Dave Ramsey was Right? Credit Cards Bite…

How a $10 domain cost me thousands in house payments

If you listened to Dave Ramsey at least once, you know his stance on credit cards. Pay the balance in full every months? To make sure you earn your miles but don’t pay the interest? No! Dave Ramsey is quite blatant, if you play with it (the credit card), it’ll bite!

Well, I just got bitten. I did manage to play with my credit cards for years. I got some miles piled up, claimed a few awards. All was cool…

Yesterday, I decided to take advantage of  the record low interest rates and refinance the mortgage on my Marysville, WA home. I called my mortgage guy. He was excited, “What’s your income? Great! What’s your house worth? Super! How’s your credit? Upper 700 hundreds? Awesome! You know what, I can refinance you without an appraisal, no employment verification (yeah, this conversation did take place yesterday!). Let me run your credit check but I can tell you now that you should qualify for 4.75% on 30 years fixed with $1,500 in closing costs! That will save you $250 a month! Man, you’re so easy to qualify! I wish I had clients like you everyday!”

I was about to pat myself on the back but realized that he woudn’t see it anyway. In the meantime my mortgage guy continued chatting, “Ok, I’m pulling your credit report… Hmm… mmm…”  At that moment something did click in my memory.

I had this Chase card I hadn’t been using for a while. However, a while back I purchased a domain on it. I also did the right thing and signed up for paperless billing. Yes, you are guessing what happened! In April the domain renewal was charged to the card ($9.95 by Netfirms). The statement from Chase ended up somewhere in the Trash folder of my Gmail. And I missed the payment! For the first time in my life!!! (I think)

Yes, I paid the balance the following month (around $40 with interest charges and late fees) after Chase mailed me a letter informing that I missed a payment. However, it dragged my and my wife’s (she was an authorized user) credit scores dramatically. From upper 700 hundreds (as when we bought the house 2 years ago) to below 680!

All of a sudden my mortgage guy could offer me only 5.25% with $500 more in closing cost… My savings dropped more than a half! Quite a bite from a $10 domain, courtesy of Chase!

Well, I admit. Ultimately, it’s my fault. And the lesson for home buyers is watch your credit card statements! Or maybe Dave Ramsey was right? (See the picture above).