Monday, July 28, 2008

Roxy and the Magic Checks

Have you ever gotten yourself into a financial jam? While Rex and I have never had to think about filing for bankruptcy, I can certainly understand how a few innocent mis-steps can create a downward spiral into a financial nightmare.

I typically use online banking to pay off my credit cards on their due date and never carry a high interest rate balance. However, I have been known to take advantage of low interest "magic checks" that come in the mail from our various credit card lenders. When I pick up the mail, I usually find several different opportunities to borrow up to our credit limit at a rate of less than 4.99% until the balance is paid in full, a very attractive way to free up money for a vacation, medical bills, or other large expenses. If you're a risk-oriented day trader (I'm not), borrowing at 4.99% and investing in the stock market looks like a great way to make a quick profit.

The key, unfortunately, is staying on top of the monthly payments, because if you make a payment on a "magic check" balance just one day late, the interest rate rises immediately to the highest legal rate (usually around 30%!!) and all sorts of finance charges hit your account. I know from experience. My loyal readers may know that, even on a good day, Roxy is not well organized when it comes to keeping up with paperwork. Throw a monkey wrench into the works -- like when Rex had his knee surgery back in April -- and you've got one of those innocent mis-steps I mentioned. I missed the payments on three of my "magic check" accounts by just a few days and found myself in a financial nightmare, needing to pay off all of the balances to avoid paying ridiculous interest rates. Of course, when you need another "magic check" for this type of situation, you return from the mailbox empty-handed....

After all, there are no fairy godmothers to wave a magic wand over your stack of bills. However, there's a web site, BillsIQ, that people like you and I can use to gain a better understanding of our overall financial health and learn about ways to improve your financial score. Go ahead, take the test...

P.S. -- The good news is, I've recovered from April's financial setback and I'm back in the "magic check" business!

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