Just imagine the interest payments that will pile up when you pay your mortgage with a credit card. Interest on top of interest. Amex says they’ve had so much success in getting people to charge condominium down payments that they now want you to charge everything. Imagine the excitement, you can get rebates too. Yes sirree, charge $6500 and you get 1.5% back. Wow, that’s a whopping $97.50. But wait, their web site says that after the intro period is over, that interest rates are anywhere from 12-19%. Paying 12% to get back 1.5% isn’t really advisable, I’m thinking.
Oh, they charge a one time fee of $395 for allowing you to charge your mortgage. That’s mighty generous of them.
And if you need that mortgage but have a low FICO score, no problem.
Just get yourself added as an authorized user on a credit card of someone who has excellent credit. Presto, your FICO score goes up. You can’t actually use the credit card though, while the person who rents out the card gets paid for doing so. Any number of weaseldick companies are popping up to service this scam. They make several hundred a month per card leased out, while the card owner makes $150 a month or so.
Fair Isaac Corp., developer of FICO, says they’ll be slamming the door on this loophole soon.
Whole new possibilities for debt emerge here. Pay the weaseldicks, say, $1500 a month to lease space on several credit cards (and charge the expense of course.) Use that to get a mortgage which you also charge. You’ll then be paying interest on the credit card to pay the mortgage, which of course also has interest charges, with $1500 a month on top of that to keep the illusion going.
Of course this is no more delusional than what D.C. is doing, funding expensive wars with money it doesn’t have by going hugely into debt. Debt castles made of sand.
Amex is just jumping on a very old bandwagon. Twice a month, Bank of America sends us “checks” (payable by our credit card account) that they encourage us to write for any purpose we choose. “You’ve got a credit line of $X,000! Why not use it!” Those checks go straight into the shredder. Oh, and not only would they charge interest on the balance, but they charge a fee for using the checks, too.
Let’s face it: lending money is a profitable business. It’s also prohibited by the scriptures of all three of the Judeo-Christian-Islamic traditions. By let’s not mere religion stand in the way of a profitable business exploiting the poor!
BTW, after my own personal crash-and-burn 17 years ago, I refused to have credit cards for many years. Then, as I went into business and got married, I wanted things like a car loan and home mortgage. One small problem: to the credit agencies, I didn’t exist. The only way I could establish credit was to become an authorized user on my then-fiancee’s card. (My student loans, with every payment made on time for several years, didn’t generate enough positive credit history to even get a Penneys card.) These days, I have a credit score well above average– and almost no debt because I pay everything off each month.
They don’t teach kids how to handle their money in school. Those who learn are either taught by their parents, or they learn it the hard way. Some never do.
And while I don’t support the scam of companies “leasing” credit cards, I do recognize that if history as an authorized user on someone else’s card is not considered, a permanent underclass of “poor credit risks” could result. Those people would be stuck paying 18-20% or more for a car loan, and home ownership would be forever impossible.
While I agree that this product would no-doubt lower our collective fiscal IQ a few more notches and lead to greater debt for many already maxxed-out folks, I would use it.
I have never paid a dime of interest in 10+ years of using credit cards (and never will). I would put my mortgage on a credit card in a heartbeat if permitted to do so. My wife and I travel to New Zealand for free every couple of years thanks to bonus miles. We put everything on our credit card – holy crap could we do a lot of travelling if we were allowed to include our mortgage on there. I need to pay it anyway, so why not get something in return?
So as I consumer, I say BRING IT ON! If I were in government however, and responsible for implementing responsible policies that benefit the majority of my constituents, I’d have to rail against it because I think most Americans take after their federal government when it comes to fiscal responsibility – that is to say, what fiscal responsibility?