I don't have an amex.
Credit Discussion Thread (2 Viewers)
- Thread starter Payback
- Start date
louBdub
Full House
Thanks for sharing, I loved reading this.
Credit scores and history can be a blessing or a curse. It will either eat your entire life up, or open up rewards and benefits not realized without.
Reading your journey to wrangle the situation and grow from it made me smile. My wife and I did the same when we started out 18yrs ago, so good on you and keep up the great work!
louBdub
Full House
AMEX will waive the annual fee (it’s like $600 now for my platinum) along with the other cards except Centurion, as a courtesy to military vets, active members & retirees. Not sure if you fall in on those, but if you are definitely look into it.
only 1 of the 3 were frozen. Corrected that thanks to this thread.
My buddy thinks I have a mental disorder because I have an issue with Wells Fargo (2% cashback, my go-to everyday card for anything I can't get better rewards on) only letting me pay my bill online 4 times/month.
I just run a tight ship.
GetUrShineBox
Flush
This used to be true. I've been in the mortgage business for 18 years and for 17 of those a 740 score was just as good as an 820. They have recently changed the pricing adjustments making 780+ the top tier and it goes in tiers of 20 point increments. These "pricing adjustments" can be avoided with larger down payments or as a first time buyer making under a certain income limit but that's besides the point. I'm not sure how the auto industry and credit card industry tier our credit scores though.
best advice in this whole thread. And I don't even have to read any other comments.
well said.
GetUrShineBox
Flush
First and foremost congrats on rebuilding your credit!
I've been in the mortgage business for 18 years and have looked at thousands upon thousands of credit reports. If your goal is to simply have a higher credit score that most likely won't happen until you get the balance on the 0% card down. You ARE doing the right thing by eliminating the high interest rate credit card debts, but just be prepared to see your score drop in the first month simply because you had your credit run, opened up new debt, and maxed out the card. As you make payments your score will gradually increase assuming you keep all other cards at a very low balance (Typically you want to keep balances below 20% of the limits).
The credit card companies should not close your cards out for not using them, but they can really do whatever they want. My advice is DO NOT proactivity close them but at the same time it's not worth it to used 7-8 different cards every month just to keep them active, god forbid you go 30 days late on one $10 payment all these years of hard work go right out the window. If they do close them it will most likely be after years of inactivity and by then your scores will be higher. Someone gave great advice, may have been @CraigT78, definitely pay the 0% card completely off 1-2 months before the promotion end date, you never want to owe all that interest at the back end and you never want to take the credit card companies word for it on when exactly that 18 month period is up.
The credit grading system is very fickle, I've seen people with zero 30 day lates and not much credit card debt still not have 780+ scores but as soon as they pay a card down to say $10 their score jumps up. I have software within my company that can tell me exactly what a client needs to do in order to boost their score to a certain number, it's pretty cool.
Another thing is that when monitoring your credit via credit karma or through a credit card those scores are "consumer scores" and the chances when you apply for a mortgage the credit score I pull will be lower than the one you see. Sucks, but it's the truth.
I've narrowed our credit cards down to United, Jet Blue, & Hyatt. We get lots of free flights/bag check/vip airport lounge passes and lots of free rooms using these cards. The retail cards are junk and the 10%-20% you save on a $150 purchase by signing up will cost you way more in the long run.
Feel free to PM me anytime for any other credit info.
Good job & Good luck!
I’m probably the worst audience for this post… I have not had a credit card in 25 years. I own my home outright, so no mortgage. I don’t travel, so racking up airline or hotel points is literally pointless.
I pay all my utilities and other bills on time, but don’t know if credit scores track those.
I live pretty frugally (poker chips aside!) and always pay cash. I just don’t make a purchase if I can’t do so.
I carry zero debt, besides (say) the brief period between a propane delivery and when I send them a check 1-15 days later.
So does that mean I have a 0 credit score, or a perfect one, or none? I truly have no idea.
If I ever needed to borrow, it would probably have to be against my house/land, I guess.
(The one time someone ran a credit check on me in the past quarter century was when I had to rent an apartment briefly while renovating. I warned them that they were not going to turn up much of anything, but could prove my ability to pay. They said that indeed their check turned up next to no info, but since this was a very local deal and I had people close to the landlord who vouched for me, it wasn’t an issue.)
My dad was an economist, who urged me at a young age not to borrow. He said over the course of a lifetime this would save me a ton in interest. Now that I’m in my 50s and can reliably pay my bills, I could imagine opportunities where borrowing could make sense, if interest rates are very low and the opportunity to use the money profitably we’re high. But I don’t do that.
I pay all my utilities and other bills on time, but don’t know if credit scores track those.
I live pretty frugally (poker chips aside!) and always pay cash. I just don’t make a purchase if I can’t do so.
I carry zero debt, besides (say) the brief period between a propane delivery and when I send them a check 1-15 days later.
So does that mean I have a 0 credit score, or a perfect one, or none? I truly have no idea.
If I ever needed to borrow, it would probably have to be against my house/land, I guess.
(The one time someone ran a credit check on me in the past quarter century was when I had to rent an apartment briefly while renovating. I warned them that they were not going to turn up much of anything, but could prove my ability to pay. They said that indeed their check turned up next to no info, but since this was a very local deal and I had people close to the landlord who vouched for me, it wasn’t an issue.)
My dad was an economist, who urged me at a young age not to borrow. He said over the course of a lifetime this would save me a ton in interest. Now that I’m in my 50s and can reliably pay my bills, I could imagine opportunities where borrowing could make sense, if interest rates are very low and the opportunity to use the money profitably we’re high. But I don’t do that.
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I understand the thinking, and sincerely kudos to your diligence, but using a rewards credit card that you pay off every month is not borrowing, and is literally free money - even if you don't travel, there are cashback cards and they will just send you the accumulated money whenever you are ready. Hell if you buy from Amazon, their card when used properly amounts to a straight 5% discount on everything you order with no effort other than paying the balance once a month. I can't say that you need a good credit score, but it certainly can't hurt to have one just in case.
ngmcs8203
Flush
If you buy a new car you just pay cash? Damn, must be nice!
New cars are a waste of money
ngmcs8203
Flush
Not when they’re cheaper than used!New cars are a waste of money
Well, I can't argue this fact.
I just totally repeated myself, not realizing this was the same thread. How embarrassing. I saw the low post count and thought it was new.
It doesn’t happen very often, and usually involves a trade-in. (I’m
in my 50s, so I ought to be able to swing it by now.)
The car dealers usually look chagrined once they realize it will be a cash deal. I think that’s how they make much of their profit. Which also speaks to my dad’s reasoning.
ngmcs8203
Flush
That’s awesome. I’m not too far from you and for us a $75k+ cash purchase isn’t in the cards. Then again with our luck, neither will owning a home. Gotta love that Cali sun though!
My brother, who has a much higher income than me, used to keep 25-30 cards going at a time, just to accumulate travel and other benefits. He would look for good introductory sweeteners and cancel as soon as those were locked in. He gave it up finally because it was too exhausting.
But I probably told that story before, too.
Thing is about all these perks, of course the card companies are not offering these for fun or out of generosity. They lure people in and most people don’t pay on time, so the interest easily pays for the perks.
A related idea I’ve seen discussed elsewhere is that you should never buy those “extended warranties” on appliances and electronics — if you can afford the risk of them failing and needing non-warrantied replacement.
The theory there is that the warranties are priced to make sure the company comes out way ahead, and are a losing proposition for all but the unlucky few whose product fails… And that assumes people retain the paperwork and spend the time to enforce it.
My day-to-date car is a basic Toyota which cost about half that before the trade-in.
yes that is overkill. i have 2 cards i use (plus amazon which is not physical).
well yeah, but it's easy to not be that guy lol.
MrCatPants
Full House
If you are a min/max type, check out if you can make the top rewards tier at BofA. 2 rewards categories - 3.5% back and 2.87%. I just had to move an old 401k to Merril to qualify. That's my everyday.
Amazon as you mention is a great card, but Amazon and whole foods only.
Then hotel & airline cards if you travel.
Also - make sure you understand 100% how your payments are accrued to the balance.
It’s not uncommon for CC’s to put balance transfers in a separate “bucket” from charges. They will apply your payments differently to charged vs x-fer balance (ie - stack the x-fer balance such that your payment is applied to 0% interest balance first while any “charges” are accruing interest until the x-fer balance is paid)
Consolidating to a single low interest card is a great play. I always recommend however that card not be used for any additional charges. (Zero, none - that single charge may accrue interest until the entire x-fer balance is paid)
This will help you pay that balance off much faster.
I worked for a CC company for ~15 years, 10 of which were in bank card collections ops and strategy. I have literally thousands of stories of CC’s gone bad. Keep that card separate and don’t use it. Pay it off as fast as you can.
i have BoA but only for regular monthly checking. i have nothing else i could/would want to keep there to get me to the minimum balance.
i guess i lied here - i do have a 3rd card (chase) with rotating 5% cashback categories that i almost never use because rotating categories sucks, and usually when they are good they overlap with my other cards anyway. once in while when they don't (if i already hit my max on 6% groceries or when it is 5% for gas vs. my normal 3%), i will use it for those 3 months.
and i just noticed i actually do have a physical amazon card, though i have never once considered swiping it.
ngmcs8203
Flush
My credit score hovers around 790-810. Whenever we open a new line of credit (new car, credit card, whatever) it drops about 20-30 points. The problem is we never do a good job of making sure we are hitting the bonuses on a new credit card. We charge and pay off about 20-25k a year on credit and rarely carry a balance. I think we need to use an app to track our card bonus point accumulation. I have a caeser's card that I never spend enough on to get the bonuses, however I feel like if we properly timed purchases we could hypothetically have a few more rewards based cards. Has anyone here ever used AwardWallet?
louBdub
Full House
My Apple Card earns apple cash, and that is a fun benefit for eBay singles. I love using apple cash for online stuff on my phone, it accumulates and is always there to use, instant points if you will but in online snap buys. (Looking at you Sundance $100)
Amazon is another huge one for sure. Free money with that too!
We own our cars and paid cash so that doesn’t benefit my fico…. Naturally.
The absolute best way to run the fico up to 800+ is low REVOLVING credit utilization, and getting credit limit increases on the cards you have. There is an entire hobby dedicated to this called credit farming and they have forums as well. Think elite level credit gurus helping build amazing credit, just like PCF and other forums. I learned a ton on those forums long ago and it helped me tremendously in understanding what’s what and how to navigate a much better financial footing.
I can honestly say that myfico forum and the F.I.R.E. Movement mentality, both changed my life.
Amazon is another huge one for sure. Free money with that too!
We own our cars and paid cash so that doesn’t benefit my fico…. Naturally.
The absolute best way to run the fico up to 800+ is low REVOLVING credit utilization, and getting credit limit increases on the cards you have. There is an entire hobby dedicated to this called credit farming and they have forums as well. Think elite level credit gurus helping build amazing credit, just like PCF and other forums. I learned a ton on those forums long ago and it helped me tremendously in understanding what’s what and how to navigate a much better financial footing.
I can honestly say that myfico forum and the F.I.R.E. Movement mentality, both changed my life.
That's not the entire picture. The second largest source of revenue for credit card companies is the transaction processing fees, and they structure their merchant contracts such that merchants cannot price discriminate or set minimum purchase amounts based on payment method. (Those "minimum $5 purchase on credit cards" signs you see in small convenience stores are likely in violation of their agreements.)
Since merchants cannot discriminate at checkout, these costs are moved into the price of goods. Cash and debit users pay the full $price, while credit card users pay $price(1 - $cashback). Those who do not take advantage of credit card rewards programs are quite literally subsidizing those who do, simply by participating in the retail economy, and without necessarily being customers of the card companies!
It was a smart play by card companies to shift the costs away from their customers. It reminds me of rake in that most people don't know that they are paying it.
MrCatPants
Full House
Yup. Rewards are effectively rakeback that goes to you vs. the merchant.
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