Opinion by Steve Bucci : Credit card for wedding a lousy way to start off

Q My fiancee and I would like to get a new credit card for wedding expenses. She has a higher FICO score than I do (hers is in the 720-730 area; mine is in the mid-600s), but I make considerably more money than she does ($60,000 versus $20,000). The credit card we would be applying for would normally require a score like hers. I want to know if it would be wise for us to apply for the card jointly, or if she should apply for the card by herself.

A How do I get your attention without using a two-by-four? Why is your credit score in the 600s? Why haven't you saved for the wedding? Why are you using a credit card, of all things, to finance what should be one of the happiest days of your lives? How much of a limit are you looking for, anyway?

Is your fiancee in such a state of bliss that she doesn't realize that by financing the wedding on a card in her name she will be solely responsible for the debt?

These and other questions come to my mind immediately. That they haven't come to either of yours concerns me.

My advice is not to finance your futures, especially with a variable interest rate loan. A better idea is to save for the wedding expenses for which you would be using a credit card. If you want or need to get married before you are able to save the money, cut back on the expenses for the wedding so you don't need to charge anything.

I also endorse letting your parents contribute.

If you are not wildly optimistic about your futures now, you probably never will be. So, if you want to know how to do things your way, here goes:

It is not a good idea for either one of you to get stuck with the bill for the wedding if you part ways before the tab is paid. So, why not take an egalitarian approach: Apply for two credit cards, one in each of your names, and split the costs based on your respective incomes.

It is important for you each to have credit in your own names, and the financial responsibility would be shared equally. I know, I know, you are getting married and will be sharing everything quite willingly. Do this for the protection of both of you.

Now to the part that no one wants to discuss — paying off the balance. I would hope you are charging no more than what you can pay off in nine months or less.

Debt Adviser

Credit-card miles: Flight to nowhere

Dear Dave,

I'm a senior in college, and my roommate just got a credit card that features airline miles. He want me to get one, too, so we can take a trip together at the end of the year. What do you think about this idea?

Tim

Dear Tim,

This is a bad idea on so many different levels. First, you're close to graduation and beginning your real life. You don't want to start out with a bunch of hanging over your head.

Second, have you seen the restrictions on airline miles lately? Jupiter has to align with Mars while you're standing on one leg to cash in on those things. It's ridiculous! Plus, statistics from Consumer Reports show that 78 percent of all airline miles are never redeemed. What does this mean? It means in most cases people end up with no cool trip and a bunch of debt.

(Column continues below)

I'm not against going nice places and having fun, and you probably deserve to celebrate a little after finishing college. But going into debt for it is a really bad idea.

Just for a trip, Tim. Today, many debit cards have airline miles associated with them. So there's no reason to take a chance with credit cards.

Dave

Long-term disability insurance?

Dear Dave,

My husband is 31 years old and has been offered long-term disability insurance through his employer. It only costs $25 a month, but we're trying hard to live on a budget and get out of debt. Is this coverage worth it?

Rebecca

Dear Rebecca,

Yes!

is a fantastic buy. It's inexpensive, and in return it will pay you about 60 to 70 percent of his salary if something bad happens and he becomes disabled. That's not a bad deal for just $300 a year.

Statistics show that a man in his early 30s is 12 times more likely to become disabled than to die before the age of 65. Everyone needs to have long-term – not short-term – disability insurance.

Hopefully, you'll never find yourselves in a situation where you have to use this type of policy. But in the event that something awful does happen, it can help save you from financial ruin!

Dave

Perpetual debt

Dear Dave,

My father-in-law is telling us we should apply for an interest-only loan when we buy a house and then pay extra on the principle. What do you think about this idea?

Nick

Dear Nick,

Interest-only mortgages are horrible. Stay away from them!

Lots of folks get into these traps by promising themselves they'll pay extra on the principle. But according to FDIC statistics, 97 percent don't pre-pay on their loans.

Some lenders will also try to use a flashy or "sophisticated" analysis to convince you this is a great way to get into a great house. But the funny thing about most of these sales pitches is that there's no mention of the fact that you've exponentially increased risk. And risk can be mathematically entered into the equation, making your supposed gains disappear.

The best thing you can do – short of saving up and paying cash for a home – is make a huge down payment on a . Then, pay it off as quickly as possible.

When you have an interest-only loan, you end up paying only on the interest. And that's a great way to find yourself in debt for the rest of your life!

Dave

Credit Card Mergers Do Not Affect Card Usage, Says Cardbeat

WESTBURY, N.Y.--(BUSINESS WIRE)--In the past few years, the credit card industry has witnessed landmark
mergers between issuers such as Bank of America and MBNA, JPMorgan Chase
and Bank One, and Barclays and Juniper Bank, among numerous others.
Two-thirds of cardholders whose issuers have been a part of a merger
have not changed the ways they use their credit cards post-merger,
according to research recently published in Cardbeat®,
the syndicated market research report by Auriemma Consulting Group (ACG).

“These consumers were pleased with the
customer service, card pricing and rewards of their credit cards, and
chose to continue using them because the products and features did not
change after the merger,” says Megan
Bramlette, managing editor of Cardbeat.

Overall, consumers are neutral on bank mergers, with 68% expecting
little change to their opinion of their credit card company if their
card issuer was bought or sold.

“Consumers care less about the bank that
issues their card and monthly statements than the benefits they receive
from that relationship,” Bramlette says.
Falloff in activity occurs when card rewards are not as rich post-merger
as they were before, or when interest rates and account fees on the
portfolio rise.

“Merging banks need to consider how consumers
will react to their products post-merger,” she
continues. “Our research shows that most
consumers are confident about the ongoing independence of their current
credit card issuers and have made it clear that they will remain loyal,
even after a merger, as long as cardholder benefits and service levels
remain the same.”

The information in this release includes data from 401 credit card users
surveyed in February 2007. The findings were originally published in the
February 2007 issue of Cardbeat.

ACG is a management consulting firm in the payments and lending
industry. Cardbeat is a syndicated market research study from ACG that
provides insight into how consumer perceptions impact credit card
acquisition and usage.

CreditCards.com: Weekly Credit Card Rate Report

AUSTIN, Texas--(BUSINESS WIRE)--Average rates for instant approval credit cards edged higher this week,
potentially in response to increased default risk associated with
instant credit decisions. Rates on other popular credit card categories
tracked by CreditCards.com remained unchanged from the previous week and
are listed below:




 


 




Credit Card Rate Averages


 




 




Low Interest


11.59%




Balance Transfer


11.41%




Instant Approval


14.18%




Reward


13.72%




Cash Back


13.13%




Airline


15.07%




Business


13.95%




Student


17.88%




Bad Credit


12.81%




 




 


 

Source:







Updated: 05-03-07


 

Several major credit card companies offer instant online decisions for
their cards as a method for differentiating their products. Issuers are
able to access certain credit bureau facts in near real-time in order to
make rapid credit decisions, usually within 60 seconds. When
insufficient data is available to make an instant online decision,
issuers reserve the right to take a greater amount of time in which to
grant approval or denial of an application involving offline review.

The CreditCards.com national weekly credit card rate survey is conducted
each week using data from the leading credit card issuers in the United
States.

Introductory offer periods and actual regular interest rates can vary
depending on individual applicants’ credit
quality and issuer risk-based pricing policies.

About CreditCards.com

CreditCards.com ()
is an Internet publisher and marketing organization that operates the
leading and fastest growing online destination for consumers to search,
compare, and apply for credit cards. The company matches millions of
consumers each year with the credit card offers that best meet their
financial needs. CreditCards.com is based in Austin, Texas and was
founded in 2003.

NOTE TO EDITORS: The information contained in this release is available
for print or broadcast with attribution to CreditCards.com.

N.Z. Dollar May Gain Versus Australia's on Interest-Rate Gap

New Zealand's dollar may gain against
Australia's currency on speculation that nation's central bank
will leave interest rates unchanged today.

New Zealand's official cash rate is 1.5 percentage points
higher than Australia's 6.25 percent cash target rate. There's
just a 2 percent chance the Reserve Bank of Australia will raise
the benchmark rate at 9:30 a.m. today in Sydney, according to a
Credit Suisse index based on overnight trading in interest-rate
swaps.

``If Australia doesn't go then people will lean toward the
New Zealand'' dollar Alex Sinton, currency dealer at ANZ National
Bank Ltd. in Auckland. ``It's all about the relativity of
interest rates.''

The New Zealand dollar has advanced 7 percent against the
Australian dollar in the past 12 months. That's the biggest gain
of any major currency against the Australian dollar in that time.
New Zealand's 7.75 percent benchmark rate is the second-highest
after Iceland's among countries with the top rating at Moody's
Investors Service, helping swell demand for the local dollar.

New Zealand's dollar bought 89.56 Australian cents at 8:41
a.m. in Wellington, from 89.41 cents in late Asian trading
yesterday. It may rise to 89.80 cents if Australia's central bank
does not increase rates, Sinton said. It fell to 74.07 U.S. cents
from 74.28 cents yesterday.

RBA Governor Glenn Stevens will leave the overnight cash
rate target unchanged today at a six-year high, according to all
26 economists surveyed by Bloomberg News.

Bollard's Strategy

There is a 12 percent chance on the Credit Suisse index
Reserve Bank of New Zealand Governor Alan Bollard will boost
rates at his next monetary policy review on June 6. Bollard
boosted rates twice by a quarter-point in March and April, and
did not warn of further increases at his last review April 26.

The local dollar may extend its drop against the U.S. dollar
today as signs of more economic growth in the world's biggest
economy stokes demand for its currency, Sinton said.

The dollar rose from near an all-time low against the euro
and touched a two-week high versus the yen after a private report
released yesterday showed U.S. manufacturing strengthened last
month by more than economists forecast.

New Zealand government bonds rose after the yield on the
benchmark 10-year note fell 0.04 percentage point to 6.05 percent,
according to data compiled by Bloomberg.

The country's one-year swap spread over the U.S. rate
dropped 0.01 points to 2.86 percentage points today. The one-year
swap over Japan is at 7.33 percentage points, from 7.32 yesterday.

To contact the reporter on this story:
Emma O'Brien in Wellington at