Dear WhatsMyScore blog readers,

I’m not going to lie to you—Valentine’s Day is not my favorite holiday. I am just not into fighting to get dinner reservations, and flowers and chocolates are overrated. But I’m also a romantic, and love an excuse to spoil my bf (and my bff). If you’re a romantic and want to give your boyfriend, girlfriend, wife, husband or best friend something sweet this year, I have one tip for you: be thoughtful. Pricey jewelry is nice, but cool dates and small gifts are where it’s at. Here are a few totally affordable options:

• Get cooking. What’s more thoughtful and sweet than cooking your sweetie’s favorite dish, or something new and fancy? Think candles, tablecloth, dessert—the works.
• Bake it up. Lemon cake is on my list this year. Since my guy is far away, I’m going to bake it, wrap it up in red tissue paper and mail it over. Come on, a care package? So sweet.
• More music. You guys have seen High Fidelity, right? Because Rob was onto something. Introducing your loved one to new tunes or making a mixed CD with awesome love songs is about as romantic as it gets (yeah, this is going in the box with the lemon cake).
• Plan a fun date. Think a walk in the botanical gardens in the next town over, a community composting class, karaoke or open mike night, a trapeze class—whatever is different, affordable and up your alley.
• Get writing. One of the most romantic gifts I have ever gotten for Valentine’s Day was a card filled with a huge list all of the ridiculous, sweet and original things my guy liked about me. Aw.
• Small but meaningful. Plant a flowering bush. Buy that scarf she was eyeing at the mall a few weekends ago. Take him to the cheesy blockbuster you said you didn’t want to be caught dead in. Tune up her bike. All super affordable and really nice.

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There have been a lot of news headlines over the recently released card by Suze Orman, personal finance expert. Many consumers believe using debit cards keeps them out of debt and avoids high interest rates. However, if you are intent on repairing your credit and boosting your credit score, using a credit card is a wiser move to make but you must do it responsibly.

Fraud is one reason consumers should consider when avoiding credit cards, especially when making online purchases. Debit cards do not protect you like credit cards can. If someone accesses your bank card information, they literally can access all of the cash you have in your account. Since many consumers do not notice until it is too late, this can be detrimental to your overall finances.

Another concern of personal finance experts is the lack of credit rebuilding power associated with a debit card. When you make purchases on a debit card linked to your bank, you are doing nothing to increase your own credit score. This can be dangerous, especially now when many industries are relying on your credit score to make decisions. Credit scores are becoming increasingly important and it is vital to consumers that their credit score stay in the 730 range to get the best interest rates and other option within financial services.

Personal finance experts also caution consumers on the limitation of debit cards. For instance, having only debit cards can make it difficult to make reservations for hotels and rental vehicles. Most companies in these industries require a consumer to have a major credit card to make the reservation.

While credit cards have been a big problem for consumer’s personal finances, there is a renewed encouragement to learn how to utilize credit cards for your benefit rather than avoid them in the interest of debt. Consumers have to learn how to pay their credit card balances in full each month and avoid impulsive spending on the card just because they have certain credit limits.

A credit card is a vital component of a healthy financial life. It makes sense to use credit cards for its credit benefits and other perks on a limited basis so you can be sure you can afford a full and timely payoff.

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A quick loan from commercial companies is designed as only a short term solution. It should never be used long term considering it can encourage you to keep borrowing more and falling further into debt. How can a cash advance for my financial obligations put me into debt when it’s created to keep me from falling in debt? While this is true, the more money that you borrow, the more money that you have to pay back. With a quick loan of $500, you may have to pay $100-$150.

You can actually put on another bill this extra money. Most people resort to obtaining a quick loan for financial burdens when they do not make enough money to cover them. So, if you continue to borrow money that you have to pay high interest rates for, how is that you can afford to pay that back? This is how you fall into debt. The terms and conditions of a quick loan can vary from lender to lender, meaning that you might not always get the best repayment options.

Besides, the fact that you can get a quick loan to fulfill your desires with very little effort is enough to encourage you to keep borrowing more. It is just like when you do something that benefits you, but you know it is wrong. If you think that it is easy for you to get away with it, you will continue to do it until you do not. Do not fall victim to this common made mistake. If you really do not need a quick loan for financial thorns, then it is best to leave it where it is.

If you want to do something nice for yourself, try not to borrow any more than $100. Why? $100 will be easier to pay back considering you will probably only be charged $15-$20.

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Its a great question. The Target REDcard 5% discount on virtually all purchases is more generous than other loyalty reward programs, general purpose credit card reward programs, and is certainly better than other debit card reward programs, many of which are no longer around since the Durbin amendment limited debit card swipe fees. On top of that, Target will donate 1% of the amount you purchase on one of these cards to a local school you designate. Target wouldnt continue to offer those rebates if the program wasnt lucrative for them.

Johns thinkingthat customer loyalty and information must be worth something to themis logical. So what kind of information are they collecting from cardholders, and what do they do with it?

To summarize, Target says it may share personal information gathered in the course of using your Target REDcard (credit or debit card):

• For our everyday business purposessuch as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus
• For our marketing purposesto offer our products and services to you
• For joint marketing with other financial companies
• For our affiliates everyday business purposesinformation about your transactions and experiences (Target defines its affiliates as companies related by common ownership or control, including Target National Bank, Target Bank, Target Stores and websites and Target Commercial Interiors)
• For nonaffiliates to market to you

Targets privacy policy says it does not share information For our affiliates everyday business purposesinformation about your creditworthiness. In other words, while Target may share credit information with the credit reporting agencies, it doesnt share it directly with affiliates. And although its not stated in the privacy policy, credit card activity is reported to the credit reporting agencies, but debit card activity typically is not.

Unfortunately, you cant opt out of having your information shared for any of the above purposes, with one exception. You can instruct Target that you dont want them to share your information with nonaffiliates in order to market to you. Everything else is fair game.

Whats It Worth To You?

But is it really so bad for Target to collect and use your information for marketing, either internally or with other companies? A recent New York Times article, How Companies Learn Your Secrets, by Charles Duhigg, suggests Target places a lot of value on your personal information. He writes:

Duhigg reports that Target will collect information from credit card purchases, coupons, surveysand presumably your REDcardand supplement that with demographic data it may gather from other sources, all in an effort to understand what you buy and to find ways to encourage you to buy more at Target.

To be fair, this may not be that different from what other retailers do through loyalty programs and the like. But the article seemed to imply that Target is very, very good at mining and then using data. The article gave an example of a father who found out about his teen daughters pregnancy after noticing that Target was sending her coupons for maternity and infant products and then confronting her with that information.

Target declined to elaborate on its privacy policy or share any additional information about what type of information is gathered through the use of a REDcard, or how that information is used, for this story.

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Now that the spending holidays have passed, there is a lot of consumer concern about eliminating the debts incurred on credit cards and starting credit repair initiatives. For consumers that overspent on credit and now face the inability of being able to repay their debts, it is important to explore debt relief options before choosing one, especially for those considering a zero-percent balance credit card.

Balance transfer credit cards give consumers the option to transfer existing credit card balances from other cards with the theory that it is easier to pay down one debt, especially at a zero-percent interest rate. However, there are some precautions to take with a zero-percent balance transfer card.

Consumers are being advised to look at every detail of the credit card offer before signing on to transfer balances. What you don’t know about credit card balance transfers could cost you more in the long run. It is advisable to first look at the length of time the 0% rate is being offered and be assured you can repay the balance within that time frame. Many consumers fail to realize the zero-interest offer is only for a promotional period. Once that time frame ends, the interest rate could be much higher than you can reasonably afford.

The other important aspect of balance transfer credit cards consumers need to understand concerns the fees for card use. Transferring of balances from other credit cards is not without fees. If a consumer’s credit limit is not enough to accommodate the balance amounts and the fees, consumers may be setting themselves up for failure. Over the limit fees and other penalties can add up quickly, destroying your debt elimination plans and ultimately ruining your credit score.

Personal finance experts note that balance transfer cards can be one option for assisting you in a debt relief strategy and help you to repair bad credit. However, unless the card is relevant to your financial life and you have the ability to use the card responsibly, tacking on another credit card to your credit profile may not be the best personal finance decision to make.

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Credit Cards. At times, it seems like we can’t live with them and we can’t live without them. It is a classic case of a love-hate relationship. We need the credit cards to help build our all-important credit history and subsidize our expenses when we just don’t have the cash. But people deeply resent the high interest rates and the traps lurking in the fine print.

On that note, let’s start with the negatives. By setting aside our emotions, we can identify and possibly avoid those disadvantages that cause us to hate our credit cards.

1. “YOU WANT ME TO PAY HOW MUCH IN INTEREST?!?!”

I have friends who’ve received credit card offers in the mail that have a starting interest rate of 35%. Even Shylock, the ruthless moneylender from Shakespeare’s Merchant of Venice, would think that was excessive. Never forget that credit card companies are a business not a charity. They exist to make money and their business model is based entirely upon the interest rates they charge. It has been reported that some internal communications from credit card companies sarcastically call customers who pay off their principal in short order as “deadbeats.” The longer the customer takes to pay off their credit card debt, the more interest they pay, the more money the company makes.

2. “DID YOU NOT READ THE FINE PRINT?”

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Ever notice that the bank’s credit card offers are in BIG BOLD letters. “GO ON VACATION,” “WRITE YOURSELF A CHECK,” “BUY A NEW WARDROBE,” and the like. You are so focused on the headlines that you don’t read the rest of the story. You may have to use an electron microscope to read it but at the bottom of the page are terms, conditions, restrictions and fees written in legal jargon that is all but incomprehensible to most people. Consumer advocate Elizabeth Warren colorfully refers to it as “word barf” and if you sign such an agreement, you may be giving the company license to raise your rate, charge you fees, sue you and perhaps take your first-born child.

3. “THIS ISN’T WHAT I PAID FOR”

You know those pre-approved credit offers you receive in the mail nearly everyday? Well, per reason # 2, the fine print often shows they are pre-approved in name only. The banks and credit card companies employ armies of lawyers and lobbyists to create loopholes that enable them to not give you the card you think you’re signing up for. The offer may say, “0% for six months, then 9.9% fixed, with no annual fee, and $5,000 credit limit.” Then you get the card and it’s “6.9% for 3 months, 29.99% variable, $50 annual fee and $400 credit limit.” Reading what you are signing and consulting reference materials to understand what you are agreeing to is the key to being “debt smart.”

4. “WHAT HAPPENED TO MY GREAT RATE?”

Credit cards and banks reserve the right to raise your rates for many reasons. One of my readers at DebtSmart.com told me that her bank raised her rate to 23% because she was late paying her bill. They are just waiting for any misstep and then, BAM, your best rate becomes your worst. After all, you agreed to it when you signed the contract with all that fine print.

5. “I CAN JUST DECLARE BANKRUPTCY AND SORT IT ALL OUT”

Here’s another good one. The banks have successfully lobbied Washington to change bankruptcy laws to make it more difficult to dissolve debts in bankruptcy. They want the consumer to be more responsible for repaying their debt! The banks want to have their cake and eat it, too. Who gave the consumer making $10,000 per year a $50,000 credit line? This is why the lobbyists pounce on even the most modest credit reform proposals.

5. “LIES AND DECEIT!”

You think you’ve done due diligence by reading the fine print and doing the math at your kitchen table. But months later, you get whacked with a penalty that you knew nothing about. You call the customer service line and the person at the call center pulls up your account and spits back jargon to imply that you’re an idiot with no common sense. Their company sends you credit offers that say, “you can use all your available credit” and when you do they charge you a penalty. Late fees, over limit fees, annual fees, service fees—they are always coming up with new ways to separate you from your money. And the fees always to seem to increase, never decrease.  A $35 flat late fee. It does not cost the bank $35 when you are late. You may not have been late at all. The bank may have just credited your account late and charged you anyway. Banks make 47% of their revenue from fees! Don’t ever let a fee go. Call the bank and make them waive that fee, and if they don’t, punish them by taking your business elsewhere.

6. “YOU CAN’T STOP ME FROM GETTING A JOB OR HOME”

Yes, they can. If you have a problem with your credit card bank, they automatically report it on your credit history. Everyone looks at your credit history. Landlords review it to determine if they will rent to you, insurance companies look at it to decide what policy you will get and, in some cases, prospective employers use it to determine whether you will get the job you want.

What happens when the creditors make a clerical mistake that adversely impacts your credit report? A mistake that makes you appear terrible to potential employers and landlords? Not their problem. It’s your responsibility to find and correct their error.

7. “LET ME SPEAK TO YOUR SUPERVISOR”

People are busy going to work, shuttling their kids to and from school and doing household chores. We don’t always have time check in on our account or call the company if we have a question or concern. When we do, it takes forever to speak to a human. You have to navigate through a menu and key in your account information. Numbers, letters, symbols—all so that you can talk to one of their drones who start by asking you for all that information again. I typically get around this by hitting “0″ then the “#” keys. I get a reply, “We cannot recognize your account number so please be tortured again by reentering it now.” I keep hitting the “0″ and “#” keys until the automated recording system gives up and says, “Please hold while we transfer you to one of our new hires who probably cannot help you anyway.” It almost seems like they would rather not talk to me. But I thought my call and business was important to them.

CONCLUSION

Credit card companies and banks are sharks. They care about one thing and one thing only—and that is attracting paying customers. The only way to fight back is to use the naturally existing competition amongst the banks to your advantage. They need our business so we need to reward the banks that are good to us and punish the ones that take advantage of us. Banks are a business like any other. Their job is to service you and me. If we don’t like the way they treat us, then it’s time to do business with another bank. This is not Coca-Cola. Don’t ever be “brand loyal” unless that bank has been “customer loyal”—meaning that they’ve always given you their best rates and service.

Image: RogueSun Media, via Flickr.com

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