 13.99%. Of course the rate is variable - they can change it on you at any time for any reason. Standard icky credit card practice.

The Other Terms

The rest of the terms of the credit card are rather important, but I’m willing to bet most people don’t look at them, or do, but don’t understand them. But they’re still really important to know before you apply for any card.

Cash Advance APR: 23.85% - Don’t get a cash advance. They’re so painful!

Penalty Rate APR: up to 31.85% - The rate you’ll get if you’re late on a payment. I’m willing to bet there’s also a Universal Default clause hidden in here somewhere. That means this is the rate you’ll get if you’re late on ANYTHING - even your electric bill or your cell phone bill.

Grace Period: not less than 20 days - This is the amount of time from when your statement ends for the month until they start charging interest. Pay your bill in full in this time frame, and you’ll never be charged interest.

Method of Computing the Balance for Purchases: Average daily balance (including new purchases). - This is good. What you don’t want to see here is “two cycle billing.”

Annual fee: None. - Good! Unless a rewards card is really, really, spectacular, and you know you’re going to charge enough to take advantage of it, you never want to pay an annual fee.

Over Limit Fee: $35
Late Payment Fee: $35 if your New Balance is less than $500; or $39 if your New Balance is equal to or greater than $500.
These fees are painful, but pretty standard. Remember, not only will you be charged the late fee, but your interest rate might jump to upwards of 31.85%.

So… good card?

Yeah, it qualifies, if you’re an avid WoW player who’s going to charge enough to get the real benefit out of it. The 0% APR intro period is nice, too. Just remember, once that intro period is over, you have to pay your balance in full every month, or else the interest charges will almost certainly cancel out your rewards.