Credit Card Myths


A really good article on credit card myths from kuro5hin.
I’m publishing the complete text here.

“Credit Cards Are Expensive”

This should not be the case at all — credit cards can in fact be entirely free. I
certainly don’t pay anything at all to my credit card company beyond what I actually
charge on the card (plus the cost of a stamp to mail payment for the bill), and there’s
no reason you should either.

There are of course some expenses one could incur through unwise use of credit
cards, but these are fairly easily avoided:

  • Yearly Fees: These can range from $50/year to over $400/year (for some fancy
    American Express Platinum cards). These may be worth it for some of the high-end cards
    like American Express that come with many ancillary services, but if all you want
    is a credit card, don’t pay any yearly fees. Keep reading those offers as they come
    in, and you’re bound to find plenty of cards that have no yearly fee. Many Visa and
    MasterCard issuers charge no yearly fee, and American Express’s “Blue” card does not
  • Interest: This is the biggest problem with people’s use of credit cards, but
    is again easily avoided. Simply treat your credit card as if it were a bill that must
    be paid, and ignore the “credit” part of the name. When you buy things on it, pretend
    it was a debit card or cash, and only spend money you actually have. Then pay the
    bill in full when it comes, and you’ll pay no interest at all.A word of warning, however: that there are some unscrupulous credit card companies
    with whom this is not possible. Before signing up for a card, carefully read the terms
    to make sure there is a “grace period” (generally 14-21 days). If there is, you can
    pay the bill within this period and incur no interest at all. A few cards lack grace
    periods; with these you pay interest starting from the date of purchase (not the date
    the bill is sent), regardless of whether you pay the bill on time or not. Avoid these

The summary to using a credit card for free: Get a card with no annual fee and at
least a 14-day grace period. Then pay your bills on time, and you’ll never pay anything
more than your bill.

“Credit Cards are Insecure”

This is simply untrue. In the United States at least, there are strong protections
in place for cardholders.

  • Theft: Under US law, the cardholder is responsible for no more than $50 of
    charges made to a stolen card, even if the theft isn’t reported right away and thousands
    of dollars have been charged in the meantime. Timely reporting can even avoid this
    $50, as the holder is not responsible for any charges at all made after the card is
    reported stolen (it’s considered the responsibility of the credit card company to
    deactivate the account as soon as it’s reported stolen). Some credit card companies,
    especially “Platinum” level cards, also waive the $50 and take full responsibility
    for any charges to a stolen card. Furthermore, the $50 only applies if you physically
    lose your card — if someone steals your number but not the physical card, you’re
    not responsible for any charges. But in any case, by law $50 is the absolute maximum
    you can possibly lose from a stolen card.
  • Fraud: The credit card dispute-resolution procedures are heavily tilted in
    favor of the cardholder. Simply registering a dispute automatically puts the charge
    on hold, and you don’t have to pay it until the dispute is resolved. The burden of
    proof in resolution is primarily on the charger, not the cardholder — they must produce
    evidence that the charge was authorized by the cardholder, and that the services paid
    for were rendered. This is a notorious complaint of anti-spam ISPs (they almost never
    succeed in collecting on their “we’ll charge your card $500 in spam clean-up fees
    if you spam from our account”), but it works well for cardholders. You’re doubly protected
    online, because the credit card companies require a higher standard of evidence from
    the charging party in cases where they don’t actually have the cardholder’s signature
    on the transaction. If you are in deep trouble and can’t seem to find the solution , perhaps this list of credit repair companies will help you.

But Why Not Just Use Debit?

There’s quite a few reasons I consider a credit card, when properly used, to be preferable
to a debit card.

  • Fraud and Disputes: With a credit card, disputing a charge automatically puts
    it on hold, and you don’t pay pending resolution of the dispute. With a debit card,
    your money has already been debited, and you generally don’t get it back until the
    dispute has been resolved in your favor. If the disputed amount is large, being out
    the money for the weeks it takes to resolve a dispute may be undesirable.
  • Security: If you lose an ATM or Debit card and report it within 2 days, you’re
    covered under the same $50 limit as with credit cards. However, if you don’t notice
    for 3 days, the limit becomes $500. There is the added security of a PIN number to
    balance this, but in the US at least, this can easily be circumvented with most cards
    by simply using the debit card through the credit card charging system (e.g. by making
    online orders, which generally don’t ask for PIN numbers). With a credit card, you
    can never be out more than $50. With a debit card, you could well be out $500 if you
    don’t notice for three days, and someone has gone nuts on in the meantime.
    And, as with the disputes, there’s also the issue of who fronts the money in the interim.
    When you report a credit card stolen, all the charges are put on hold. When you report
    a debit card stolen, you don’t get your money back right away, until the “stolen card”
    procedures and paperwork are completed. So even if your liability ends up being only
    $50 (or $500), you could be out the entire balance of your bank account in the interim.
  • Financial benefits:
    • Delayed payments: Credit cards on average let you keep your money for around two weeks
      before you actually have to pay for your purchase on the next monthly bill. If you
      make a lot of purchases, and keep your money in interest-bearing accounts until payment,
      this can make you, over time, quite a bit of extra interest (though moreso during
      periods when interest rates are a bit higher than they are now).
    • Cashback: Many credit card companies have programs whereby they give you back some
      percentage (usually 1 to 1.5%) of the cost of your purchases to encourage you to use
      the card more. If you make a lot of purchases, this can add up nicely.
    • Platinum benefits: If you have a platinum card (they’re quite easy to get for free
      if you have good credit), they come with a number of added benefits, such as supplemental
      warranties for items purchased on the card, rental insurance for car rentals paid
      for with the card, and so on.
  • Building a Credit Rating: Using a credit card responsibly for some time builds
    a credit rating, while using a debit card (or paying cash) doesn’t. This is useful
    if you plan at some point to take out loans of any sort (whether to buy a car, mortgage
    a house, or start a business).

In short, a credit card does not have to be expensive, or put you in debt, or any
of the other normally negative connotations associated with it. When used properly,
essentially as a delayed debit card, it is entirely free, can have some side benefits,
and gives me a greater feeling of safety — the process of “charge things on the card,
then review the bill, then pay it if nothing is amiss” strikes me as safer than the
process of “charge things on the card, then review the list of debits, then try to
get my money back if something is amiss.”


Credit Card Myths

Creating a Virtual Directory

I always wondered what the differences were between creating virtual directory using
the IIS and through Windows Explorer (Web Sharing).

I found out today after spending over an hour trying to figure out why I was getting
this error when calling my web service from a windows client: WebException: The
request failed with HTTP status 401: Unauthorized

The reason is that when you create a Virtual Directory through IIS the default permission
for the directory is Anonymous but when using Windows Explorer the default permission
is set to Integrated Window Authentication.

Creating a Virtual Directory

70-316 Developing and Implementing Windows-based Applications with Visual C# – Passed

Two down three more to go!

This exam was easier than the Web exam and I was able to finish the exam in about
an hour. The main reason for this would be that the topics were very similar, I guess
I should have studied for the Windows exam first since the security and globalisation
concepts are covered very well in the MOC course.

Next up is the 70-320 Web Services and Server Components exam.

70-316 Developing and Implementing Windows-based Applications with Visual C# – Passed

70-315 Developing and Implementing Web Applications with Visual C# – Passed

One down four more to go! The real exam was much tougher than the Transcender practise

The questions were evenly distributed and some of the areas that I got caught was
in the Security (What the heck was that PrincipalPermission class?). The Data
access questions were not too bad and pretty much everything was covered in the ADO.NET

Next exam: Windows Applications.

70-315 Developing and Implementing Web Applications with Visual C# – Passed

70-315 Exam Preparation

Thought of outlining how I’m preparing for the (70-315)
Web Applications

Step 1: I started out by reading the three recommended MOC courses (ASP.NET, ADO.NET, Upgrading
). One advantage that I have being an MCT is that I can download the
Trainer kits for all the MOC courses.

Step 2: I tried one of the Transcender exams and scored 820/1000 which was a
fail (850 was the pass mark) but hey I’m happy. Usually the Transcender exams that
I have taken are very much harder than the final exam but this Transcender was
much easier. Which means that either this particular Transcender exam was not tough
enough or I have really studied well 😉

Step 3: Right now I’m going through the study
over at Cramsession, this
is sort of a revision of all the areas that I have covered, once I have done this
I will try to skim through Tim’s
links and spend some time reading areas that I am not sure of. After that
it will be a good dose of Transcender exams before I take the final exam in two days
time. If you need help studying for your exam then consider getting a tutor.

70-315 Exam Preparation

Path to MCSD.NET

I suddenly realised that September is creeping up next month and I have not been able
to do a single Microsoft certification on the .NET exams.

So I’ve now taken on a sort of Mission Impossible trying to do the five exams to get
my MCSD.NET before 31-Sep. I will be starting with the Web Development exam
next Tuesday and do two more this month and then try the other two next month. All
current MCSD get a free voucher for the Analysing Requirements exam until 31.

This is going to be my certification track.

Exam 70-315: Developing
and Implementing Web Applications with Microsoft Visual C#”! .NET and Microsoft Visual
Studio .NET
Exam 70-316: Developing and Implementing
Windows-based Applications with Microsoft Visual C# .NET and Microsoft Visual Studio
Exam 70-320: Developing XML Web Services
and Server Components with Microsoft Visual C# and the Microsoft .NET Framework

Exam 70-300: Analyzing Requirements and
Defining Microsoft .NET Solution Architectures

Exam 70-229: Designing and Implementing
Databases with Microsoft SQL Server 2000 Enterprise Edition

Path to MCSD.NET