New Credit Card

My chosen lifestyle — like that of most Americans — can be summarized as “just a little bit beyond my means”.

Abetting this attitude is the ready availability of pre-approved credit cards. I largely resisted these for a long time until one particular come-on caught my eye. It was for a Discover card, and the cool thing about it was its featured picture of a free-floating astronaut in a space suit. I’m a total sucker for the space program, so I got the card.

And I used it. Unwisely.

Credit cards can be a good deal if you just need them as a handy cash substitute — such as needing extensive car repairs on a long road trip — that you promptly replenish with ACTUAL cash at the end of the month. But it’s a fool’s quest to use them essentially for long-term borrowing.

Meet the fool. That would be me.

I’ve got a terribly lackadaisical attitude about money. If I’ve got it, I spend it; if not, I don’t. The credit card gave me the ILLUSION of money. So, as is my wont, I spent it.

I have no recollection of what interest rate Discover was originally charging me, but on last month’s bill it was 26%. That’s on an unpaid balance of $9000. A little quick math shows that my self-indulgence is costing me $2340 a year in interest. This is phenomenally stupid.

A separate credit card, which I had to get to buy my beloved PowerBook G4 on credit, is charging 20%, but it’s nearly paid off. In fact, it WOULD have been paid off by now if iTunes weren’t so damned seductive and easy to use.

I would probably have continued on my oblivious way if something hadn’t caut my eye the other day. It was one of those informational fliers that comes with my monthly credit-union statement. Normally I just glance at it and throw it into the recycling bin, but this one had a headline that grabbed me, something along the lines of “Paying too much for your credit cards?”.

The story it told was essentially my story. You get a pre-approved card from one of the big national companies at a low introductory rate, but the issuer keeps bumping it up incrementally until it’s finally something ruinous, but you seldom pay attention to the fine print. (And, again, if you pay off your card every month, there’s no REASON to notice. But that wasn’t me.)

The deal offered by Summit Credit Union (formerly State Capitol Employees CU and soon to be Great Wisconsin CU) was a locally issued card with a much lower rate. They had 5 plans, and I chose the one at 10% with no annual fee. The math on this works out to $900 in interest a year, a savings of $1440 over the Discover card (which, incidentally, Summit required me to terminate as a condition of getting their new card). This is a pretty damn good return on investment for the half hour I spent filling in the application form. (It was approved electronically in under 15 minutes, while I waited in the lobby, reading a book.)

This means that all my finances are now handled thru Summit, just as all my health issues are handled thru Group Health Cooperative of South Central Wisconsin.

Both of these organizations are member-owned cooperatives, which means that they are totally dedicated to member service. They don’t have to pay huge CEO salaries, employee incentive bonuses, or dividends to investors. All of their net income gets plowed back into doing right by their members.

Frankly, I was an idiot for not looking into this sooner. But, as the old saying goes, “It may be that your sole purpose in life is to serve as a bad example to others.”

Intelligence is learning from your own mistakes; wisdom is learning from the mistakes of others. Be wise, my friends.