Apple Card

Twelve and a half years after Steve Jobs borrows technology already in use by Palm and Handspring to create the iPhone, Apple has today invented the credit card. Now, some will say, “wait a minute, credit cards have been around for decades.” But that would be incorrect. There has never been a credit card made of titanium before! An actual metal card, not plastic.

TechLeadWhy the Apple Card is pure garbage – Aug 21, 2019

I’m kidding. It really is garbage, as the video above goes into. In fact, cashback cards in general are garbage, something he doesn’t go into. Cashback is a gimmick. The card issuers count on you charging things and then forgetting to pay the cards off each month. They don’t make money unless you pay them interest for carrying a balance from month to month.

The solution to the credit problem is not to have any credit cards. Use cards tied to your bank accounts, issued by your bank or credit union (I try to only use credit unions myself) and only use credit when absolutely necessary. Then pay back the entire amount as fast as possible in order to reduce your own costs. If you have to have a card to do certain kinds of transactions, have one card to do those transactions with and then pay that card off before the issuer can charge you for the carry-over balance.

60% of reward cards holders don’t pay off their balances each month. That statistic troubles personal finance experts, because credit card interest rates are at a 25-year high.

NPR

It would really be nice to have enough money (as the youtuber above clearly has) to be able to resist the urge to put essentials on credit. To go on a spending spree and not have to worry about doing without essentials later. If you cannot afford to buy essentials, you cannot afford to have that temptation lying around. Cut up the cards and never look back.

The concept of customers paying different merchants using the same card was expanded in 1950 by Ralph Schneider and Frank McNamara, founders of Diners Club, to consolidate multiple cards. The Diners Club, which was created partially through a merger with Dine and Sign, produced the first “general purpose” charge card and required the entire bill to be paid with each statement. That was followed by Carte Blanche and in 1958 by American Express which created a worldwide credit card network (although these were initially charge cards that later acquired credit card features).

Wikipedia, the free encyclopedia

The US government has taken to issuing charge cards to people who qualify for benefits these days. I’m not sure what I think of this development other than that it is a way to get funds into the hands of the unbanked, a serious problem in poverty stricken areas. And as long as the card only works up to the point where the benefits end, that shouldn’t be a problem. What would be a problem is the government issuing cards that could then be used to tie more poor people to debt that they will never be able to pay off. That would be a problem.

So, there you have it. Apple creates the charge card in 2019, about 150 years after the idea is first proposed in speculative fiction, and about 60 years after the first general charge card is introduced into the consuming population. Just in case you thought Steve Jobs was full of himself when he claimed to create the smartphone. Apple creates Paypal for Apple, joining the leagues of credit card issuers that are only a benefit to the wealthy who can pay their cards off regularly. Charge cards which are just another cross for the poor to be hung on, unless those poor are lucky enough to qualify for government benefits. In which case, track your balance! (the one solid word of financial advice offered in the video) But, you know, shiney new overpriced technology. We’re all excited to see it. Can’t you tell?

A h/t is due to the Economist Radio episode Money talks: From bad to wurst-Germany’s economy shrinks where I first heard of this latest offering from Apple.

The Dirty Dozen Credit Card Traps

Credit cards are the most lucrative segment of banking, and not just because of the interest charges. Everyone in the industry wants to sell you a credit card. Don’t be fooled by the offers. We present a dirty dozen traps and tricks used by credit card peddlers to fill their pockets and empty yours.

here is a summary of the dirty dozen credit card traps:

The 0% APR is a marketing technique to gain new customers. It is temporary and often part of a bait and switch scheme in which you apply for the 0% APR credit card and are given a card with a much higher interest rate. Even if you do receive the 0% APR, the lender’s strict terms and conditions increase the likelihood of you losing the rate before the introductory term expires.

The default APR is the lender’s highest interest rate. An increasing number of good credit customers are being charged this penalty rate, at the whim of the creditor.

A fixed APR is a meaningless term. Credit card providers can change the interest they charge to lend you money at any time, for any reason. The fixed APR simply gives the consumer the right to be notified if the lender changes the interest rate for reasons other than those specified in the contract terms (i.e., any reason at all). A variable APR can also be changed at any time by the provider, but in addition it varies according to a national index, such as the Wall Street Journal’s survey of prime interest rates among U.S. banks.

Listing several APRs on credit card offers is a technique to confuse customers and prevent them from comparison shopping. It also makes it easier for a credit card provider to defend itself against lawsuits, since its advertising does not make a specific promise or claim to provide a certain interest rate.

Late fees are much higher than they used to be (currently around $40 or a percentage of the loan balance), and are imposed much sooner than in the past (payment must be received before close of business on the due date). Late fees are just one of a raft of financial penalties that credit card providers are using to increase their profits

Borrowing cash via your credit card is much more expensive than making a purchase, in terms of a higher interest rate and a cash advance fee. The cash advance loan remains on your unpaid credit card balance the longest in order to maximize the creditor’s interest rate profits.

Credit cards that have added value for the holder have annual fees, some of which are quite expensive. For the wealthy consumer, added value can mean exclusive concierge and personal shopper services; for the consumer with damaged credit it can mean obtaining and rebuilding access to credit. For those in between, added value can mean accumulated rewards such as free airline tickets. In all cases, the consumer should evaluate the annual cost of the card in relation to its value-added reward.

Charity affinity cards are frequently a deceptive marketing technique, designed to appeal to the consumer’s heart in hopes she will forget to use her head. Suspiciously, many charity credit cards do not disclose the amount that is donated to the charity, and when they do, the percentage is infinitesimal.

Two-cycle balance computation is a method of computing finance charges that is more costly to the consumer than the average daily balance method. Because there is no specific number (as with an APR or a fee) listed in the credit card offer disclosures, it is easy to overlook this trap, which could be an expensive mistake for those who do not pay their credit card balances in full every month.

Some credit card providers charge non-usage or inactivity fees. Although this is not an issue for most credit card holders, since we use our credit cards daily, it is important to be aware of in certain cases. For example, you may be trying to improve your credit score by paying off a credit card and not using it.

Foreign transaction fees are another invention of credit card providers to diversify and increase their profit-making activities. Purchases and cash advances from foreign countries are charged a fee that is frequently 3% of the purchase price.

Setting the minimum monthly credit card payment at a very low percentage of the loan balance is a practice that seems to be friendly to the consumer. It is not. Making low payments increases the cost of the loan and lengthens the time needed to pay off that loan.

www.careonecredit.com

I, for one, have sworn never to carry another credit card. They are worse than matches and gasoline. Best to never combine the two unless you like being burned.


Editor’s note: 2017. I wrote two sentences of this. Two sentences. My apologies to the writer at Careone Credit for this bit of copy and paste. However, in light of the fact that the Wayback Machine is the only place this can be found now, I see no reason to remove it.

Historically there were links to Digg.com articles in most of these blog entries. Digg was an early competitor to Reddit but never as popular. It has since been sold and repurposed as a raw aggregator and a clickbait spam source. I really don’t see the purpose in leaving these old bad links in the articles, so I’m pulling them out. Where possible I will reconstruct a link to the current home of the information, along with a label that actually communicates where it is the link sends you so that the next time the links break, at least a title search will be possible.

Major thanks to the Wayback Machine. Drop by and give them a contribution if you agree.

I haven’t had a credit account since writing this. I’m not planning on ever having one again. If you don’t have the money, don’t spend the money. Easier to say than to do, but it seems to be the only way to keep from having to default on credit card debt.