To be perfectly upfront about it, I am not much of a fan of credit cards and debt. I do recognize that in this modern world of ours we often have to have a credit card if we want to do things like reserve hotel rooms or rent cars... at least in some part of the world.
I suppose that debt is okay in some situations like getting a mortgage because you need to borrow money to buy a house. After all, most people don't have the sort of cash laying around that's required to buy a home.
Because I have largely paid with cash for a long time — following a bankruptcy in 1997 — I don't didn't have much of a credit history. Here in the good ole US of A, having a credit history and a good credit score is pretty much everything. Well, at least for a lot of people it is.
Knowing that Mrs. Denmarkguy and I are likely going to be moving to a smaller house in another 5-6 years or so, it's also realistic too suppose that we will be borrowing money to buy this new house so we can move into it, and then sell the old one and invest any money we get out of it to give ourselves some investment income.
To that end, I've been trying to build up my more or less non-existent credit history so that we will at least appear creditworthy when the time comes to do the house transaction deals.
Here Come the Offers!
Of course the interesting thing is that the moment you start showing any interest in such things as credit cards and personal loans, every loan shark on the planet descends on you like a flock of vultures!
I suppose that is simply to be expected when you live in a consumer economy. However, what I was really not aware of is the absolute extortionist rates and offers that companies are allowed to make. And these are not actually just finance companies they are large commercial banks!
I just tore up an offering... I pretty much laughed at it because the bank was offering me a credit card with $1,000 credit limit, 34.9% interest rate on purchases, and annual fee of $49 and a monthly service charge of $12.50.
If you crunch the numbers on that, you're effectively paying 20% of the amount you could potentially borrow just in fees, in order to just have the account open, and then another 34.9% on anything you actually charge to the card?
I started this process of rebuilding my credit about three years ago, and over the past couple of years I have seen some of the most ridiculous things you can imagine!
The worst of them was some private Finance Company that was offering an unsecured personal loan for what essentially — after all the fees and everything was taken into consideration — amounted to a 24-month loan at 234% interest! I didn't even think that was legal!
But apparently it is, or it probably wouldn't have ended up in my mailbox.
There was even a very small "warning," buried in the fine print to the effect that "this is an expensive form of credit." Yeah... no shit, Sheerluck!
This process of building a reasonable credit record is turning out to be more difficult than I could have imagined. And more expensive than I could have imagined and yet it is one of those things that it's very difficult to get by without, at least if you want to ever make any kind of large purchase like a house.
So far, I have been very discerning and what I have managed to pick up, and the rates have not been too ridiculous, but certainly not cheap, either. But sincerely decent offers are few and far between for those who are trying to build credit, or that don't already have stellar credit.
Thanks for stopping by, and have a great remainder of your weekend!
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Created at 2024-02-11 01:44 PST
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