This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Don't Let Hurricane Sandy Wreak Havoc With Your Credit Cards





As Hurricane Sandy approached the east coast, a number of newspapers in the region invited readers to post pictures of their personal experiences. Many were heartbreaking: trees across cars, branches that had crashed through roofs into bedrooms, and appalling flood damage. Luckily, most of what we saw was probably covered by insurance, although some policyholders may be disappointed when they come to make claims.

In particular, according to The Washington Post of Oct. 29, many householders may be in for a shock when they try to claim for flood damage. That's because few standard homeowner policies cover those risks. If you haven't paid extra for flood coverage, you could be looking at paying to repair the damage and replace ruined possessions yourself. And that could be expensive: The Post reports that claims for flood damage between 2007 and 2011 averaged $30,000.

Credit cards are one way forward

Some people have set aside money for emergencies in -- in this case aptly named -- rainy day funds. But few are likely to contain $30,000, so it's almost inevitable that many on the east coast are going to be borrowing to bridge some wide gaps.

If you're lucky, you may be covered by federal disaster assistance, but be warned: that only applies if the President declares an emergency for your area, and even then the money you receive is a loan that has to be repaid -- with interest. FEMA gives an example: "For a $50,000 loan at 4 percent interest, your monthly payment would be around $240 a month ($2,880 a year) for 30 years."

That's a pretty good rate, and you might struggle to beat the deal even with a mortgage refinancing once you've taken closing costs into account. Other low-rate options, perhaps for smaller amounts, might include:

  1. A home equity line of credit or personal loan from your bank.
  2. Borrowing from relatives and friends who have the means to help.
  3. Applying to a peer-to-peer lender such as Prosper or Lending Club.
  4. Using your credit cards.

Using your credit cards smartly

Obviously, your primary objective is to pay as little interest as possible, which may make plastic your least desirable option. IndexCreditCards.com reckons that, on the day Hurricane Sandy hit the continental United States, consumer credit card rates averaged 15.15 percent for non-rewards cards, and 17.64 percent for rewards credit cards.

However, you may have no alternative other than to use plastic to purchase some replacement possessions and to fund some repairs. If that's the case, don't be dazzled by rewards. Almost always, whatever you earn in cash back, points or miles is going to be eaten up quickly by higher interest rates.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,042.90 -28.32 -0.17%
S&P 500 1,972.29 -5.51 -0.28%
NASDAQ 4,493.39 -12.4620 -0.28%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs