Good news! Quicken 2010 is available to purchase beginning today!

Quicken desktop products, like Quicken Deluxe and Quicken Premier, have capabilities such as investing research, portfolio management, tax information, net worth tracking, etc. You could spend hours with these Desktop tools doing financial analysis and planning.

Quicken makes it easy to know where your money is going.

• Quicken instantly updates spending and banking transactions so you can see your accounts in one place.
• Instantly shows you where you’re spending your money
• Save time – see everything in ONE place, using ONE single password
• All-in-one bill management brings peace of mind that you are always on top of your bills
• Brings all your information together – view your checking, savings and credit card account details in one place.

What’s new in Quicken 2010?

• NEW! Quicken helps you avoid overdraft fees and penalties by showing how much you’ll have left in your account until your next paycheck.
• NEW! The new Quicken home page puts all your most important financial information in one place so that you can quickly and easily see how you’re doing.
• IMPROVED! Quicken’s improved menu and toolbar make it faster and easier to find the tools you need to help you organize your finances.
• IMPROVED! Quicken’s improved account registers make it faster and easier to review your downloaded transactions so you can ensure your data is accurate and quickly identify suspected fraud.
• IMPROVED! With Quicken’s Live Community you can get help and advice from other Quicken users without ever leaving Quicken.

Available Versions

Quicken Online

Quicken Online is 100% FREE personal finance software. Manage your personal finances online. Easy personal banking at your fingertips. It’s setup to help you avoid overdrafts, not spend more than you make, and to look at how you spend your money and make spending recommendations.

Since Quicken Online is available from anywhere via a mobile device it’s setup to help consumers make quick buying decisions when they’re at the store. You can set it up so you can check your bank balance on the go so you know before you buy something what your balance is and whether you can afford it.

Quicken Online Mobile

Put America’s #1 personal finance software in your pocket. View all your online accounts. Do budget forecasting. Track cash expenditures. Even find the nearest ATM.

Quicken Deluxe

• Avoid late fees and penalties.
• See where to save: Deluxe analyzes your spending and helps you set reasonable budget goals.
• Reduce or eliminate debt faster with a customized financial plan.
• See the progress you’re making toward your savings goals, with tracking of your loans, investments, 401(k), 529, and IRA accounts.
• Save time on upgrading from an older version of Quicken: simply import your data.

Quicken Premier

• Makes budgeting and organizing your personal finances easy by showing all your accounts together.
• Grow your net worth with help maximizing your investment portfolio.

Quicken Home & Business

• Easily organize and manage your personal and home-based business finances.
• See where your money is going: Home & Business automatically categorizes your personal and home business expenses.
• View your profit and loss at a glance.
• Save time at tax time with Schedule C reports.

Quicken Rental Property Manager

• Easily organize and manage your personal and rental property finances, all in one place.
• See how your rental properties are doing and where you’re spending at a glance.
• Save time at tax time with a Schedule E report.

Quicken Mac

• All-new and designed to be as smart, beautiful, and simple to use as your Mac.
• Makes budgeting and organizing your personal finances easy by bringing all your accounts together.

Post from: Retired by Choice © 2010 All Rights Reserved.

Quicken 2010 Now Available

The recent departure of Microsoft from the personal finance category caused me to be orphaned like thousands of other Microsoft Money users. After researching the alternatives to Microsoft Money I decided to convert to Quicken based upon the similarity to Money and the promised easy data transfer. The fact that Amazon.com had Quicken Premier 2009 on sale for less than half price for a short time was a nice bonus!

I followed the official Money to Quicken data transfer instructions and found them to be good overall but a bit lacking in details. Upon import I discovered an error in the instructions as well. To make it easier for anyone else who wants to transfer their data from Money to Quicken I decided to publish a set of corrected and enhanced instructions here.

Please note: The step numbers here do not correspond to those of the official instructions because I added some steps to help clarify the process. Do NOT attempt to follow both sets of instructions. Either use these instructions OR use the official ones. Of course, I recommend this set to make the process a bit easier.

Before You Begin

Please note the following Money data items cannot be imported, you can always enter them manually after the conversion:

• Money 2008 files with more than 10,000 transactions.
• Memorized transactions
• Online account activation information
• Budgets
• Loan accounts
• Planner information
• Classes
• Unexercised employee stock option grants
• Exchange-traded options
• Empty accounts with no transactions
• Reconciliation state of your transactions. For this reason, you should reconcile the imported transactions before adding new ones.

Make sure that:

• Quicken 2004 (or later) is installed on the same computer that Money is on.
• Account names in Money are less than 15 characters and contain no punctuation or symbols. To rename an account:
  1. Open Money’s account list.
  2. Right-click the account and select Rename.
  3. Type in a unique account name, then press Enter.
• Categories and classifications in Money are less than 15 characters and contain no punctuation or symbols. To rename a category or classification:
  1. From Money’s More menu, choose Categories & Payees.
  2. Click Categories.
  3. Right-click the category and select Rename.
  4. Type in a unique category name, then press Enter.

Step by Step Conversion Instructions

1) Back up your Microsoft Money data file. Go to File/Back Up and save a copy or even two to different places. This is a highly-recommended precaution.

2) Install Quicken. As part of the installation process you will be asked to register Quicken to have access to updates. Do so, and let the installer update Quicken to the most current version. It is not necessary to start Quicken at this point – you will do that later after you convert your data.

3) Print these instructions. The conversion process is lengthy, so having a printed set of instructions will probably help. You can also refer to them on screen, but the nice thing about having the instructions on paper is that you can jot down notes or cross off steps as you complete them.

4) Download the Money-to-Quicken Data Converter to your desktop. Run the downloaded program to install the converter to your desktop as well.

5) Open Money. (Quicken should be closed.) You’ll be creating one, possibly two reports in Money. Do not skip these reports, as they are essential to converting your data.

6) Create an Account Transactions Report:

Money 2005 – 2008

• Click the Reports tab.
• In the Income and expenses area, select Account transactions and look for the Account Transactions Report. (If you don’t see it, select Change report settings in the Other tasks list. Then select Switch from Essential Reports to Advanced Reports and click Use Advanced Reports.)

Money 2003 – 2004

• Select the Reports menu and select Reports Gallery.
• In the Pick a report or chart list, select Account Transactions.
• Click the Go to Report/Chart button.

7) In the Common tasks list, select Customize. Click the Reset button (skip this step if you don’t see one). Click Yes to any confirmation message(s) and select Customize again.

8) In the Rows & Columns tab, in the Include fields area, select the Memo, Account, Cleared status, and Category options.

9) In the Subtotal by field, select Accounts.

10) Select the Show splits checkbox, and then click OK.

11) In the Accounts field, select All Accounts.

12) In the Date range field, select All dates and click OK .

13) Select the Send to menu and select Desktop. This might take a while if you have a large data file. When the transfer is complete, click OK.

If you used Money to track investments continue on with the next step, otherwise skip to step 21.

14) Now create an Investment Transactions Report (skip to Step 21 if you have no investment transactions to import):

Money 2005 – 2008

• Click the Reports tab.
• In the Investment area, select Investment transactions. (If you don’t see it, select Change report settings in the Other tasks list. Then select Switch from Essential Reports to Advanced Reports and click Use Advanced Reports.)

Money 2003 – 2004

• Select the Reports menu and select Reports Gallery.
• Click Investments.
• In the Pick a report or chart list, select Investment Transactions.
• Click the Go to Report/Chart button.

15) In the Common tasks list, select Customize. If the Reset button is not available, proceed to step 17. Otherwise, click Reset. If a confirmation message appears, click Yes, and select Customize again.

16) Click the Rows & Columns tab, and in the Include fields area, select the Memo, Account, Transfer account, Cleared status, and Category options.

17) In the Group by field, select Investment Types and click OK.

18) In the Accounts field, select All Accounts.

19) In the Date range field, select All dates.

20) Select the Send to menu and select Desktop. This might take a while if you have a large data file. When the transfer is complete, click OK.

21) Close Money; leave Quicken closed as well.

22) Run the Data Converter you installed in Step 4. In the Data Converter window, click the Import into Quicken button. Quicken will open once the import is complete.

23) Review your transactions for accuracy.

24) Reconcile your converted transactions before adding new ones.

• Click on the account name in the left column.
• Under the “Cash Flow” button it will say either Reconcile or Reconcile Account. Click on that and follow the instructions.
• For assistance, select Contents or Quicken Help from Quicken’s Help menu, click the Index tab, and type in reconciling, accounts.

25) Set up online access. One thing that won’t transfer from Money is the online access to your accounts. To set it up:

• Click on the account name in the left column.
• Select “Set Up Online” near the top of the page.
• Follow the instructions.

Post from: Retired by Choice © 2010 All Rights Reserved.

Step-by-Step Guide: How to Convert Your Data from Microsoft Money to Quicken

There is a video making the rounds this week in which a woman named Ann Minch decides to take a stand against Bank of America after her credit card interest rate was boosted to 30%. Although we only hear her side of the story, it is an interesting tale in light of the horrible time banks have had recently.

In America we like to root for the underdog, so at first it is easy to want to be on Ann’s side and join her “Debtor’s Revolt.” If you take a closer look at what facts we know, however, you might find that joining her cause isn’t as appealing as it seems.

Ann Minch’s Story

Ann claims to have been a Bank of America (BoA) customer for 14 years. She has two BoA credit cards, one on which she carries a $5943.34 balance and makes the minimum monthly payment. Ann is not over the limit or behind in payments, she has good credit and no problems paying her bills in spite of being laid off recently.

This year BoA started to raise the interest rate on her credit card, which was originally 12.99%.  In July it reached a whopping 30%, which is the number she quotes throughout the video. Ann feels this is unfair and has decided to stop paying on the credit card until BoA lowers the interest rate to a more reasonable amount.

Ann claims this will be, “…the proverbial first shot fired in an American Debtor’s revolution…” She calls what she is doing, “civil disobedience.”

This past weekend Ann closed her BoA checking and savings accounts and transferred the balance (approx. $5000) to a local community bank.

Facts to Consider

• A note 52 seconds into the video reveals the interest rate on the credit card in question is 23.74% as of the most recent statement. Quite a high rate to be sure, but not nearly the 30% she is so upset about. This is good news for Ann as it seems her rate is going down.
• A credit card is a financial option you request. When you apply for a credit card you sign a legal agreement. In this case that agreement must have stated that BoA can raise the interest rate at any time for any reason.
• Ann had almost enough cash in her checking and savings accounts to pay off the credit card.  There are also other options she could explore such as transferring the balance to a lower rate card or taking out a lower rate loan to pay off the card.
• We don’t have all the facts, so it is difficult to draw conclusions.

My Take on the Situation

I can totally understand where Ann is coming from – she lost her job, is still meeting her financial obligations and as a reward her interest rate is nearly tripled. This can be quite demoralizing, and given the recent situation with the banking crisis and bailouts it is easy to point the finger at BoA and portray them as the “bad guys.”

The reality is that Ann chose to carry a balance of almost $6000 on a credit card with a variable interest rate. The lender decided to raise the interest rate over a period of six months or so. It came at a bad time for Ann, but it was the risk she signed up for.

In a later video Ann mentions in an offhand way that using an American Express card has worked for her because you have to pay off the balance each month. Obviously she KNOWS that carrying a balance is financially risky, yet she is doing so for whatever reason.

I applaud Ann for taking a stand, but I can’t help but feel that her approach could be better.  Closing her BoA checking and savings account was a great move – banks need money to make money, so by removing access to her funds it has an impact on BoA (albeit a small one).

Choosing not to pay an obligation you chose to assume won’t solve anything. BoA will pile on late fees, raise the rates even more, and ultimately write off the bad debt and sell it to a collection agency. There is a legal obligation to pay off this debt, and not doing so is criminal disobedience, not civil.

Another thing to consider is that Ann will take a credit score hit, which seems like a poor move for someone who is looking for a job (many employers check credit scores as part of the application process).

The Bottom Line

When you borrow money you give someone else control over a portion of your finances. When you are not in control bad things can happen at bad times. Poor Ann just learned this lesson the hard way.

Take control of your finances by paying off any debt you owe.  If your financial institution is unsatisfactory stop using them and take your business elsewhere. Read the fine print of any legal agreements and if you aren’t comfortable with them don’t sign.  There are always other options.

Post from: Retired by Choice © 2010 All Rights Reserved.

Woman Refuses to Pay Bank of America Credit Card

Personal finance software company Intuit will acquire online personal finance service Mint in a deal to be announced later this week, according to TechCrunch.  Intuit is the company behind Quicken, QuickBooks and TurboTax.

Mint launched two years ago and quickly became the #1 online personal finance service with over 1 million users, ironically beating out Intuit’s own Quicken Online.

This could be a very good deal for customers of both companies over the long run.  With the recent demise of Microsoft Money Deluxe, Quicken is now the de-facto standard in personal finance software.  Founded in 1983, Intuit has been around for a long time and is a very trusted company in the personal finance software field.

Intuit struggled in the online arena though.  Mint stormed out of the gates and rapidly became the #1 choice, beating Quicken Online because it was free, easy to set up, easy to use and had compelling features.

With this deal, Intuit gains a fresh perspective into what users want out of a personal finance service by adding Mint to its stable of financial services.  Mint gains the resources and reputation of a long-established company in the field.

We will bring you more details when the official announcement happens.

Post from: Retired by Choice © 2010 All Rights Reserved.

Intuit to Acquire Mint

On June 30, 2009 Microsoft Money became yet another casualty of changing consumer tastes.  From the Money website:

With banks, brokerage firms and Web sites now providing a range of options for managing personal finances, the consumer need for Microsoft Money Plus has changed. After suspending annual updates of Money Plus in 2008, Microsoft ended sales of Money Plus on June 30, 2009.

Additional information about the change and how it impacts Microsoft Money users is available in this extensive FAQ, including this interesting tidbit:

The category of personal financial-management software has changed considerably in the 17 years since Money was first established. As more users shift their attention to full-service offerings provided by banks and brokerages, demand for a comprehensive personal finance toolset has declined.

Exactly what does this mean for current Microsoft Money users?

The good news is that your copy of Money will continue to work.  Microsoft is phasing out the online update portion of the software over the next two years.  The FAQ contains details about the expiration dates and is a worthwhile read for all Money users.

At some point all Money users will need to migrate to different financial software to receive online updates for their accounts.  This point hit home this morning when a Money dialogue box revealed that my online updates will expire in 22 days (see screenshot at top of post)!  Time to do some research!

Fortunately the competition that drove Microsoft to stop selling Money benefits stranded Money users by giving them a wide array of choices.  In fact, there are so many financial management software solutions out there I can’t possibly fit them into one article!

During the next few months I plan to investigate the many financial management software options that are available.  In the meantime here are seven excellent candidates to replace Microsoft Money:

GnuCash – This is a popular open-source (free) accounting software package that can be used to track personal finance accounts too.  Open-source programs are developed and supported by the very community that uses them.  Firefox web browser is probably the open-source example most people would be familiar with.  GnuCash has an excellent reputation and a strong base of users.

Mint – Mint is quite possibly the most popular financial software website you have never heard of!  With over 1 million registered users, Mint is currently the #1 online personal financial service.  Better yet, it is free!  Mint is constantly adding new features and tools and is well worth a look.

Quicken – In terms of familiarity Quicken will be a popular choice for Money users.  Quicken is probably the best-known and most popular personal finance software solution available.  It is computer-based, so you don’t need an active internet connection to check on your finances.  Quicken provides a convenient page with details about switching from Money.

Quicken Online — This is the free online version of Quicken.  It offers the functionality of software-based Quicken minus some of the more advanced features.  There is even an iPhone app available!  Quicken Online is a good choice for those who want free, easy money management.

Wesabe – Wesabe has been around for years.  Wesabe offers some excellent financial tools for budgeting and money management.  Possibly the best “feature” of Wesabe is the community that has sprung up around it offering support, tips and advice.

YNAB – You Need a Budget (YNAB) is a popular choice for people who need to take control of their finances.  YNAB allows you to import bank accounts, pay bills and develop budgets.  It is an excellent choice for those who are looking to pay off debt.  YNAB offers a 15 day free trial.

Yodlee – Yodlee powers many of the most popular personal finance websites.  In addition Yodlee offers their own online financial management solution called MoneyCenter.  The strength of MoneyCenter lies in account tracking, but not so much in budgeting.

I encourage you to test-drive one of more of these choices to determine which is the best for YOUR particular needs.  In the weeks and months ahead I will continue to explore and report on this ever-changing software category.

Update from Microsoft (8/5/09): Later this year, Microsoft will release versions of Money Plus Deluxe and Money Plus Home & Business that will not require online activation. This version will allow you to keep your Money files and transactional history but will not allow access to online services or premium services.

Post from: Retired by Choice © 2010 All Rights Reserved.

Seven Solid Alternatives for Microsoft Money Users

According to a recent post by American Banker, American Express and Discover are eliminating overlimit fees on consumer credit cards.  The is great news for cardholders of those two issuers!  Unfortunately, it also comes at a price as you will soon see.

Card issuers are in business to make money off of lending you money, so you know there has to be a good reason for them to eliminate a source of revenue.  In this case, we can thank the new CARD Act that Congress passed in May, which will require consumers to opt-in before they can exceed their credit limits.  Apparently it is too much of a hassle to get all of their cardholders to opt-in, so these two card issuers decided to eliminate the fees outright.  It will be interesting to see if other card issuers follow suit.

What is the catch?  Expect to see increased fees in other areas to make up for the revenue shortfall.  Right now all credit card issuers are scrambling to add new fees, increase existing fees and in general are bracing for February 2010 when the CARD Act goes into effect.  This includes higher interest rates, increased late payment fees, higher cash withdrawal fees and whatever other fees they can levy.  I’m waiting for the “you paid your balance” fee for those of us who pay off our entire balances each month. (On second thought, forget that, I don’t want to give the card issuers any ideas.)

Another victim is all of those credit card rewards programs we love to take advantage of.  Who doesn’t like to receive rebates, points or miles for the purchases we make?  Get ready, because card issuers are rapidly lowering the boom on all of them.  This bums me out the most personally — I use credit cards to pay for just about everything (always paying them off each month) so for me the rewards were icing on the cake!  The icing is the best part, right?  Now it looks like I’ll have to settle for just plain cake with very little icing.

Congratulations to all of the Amex and Discover credit card holders out there — you have one less fee to worry about!  Now keep an eye on the mailbox because very soon you will learn what losing that fee really cost you.

Post from: Retired by Choice © 2010 All Rights Reserved.

Amex and Discover Eliminate Overlimit Fees

Financial Freedom is a concept you will see mentioned a lot throughout the Retired by Choice website.  If you Google the term Financial Freedom you get over 42 million results!  Obviously there is a lot of interest in the topic.  But what exactly is Financial Freedom?

The short answer is:  there is no set definition of Financial Freedom.  It means different things to different people.  To some it might mean having so much money you could dive into it, just like Uncle Scrooge!  To others it may mean having enough to buy everything they could ever want.  To others it might mean never having to think about money.  Ask 10 people to define Financial Freedom and I bet you’d get 10 different definitions.

To me, Financial Freedom means being free to live my life as I choose without having to worry about my financial situation. My worth is defined by who I am and what I do, not by how much I have.  Time, especially having the time to do as I choose, is much more valuable to me than money.

That is my definition, formed after much reflection over many years, and it has had a profound impact on my life.  As you read Retired by Choice you will see these principles constantly reinforced.  When I write about Financial Freedom that is what I am talking about.

Now that you know where I am coming from, what is more important to you is to develop your own definition of Financial Freedom that works for you.  Give it some thought.  What is most important to you?  How do you want to live your life?  How does money fit into those areas?

The definition you come up with, whatever that may be, is the right one for you.  Once you know what Financial Freedom means you can begin to take the steps to achieve it if that is your goal.

Post from: Retired by Choice © 2010 All Rights Reserved.

What is Financial Freedom?

True Story: Customer goes out for lunch at a diner.  Total bill is $6.07.  Customer pays with credit card, writing in a $0.93 tip and a total of $7.00 which he signs for.

Three weeks later customer receives the credit card statement and the lunch charge is listed as $7.07.  The statement has meal cost and tip broken out and the tip had been increased to $1.00 when it was submitted to the credit card company.

The customer called the diner to dispute the increased tip, as there is no minimum tip policy at that establishment.  The diner manager promised to look into it, but added it would take a few days to search through the records.  The manager asked the customer to fax the original credit slip.  The customer did so at an office store at a cost of $1.50.

After two days the customer didn’t hear back from the manager so he called the credit card issuer to dispute the charge.  The credit card issuer asked him to fax the original credit slip to assist in the claim.  He did so, again at an office store that charged $1.50 for the fax.

The issue is still unresolved.  The manager hasn’t contacted the customer and the credit card issuer is still processing the claim.  The customer is adamant that the seven cents be refunded because he only authorized a charge of $7.00.

If you were the customer in this situation, what would you do?

Post from: Retired by Choice © 2010 All Rights Reserved.

How Much is Seven Cents Worth to You?

In retrospect this is where my financial meltdown began all those many years ago, but as they say, hindsight is 20/20…

When I was young it seemed that having a credit card was sort of a “rite of passage” to adulthood.  My parents had credit cards.  All of the other adults I knew had credit cards.  None of the kids I new had credit cards.  So part of being an adult must be having a credit card, right?

Right…

When I turned 18 I announced to my Mom that I was going to get a credit card.  She laughed.  Then she noticed I was serious.  We had a long conversation about money and to her credit (pun intended) she urged me to rethink my position.  I was told in no uncertain terms that if I got a credit card, especially at my young age, there was a good possibility it would lead to financial problems down the road.

Of course I knew better – after all, I was an adult.  So I formulated a plan to obtain a credit card of my very own.

This wasn’t during the heyday of credit cards when they were being issued to anyone who could sign the application.  You actually had to have a job and show a certain amount of income to obtain one.  I know, because I applied for a credit card and was quickly denied due to having not enough income.  Then I applied for another one and was denied.

Part of the problem was that I had no credit history.  It was sort of a catch-22 at the time – I needed to have a credit history to get a credit card, but I needed the credit card to start my credit history.  I was stymied!

At the time I worked at a mall part-time.  One of the department stores had a table at the front of the store with some water bottles and t-shirts on it and a huge sign offering free stuff if you applied for their store credit card.  In my book free stuff is good, and as a college student on a budget free clothes are even better so apply I did!

Two weeks later I nearly fainted when I opened the mail and there was a shiny new store credit card with my name on it!  It had raised numbers and everything!  And a $200 credit limit or something ridiculous.  But hey, it was a credit card and it was mine – I had arrived!

I also had $200 to spend – so off to the mall.  At that time $200 was a fortune for me.  I think I was making something like $5 an hour minimum wage or whatever it was at the time.  Wasn’t much.  So $200 represented well over 2 weeks of working at my part time job once you accounted for taxes, social security and whatever else they withheld from my checks.  But I didn’t think of it that way at the time.

I wandered around the store looking at all of the stuff I could buy.  Up to this point I had to pay cash for everything I wanted.  It was simple really – no cash, no stuff.  I was used to saving up for things.  I was used to not being able to go out and just buy anything.  Using cash helped me to manage my finances effectively because it forced me to think before I made a purchase.

That is such a good nugget let me say that again.  Paying cash helped me manage my finances well without me even knowing it because I was forced to think before buying something.

But I had arrived, remember?  I was no longer stuck in that all-cash world.  I had graduated to the world of credit!

Eventually that day I purchased something.  Maybe a pair of jeans, to be honest I’m not really sure.  I do remember that it was a relatively small purchase.  I also remember having to show my ID when I paid because the card was new.

Whatever I purchased that day was bagged up and I signed the receipt and walked right out of that store.  It felt really strange to me – almost like I was stealing.  I mean, here I had a bag with the stuff in it and my wallet had just as much cash in it as when I walked in!  Credit cards rocked!

Over the next couple weeks I went back to that store and made a couple more smallish purchases.  I know I needed clothes to wear to work and school at that point so I’m sure that is what I was buying.  I didn’t get too extravagant.

One day I opened the mailbox and there it was – my first bill!  I opened it up and WHAM – reality set in.  Instantly.  “Balance = $109.”  $109?  How in the heck did I spend $109?  The stuff I bought was on sale.  How in the heck do I end up owing $109?!?  I don’t have $109 to spare – I’m a poor college student.

So, yeah, I should have learned then.

Of course that didn’t happen.  I looked at the bill closer and I noticed another line: “Minimum Due = $5.”  I was saved!  $5 was easy!  I had $5.  I could afford $5 easily!  If all they want is $5 no problem!  Besides, if I make a payment I establish a credit history, don’t I?

I dutifully made out a check for $5 and sent it off.  And I kept shopping.  Because walking out of a store with stuff you haven’t “paid for” is kind of fun, isn’t it?

You can guess what happened when the next bill arrived.  Not only was the balance closer to $200, but there was a new line on the bill called “Finance Charge.”  To me finance charge meant I paid MORE for the stuff.  Who pays MORE for stuff?  Why would I want to pay MORE for stuff?

Whatever the amount, and it couldn’t have been much considering the balance, I think it was on that day that I developed my deep hatred for paying interest.  But that is another story for another day.

I stopped using the card that day.  In fact, I never used that credit card again and a few years later I sent them a letter asking them to close the account.  It took me 3 months to pay off the balance.  Every penny of interest I paid made me see red.

Even worse, Mom was right.  At that age, when you think you know it all, it is tough to admit that your parents actually know what they are talking about.  At least it was for me.  She was right.  I was wrong.  I learned a valuable lesson.

For a while…

Post from: Retired by Choice © 2010 All Rights Reserved.

First Credit Card

The Bottom Line: Every time you use your credit card, even if you pay off the balance in full every month, someone is paying for you to use it.  Usually that someone is you.

This past week 7-Eleven – home of the Big Gulp and Slurpee — launched a petition drive calling upon Congress to reform unfair and excessive transaction fees.  Read all about it at their website: Stop Unfair Credit Card Transaction Fees.

Credit card companies don’t only make money by charging interest to borrowers.  Interchange (or transaction) fees are hidden fees to the consumer and are set privately by credit card companies and charged to store owners every time that a customer uses a credit card.  In 2008 these transaction fees totaled $48 billion dollars according to the press release.  That ain’t no small change!

I’m not bringing this to your attention to support either side.  Credit card companies have a right to charge for using their service, and retailers have a right to protest these charges.  Heck, retailers aren’t forced to accept credit cards – they could just stop taking them entirely (although in their defense credit cards have become so ubiquitous that not accepting them could possibly cost sales as customers turned elsewhere).

Rather, I am bringing this up because I’m not sure everyone who uses credit cards is even aware that there is a transaction fee.  Even if you are aware you might not care.  Credit cards are so convenient to use, right?  Besides, the fee is not being assessed to you is it?  Or is it?

As someone who has spent years in the retail game I can assure you that these fees are definitely taken into account when prices are set.  Retailers are painfully aware of how much they are spending in transaction fees and they will offset those fees by increasing margins (higher prices), reducing payroll hours (resulting in less service) or in other ways.  Nothing in life is ever free – SOMEONE is paying for you to use that credit card, and chances are that someone is you!

Also, it is also interesting to do a little math (shudder) on the numbers they present in the press release.  Don’t worry – this will only hurt a bit.

If $2 out of every $100 (2%) we spend goes toward transaction fees and we spent $48 billion on those fees in 2008 that means credit card companies processed approximately 2.4 trillion dollars in sales.  Yes, that is trillion with a “T” and that means a whole lot of zeroes!

The estimated population of the US is 307 million as of today.  That means each person on the US is responsible for, on average, charging $7817 in 2008 on credit cards.  That is every man, woman, and child regardless of age.  Wow!

This is a broad hypothetical mental exercise based on numbers from a press release so don’t get all bent out of shape if my calculations are a billion or twenty off.  Credit cards have become ubiquitous in our society since they first came out around 1951 in large part because they are convenient to use.  Just remember that convenience costs.

Post from: Retired by Choice © 2010 All Rights Reserved.

7-Eleven Fights Credit Card Transaction Fees