"I find society's obsession with credit scores completely insane."
Spoken like somebody who has never been raped due to a low credit score. Due to identity theft that took me over two years to clear up, my credit score was temporarily in the upper 500's back around 2007. Obviously, now it's all cleared up and back to normal, but my God, those of us on the normal credit scale are clueless as to how expensive bad credit is.
EVERYTHING costs more when you have bad credit. You are perceived to be a risk, and that risk is priced into anything that involves a long term commitment of payment. Move? You will pay a higher rent at some places, or simply a higher security deposit. Activating utilities? The power or water company will want a few hundred dollars down. Want to switch cell phone providers? Oh wait, your credit sucks so you need to give us a $200 payment on top of the normal fees. Want car insurance? Guess what, on top of that extra high car payment, you will have an extra high car insurance payment. See where I'm going here?
All of these extra "taxes" you pay due to being a quantified risk exact a huge opportunity cost. Many companies use bad credit as an "excuse" to charge you more. Others have a very valid reason to make you pay a risk tax. There are numerous cases where credit score is not statistically connected to risk, particularly with car insurance, but they will charge more nevertheless.
You might want to read the fine print there... These companies aren't morons. A guy sitting next to me, on a United flight, and I worked out the math. At best you saved $50 on your airfare. You didn't fly for free. There's annual fees on top of limits sometimes on top of redemption restrictions... You just fell for the gimmick I'm afraid. In particular that Mileage Plus card. There used to be a better one from Continental. No free miles up front, but free checked bags and a % that you spend goes to a travel bank. I saved $40 on my flight to Austin, coincidentally, with average spending over a year or two. It's simply my travel cars now. The thing with these cards is that yes you can save a few bucks...a few...but you gotta go crazy over which one you use for which purchases. Dunno. It's a gimmick.
Can you elaborate on you math here? I am also always skeptical with deals like the ones mentioned in this article, but the claim that he only saved $50 on airfare makes no sense to me without further justification. He specifically mentioned that the first year annual fee is waived. I am not sure what limits you refer to. And of course there are redemption restrictions which usually require you to purchase such flights a few months in advance.
A further reason I don't believe your comment is that I just returned from a fantastic holiday to the Caribbean whose flight was paid for entirely in United miles acquired exclusively through opening and using once a United Explorer Card. This, incidentally, is a neat trick to know: Flights to the Caribbean are considered domestic flights in the United system which means they only cost 30k miles, same as a flight from Boston to New York for example.
7 comments
[ 6.2 ms ] story [ 27.6 ms ] threadSpoken like somebody who has never been raped due to a low credit score. Due to identity theft that took me over two years to clear up, my credit score was temporarily in the upper 500's back around 2007. Obviously, now it's all cleared up and back to normal, but my God, those of us on the normal credit scale are clueless as to how expensive bad credit is.
EVERYTHING costs more when you have bad credit. You are perceived to be a risk, and that risk is priced into anything that involves a long term commitment of payment. Move? You will pay a higher rent at some places, or simply a higher security deposit. Activating utilities? The power or water company will want a few hundred dollars down. Want to switch cell phone providers? Oh wait, your credit sucks so you need to give us a $200 payment on top of the normal fees. Want car insurance? Guess what, on top of that extra high car payment, you will have an extra high car insurance payment. See where I'm going here?
All of these extra "taxes" you pay due to being a quantified risk exact a huge opportunity cost. Many companies use bad credit as an "excuse" to charge you more. Others have a very valid reason to make you pay a risk tax. There are numerous cases where credit score is not statistically connected to risk, particularly with car insurance, but they will charge more nevertheless.
A further reason I don't believe your comment is that I just returned from a fantastic holiday to the Caribbean whose flight was paid for entirely in United miles acquired exclusively through opening and using once a United Explorer Card. This, incidentally, is a neat trick to know: Flights to the Caribbean are considered domestic flights in the United system which means they only cost 30k miles, same as a flight from Boston to New York for example.