Go after cards before they go after you
TESS VIGELAND: A few years ago, my husband and I had our first of three brushes with identity theft. We got a $6,000 bill for a credit card we didn’t own.
We’re pretty sure that the thief just grabbed out of the trash one of the dozens of pre-approved credit card offers we used to receive and used it to open the card.
Now we’re on a list that removes us from the modern scourge of multiple card offers. But a colleague here are Marketplace hasn’t done that just yet.
This week, Lisa Napoli took a closer look at her mail — and tried to make sense of it.
LISA NAPOLI: For about two months now I’ve been saving all my credit card offers. The other day, for dramatic effect, I opened them up all at once.
In this thick stack of paper I tallied up offer after offer of vast fortunes, or at least the modern equivalent:
Lots of chances to consolidate credit cards at really low interest rates.
Lots of companies offering me tons of frequent-flyer miles and no annual fee if only I’d accept their card.
CREDIT CARD LURE: The tools to give you control. The Skymiles to send you on vacation.
Home equity loans for six figures — even though I don’t own a home any more.
Then there were the sweet offers to share the wealth, like:
CREDIT CARD SWEET-TAKING: Every day you give so much to your loved ones your time and expertise, your care and concern. Now you can give them something more.
Now, not only am I not going to give someone I love a credit card, I try not to use them myself-and I pay them off right away when I do.
And credit expert Jason Rich says that’s why I’m a target:
JASON RICH: The credit card companies want you to sign up for their credit cards and they want you to sign up for as many credit cards as possible, cause that’s how they make their money. Basically the average American gets somewhere between five and a dozen or more credit card offers every single week.
Rich says these companies are hoping I’ll want the cards so I have the plastic ready for the day I fall into a cash crunch — or the time I decide I just have to have that plasma television, whether or not I have the money.
And so the credit companies wine and dine me:
RICH: You’re being offered the very best deals these credit card companies offer. So you’re gonna have no annual fees, you’re gonna have very low interest rates, plus they’re going to offer you really good perks, like the frequent-flyer miles — and a large a number of them.
Let’s be clear: There’s nothing special about me. Someone with below-average credit is gonna get just as many offers as I do — just not as generous. But flattery and freebies can get you anywhere.
Bob Manning is the author of “Credit Card Nation,” and he sees how foolish consumers can be:
BOB MANNING: People, do they take out their calculators and look at their line of credit and actually then factor in what their cost of doing the transcation is, and compare it to their current APR? And do they really understand what their cost savings are? No, of course not.
Manning says do the math if you’re enticed by what a company dangles to lure you in. For instance, figure out if there’s a balance transfer rate for consolidating cards and when it kicks in. A lower interest rate might not compensate for any penalty the company might charge.
And Jason Rich says be careful how often you apply for a credit card — because if you get rejected, that’s a mark against you that will linger on your credit score for months.
He says if you decide you need more credit, it’s better for you to go after the credit card, rather than to let the credit card go after you.
RICH: There are actually a bunch of Web sites that you can go to that actually compare all of the different credit card offers from the different banks. You’ll fill out like a five-question questionaire. Is this for a balance transfer, are you looking for a zero-annual fee. And then they’ll tell you what they think are the 10 best offers.
Just be careful the sites aren’t ones that are paid for by the banks themselves. Rich recommends Bankrate.com, Creditratings.com* and Creditcards.com. And he reminds you to watch what you do with your mail.
Remember to shred all those offers you get. Because even if you don’t want them, identity thieves will.
In Los Angeles, I’m Lisa Napoli for Marketplace Money.
*Correction: The web site to find credit card ratings can be found at Cardratings.com
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