‘Stop and Proceed Slowly’ Sign by ComplianceSigns.com
INTRODUCTION
My Financial Profile
A recent promotional bonus credit card program has allowed me to be very resourceful with credit cards. Even though I live on a fixed monthly stipend that is typical of a retired low income senior, credit card programs have been a benefit for me. This is because of the tools I have learned and benefited from.
I have written at length about the potential benefits from the responsible use of credit cards. Below are the four Ebook I have written about various credit card benefit offers. These minimally priced Ebooks are available on Amazon.
Financial Ebooks I have written that are available on Amazon
A New Credit Card Promotional Bonus Program to Explore
Several months ago, I was able to apply for a new Promotional Bonus Program Credit Card. I applied and was immediately accepted. Much to my surprise, I had the opportunity to apply for several more of them. I was accepted by those as well.
Without blinking, I went from qualifying for one, then four, and even as many as six of these credit cards. Even then, I kept finding more of these offers. Since I did not want to miss out on a single one of them, I kept applying and being accepted.
Capital One Promotional Bonus Credit Card Offer
RULES OF THE PROGRAM
How To Play
At first, I thought the rules were simple. The Promotional Bonus Credit Card program required only that I charge a given amount of purchases ($500 to $1,000) within a three month period of time. As the bonus, I could receive the equivalent of two hundred dollars per card. Since I always charged many of my purchases, I assumed this was going to be an easy win.
Wells Fargo Promotional Bonus Credit Card Offer
VISITING LAS VEGAS
A Grand Total of Ten Cards
By the time I finally got a denial, I was the recipient of ten promotional bonus credit cards. Wow, I was really feeling exuberant. What I didn’t realize was, like a gambler, feeling exuberant would not last. In other words, I was becoming addicted to applying for and acquiring more of these promotional bonus credit cards.
Because I couldn’t stop, things really got out of hand. With each new card, the game I was playing became increasingly complicated as well as much less manageable. It became harder to keep track of all the rules. I kept making charts of when and how charged were due. Even with this extra effort, I still went from feeling high to feeling totally overwhelmed.
Roulette Table of a Casino Stock photo courtesy of istockphoto.com
PROS AND CONS OF THE PROMOTIONAL BONUS PROGRAM
Not As Easy As It Appeared to Be
Given my history of a perfect payment record, I thought this program would work like a charm for me. I was confident that it would be an easy win. But so many complications plagued me along the way. At times, I have questioned my investment savvy even my sanity. I’ve sworn I would never get in over my head like this again.
CREDIT CARD REWARDS, STATEMENT CREDITS, OR GAMBLING
A Bit of Each
Depending on how intensely one dives into this game determines which level of risk one plays this promotional bonus credit card offer. The more one is tempted to use this program as a gambling gambit, the more one is likely to risk.
CONFUSION AND CHAOS SET IN
I Had Definitely Overdosed on This Program
At times I felt very confused, even sleep deprived by the amount of time some of the transactions required. Numerous ‘unk unks’ (unknown unknowns) have taken place. In other words, I had nothing to do with certain things that happened to complicate the process.
Beware the dangers of this credit card program. Like the saying goes, ‘if it seems too good to be true, it probably is’. Sign from CreativeMarket.comBank of America Promotional Bonus Credit Card Offer
A PROMOTIONAL BONUS IS NOT NECESSARILY A CASH REWARD
How Do You Know Which Is which?
In total, I theoretically could net many cash rewards or statement credits. Forms of redemption were unclear. For example, the funds may be held over towards the payment of the next month’s bill. Another scenario was ‘the check is in the mail.’ We all know ‘the check is in the mail’ scenario. In that case, it can take up to several monthly cycles.
Gift Cards
Let’s not forget the gift card option. But is that a gift to me? I didn’t know who it would go to. In conclusion, none of these alternate options was optimal. Given my preference, I like my promotional bonus to be deposited right into my checking account as a cash reward. But that is not always possible. In fact, if the only option is a statement credit, the promotional bonus tool is a guarantee to the credit card company that I will continue to charge in the future to make use of their bonus.
‘Danger Go Slow’ sign from SafetySupplyWarehouse.com
POTENTIAL COMPLICATIONS
A Credit Card Gets Hacked
For example, while I was accumulating bonuses, one of these new cards got hacked. I had to replace it in the middle of my promotional bonus project. In addition, I tried to cancel items that were not refunded but turned into ‘honey points’. Other charges were also counted twice. Even though I did not cause these issues, their occuring caused me to have a severe lack of focus. It became very difficult for me to concentrate on the credit card bonus offers.
The Citi Custom Cash Promotional Bonus Card Offer
MAKE ONE CHANGE AT A TIME
New Tools Can Be Very Tempting To Use Simultaneously
In addition to signing up for these credit card bonus offers, I signed up for autopay. Making two major program changes at one time was a mistake. As a result, some bills got paid twice. It was becoming impossible to keep track of what I was doing.
BEWARE OF TRAVELING IN UNEXPLORED TERRITORY
Use a Reliable Map
Ultimately I realized what was wrong. It was that I had embarked on a new system that was going outside the box of familiar navigation. This new program was twice as hard to maneuver since I was exploring the unknown. Therefore I strongly advise readers to make one change at a time when adding a new element to an existing template.
Bank of America Promotional Bonus Card
NOT QUITE THE CONCLUSION
Is This Calculus or Physics? It Can’t Just Be Bookkeeping
Using credit cards responsibly and profitably is not a strictly arithmetic endeavor. As I discovered with each new profit making tool, their value is equaled by their complexity. Although the original templates are the foundation of this program, with each new component the program goes further outside the original box.
PROMOTIONAL BONUS BAIT
Something Smells Fishy
Along these lines, credit card companies continue to make themselves increasingly tempting to individuals who think they can stay on top of the latest innovations. This requires that individuals stay more than sharp and continue to search for new and existing credit cards. These can improve as investment tools, not just a means of delaying payments on purchases. But they become very challenging to use.
ANOTHER WARNING
This Is Not Bookkeeping 101
As time has gone by, this project has become painfully complicated. What initially seemed like a straightforward giveaway has become a torturous maze of numbers and dates. I participated to see how far I could go outside the box. In other words, I wanted to see how much I could challenge myself. It has been several months with a total of ten new cards. But I am not yet finished with this program. I can hardly wait to be done with it.
This chart illustrates how my credit score was affected by the promotional bonus program. It was 820 before I started and went down to 800 at its lowest. It is rising again since I have almost completed the program.
MY FINANCIAL PROFILE GETS HIT
Effect on My Credit Score
My credit score dropped during this project. The reason is that each credit card application was a ‘hard’ check to my score. But since I have met each charge challenge in a timely manner, my score is rising again and is recovering it’s 800+ scores. Credit score chart courtesy of American Express.
But there is one catch to building an emergency fund with this program. Money has to go out before it can come in. For a while it has seemed that I have lost rather than gained financially.
Warning sign from readers-digest-ca
CASH REWARDS OR CREDIT STATEMENTS
Read the Fine Print to Find Out
Besides the delay, the rewards are often available as statement credits rather than cash rewards. Since my tendency and necessity has been to buy more things, this project has not been a great source of emergency savings. Saving up for them was why I participated originally. Instead, it has also required constant vigilance with each card. Besides that, the amount that I have had to charge is requiring the use of partial payments to stay flush each month. Now I also have to keep track of the deadline on partial payments.
This is a very tricky game requiring numerous greater than rudimentary skills. It feels like the Olympic decathlon competition. In fact, I am now having to use the partial-pay 0% APR feature that comes with these cards. Therefore I am learning something else that is new. But I have been pulled deeper into this maze. I never paid attention to APR percentages in the past, nor did I need to. But now, how many months will I need to use this new tool keeping to the 0%APR?
A FINAL WARNING
Do What I Say, Not What I Did
I do not recommend going to the extremes I have. It has nearly driven me crazy. I may have even permanently burnt out some numerical brain cells besides spending a huge amount of time on this experiment. Has it been worth it?
Sometimes, the way I learn things is by going to extremes. It involves extending the limits of my existing skills to see what new ones I want to gain. Taking little steps would be more prudent. In fact, I suggest taking small, prudent steps for anyone who wants to sign on to this or any cash bonus program.
A set of directional signs from Monexsafetyservices.com
A FINAL WORD ABOUT THIS CREDIT CARD BENEFIT OFFERS PROGRAM
On the Plus Side
One: Paying car insurance in four instead of six payments saving money on installments. Two: Paying home contents insurance in full annually saving about $50 dollars. Three: Paying car registration for the next two years, early, without a pinch, and in full. Four: Being able to afford a healthy diet and avoid illness. Five: Purchasing pleasant necessities rather than feeling very deprived. Six: Occasionally buying something new, even secondhand, but not completely pantry hand-me-downs.
CONCLUSION
The Tip of the Iceberg
As you can see from this blog post, there are many credit card benefit offers. But they have complications that may outweigh their worth. These benefits are like an iceberg. What they appear to offer is actually only the tip of the iceberg of what they can cost.
Were you able to navigate this obstacle course? I’d love to hear your experience. Please share with the rest of us in the comments area. I will report in with my final results as soon as I am done. Right now, I’ve got two cards to go. One is to make a claim. The other is to charge $500 and then make my claim.
Bondi Beach Australia, Bondi Icebergs, Courtesy of Marley Clovelly
I check my credit scores everytime I check my credit card balances. The scores are stable, fairly consistent and fluctuate a few points at most. The chart below is a clear illustration of that stability.
I usually have a consistent FICO® score as illustrated by the Transunion chart here
An Untypical FICO® Score Situation
So when I got a notification last month that my best score had dropped 12 points, I was shocked. The charts below mentions the 12 pt decrease in red.
My credit score has decreased by 12 points. Why did it change so much?
Because I pay such careful attention to my score, I usually have a pretty good idea why it might change and by how much. As I mentioned, I usually have a fairly stable FICO® score. Therefore a decrease of 12 points was a red flag to me. Something was wrong. But I had no idea what it was. It was time to investigate.
Five FICO® Score Factors System
There are five or six main categories that go into determining a credit score. They are illustrated in the three examples below.
Five FICO® Score Factors
Six FICO® Score Factors System
Six FICO® factors
Primary Credit Factors
The wording may vary slightly and the scoring may as well. But it comes down to basically the same thing. Scoring may be based on a letter system like A, B, C, D or words like, Excellent, Good, Average, Below Average. In my case, my monthly grades have enough excellents that my score remains around 800 for these six categories:
• Payment history (On-time Payments)
• Credit Utilization (Credit Used)
• Age of Credit (Oldest Credit Line)
• Credit Inquiries (Recent Inquiries)(New Accounts)
• Total Accounts (Available Credit)
• Negative Marks
What Impacts Your Credit from Capital One
Searching for the FICO® Score Factor Red Flag
The above grades are good enough to rank me around an 800 FICO® score each month. Previous to last month, no action I took lowered my score by 12 points. But I knew that once I found what category was off and why this had happened, my decrease would be explained. In fact, what it was turned out to be kind of humorous.
The Solution Turned Out To Be in the Credit Utilization Category
On an average, I use between 1% and 2% of my credit utilization category. This means that if I have a $100,000 credit limit on all my credit cards, I only charge $1000 to $2000 dollar a month total. Two months ago, I had gotten a new promotional credit card. It offered a cash back reward of $200 if I charged $1,000 on it within three months. I was so excited about the cash reward that I charged the full amount within two months. That reflected a very unusual credit utilization percentage for me. It was much more than normal.
Credit Utilization Flagged
Glancing at the chart above, one can see that my normal credit utilization is 2%. But the new card that I purposely charged a large amount on had a credit utilization rate of 22%. Here’s the irony. In order to fulfill the requirements for the promotion, I charged much more in a month than normal. It did not significantly damage my credit. But it did throw both the credit rating company and me for a bit of a loop at first. I am sure that by next month everything will be back to normal since that kind of utilization is atypical for me. In addition, I will have a statement credit or a cash reward of $200. to ease the pain. Not a bad FICO® score lesson in my book!
Conclusion
I was fortunate in this case that nothing serious had happened to my credit. I did not need to contact any of the credit reporting agencies. They are Transunion®, Experian®, and Equifax®. If there is a situation that does not seem right and that you cannot figure out on your own, do not hesitate to call the particular credit card or one of the three agencies. We live in a time when we have easy access to these agencies and we should be careful as well as protect ourselves from errors and fraud.
Two published eBooks and a third on the way in the 3 eBook series about ‘The Former Middle Class’
The Former Middle Class.The Poor Middle Class Crisis chronicles our history as people who were devastated by the 2008 stock market crash. My husband lost his job the same week as the crash. He was 62 at the time. I became very ill from all the stress.
We had become part of The Former Middle Class and did not know how we were going to survive. Our low point was when we faced the possibility of having no place to live and were, One Day From Homeless.
Our journey became one of survival. That became our priority. We had to learn to live all over again under very different financial circumstances. We explored many different avenues and began to build our financial survival tool kit.
The Financial Survival Toolkit for Living a Consciously Frugal Life from the Viper Tool Storage Company
OUR FINANCIAL SURVIVAL TOOL KIT
Building our kit involved many lifestyle changes. We went from a two bedroom apartment to subsidized senior housing. Access to food was a big challenge. Instead of the opportunity to purchase expensive, organic foods and eat out on occasion, we had to depend on the generosity of others and the government. Food pantries and food stamps are crucial financial survival tools. But they may be hard to swallow.
We went from middle class comfort to former middle class frugal living. It was a huge adjustment. We explored many tools that didn’t work for us. Things like couponing and taking surveys. Many more thrifty tools are mentioned in the first ebook. Eventually we found one tool that not only helped us survive but also became profitable. That tool is credit cards.
Let me make very clear right from the start that our use of credit cards has involved a very responsible set of guidelines. We pay all our bills on time and in full. Our credit rating fluctuates between 775 and 800 depending upon which credit reporting agency you ask.
Credit cards have given us a financial cushion between sign up promotional bonuses and monthly cash rewards. My refinement of credit cards as a financial survival tool lasted about eight months. What I have learned, and continue to learn about credit cards is fascinating and extremely informative. I have my accounts charted with spreadsheets for each month. Read My Credit Card Accounts Maintenance System for the details of my system.
Part of My Credit Cards Accounts Maintenance System
In less than a year, I had become sophisticated in the financially lucrative use of the credit card benefits tools. All of a sudden, the additional hefty promotional signup bonus credit card memberships applications began receiving denial letters. My stellar tool of acquiring credit cards with promotional sign up bonuses of $100-$200 had lost its winning streak. Clearly, it was time to rest that tool, re-examine some of the other financial survival tools that I had discarded in the past and to research additional new tools. I was at a loss and needed new financial fertilizer.
Mastering the Art of Green, The Third ebook in the Former Middle Class Trilogy @2018 Alison D. Gilbert
MASTERING THE ART OF GREEN
Mastering the art of green is a process. For me, it has involved taking stepping backwards to get a different, larger view on what ‘green’ means. It can refer to money. It can refer to food, lush grassy fields, innocence and inexperience.
Sure enough, once I stepped back and started to look at green in a new way, as fertility and productivity, new tools started to sprout. I started growing food indoors calling it, Table Top Farming. I am growing microgreen in soil and hydroponics in water.
This project is of major importance to us since healthy, live food sources can be scarce for seniors on fixed incomes. Food pantries tend to offer the lowest quality packaged/processed food. The SNAP (food stamp) program provides a miniscule amount of money to supplement nutritious food. So growing one’s own live, local greens can be better than money in one’s pocket.
RECONSIDERING COUPONS, STORE SALES AND SELLING SITES
Coupons and other money saving programs do have their value. They are not as lucrative as credit card sign up promotional bonuses. But what is? There again, when I took a step back to get a better perspective on what made sense for me to pursue, I found many options.
A great savings of 50% at Michael’s Art & Craft Supplies in store and online
Some coupons like the specials CVS Pharmacy and Michaels Stores-Art Supplies, Crafts and Framing offer can be as high as 40-70%. A Bed, Bath and Beyond 20% coupon get help a lot on a $100 plus purchase. Target, Walmart and Amazon vie for top savings. In addition, there are programs that will automatically check to see if there is a savings special when an online purchase is made. These include Ebates, honey, and cently and piggy. Other apps exist that I have not yet had a chance to explore. Two of the most popular are ibotta and Groupon.
Decluttering, Sarah Mueller style can provide lots of potential items you no longer need and want to sell. The above video is from a workshop she did with an expert at selling stuff. Two of the most popular selling sites are Ebay and Etsy. I have not sold on Ebay. I do have an Etsy store, Tin Can Ali. It displays some of my painted items for fun. I have not really tried to sell anything. But Ebay can be a great place to sell things especially if you watch the Kathy Terrill videos from I Love To Be Selling.
CONCLUSION
As you can see, the possibilities are endless. Prioritize your options. Find what is most beneficial and takes the least time to execute it. New savings hacks are invented all the time. Be resourceful. Do the research. Continue to read my and other blog posts for the latest information.
My goal, as a retiree on a very fixed income as well as a member of The Former Middle Class is to make ends meet on a monthly basis. I find that Using Credit Cards for Survival and Profit is very helpful to accomplish that. But in order to do this, a credit card accounts maintenance system is necessary. Because I have used my system religiously, I have graduated to Mastering The System of Extreme Credit Card Benefits. The purpose of this post is to describe my system in detail so that you might be able to take these steps to make ends meet, too.
Because my credit card accounts maintenance system is so effective, I can manage a substantial number of credit cards responsibly and profitably. Even as the number of credit cards has increased, it has not interfered with my accounts staying in order. In addition, my credit scores continue to hover between 780 and 800, my credit report profiles are in good standing and I have very good to excellent credit.
My checkbook with a Vera Bradley® cover, checks and register from Checkworks.com are all elements of tool #4
My Credit Card Accounts Maintenance System
I’ve developed a Credit Card Accounts Maintenance System that consists of a set of tools combining old fashioned manual bookkeeping techniques with up-to-date digital tools:
1. credit card information chart
2. manual ledger paper spreadsheet
3. digital bookkeeping program with checking ability
4. manual checking account with a colorful checkbook cover, checks and paper register
5. email access to and from all my accounts
6. online account access to each credit card listed in my bookmarks
7. online bill paying capability
8. telephone contact with each credit card company
1. Credit Card Information Chart
I created a table in Microsoft Word®. It consists of the data for all my credit cards. That includes every bit of pertinent information about each card. There are even icon size images of all my credit card for visual recognition and order. See the categories shown below this illustration.
These are the header for my comprehensive Microsoft Word chart, tool #1. It has about 2 dozen rows of individual credit card data.
2. A Manual Spreadsheet
Perhaps because I grew up in the paper world before the computer, I still find it easier to use manual ledger paper for my credit card accounts maintenance system. But if I become more comfortable with Excel, I might shift my spreadsheet to Microsoft Excel®. Digital or manual, it is possible and prudent for me to keep a tally of every dollar I have charged on each card. Actually, all my tools create a checks and balances system to make sure my accounts are accurate. It doesn’t matter if they are manual or digital. Use what works for you.
3. A Digital Bookkeeping Program
Because I have a Macintosh Computer, I got the only bookkeeping program that was specific to Apple many years ago. It was originally called, MYOB an acronym for ‘Mind Your Own Business’. The name was updated to Accountedge because it now has many accounting features in addition to its original bookkeeping features. Accountedge.
My 6 column ledger pad from from WilsonJones is tool #2Accountedge, My Online Bookkeeping Program is tool #3
4. Manual checking account with a checkbook cover, checks and paper register
I still pay a few bills manually using checks. Doing this makes it possible for me to keep track of certain personal loans as I pay off them off. This way I have a check copy on my monthly statement for record keeping and documentation. The purpose of my Checkbook Register is to keep a record of every financial transaction I make. I even devised a system of color coded symbols that shows when:
a. a purchase was made
b. it is recorded online by my bank
c. I entered it into my online bookkeeping system
5. Email access to and from all my credit card accounts
The Credit card companies contact me by email. They remind me when bills are due and let me know if there is some other issue concerning my account.
6. Online Account Access to Each Credit Card
I bookmark every credit card URL so that I can easily check each credit card account daily. This is another way for me to make sure that the numbers online coincide with my manual spreadsheet numbers.
7. Internet bill paying capability
Each credit card websites is listed on my Internet bookmarks to be accessed easily. Most of my bills are paid on line. Some are even on autopay. When I get a new card, I have my closing and bill paying dates adjusted so that my payment is due shortly after my monthly fixed income arrives. This way I can get all of my bills paid on time and not have to think about whether or not I paid them all month long.
A telephone (not as old as this one) is tool #8
8. Telephone Contact With Each Credit Card Company
Having telephone contact is very important. One can use any phone, a landline or cell phone. I make telephone contact with each credit card company when I have questions about my balance, closing or due dates.
Since most of these companies are open 24/7, I enjoy calling very early in the morning. It is usually the quietest time at their end. I’ve enjoyed hours of what become personal interest conversations with their staff who are located around the globe. It is fascinating and one of my favorite tools. In fact one call was such a delight for both of us that the customer service person from Capital One actually sent me flowers!
Flowers from Imma, a Capital One telephone customer service representative. This illustrates the most extreme credit card benefit, a wonderful human connection. It is part of tool #8.
Conclusion
As I mentioned in the previous post, if a person needs or desires to have many credit cards, it is prudent to keep a very close watch on them in order to maintain a good relationship with each company as well as the credit reporting bureaus. This involves accurate reporting to keep my credit score high, to pay all my bills on time and stay within my budget. Because having many cards is based on need, I am very careful about using them responsibly. It is essential for me to be able to I continue to make use of what has helped me to make ends meet since we became part of The Former Middle Class.Extreme credit card benefits have been a tremendous help to me in making ends meet.
Before extreme credit card benefits can become a consideration for someone in The Former Middle Class, two things need to be explained. The first is that one must be thoroughly versed in The Principles of Good Credit Card Hygiene. Even if someone has a history of medicore credit, the credit score must become very good to excellent. ‘One Must Learn to Walk Before One Can Run’.
In contrast, there are people who can achieve even more extraordinary benefits than those of us who are part of The Former Middle Class can. That is because they have the funds to spend from the start. For example, one of the super benefits credit cards requires an expense of thousands of dollars to receive a heftier signup bonus. But in my case, I had started using credit cards with monthly bonuses to add a small amounts of cash to my retired, minimal fixed income.
Best Credit Card Promotions compiled by Jim Wang of Wallet Hacks
How Someone from The Former Middle Class Can Obtain Extreme Benefits
During the time I was getting this kind of ordinary cash bonus of between 1% and 3%, I developed the need to acquire a travel point credit card offering both a cash rewards bonus and travel miles. That was when I became aware of the extreme benefits I could receive separate and apart from using credit cards the way I had been. The fact that both my husband and I had credit scores hovering around 800 helped tremendously to move into this new level credit card benefits, the sign up promotion.
What Your Credit Score Says About You from www.blog.mint.com
Your Credit Score
As explained in the last blog post, a very good to excellent credit score is one of the most important aspects of qualifying for extreme credit card benefits. But let’s go back a step to when credit cards had cash rewards that paid out in increments of a minimum of $25. It was not difficult to earn about $40 over a two month period. But that is not extreme credit card benefits and I needed extreme benefits.
What Extreme Credit Card Benefits Involve
Extreme credit card benefits involve more than just getting monthly cash rewards or travel points. They require additional incentives from the credit card company to get someone to apply for a particular credit card. So that is exactly what the credit card companies started doing. They began to offer either large sign up cash or travel points promotions or both when a certain amount of money was charged by the customer in a given amount of time. The cash usually ranges between $100 and $200. Payment occurs after $500 or $1000 in charges. The period of time to make the charges is usually 3 months.
People who are solidly middle class can make a lot more cash back. But if one compares the percent of return rather than the cash itself, someone in The Former Middle Class can match and even outrank the returns that the Middle Class and above can. In one situation, I got a 40% sign up promotion cash bonus! I only had to spend $500 over a three month period. So $200 cash back from $500 spent is a 40% return. This is definitely Mastering The System of Extreme Credit Card Benefits.
The AARP Cashback Credit Card Offers a Signup Promotion of $200 after $500 is charged Within 3 Months of Opening the Account
Qualifying For Extreme Credit Card Benefits Cards
We know that the first and most important thing is to achieve and maintain very good to excellent credit. The next thing is to apply for such a card after you have paid your balance in full and have zero debt. Lastly, it is important not to apply for too many credit cards in a short amount of time. Straight forward? So it would seem. But it can get complicated and time consuming requiring a actual bookkeeping system to stay on top of things. This will be discussed in a future post. This is the system of tools that I use to keep track of my extreme credit cards benefits card accounts.
In Conclusion
It can become very enticing to continue to apply for and collect extreme credit card benefits cards. They offer a one time promotion that is a lot more than regular cash rewards or travel points. But one must proceed with caution by keeping diligent track of all of one’s accounts as the number of the hot credit cards in one’s possession increases. If a person accumulates a large number of these cards, it can become a job just keeping track of everything. Obtaining these cards can be a way to earn some extra non taxable income for The Former Middle Class person. But at the same time, unless it is a real necessity, it is easier to have a few top notch cards that offer cash back and are “tied to a travel program like an airline or a hotel”. According to Jim Wang of WalletHacks, they offer the best bonuses.
Good Credit Card Hygiene is based upon several principles. They are the focus of and shall be reviewed in this blog post. Before any discussion can be held about extreme credit card benefits, one must have a firm grasp of the basic principles especially the components of your credit score.
Credit Score Chart Showing the Components of your Credit Score from TFD
The Components of Your Credit Score
To start with, it is very important to gain and maintain between a very good to excellent credit rating. Even if your credit is poor to start with, there are many resources, both nonprofit and professional that can help you to raise your credit or FICO® score. See the pie chart below for the breakdown of components.
Payment History
Payment history has top billing in the equation. It is crucial to always pay your monthly bills in full and on time. This is the first of the five components of your credit score and counts for 35% of the credit score algorhythm. You could say that it is the key player in good credit card hygiene.
Level of Debt
The next component that counts for 30% of your credit score is your level of debt. What this means is that the amount you owe or your monthly debt should not comprise more than 30% of the entire amount of credit that has been made available to you. If your total credit allocation is $100,000 then you should charge less than $30,000 each month. Actually, the most recent numbers I have heard, are that the credit reporting agencies are looking for a percentage of between 6-9%. This means that one’s monthly debt (credit card charges, loans, mortgage payments, etc.) should not exceed between $6,000 to $9,000.
Age of Credit
The first two factors make up 65% of your score so clearly they are the most important ones in obtaining and maintaining good credit card hygiene. Next is the age of your credit which makes up 15% of your score. Start applying for a credit card as early on as you can so that you will have a long credit history. In order to increase your chances of getting one, apply for a card for which you have been pre-approved. That way your credit score will not go down because of your application. Picking out a card that has not be pre approved will result in the reduction of your credit score whether you get the card or not. But it may not be a serious problem. You can still have good credit card hygiene and a decent FICO score.
Types of Debt and Credit Inquiries
Now you have 80% of your credit score accounted for. These are the three most important factors. But don’t ignore the others. It is good credit card hygiene and good for your score to have a mix of types of debt, credit card, loans, and/or mortgage. Here again, since this makes up only 10% of your score, it is not crucial. Likewise, credit inquiries also make up 10% of your score. So they are not crucial either.
What Is A Good Credit Score? From Experian.com
More About Good Credit Card Hygiene
There are numerous types of credit score systems, each with its own algorhythm. Two of the most popular systems are shown above FICO and Vantage. FICO® was created by the Fair Isaac Corporation. VantageScore is comprised of the input from these three reporting agencies, TransUnion, Equifax and Experian. They do not have the same exact rating scales but the difference is not far off. So let’s continue with the characteristics of good credit card hygiene.
Good Credit Card Hygiene Do’s and Do Not’s
Do not apply for too many cards in a short period of time. You will know that you are applying for too many in too short a time if you start getting rejections and that is the reason the credit card company gives for it.
Be mindful to not do anything that will result in negative comments on your credit report. If you do, these will reflect poorly on your credit score. This is not considered good credit card hygiene.
Check your credit card activity often and your credit scores regularly. Now that most, if not all credit card companies have this as a free feature, it is very easy to do. If you find any errors on your credit card, contact the company immediately. If you suspect fraud, contact the police as well as the credit reporting agencies. This can be very serious. Do this in a timely matter.
It is recommended not to close credit card accounts especially old ones. But if you must, wait until you have zero debt to do so. You don’t want to negatively affect you debt to available credit ratio.
15 Credit Card Do’s and Don’ts from Time.com
Conclusion
That’s about it for a review of what good credit card hygiene is. Once you have established a level of comfort and confidence with it, you can move on to the exciting part, Extreme Credit Card Benefits. That is the topic of the next blog post. I promise you will be WOWed by it.
‘Stop and Proceed Slowly’ Sign by ComplianceSigns.com
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