Parchayi.com – Personal Finance Simplified

If you have an HSBC Credit Card, here is a security warning for you:

The website http://www.hsbccreditcard.com/ is not secure and their “Secure Login” is also not secure. You should always look for https:// in the URL to make sure that a site is secure. Just having the words “Secure” and  a padlock does not make the login secure.

If you are technically inclined here is the form source code from that page:

<form id=”login” method=”post” action=”" enctype=”application/x-www-form-urlencoded” target=”_self” onsubmit=”if (this.submitted) return false; this.submitted = true; return true”>

That means that the form is not even submitted to a secure page and it doesn’t even hash your password onsubmit. So if you do have an HSBC Credit card, use this link:

https://www.hsbccreditcard.com/

It is shameful that a large bank is so willy nilly about your security.

Parchayi and me both have credit scores in the 800s, always pay all bills on time etc. and in spite of that we have been seeing notices from credit card companies every few months increasing rates and reducing benefits. It seems we are not alone and banks are just jerks who will do as they please before Obamas new Credit Card Act goes into effect in 2010. Have you noticed your rates go up too?

Also the credit card offers have completely dried up. In the last year I have also seen credit card companies canceling cards that I don’t use very often.

Amongst the cards that have slashed benefits is HSBC Cashback Platinum Mastercard. I had a card that had increasing benefits the more you use the card. It was 1% cash back upto 2500$ spending. Then 2% from $2500 – $5000. And 5% for all spending over $5000 in a year. Now it is just 1% no matter what. Also this was the card we used the most.

Amongst the cards that increased rates is Citibank Dividend Platinum Mastercard. They raised from 12.99 to 19.99% and that too after we started using the card more often since HSBC cut the cashback!

Amongst the cards that I had canceled is Washington Mutual Visa Platinum. The only reason I had the card was so I could get my credit score free each month. So I can’t complain about that one being cut. The bank got nothing from me.

Here is how to get Lifelock (a service that puts a Fraud Alert on your behalf at all the credit reporting agencies automatically every 90 days) for Free. Go to their Enrollment Form and enter ‘ or 1 or ‘ with the quotes included and voila – the service goes down to 0$ annualy. Wonderfull programming from a site trying to protect your identity!

Just so you know these guys are being sued for misrepresentation of services and their CEO, Todd something or the other has had his identity stolen at least once and maybe as many as 20 times according to some reports. So don’t go posting your SSN online, on TV etc. like him!

Just so you know, you can get your credit report for free from http://www.annualcreditreport.com and your credit score for free just by opening a WaMu Credit Card account and if you are interested in improving your credit score, check out my previous posts on Credit Score Whoring.

A friend of mine who graduated with me was refused an interview at a DC company because his GPA was less than 3.5 and he used the term ‘GPA whore’ for the company. Thus leads to the birth of my new term – ‘Credit Score Whoring’ ^TM (CSW) – trying to artificially raise your FICO Credit Score for the purpose off showing off.

I have tried some techniques of CSW successfully (YMMV – take this advice at your own risk) before applying for my home loan in 2005 and here I will describe my method. Be warned that the process takes several months to several years, a strong will, some degree of discipline not to go overboard and atleast a decent credit score to start with (>= average). The first thing to understand that to have a good credit score, you must have debt or atleast have had some debt in the past and you must pay on all your debt in time all the time. So let’s start.

Step 1: First calculate your current credit card debt = D. Next calculate your credit limit of all your credit cards combined = L. Note: If you already have credit card balances that you cannot pay off in full, pay those off first before trying this out.

Step 2: Apply for a 0 intro APR (on purchases and balance transfers) and no fees card from one of the offers you get in the mail (such as the Discover® Gas Card). Transfer all your balances to this new card. Only use this card for a while for everything – you have to get your D/L > 0.2. If you cannot get one card that offers this open two card accounts – one for purchases and one for balance transfers.

Step 3: Now that you have only one or two cards to pay, pay slightly more than minimum to the cards each month. Put the rest of the payment in a high yeild savings account instead of paying your credit card (do not touch this money because you will have to pay your bills later). Be warned, your credit score will temporarily decrease as you rack up debt on these new credit cards. And do not use any other credit cards.

Step 4: At the end of your 0 APR period. pay off the entire balance of the credit card(s). In about one month, notice the huge increase in your credit score .

Rinse and Repeat – Go to Step 1. In this process if you end up with too many cards, just merge all the cards form the same bank into one account – preferably your oldest account with that bank because length of your having a credit account is very important.

Why This Process Works
Your credit score depends on the following things:
- Low D/L (Drastic reduction of D/L = drastic increase in score)
- High L (never close credit card accounts, always merge)
- Paying more than minimum each month (even if it is just 1$ more than minimum)
- Not having balances on too many credit accounts (no more than two)
- Using credit cards (stop using your debit card, cash, checks – use credit cards, earn free cash back and improve your score)

This is from my own experience over the last 6 years and I repeat – YMMV (Your Mileage May Vary) and use this information at your own risk.

Over at Yahoo Finance today, I found this article – Negotiate a Lower Credit-Card Rate from the Wall Street Journal. The artice goes on to say that credit card companies will lower your interest rate if you ask for a lower rate. Most of my credit cards are low fixed rate cards, plus I haven’t paid interest to cards for a long time, however I would agree that credit card companies are customer friendly.

I have forgotten to pay my bill on time twice or thrice and I have called and had late fees waived with both Citibank and Chase (or maybe it was FirstUSA before being acquired by Chase). I call and say – ‘ I got my statement today and it has 35$ of late fees. I have never paid late before, can you please waive the fee’ and they have done so without any questions asked. Also in both cases the late payment was not reported to the credit bureaus.

I mentioned the procedure of merging HSBC cards before here and finally sometime last week or the week before that, HSBC merged my credit cards and the new limit is the combined limit of the cards. Yipee!

Continuing my story on attempting to merge two HSBC credit cards, I received a letter from HSBC asking me to fill out an account consolidation request which basically was information similar to a new credit card application. So it is not so very easy to merge cards, inspite of the fact that I manage them online under the same login.

If you have no credit history, some people/sites may lead you into getting credit cards that have an annual fee or some sort of payment involved to get credit and establish a history. However you almost never need to go that way. You have several options depending on whether you are a student or not.

If you are a student, you can apply for student versions of credit cards. I know that atleast Citibank, American Express and Chase will give you student credit cards which as as good as the regular ones with decent credit limits (in the range of $3000, not $500 like many other banks).

If you are not a student, you can start by applying for store credit cards (e.g. the GAP card). Then wait for six months and apply for regular credit cards. Don’t apply for more than two or three cards in a six month period. This will affect your credit score negatively.

One thing to note, always make more than minimum payments on all your cards. Credit Card companies report to credit agencies one of the following (based on what I could figure from Providian’s credit manager/my credit reports)

• Did not pay/Paid Less than Minimum
• Paid Minimum
• Paid More than Minimum

If you have too many credit cards to manage, you can simplify things by merging credit cards that are offered by the same bank. All banks do that for you in a single call. The credit card merger will give you one card that has the combined credit limit of both the cards. This will have no significant effect on your credit history if done correctly because your total credit limit will remain the same. This makes merging your cards a much better option than closing the accounts of unused credit cards. When the banks of two of credit cards merge or one takes over another, take advantage of that to combine credit cards.

Make sure you combine the credit cards into the card that has better benefits (better rewards, lower fixed APR or whatever criteria are important to you). However if your credit history is not very long (under 5 years), my suggestion is to combine both the cards into your older card because it is generally not advisable to close down old credit card accounts.

You can get one credit report from every credit reporting agency free per year from annualcreditreport.com, however they still charge you if you want to see your FICO credit score.

Providian offers your credit score free every month if you have any Providian Credit Card, at their website. Also offered are alerts if your score changes too much in a month and a graph that traks your score over a period of time. So far Providian is the only bank that offers this.