The most unexpected event occurred this past year in the midst of the “financial meltdown” as they continually call it.  After 10 years living under the illusion that I had a firm grip on my credit card behaviors and that I was “laughing all the way to the bank” with my rewards, my credit card companies kicked me to the curb and caused a virtual yard sale with my finances.

When we crash our motorcycles, dune buggies, and quads, the resulting aftermath, spread across a few hundred feet of sandy dunes, is referred to as a yard sale.  Beer over there, cooler over there, helmet and goggles, jersey, whip, front wheel, etc.  You get the picture.

Credit card companies are financial yard sales waiting to happen.  Here’s my story.

A little over 7 years ago, before financial institutions had really began offering “paperless” statements, I had all of my mail redirected to a company called Paytrust.  Not a bad idea at the time.  They give you a P.O. Box, your physical mail is shipped there, they scan it, and e-mail it to you.  They also facilitate cutting paper checks automatically to your vendors, creditors, etc.  It’s a bill-payment service and a mail-scanning service.  I had all of my mail redirected to them.

Then, as the financial world started offering the option to cancel paper statements, and everyone started offering bill-pay, I decided that sending $15/month to Paytrust was a waste of money, so I canceled the account.  In doing so, Paytrust was supposed to send out letters changing my address at all of my financial institutions to my home address.

Some of them didn’t get changed.  One of those companies was FirstUSA who issued my Southwest Airlines Rewards Visa.  When it was issued to me, I had a 7% rate and a $5,000 limit.  By the time the problems started, I had built up to a $26,000 line of credit and was earning a round trip ticket every 6 weeks.  That was due to my stupidity, by the way.  I was running purchases at work through my card, extending credit to my employer as a vendor.  Not a good idea.  Never loan money to your employer.  Stupid, stupid, stupid.  eBay is where I liquidated the miles, which worked, but it just wasn’t worth the hassle in the long run.

So, about 2 years ago, I finally paid off my FirstUSA card, which had carried a balance over from money I had loaned to my employer.  Yeah, they failed to pay me and I ended up carrying $8000.00 for them.  Still owe it, but now it’s on my HELOC.  That’s another story for another post.  So here I was, 2 years ago, finally paid off, never to use the card again.  Excellent place to be!  I had forgotten one important fact.  FirstUSA had a $59.00 annual fee.  This wouldn’t have been a problem if I had received the statements.  Apparently they had sent the most recent statement to the P.O. Box that I had setup with Paytrust, and I never knew about it.  Out of sight, out of mind.

90 days passed, and guess what?  I get a letter from American Express, who had issued $10,000 in credit to me that my account had been closed.  AT&T Universal boosted my rate from 8% to 29.99% then promptly dropped the $29,000 limit on the card to the outstanding balance of $5,500.00.  My discover card which had a zero balance went from $6,000 to closed.  Two Wells Fargo business cards that each had a $10,000 limit were dropped to $500.00 and $2,400.00.  This trend continued on all of my credit accounts.  On those which I had a balance, whether I paid it off every month or not, the limits were dropped to the amount of the balance.  Do the math and that equals additional over the limit fees if ANYTHING hits the card.  Do they tell you that this stuff is happening when it happens?  No.  Of course not, they’re slimy bastards and they want every reason to charge you a fortune.

My Home Equity Line of Credit was frozen at the same time.

It was at this point that I began to really question what was going on in my financial life.  Thankfully, I’m on the right track now.  I have only one credit card with a balance, and as soon as it’s paid off, I will be closing it permanently.  I don’t need it, and I don’t want it.  There’s too much risk involved and I can exercise enough patience to pay for things that I want in full, up front from now until I’m dead.

You see, had I simply closed the FirstUSA account, none of these problems, which ended up costing me quite a bit of frustration, time, and penalties, would have ever happened.  Am I worried about my credit score?  No.  I don’t care at all about the lending institution’s measurement of how well I enslave myself to their whims.  Credit is positive, DEBT is negative.  To give weight to a number that’s masquerading as a “score” when it’s actually a penalty is ludicrous.  We don’t need a number to prove we have integrity.

Don’t get caught in the trap of credit card debt.  You will get bitten!