I Thought We Were in the Middle of a Credit Crisis?

I was under the mistaken impression that credit was getting scarce in the U.S. credit market. I have mistakenly believed the news when they say that we're at a point where free money is over and credit will be more difficult to obtain.

I'm not sure if this supports this or disproves this, but I got an email from American Express to pimp out my friend's email address in an effort to earn $25. The email reads:

“Show your friends what Blue Cash from American Express can do for them, and you can earn a $25 Statement Credit for each friend approved. “

So let me get this right - The credit industry is in shambles and my credit card issuer wants to pay me money to solicit more people to get more credit - just in time for Christmas? Isn’t this how we got here in the first place?

BTW – Don’t be surprised to get an email from me asking you to sign up for an Amex card – but it’s completely unrelated to this…

Dealing with a Credit Union – I couldn't make this stuff up

I just had to chronicle my experience with the State Department Federal credit Union. These guys were just goofy…

When I went to get a motorcycle loan I checked out their rates (admittedly this was at the beginning of the credit crunch). I saw they offered a new loan rate of 4% which was way under the others I was looking at – so I decided to go with them (blindly assuming of course they would give me a loan). Of course in order to apply for a loan, you have to be a member.

So I called the Credit Union while I was surfing their site and I was connected to a nice lady who asked me “What makes you think that you can be a member?” Fair enough question I guess – so I answered that I was a military person stationed at an embassy overseas. She put me on hold for two minutes and came back to say the only way a military member can join the SDFCU is if they were stationed on Fort McNair (DC). When I pointed out to her that on their website it specifically states an eligible category is "U.S. military employees assigned to a U.S. Embassy overseas" the line went silent... Then she said I should probably go ahead and register on the website because she couldn't help me.

Maybe at this point I should have run screaming.

So I applied online - but it wasn't that easy. Even though they took my $99 as an initial deposit - they said I had to wait 24 hours for the account to be created before I could even apply for a loan... Is this one of the reasons that banks fail?

That was 15 October when they took my money. I called 16 October and she said – it would take more time. I got distracted and didn’t call back until the 27th of October – They told me my account would be established that day. The next day I called back and said I wanted my money back – They apologized again and that night I got a personal email from some supervisor with his apologies. The next day I had an approved account, so I finally applied for that loan. In those two weeks that I was waiting, their loan rates had gone up by 1% so now that same loan was going to cost me 5% vice 4%. Of course…

So I applied for the loan and submitted it. To my surprise they got back to me the next day. They had tentatively approved the loan, but wanted me to provide the following additional information (pasted exactly):

1. PURCHASE ORDER.
2. LOAN APPLICATION AND OPEN END AGREEMENT.
3. ACCEPTABLE INCOME DOCUMENTATION.
3. Verify approximate term of 24, 36, 48, or 60 months (72- or 84-month car loans are available with a minimum sticker or retail value of $25,000 at a higher annual percentage rate). There are no prepayment penalties.
4. DISBURSEMENT INSTRUCTIONS.
5. AUTOMOBILE INSURANCE INFORMATION
6. WE NEED TO KNOW THE REASON FOR THE 5 INQUIRIES ON THE CREDIT REPORT IN THE PAST 6 MONTHS.

Most of the above is standard – I did wonder why they used the number three twice (and why the second number three only got lower case billing) and then I started to wonder who purchases insurance first and then goes out shopping for a vehicle and if it was my income that had to be acceptable, or just the proof of income that needed to be acceptable. So many questions...

The oddest request was number six (really seven but who’s counting). Ignoring that this woman was ‘yelling’ at me by using all caps but her note really made me want to reply with:

“Dear Ms. X: The reason that you see five different credit inquiries is that I decided to shop around for an auto loan instead of taking the first offer I received. You see – I am not a moron.” But I didn’t. I sent the information back and assumed they would mail a check the next day or so. Then the next day I got this email back:

“Good Afternoon,

Prior to disbursement we normally require a VIN (Vehicle Identification Number) for the vehicle we are financing. We will make an exception in this case as long as you agree to be responsible for the payments even though you do not have possession of the vehicle at this time and you will provide us with the VIN# as soon as possible.”

Holy crap!! My social security number and my signature on the loan paperwork wasn’t good enough – now I have to make a pinkie promise, via email, that I’ll be responsible for paying back the loan?!? Seriously – This has to be the reason banks are going under – forget the contracts and just send us an email saying that you swear to pay us back, okay??

At first I thought they might talk to all their clients like this, then it dawned on me they might think they need to talk a little slower because I’m military and not State Department… Oh yeah - I went there.

So they did finally mail out the check – and yes, keeping with my email promise I even began to repay them, but last week I received the quaintest little package via snail mail – They sent me a payment booklet. You know – a little stapled booklet (like the kind my son makes in art class) with 12 pieces of paper that lets me record the check number and the date I mailed the check to the bank. It even had the due dates for the next 12 months so I wouldn’t forget.

I now firmly believe that the payment booklet is the reason that banks are going out of business. In the year 2008, this antiquated Credit Union printed and mailed a personalized booklet to me - halfway across the planet - so that I would remember to make my payments on-time. They might as well have pinned my mittens to my jacket! The time and effort to do such a thing, multiplied by the thousands of customers they have must be an extraordinarily unnecessary cost. I haven’t written a paper check to anyone but the embassy cashier in the last three years and neither have a lot of people I know. If you as a banking institution, are not setting yourself up for direct deposits...

This was way longer than I expected – and I’m ragging on them pretty hard, but I feel like I’m dealing with a Mom and Pop shop that sells licorice in the back next to the soda machine. I’m amused if nothing else – and they're not all bad -The do have a fancy internet site and everything.

Getting a loan these days...

Unless you've been hiding under a rock, you're probably familiar with the current 'crisis' int he credit and banking systems, and I think we’ve all heard about how banks are failing and going bankrupt and how we're all going to suffer right? Hearing the presidential debates I was convinced I was never going to get another loan again.

Is it just me or does this remind anyone else of when the airlines were going under and the Government bailed them out? When that happened, it seemed like someone flipped a switch and a large percentage of airline employees became extraordinarily grumpy overnight. I assumed at the time it was because they were fearful or angry they were going to lose their jobs. It might be just me, but I’m certain I’m seeing something similar now with the banking industry.

Several weeks ago my 17-year old Suzuki motorcycle looked like it was gone – broken beyond [reasonable] repair. I, being the person I am, quickly ran through the five stages of grief and then bought a brand new 2009 Harley Davidson Sportster XL1200L. Yeah, it’s sweet.

In order not to drain my savings or the kid’s college money, I decided to shop around for a loan. My thinking was that looking for a measly $15,000 loan ought to be a piece of cake – heck I should have banks flocking to me right? Yeah, not so much.

I went to five places:

USAA - My trusted bank of most of my adult life. They offered me 6.74% interest, but they were dodgy about the paperwork requirements. Two weeks later I called to find out where the draft check was (supposed to be mailed) and the man on the other end snapped "It's just been sitting here waiting for you to call us back". Something about his tone turned me off - so I declined the loan and moved on.

Next I tried Capital One for a loan. I applied over the phone and the guy on the other end sounded nice enough, but seemed like he was annoyed to answer my questions and I had lots of questions. When I asked why I was offered 5.87% interest rate over the 5.47% rate listed on the web site, he point blank told me that rate was for people with better credit. Well excuse me! Turns out Capital One dosen't consider a motorcycle a vehicle - so that ended that search, but they would not have gotten my business either.

Next up was Navy Federal Credit Union. They approved my motorcycle loan for 6.5% APY, but right before I agreed to the deal, they dropped a bombshell - They would only approve my loan if I took my wife's name off the title. Apparently they had a problem that my wife did not have an income - even though her credit score is like 30 points higher than mine. I told them to pound sand and cancelled my Navy Federal membership n the spot.

Next up was Pentagon Federal Credit union and their offer was fair and the rate was 6.49%. Getting a loan was fairly straightforward and they mailed me a draft check within days. Overall they were fine, but the whole process was quite sterile. I don't think I ever talked to a real live person.

Then I went to the ‘Dark Side’ and checked out the State Department Federal Credit Union. Overall they were a good deal. The final interest rate was 5% (should have been 4% - I’ll go on a rant next week about my experience with SDFCU). Their customer service leaves a lot to be desired, which I'll go into on a later post, but in simple terms of who offered the cheapest loan - they won by a landslide.

Now I haven’t opened up any new credit cards since the credit crisis set in, and obviously I haven’t bought any houses – but to me it seems that if you’re a good credit risk and you shop around, then there are still decent loans to be given. I mean, SDFCU gave a loan to a guy buying a motorcycle over the phone from a quasi-dealer in New York, having it delivered to Houston and then shipped directly overseas without even registering the bike! If they’ll give me a loan, then they’ll give anyone a loan – right?

Happy Thanksgiving!

Typically we Americans think of Thanksgiving as a time to be thankful for all that we have – and we think of the day after Thanksgiving as the best day to get more stuff to be thankful for!

So Happy Turkey Day – Enjoy the stuffing – and to make you feel at home – check out some of the sites tomorrow for Christmas deals and bargains. Remember, nothing says I love you to your brother-in-law, like sending him a whole stack of $1 USB cables for Christmas!

Ben’s Bargains.net - This is one of my favorite sites for finding cheap crap I don’t need. I’ve been know to buy super sized race tracks, miniature Batmen, and completely useless network cables because they were all cheap.

XP Bargains and Tech Bargains - Both are similar websites that give deals on electronic equipments mostly. Extremely helpful if you know exactly what you want - otherwise a great time waster.

Retail-Me-Not is a great website for when you get to the checkout portion of a website and it asks you for a coupon code. Surf over to this site just to see if you can get any extra cash off - I've saved quite a bit using these guys.

Turns out there are a million websites like the one above - but someone recently sent me the link for CurrentCodes.com and that looks pretty promising as well.

And lastly - if you are looking for deals online to send to relatives in The States - don't wait until Black Friday (tomorrow) or Cyber Monday next week - Poke around today after you finish you turkey - Many of the best deals that you're going to find (until December) are posted today.

Happy hunting!

Where have all the good banks gone?

Do you remember how the airlines got after 9/11? Remember when the flight attendants all of the sudden became scared that their professions just got exponentially more dangerous and combined with the uncertainty about their jobs and their future became easily agitated and seemed a bit rude?

I think I'm seeing the same thing now that the credit crisis has really set in. In the last couple of weeks I've dealt with several different banks looking for a modest loan for another motorcycle at the house of the Thrifty Expat.

To my surprise the people at the banks that I’ve been dealing with are generally not friendly. I turned down a loan from my bank (who I have this insane loyalty to) because the guy on the other end was just a little rude. I turned down another with a lower interest rate because they refused to issue me a co-signed loan with my wife (who for the record, has a better credit score than I do).

This of course means very little in the grand scheme of things. The rates for borrowing are going up (one percent in the last 3 weeks that I have noticed) while the prime interest rate is going down. Someone explain that one to me! The Federal Government is infusing banks and lending institutions with money, but their standards for loaning out seem to be tightening up.

I'm not just talking about big banks - I'm talking about Credit Unions and member-only banks that appear to be circling their wagons and keeping their money to themselves. I just wonder exactly how long this is going to go on for.

The Language Tax

In the almost 11 years I’ve spent overseas, I've noticed a phenomenon that I haven't seen addressed anywhere else. For lack of a better term - I call it "The Language Tax".

The language tax is when you pay more for something because you don't know how to get the better deal because: You don’t speak the language!

As much as I'd like to think I'm cheap enough to always find the better deal, I know that I pay too much for some things, and I just don't know how to fix it.

It almost happened to me again at the mall a couple of weeks ago. My wife was buying matching clothes for this year’s family Christmas photo (I think I was pressed against the glass front of the store with a please-save-me look), and we racked up a fairly big bill. The lady behind the counter asked if we had a discount card to the store (all in Polish), and I answered no. No is one of the few words I do know in Polish. The nice lady then asked us if we wanted to be part of the discount club and I assumed that there was a charge... Luckily while she was checking us out, I looked up and was able to ask if there was a charge or not. She said no so I said “Sure - I'll take one of those cards.” End result: 2 minutes later I saved 25% off new clothes for six people.

This also happens with most of us who don't bother to get the Skarbonka Card at Auchan and the equivalent card at Real. I know that I can save money (although admittedly I have no idea how it actually works) but I just don’t have the motivation to ask and try to fill out the little card they have.

I mean, if you don't read the language, and you don't find someone who speaks English, it's easy to just mentally calculate the anticipated cost of the purchase, get your faktura and get the heck out of there.

The negative thing here is that I have no idea how you solve this. I had to ask someone else to figure out the Skarbonka thing. 5-a-sec has a frequent shopper's card that I never bought because it supposedly saves you money – but not on everything… I’m pretty sure I’d save the money over a year, but I can’t ask the questions I want to – ‘cause I don’t speak the language.

But my biggest problem is the lack of the good old boy's hardware store. Back in Texas, if I wanted to take on a household project, I'd go down to the hardware store (Preferably Andy’s Hardware off of FM 249) with a list, and find the first knowledgeable person I could and start peppering them with questions. By the time I left the store I knew that I could go home and figure out at least how to get started on whatever it is I was working on. Here I don't have that luxury - so instead of buying the parts needed to fix the hose - I'm pretty likely to just buy a new hose.

The other thing is finding the bargains. In the states I'd check out the newspaper ads or check out the internet ads and head out to the store – Here, I’m sure I could do the same but I don’t have a newspaper subscription, and I have no idea what the Polish equivalent of BensBargains.net is.

Again, this is the by-product of a stranger living in a strange land. It's not something that I'm going to fix unless I really learn the language.

My credit score is affected by what!?!?

In these times where credit is beginning to dry up, it almost comes as no surprise that it’s possible your credit score may be hurt by the types of transactions you make. But that doesn’t make it any less infuriating.

MSN reports that the Federal Trade Commission filed a law suit against card issuer CompuCredit for using purchasing patterns as a basis for cutting credit lines for card holders who visited certain establishments such as tire and retreading shops, massage parlors, bars, billiard halls and marriage counseling offices.

Most of us are familiar with the idea that our credit scores can be used for more and more things. If your credit history is bad, in many states you might pay more in auto insurance or worse, you might not qualify for a better job; my credit score been used as a qualifier for renting an apartment for as long as I can remember. But the thought that your card issuer may restrict your credit line because you shoot pool every Thursday night is a bit disturbing.

Possibly the biggest downer is that the FTC is not suing CompuCredit because they used purchases as a determinate of their credit line, but that they didn’t disclose that they were doing it. Has anyone ever really read through their Credit Card’s disclosure statements?

So depending on how frequently you visit the club – you might want to consider paying cash. I’m not sure how that works for our overseas purchases since half of the merchant categories for everything I buy are wrong or misleading to say the least. I know that my Mokpol on the corner of my street is listed as "Speciality Merchandise". One can only guess what U.S. merchants are also labeled as "Speciality Merchandise". Good luck.