A few questions about credit cards
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Anonymous
Ugh... not true. They are profitable - quite profitable in fact (and no, they arent called deadbeats either). If that wasn't the case, companies like American Express would be in deep shit financially, since basically, thats the #1 customer they attract. Take a look at AMEX Plum for instance, they actually pay you to pay them early. There's no secret fine print here - if you mail in your payment before the due date, you get money back, whether that payment is in full or not. While its true these people generally don't incur finance charges, its also true they are low-risk. Thus, the default rate on this population is usually much much lower, meaning, you have less losses to cover. |
Anonymous
Oh PBS said so? Well, jeez, I cant imagine why PBS might sensationalize something for you know, the sake of a pithy statement. They are called transactors. Those who occasionally revolve are called Transvolvers. Those you regularly revolve are called Revolvers. I've been in the industry 30 years and I cant think of a single time I've heard anyone refer to them as deadbeats. To the contrary, as I've said, they are a highly sought after profitable customer segment. |
Anonymous
Yes, this poster is definitely wrong. CC companies make a ton of money from vendor transaction fees. On the swipe fee, for every time your card is swiped, the CC company will make between 3-6% of the transaction fee (with a minimum fee per transaction for smaller transactions) paid by the vendor. So, they are quite happy to have users who use the credit card for many transactions and pay it off every month. That is their core revenue. Having users who use the credit card frequently and carry a balance is just icing on the cake for them as that is additional profit. This is why AmEx, which is a charge card, not a credit card (users are not expected to carry a balance from month-to-month) and the many credit cards that offer cash back perks are still profitable. They make a ton of money from many, many small transactions. This is why many small businesses put a dollar minimum on using credit cards, because they still have to pay the minimum swipe fee and it isn't cost effective for small transactions. And regularly using the credit card and paying it off is an excellent way to improve your credit rating. Just holding a credit card and not using it does not actually make that much difference on your credit rating. Using and paying off the credit does help. So I recommend that you use your credit card(s) for a small number of purchases monthly for things you would already spend on, say gas in the car, or groceries. And then pay it off every month. That will actually help your rating. As someone else pointed out, it is not good to have high credit limits. The amount of credit that you have will be counted against you when borrowing. The reason is that a lender will want to know that they have the best chance of being paid from your monthly pay. If you have a credit limit of $1600 (like now), the chances that a lender for say a car loan would be able to get paid every month is greater than if you added a $5000 credit limit card and there was the potential for you to have up to $6600 worth of credit card debt to compete against their loan for payment every month. So, when you have a higher credit limit, you actually make getting additional credit from a separate lender harder. So, with a high credit limit, you may get worse interest rates from new loans (mortgages, car loans, HEL/HELOCs, etc) or may have to pay more in points to purchase. When getting credit, the best way is to get credit commensurate with your level of need and spending. If you don't need a lot of credit, don't accept a lot of credit. I've turned down several offers in the last several years to raise my credit level from existing credit cards to avoid this problem. We have enough credit for any emergencies and travel and don't need/want more. |
Anonymous
| If you travel internationally at all, get a Capital One card b/c there is no foreign transaction fee. Other than that, i can't think of why you need a new card. |
Anonymous
| 800+ credit scores for my DH and I, we have never run balances, pay our cc's in full every month (and always have), and have, literally, over 100K in credit on credit cards available to us. Paying your bills on time and length of credit history is plenty good enough to get you to a top credit score. |
Anonymous
+1 One thing to keep in mind, even if you DO pay your card off every month, make sure to keep your charges under 20% of your limit (that is me being conservative). The more you use, the lower your score drops (even if you pay it off). 20-30% is fine- no dings. So if your limit is $1,000 never charge more than $200. Personally, we have two credits cards (Discover and a Visa) that offer cashback/rewards with no monthly fee. We put EVERYTHING on the cards and pay it all off every month. We usually end up with a couple hundred in cashback at the end of the year- Works out nicely if you are disciplined. |
Anonymous
| OP, make sure you are not paying any fees for those cards. There's no credit card on the planet that is worth an annual fee at your income. |
Anonymous
Great job OP  not many people your age can achieve that. Paying off your cards is great, and paying your balance monthly is not a bad thing. I wouldn't cancel the cards. Congrats to you.
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Anonymous
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Congratulations, your young have a college degree (again congrats on that i know it's not easy!) a job w/decent pay (benefits?) and are finanical savvy enough to have paid down/off your credit cards.....all that said, I think you should do the following...
1) find out what your FICO score is froll all 3 credit rating agencies, then devise a strategy to get your FICO score up...some ideas from previous posters could help. 2) figure out how to pay your student loans (if you have any?) and consoliate a.s.a.p. 3) call your credit card carriers and ask them to lower your interest rate...depending on your FICO score you can request them to ower it significatnly ...if not, telll them you're closing your account. 4) regardless of what your present CC carriers do (or don't) you might wnat to keep on sopen---but do NOT use it if it has a high IR, you want to time you opened it up to work to your advantage, but do NOT use it! 5) research and apply for a low IR ccredit card carrier...they're out there, but youhave to do a little legwork 6) save, and maximize your work savings plan program as much as possible. contine to be smar on how you sue your case, credit, debit and consider sugin checks...they're still honored and with the recrnt increase in fees on CC'and are usually a cheaper option. Goo luck! |