Thursday, October 18, 2007

7 Offers

Since about 90% of my mail is junk I usually pile it up and look at it once a week or so. Today was that day. And 90% of it was junk as usual. * Part of the 90% were 7 credit card offers. How nice, one for every day of the week. This is a new record I do believe, 7 in one week.

5 of the 7 were 0% offers which always intrigue me. If someone wants to give me free money for a set period of time I'll listen. Used to be the offers had a $0 balance transfer fee. In which case I would write a $10,000 check to myself, deposit the money in a CD, cash the CD 6, 9 or 12 months later, pay back the credit card, keep the profit and close the card out. I did take a small hit to the FICO for doing that but figured it was worth it since the FICO hit was at most 5 points. That was worth making $500 income for the year. But now the $0 fees seem to be gone. They are 3% of the balance transfered. The math doesn't work anymore. After paying income tax on the interest earned, it's a break even proposition at best.

The other option is to get the card, make purchases and pay off the minimum during the intro rate. That could be profitable as well, but the thought of carrying credit card debt doesn't appeal to me. I know it's no different than a balance transfer technically but I don't want any part of it.

So back to my point about the 7. Their come-ons were essentially the same. With this low-interest rate card I could take that vacation I've always dreamed of (there's that word again, dream). I could buy new furniture. Or I could by that new TV for the family for Christmas. I wanted to throw up reading such drivel.

This is the same idiocy that was used to sell mortgage loans to people with 500 FICOs. If you can't afford to pay the mortgage on a conventional loan, you shouldn't buy the house. Same with the dream vacation. If you can't afford it without going into debt you shouldn't take the vacation. I guess the boys in the dark pinstripe suits still have not learned their lesson which a 4 year old could figure out. Don't lend money to deadbeats, you will not ever see it again. But why should they worry, a credit card bailout will be here soon enough, right after the mortgage bailout is finished.

My other thought was why am I getting all these offers during the so-called credit crunch? Shouldn't a credit crunch mean....uhm...a lack of credit not a flood of credit? Two possibilities. I have perfect credit. Banks are desperate to get people with good credit as customers. So they are all sending people like me offer after offer hoping someone will bite. Second possibility is maybe just maybe people are waking up and they have stopped spending on useless shit. As a result to spur people on to start again, banks are sending out the teaser offers right before Christmas (oops I mean non-denominational Winter Festival Time Period, don't want the ACLU coming after me for offending anyone).

Either reason, does anyone think I need 7 new credit cards? Does anyone need 7 new credit cards? Total current U.S. household debt is $11.4 TRILLION. That's more than the US government debt. I think the answer is a resounding HELLS NO.

* If anyone at Fidelity is reading have sent me about 20 letters telling me you received my request to change my address. You can stop now.


David said...

Hey Ed - read for the skinny on those 0% balance transfers - Dave

Ed said...

I likes it!