CREDIT SQUEEZE MOVES TO THE CARDHOLDER
Dear John: I’ve been a Capital One cardholder since 2000, spent tens of thousands of dollars on the card and never once missed a payment. My credit rating is around 750.
My rate of interest ’til yesterday was a fixed 8.9 percent. Capital One let me know that as of September my new rate will be 15.9 percent – and variable.
I talked with them and they told me that they are doing this to a lot of customers. Needless to say I canceled the account.
It would seem to me that with the conditions of the housing market and the slowing of the econ omy, should all the banks go this route we will be heading to financial ruin. What do you make of this? M.S.
Dear M.S.: You are experiencing first hand how credit gets tight.
You’ve heard the term “credit crunch.” It’s usually applied to mortgages – like when banks and mortgage companies make their qualifications so tough borrowers who could get money yesterday suddenly can’t.
For years this country had easy credit. Now the pendulum has swung the other way and people like you – who have proven they know how to handle money – suddenly are shut out.
Capital One confirmed to me that many customers are having their interest rates bumped up. I even got a notice in the mail of some additional charges the company was imposing.
The bank says it is making these changes because of economic factors, including rising interest rates.
Capital One said there are other factors but it won’t give the details. “That gets into the secret sauce,” said a spokeswoman, who obviously thinks she’s working for Bush’s Beans or Coca-Cola.
Is the bank trying to boost its profits in a bad environment? Is Capital One troubled by bad mortgages? We won’t know until the company reports its next earnings. But there are two ways to skin this cat – either dump this credit card or pay the balance off each month before interest charges accrue. I’m doing the latter.
Dear John: Do I get a tax benefit by paying my state income taxes in the current year? S.S.
Dear S.S.: Scott Cheslowitz, a certified public accountant, says you should do a tax projection for the current year. You’ll want to known whether you will receive a Federal tax deduction or whether you will be subject to the dreaded Alternative Minimum Tax.
Cheslowitz, a member of the New York Society of Public Accountants Tax Division Oversight Committee, says that depending on what you determine might necessitate your paying state estimated tax in the ensuing year and possibly getting the benefit in that year.
“You may suffer some underpayment penalty at the state level, but that is just interest for the use of money that hopefully you will be investing and getting a return on anyway,” Cheslowitz says.
Send your questions to Dear John, The N.Y. Post, 1211 Ave. of the Americas, N.Y., N.Y., 10036, or john.crudele@nypost.com.