Monday, May 22, 2023

Autopay, Notifications, and Dormant Accounts

Avoiding interest and late payment penalties isn't hard to do - or at least it wasn't.

II wrote before about credit cards and how dangerous they are - several times.  It takes a long time to figure this out.  As a young adult, I thought credit cards were fun and a sign of my fiscal responsibility.  After all, they don't just let anyone have a credit card, do they?  Do they?

They do.  In fact, the worse your credit rating is, the more eager they are to offer you a credit card, usually on onerous terms.  If you have good credit, they will make you fantastic offers with frequent flyer miles and bonus points and cash-back dollars.  They are hoping you become the person with bad credit, as a result.

A credit card is a like a loaded handgun.  Treated with respect, it can be safely used and even be useful - although it is still dangerous, by design.  A handgun that isn't dangerous is a pretty worthless handgun.  The gun that just pops out a flag saying "bang!" isn't good for much except old vaudeville routines.

Similarly, with a credit card, you need to know your closing date, your payment due date, interest rate, credit line, and balance (at all times).  And you can't let them "congratulate" you by upping your credit limit - this is how you end up with a $20,000 limit card (or more).  There is nothing on this God's Green Earth that costs twenty grand that you would want to put on a credit card.  You go to a car dealer and try to buy a car with a credit card, they will tell you to get fucked.  They aren't taking a 5% hit on credit card processing fees.  I mean, they might, if they jacked the price of the car by 5% - is that really a smart financial move?  No, it is not.

Fortunately, today, you can monitor your credit card balance daily online, through most bank portals.  We do it every day and I usually make a payment daily and my credit card balance is usually near zero and reaches zero at least once during every billing cycle.  You let the balance creep up, with groceries, gas, and restaurant meals, and, well, that's how you end up with a $20,000 balanace on your credit card and no way to pay it off.

If a credit card is like a loaded handgun, a high-limit card is like a loaded howitzer.  Once you rack up thousands in credit card debt and can't pay the balance every month, you drown in interest payments, particularly for a high-rate "rewards" card.

So, I check my balance every month and also set up "autopay" just in case, so the minimum payment would be made every month, just in case I forgot.  This avoids any late fees or charges to the account.  It is a good idea for anyone.  Why the minimum payment?  Well, if you set it up to pay the entire balance, that might drain your bank account, leading to an overdraft fee.  It is a backstop, not a payment plan.  I've had "autopay" for over a decade and never had to use it.

Well, that is, until now.   Mark is doing the balances on our local checking account (small bank) and his credit cards (one low interest, no frills, the other a cash-back, high-interest loaded handgun).  I take care of our national checking account (big bank) and the cash-back high-interest loaded handgun card we have with them.  I also have two other low-interest cards which are dormant.  And Mark has a dormant cash-back card with the big-bank.

You see the problem right away - we've accumulated too many credit cards, and we should probably get rid of at least four of them.  It isn't hard to do - you get offers all the time in the mail.

Anyway, we went camping a month ago, and we extended our stay by a couple of days and the clerk at the front desk said, "I'll put this on the card we have on file!" and he did - on Mark's dormant rewards card.   Since the balance was zero (and had been for a year) I got out of the habit of checking it.  I logged in today and was chagrined to see the payment was "past due" and we had paid interest of $1.55!!!

A BUCK-FIFTY!    Hey, that's a half-gallon of gasoline right there!

I was embarrassed, ashamed and angry with myself.  But it was a learning moment.  First of all, the big bank (BoA) will send you a daily notice as to the balance on your checking and savings accounts.  But for some reason, they won't send you a daily notice of your credit card account.  They will send you a notice that you made a payment and whatnot, but the real important things - payment due date, balance, payment due, is not part of their "notifications" system.  How convenient for them - it encourages you to run up a balance.

UPDATE:  With BoA, you can set "reminders" but only if you are within so many dollars of your limit.  No "reminder" of your daily balance like Capital One does.   However, if you set up AUTOPAY, any "reminders" are disabled.  You are only reminded - via e-mail - of the coming payment due date and amount to be paid by AUTOPAY.   BoA really sucks, doesn't it?  Maybe it is time to move on....  Capitol One certainly pays more interest, that's for sure!

I might note that Capital One DOES send out a daily reminder of your credit card balance.  Hmmm.....score one for them.

So I went on the BoA website and paid off the balance and then spent nearly an hour spelunking their unnecessarily complicated system of menus and 6 point font.  I am still seeing double.  Turns out, to get "notifications" on a credit card account, you have to set it up so you are notified when you balance is within $X of the credit limit.  So you can spoof this by saying, "Within $10,000 of a $10,000 limit" for example.

But autopay?  You have to set up eBills (not just paperless!  That's different!) and once that is set up, you can set up autopay for the account.  I had neglected to do this for the new credit cards.  Needless to say, it is done now.

Of course, that is not the end of it.  My next project is to figure out what cards we want to keep and what we want to dump.  And I think we will keep the Capital One rewards card and low rate card for Mr. See, and cancel his BoA "dormant" card.  I will keep my BoA rewards card and my Simmons First low rate card and cancel my dormant Capitol One card (or vice-versa).  Six cards is way too many, particularly when you are not using four of them.

Maybe $1.55 isn't the end of the world, but it is the first interest payment I've made in nearly a decade.  Being debt-free means owing nobody and paying nobody any interest.  It is really hard to get back on the interest payment bandwagon, once you've gotten off.

Maybe also, this idea of "cards on file" is dangerous as well, as if you change cards, and they charge the old one, well, you'd better be checking the balance on the old card, too.  Bank of America signed us up for "paperless" statements, but that only means you get a notice of a statement by e-mail, not the actual statement itself.  So maybe we will get them to delete the "card on file" and revert to an active card instead.

But lesson learned - and life is a never-ending series of lessons, that end only at the grave.  But more on that in another posting.