Showing posts with label Closing Credit Cards. Show all posts
Showing posts with label Closing Credit Cards. Show all posts

Tuesday, August 25, 2015

Practice Safe Spending: How To Use Your Debit Card Safely

By 

For hackers and thieves, your debit card is an easy target. Protect your hard-earned money by learning how to use a debit card safely.


Every time I pull my debit card out, I take a risk. Just a week ago, I left it at a Chicago coffee shop; when I returned an hour later, the barista handed it to me. I had no idea I’d even left it there. That barista got a nice tip — she was an honest person. But what if she wasn’t?

Until U.S. card issuers adopt data-encrypted microchips — which have been used in Europe and other parts of the world for years — our debit cards are in peril. No matter America’s status as the birthplace of the iPhone and the cradle of high-tech: When it comes to our debit cards, we’re still in the Stone Age. It’s that simple.


So how can you protect your debit cards — and yourself? Here are seven tips that explain how to use a debit card safely:


1. Move from debit cards to credit cards. 

2. The instant you discover your debit card is missing, cancel it.

3. Use cash.

4. Watch for skimming devices.

5. Keep an eye on your balances. 

6. Subscribe to "alerts" from your bank or credit union.

7. Migrate your debit information to a mobile payment service


Read all of each category details HERE:http://www.moneyunder30.com/how-to-use-a-debit-card-safely






Friday, August 21, 2015

Why There's No Such Thing As Too Many Credit Cards...


John Ulzheimer has 13 credit cards, but he's never paid a cent in interest, his credit score stays above 800, and he's never dug his way out of consumer debt.
That's because he knows exactly what he's doing.
Ulzheimer, credit expert at CreditSesame.com, has over 23 years of experience in the consumer credit industry and has even worked for credit bureau Equifax and for FICO, Fair Isaac Corporation.
"The initial strategy wasn't to just open a bunch of cards," he remembers, "but when I went to work for FICO, I realized that if you have a lot of cards, pay them all on time, and keep your balances low, you're actually benefiting from that." 
"A lot of people are critical of my example," he acknowledges. "But having a lot of cards is only a problem if you aren't responsible with them — if you let the cards control you."
Here, we've highlighted nine of the credit lessons to learn from Ulzheimer's experience. Even if you plan to stick with the three or four held by the average American consumer, see what you can glean:
1. Have a reason for opening each card. You should have a use in mind for every card before you apply. Ulzheimer only opens cards that have a purpose, like his Delta Reserve card. "I live in Atlanta and fly Delta all the time," he explains, "and the card earns Medallion miles, which allow me to do things like upgrade to first class and check bags for free. It makes my travel much more convenient and enjoyable."
2. Keep your cards open. Unless you're paying exorbitant fees, or find that you can't control yourself with too much credit, there's no reason to close your cards. While closing a card will not shorten your account history. It will decrease your total amount of credit available and therefore increase your credit utilization rate, which could have an adverse effect on your credit score. Ulzheimer's oldest card is from 1999.
3. Keep your cards active. "I don't use all 13 cards at the same time," explains Ulzheimer. "I rotate one or two into regular use to make sure they all get some activity, so the issuer doesn't proactively close them." Credit card companies want you to use their cards, so if you haven't touched yours in awhile, they can take it upon themselves to lower your balance or close the card altogether. They must notify you if they do, but why would you want to take that chance?
4. Be deliberate about which card you choose to use. On the recommendation of his accountant, Ulzheimer uses a business credit card for his professional expenses, a credit union card for small, everyday purchases like gas or dry cleaning, and his favorite rewards card — the Delta Reserve — for bigger purchases, like furniture or auto work. When he signed his son up for a summer of camps, he used three of the cards that have lain dormant for a few months.
5. Never spend money just to get rewards. "I call this chasing rewards, where you buy things or open cards you wouldn't normally to get the points," Ulzheimer says, noting that he uses his cards only to spend money he would anyway. "It's incredibly dangerous. Most people who find themselves in terrible credit card debt attribute it to using cards this way."
6. Get close with your account statements. Ulzheimer logs into his accounts every day — sometimes more than once. He doesn't find it difficult to keep track of them because he's familiar with exactly which cards he's using and how much he's spending. "I'm very engaged with my bank accounts," he says.
7. Be on top of your payments. Ulzheimer pays all of his credit card bills manually — no auto-pay for him — and makes a point of logging into his account and paying the balance even before the statement period closes and a bill is sent to him. "That way, I never carry a balance, and it doesn't show up on my credit report," he explains.
8. Space out your new accounts. There's no need to go out and get a dozen credit cards today. In fact, Ulzheimer advises against it. "Don't acquire a bunch of cards all at one time because the hard inquiries will destroy your credit score, and you probably won't be approved for all of them," he says. "This is a long-term strategy."
9. Use credit cards as they were intended. Credit cards aren't meant to let you spend money you don't have, and treating them that way is what gets too many of us in trouble. "You have to use credit cards for what they were designed for: convenient shopping," cautions Ulzheimer.

Read more: http://www.businessinsider.com/how-to-manage-many-credit-cards-2014-5#ixzz3jVY3zshr


*** Next Famous CRA Blog Post: The CFPB "SLAPS" JP Morgan Chase:  http://creditra.blogspot.com/2015/07/cfpb-47-states-and-dc-take-action.html


Saturday, September 6, 2014

How Closing a Credit Card Affects Your Credit Report and Score

By credit expert: John Ulzheimer:
http://www.johnulzheimer.com


If you follow credit scoring to any extent, you're probably familiar with the concept that closing credit card accounts can potentially lower your credit scores.

The idea that closing a credit card will always have a negative impact upon a person’s credit scores is untrue. There are some scenarios under which closing a credit card is completely benign. Let’s explore the issue in depth.

The Never Ending Myth:

The idea that closing a credit card automatically lowers a consumer’s credit scores due to the fact that the age of the account will no longer be counted is false. FICO® and VantageScore® credit scores still consider the age of closed credit card accounts when determining a consumer’s credit scores. In fact, closed credit card accounts even continue to age as time passes. Keep in mind, however, that closed accounts will eventually be removed from your credit reports 10 years after the closing date and at that time you will lose the value of the age of the card.

Why Closing a card can actually hurt scores:

Credit scoring models are very concerned with a consumer’s revolving utilization (or debt-to-limit) ratio. Revolving utilization is a fancy way to describe the relationship between the balances on all of a consumer’s credit card accounts with the credit limits on his open credit card accounts. Closing a credit card can cause your utilization ratio to go up and, therefore, your scores to go down.

If Joe Smith has 3 credit cards, each with a limit of $2,000 ($6,000 total available credit) and a balance of $1,000 per card ($3,000 total debt) then his aggregate utilization ratio is 50% ($3,000/$6,000 = .50). If he were to close one of the cards his total available credit would be reduced to $4,000 while his total debt remains at $3,000.

Closing that one card just shot Joe Smith’s utilization ratio up from 50% to 75% ($3,000/$4,000 = .75) within the space of a single phone call. This is the one reason your scores would go down because of you closing a credit card account.


Closing Cards Strategically:

Smart consumers know that carrying credit card debt from month to month is a bad idea. Revolving a balance on credit cards is not only bad for a consumer’s credit scores, it is a poor financial decision as well because of expensive interest. The best way to use credit cards is to spend only as much as you can afford to pay off, in full, by the due date. But, if you are resolved in your decision that credit cards are no longer for you, there are a few smart ways you can do this.

Scenario #1

If a consumer has no credit card debt, ever, then he can close a credit card without any impact to his credit scores. Closing a credit card with a high annual fee, for example, might actually be a wise decision. Remember, if the consumer has a $0 balance on his credit card across all of his accounts then his utilization ratio is 0%.

Scenario #2

If a consumer has several credit cards with high limits and wants to close a credit card with a much lower limit, then doing so will probably have little-to-no impact on the consumer’s credit scores, depending on how much debt he’s carrying on other cards. However, unless the card with the low limit has a high annual fee or perhaps a high interest rate, it’s probably a better idea to keep the account open.

Scenario #3

Consider not closing any of your credit cards, ever. Unless your card has an annual fee, it costs you nothing to keep it open. If it has a high interest rate, just don’t use it or use it for minimal purchases, like a tank of gas, so that it can be paid in full easily by the due date. This way you won’t ever have to worry about the potential damage of closing credit cards.  Furthermore, having several different cards can actually come in handy; learn more about the value of carrying multiple credit cards.


Learn more from credit expert John Ulzheimer at: http://www.johnulzheimer.com


NEXT POST: What to do when you get a 1099c for an old debt: