MBNA prospectus...the Credit Card machine.

Citizen

Member
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I had a credit card problem, with one company in particular, MBNA. Let's just say I had a balance, and MBNA thought it was a good idea to slam the interest rate to 27.98% (Not kidding) and pull some underhanded things to generate extra fees, and so on and so on.

After a day of yelling at them on the phone arguing about my interpretation of my rights and their interpretation of theirs I spent a good while reading up on my good friend, MBNA. Ok, guess what, they have clever Lawyers and every scummy trick they pull is legal and their interpretation of their rights trumped mine. So, noodling around the MBNA website I went to investor relations and ordered a copy of their prospectus for 4 years back just to waste their postage.

Wow, what an education those prospectuses turned out to be! MBNA is a pure debt generating machine. They go around and make offers to special interest groups and offer them a cut if they will give MBNA their member lists. They might go to Tom and tell him what a good guy he was, and they wanted to give TSPTalk some money with it's special TSPtalk MBNA Visa card. Tom would agree sure,and then MBNA would call us all and say that Tom endorsed them and they would like to offer us TSPTalk credit cards with 1% of purchases going to TSPTalk.

It works, too! All through the prospectus they listed all these special interest groups (Nascar, colleges, foot fetishists...you name it there'sa VISA/MC for them), how many joined and how much of a balance they carried. The amount of cash MBNA is pulling in staggering, in 2003they held 112 million in reserve for credit losses.

Another neat trick they pull is loan securitization. I'm not anexpert so I may not understand it completely, but the way I read it, they build up a certain mass of money owed to them, and then sell theloans in lots to other corporations. MBNA still administers theloan and I think they still skim theinterest off the amount,but the principle is owned by whomever bought the securitized loan. Debt itself becomes a product to sell and profit from.

These credit cards are really pretty evil if you letthem be. Thecompanies behind them are also wickedly clever, and reading MBNA's prospectus gave me a new prospective on the debt machine and why it's so critically important to use credit and not let credit use you. You should read it, too, and thereby use more of MBNA's postage. Actually if I ever get to the stock trading part I may buy a share or two of MBNA because I know I sure can't beat them. Boy I do hate them, though.:X
 
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Citizen wrote:
MBNA thought it was a good idea to slam the interest rate to 27.98% (Not kidding) and pull some underhanded things to generate extra fees, and so on and so on.
Unreal.
 
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It's very real, Tom. Unfortunately, Citizen is describing the (unregulated) credit card business today. MBNA is not "bad." There are many such companies acting in a comparable manner. If you don't like the way they act, speak with your legislators.

I realize that I'm not telling anyone anything new, but the purpose of these companies is to make as much profit as they can... on interest, fees, you name it.

You have to use them and attempt to profit from them as much as they attempt to profit from you. Try to obtain a credit card without annual fees. If you can't pay off what you owe every month then try to obtain a card with the lowest rates. If you CAN pay off every month, try to obtain a card that will give YOU a dividend (1% up to 7% back) in either cash or products for using their card.

Also the cards will charge a prohibitively high late fee ($25-50) if your payment doesn't get to them on time. Remember that even if you send in your payment 2 weeks early but the post office delays in forwarding the mail, you will be charged a late fee. One way around this is to avoid the mail.Ifyou haveyour cc with a bank, for example, and you have branches in your area, pay directly at the branch. As long as you're at the bank by the due date, you'll never pay a late fee again.
 
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I've always heard you should be extremely conservative with credit cards if you want to have a good credit score. Things like only have a small number of accounts, keeping the balances on them low, or even using the credit card and then paying it off right away so you don't pay any interest.

Then I heard about Scott Bilker. He has a credit score over 800, and he has over 80 credit cards with more then $300,000 in available credit! He's got $10,000 in credit card debt last I heard withall of it at 0% APR. He bought a $14,000 car on cash advances from credit cards with 0% APR, and then when the year was over at that introductary offer he transfered the balance to another 0% APR card. He's taking out 65,000 in cash advances at 0% APR and put them in a savings account for the year the offer was good for, made 1,800 in interest, and paid off the 65,000 at the end of the year.

His website is http://www.debtsmart.com
 
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http://money.msn.co.uk/MyMoney/Insight/MoneySpinner/ThisWeek/MakeMoneyFromPlastic/default.asp

The above site explains the Bilker methodology. I guess it would work, but would require everything to go right every time or would wind up costing a lot of money. Maybe I'd think about it if I were very organized and single, but I'm less than organized and my wife would have a stroke at the sight of lots of plastic coming in with fat balances, even interest free balances. The idea of it is really kind of interesting, like a one-person legal paramyd scheme. But not for me.
 
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Ooooooh, cool! a TSPtalk credit card...where do I get one!?

heh, j/k



saraho wrote:
Remember that even if you send in your payment 2 weeks early but the post office delays in forwarding the mail, you will be charged a late fee.
Post.....office...?

mail?

huh?

You mean people still pay with checks through snail mail and stuff? wooOOOooow!

Get with the XXI century: e-Bill



Also, announcement to the world: QUIT WRITING CHECKS IN LINES AT STORES!


[align=center]....deeeEEEEEeeeebit card![/align]

[align=center][/align]

[align=left]Oh, I just remembered that I've not been taking my St. John's Wort. D'oh![/align]

[align=left][/align]

[align=left]saraho wrote:
...and you have branches in your area, pay directly at the branch.
[/align]

[align=left]branch?[/align]

[align=left]you mean those building things? wooooOOOOooooow![/align]

[align=left]That sounds terribly inconvenient...to stand in line with all the other Dark Agers. :)[/align]
[line]


[align=left]Credit score:[/align]


  • [align=left]Ideal number of cards: 2-4 (I have 3)[/align]


  • [align=left]Use them, pay more than the minimum (pay enough to avoid finance charges)[/align]


  • [align=left]Balances HEAVILY affect your credit score. I don't carry balances on my cards; I pay them off monthly. I made sure my balances were zero when I applied for a mortgage and my FICO score increased 60 points. My interest rate would have been 1/4-1/2 point higher had I not done that.[/align]


  • [align=left]Keep balances below 1/3 of your credit line. Balances over 1/2 of your credit line kill your score and is interpreted as "living on credit"[/align]


  • [align=left]Keep new credit applications spread apart by at least two weeks. Credit checks cost 5-25 pts each. Several inquiries without new accounts is very bad. FICO, et al, do not understand loan shopping apparently.[/align]


  • [align=left]Do NOT use Lending Tree, etc. for the above reason: they send your crap to four banks who will check your credit report independently and pummel your score (been there, done that, never again). Alternative: get your score yourself so you know, shop around and ask "What rate do you offer? I have a FICO score of ___"; do NOT let anyone check your credit (you have to permit them, by law) until you've decided on a lender and to get the process moving.[/align]


  • [align=left]Learn about credit scores online. Try Gooooooogle.[/align]
[align=left]I'll have to check out that scam...I've done the "Zero-percent monty" before to have interest-free loans.[/align]
 
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Rolo:

Electronic payments are fine too (if they are free..some involve an extra charge)...alsomake sure that you get confirmations.

Also, re:branch payments, I was referring to payment via express payment machines, which have no wait time.
 
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Citizen wrote:
http://money.msn.co.uk/MyMoney/Insight/MoneySpinner/ThisWeek/MakeMoneyFromPlastic/default.asp

The above site explains the Bilker methodology. I guess it would work, but would require everything to go right every time or would wind up costing a lot of money. Maybe I'd think about it if I were very organized and single, but I'm less than organized and my wife would have a stroke at the sight of lots of plastic coming in with fat balances, even interest free balances. The idea of it is really kind of interesting, like a one-person legal paramyd scheme. But not for me.


That's not the intent of whatBilker does though. From what I know he only once tried to actually make money off of credit. The purpose of his website is to beat credit card companies at their own game doing whatever it is you need to do.
 
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