Credit Card Spectacularness - Part 1
In my quest to conquer the little things that won’t take me hours of my time once they’re over and done with (i.e. – fixing your credit card shit may take you a few hours one day, but you may only have to do it again every few years, vs. obsessive-compulsively clipping, cataloging, organizing, doubling and using coupons EVERY FUCKING WEEK FOR THE REST OF YOUR LIFE – as a healthcare professional, probably not an efficient use of your time) I reviewed the credit cards I have and which ones I can get rid of.
If you have an IQ above 50, you can probably skip this paragraph: Pay your damned credit cards on time. Pay them off every month. If you’re reading this blog, I hope I don’t have to tell you that not paying them on time will cause you to be charged late fees, and that they have truly atrocious interest rates. If you can’t do these things, please go read a blog about credit card debt and how to get out of that. Same principles, but I’m not going to tackle that here.
Let’s outline why to have credit cards: 1) They build your credit. 2) They’re good for emergency expenses. 3) They’re nice to have so you don’t have to carry fat wads of cash. 4) If you have good financial literacy, you can get some rewards for having them. That’s it. It’s mostly convenience, particularly if you have a nice long credit history and don’t need to build it up from 0. I’m in that camp. I’m not going to talk about building credit, but I will say this, and this is info I took from Suze Orman (specifically this book, if you want it): If you call your credit card company and ask them to reduce your interest rate, they probably will. I did this once. I called up Bank of America and told them all my other credit cards were at 12.99% and theirs was at 14.99% (or whatever) and asked them what they could do about that; they dropped my rate. Now this shouldn’t matter since you shouldn’t carry a balance, but it still gave me the warm fuzzies. Same thing about increasing your limit. Do you really need a 50k credit card limit on that card? Probably not, but it improves your debt ratio, particularly when you have a shit-ton of student loans, so if you’ve got them on the phone, you may want to ask them to up that puppy while you’re at it.
At the time of this writing, I have 6 regular credit cards. When I say “regular” I mean non-store accounts. That’s a whole other post. Anywho, I have these for a myriad of reasons. One used to save me 3% on gas, one I have because it has no foreign transaction fee, a couple of them I have because they PAID me to open them (“Charge $1000 in your first month and get a $200 statement rebate!” Yes, please! I’ll take a 20% discount on life.) Do I use all of them every month? Nope. I routinely use about 3. Here’s why I’ve been doing that and why I’ve been thinking about cutting back:
One card – specifically the one that used to get me 3% back on gas – I use to pay for gas. I only use it to pay for gas. One reason was that this was the only discount it offered me, and the other reason is because you see a LOT of those credit-card stealing things at gas pumps. That way, if I got my credit card number stolen, I wouldn’t be running around like Chicken Little trying to change all my credit card numbers for every recurring charge I have every month when they issue me a new one. I am considering keeping this card for this purpose despite the fact that I’ve had it so long the terms actually changed and now they only give me 2% cash back on gas. I do recommend having at least 2 credit cards, one for “out and about” in case of the aforementioned number theft, and one for recurring online purposes that doesn’t leave your house, because again, it is a really epic pain in the ass to try to remember everywhere you have your credit card number stored online and change it.
Caveat: This can be two cards on one account. Your credit card company is happy to issue you two cards with different numbers just for this purpose. Feel free to do that if you only want to pay one bill every month. It’s a reasonable way to do things. CapitalOne gave me that option, so thanks to them for planting that seed J
My second card I specifically have because it’s a travel card with no foreign transaction fees. I lived in Canada for a year and didn’t want to pay for that shit, so I got this one and I’ve held on to it. I only go out of the country maybe on average once a year, but it’s also a 1.5% cash back card, so I keep it. Because I go out of the country so rarely, I actually tend to use this as my “never-leaves-the-house” card, since it’s nearly true.
The third one I just got. It’s got a slightly higher cash back rate, the highest one I could find. It’s 1.5% cash back and then a bonus 5% on your bonus cash when you redeem it. If I did that math correctly, that works out to 1.575% on all purchases. It’s not a huge difference from the one above, but I also like this card servicer much better than the other two. This is my daily out and about card.
Is it worth it to have a separate card for a .425% bonus cash back? I’m really on the fence. I am considering going down to just the two. The way I see it is that I waste time every month checking these balances, paying these cards separately, etc. I could use that 10 minutes to do something else. The more you have, the more it also puts you at risk to forget a payment or something and get hit with fees. Hell, maybe I should even take the hit on my few-and-far between foreign transaction fees, but I’m not quite ready to do that yet because I would like to increase my international travel slightly in the future, although my previously mentioned awesome credit union charges pretty minimal foreign transaction fees. I’ll hang on to it a bit longer and see what happens.
What do all my cards have in common though? They pay me to have them. I do not have, never have had, and cannot foresee myself ever having a card with an annual membership fee. The way I see it, they’re gambling that they’re going to make money on that. And unless you want to track that shit, they very well may. I can’t say that I recommend them, except perhaps if you have very unusual circumstances. (Like you want to travel hack or something - not my deal right now.)
Also, another warning: Watch that “3% cash back at grocery stores and gas stations” shit. Read the fine print. I do almost all my grocery shopping at Walmart – it doesn’t count as a grocery, they have it as “merchandise” or something, as they do most of the “big box” stores. Same thing with gas – if you don’t pay at the pump or it’s a grocery-store gas station, it won’t count because it won’t be coded as a free-standing gas purchase. So although several of my cards offer that perk, again, I don’t want to track that shit nor change my shopping habits, so fuck ‘em. I’ll take my 1.575% on everything, thank you very much.
Last thought: I am debating about whether to actually close these accounts or just not use them until they go inactive and kind of get shut down themselves. If you start closing accounts, it can affect your credit because of the debt-to-credit ratio thing, and it also just generally makes lenders suspicious. Don’t go fucking about with them if you’re about to buy a house or something. Indeed, that’s when you should be calling asking for the credit line increase to generally lower your debt ratio and boost your credit score. So if you close them, timing is everything, and you may want to ask for increases on your remaining accounts. Again - I recommend this old Suze Orman book for reading up on this kind of stuff. These kind of basics don't change all that much. Rent it from your library if they have it.
Feel free to ask questions below. The devil is in the details on this one!
Feel free to ask questions below. The devil is in the details on this one!
(Notes: Be sure to see Part 2 of Credit Card Spectacularness on a 2% cash-back card I was initially suspicious of and also to learn more about the other side of the coin, Churning. Also, yes, the link to that book above are affiliate links. If I'm going to take the time to link that shit on Amazon, I may as well get $.03 for it or whatever. Just FYI.)