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The Benefits of a High Credit Score

June 20th, 2011

Ever since I was young, I was taught the benefits of establishing a high credit score.

My parents taught me to purchase things on the credit card since the first day that I got my first credit card, but they also pounded into my brain that I should pay it off every month. Since I didn’t carry a balance, it probably took a longer time to build up my credit rating, but since I didn’t need it for any big purchases at age 18, it didn’t affect me. That said, today my rating it’s over 800, so even by paying off my balance each month, I was still able to move my credit score up!

Credit Score Benefits

If you have a high credit score, you have some leverage to get better deals… if you know how to use it.

This is one time where it is good to brag! Tout your high credit score by asking for a better interest rate on loans for cars and mortgages. The bank know that you are valuable since you are unlikely to default on the loan, and the bank wants your business because of this fact.
You can get special discounts on financial products such as the various types of insurance. Apparently being a safe, responsible driver and having a high credit score are highly correlated.
You will receive the premium credit card offers in the mail. I typically get the premium credit card offers, including a black card in the mail. I’m sure this is because of my high credit score because my salary sure doesn’t warrant it!!!
Prospective employers can check your credit score rating before hiring you. While this may not be done much in practice, it’s an option that an employer has.

Okay, now that we know that there are obvious benefits, the trick in receiving those benefits is to ask for them! For instance, if you’re looking to buy a car and need a loan, the company loaning you the money isn’t going to say “hey, based on your credit score we’re going to shave an additional quarter of a percent off of our current rate”! You’ll have to know what you are worth before you go in to get the loan!

If you have a high credit score rate, congratulations! Just make sure you use your credit score power wisely!

MR

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Debt Busting Credit Cards

June 15th, 2011

Today’s post is provided by Les, who is a writer for moneysupermarket.com.

Credit cards come in many guises to entice new borrowers. However, with discipline and a good routine, one type of offer, the balance transfer, can be made to work in the users’ favor.

Simply, a balance transfer is where one can move the outstanding amount of one card to another card. Card issuers offer low rates of interest on these transfers.

These low rates of interest can vary from 0% upwards, but will only last for a limited period, typically 12 months. There is usually a fee associated with transferring balance.

This fee is a lump sum of the balance, often around 2 or 3 percent and one must read all the fine print and fully understand the terms and conditions before signing an agreement.

Before selecting a card, the consumer must come up with a plan to repay the outstanding debt. Ideally this debt should be repaid within the free/low interest period.

After the introductory period, the interest rate will most often return to the standard rate. A good way to avoid this high interest is to transfer to another card with another low rate.

It is important to remember that a person is limited to a certain number of credit cards and that if you change cards frequently it will affect your credit worthiness, which may prevent you getting another card.

Another thing to find out is the order in which your debts are repaid as many issuers will pay off the amounts with the lowest interest first.

This is fine if you only transfer a balance and have only one rate on your card. Nearly all cards have different rates for purchases and cash withdrawals.

These different rates are often higher than your balance transfer rate and this is how the issuers make their money. People use the card for transactions other than transfers, thereby accruing high interest charges.

Once a balance has been transferred, do not use that card for any other purchases. This is where discipline is needed, as there are often other sweeteners that entice you spend money.

Decide on an amount that you can afford each month and pay off your debts and if you need a credit card for purchases, then it is a good idea to have a separate card for this.

You must pay off the full amount of this separate card each month to avoid interest charges. Even if a small amount, for example $1.00, is not paid off, you may still pay all the interest on expenditure since your last payment.

Credit cards may have additional fees such as a yearly charge. There also may be a window period, sometimes three months, in which your transfers must occur.

Once the above has been planned and a card selected, then it is important to set a reminder as to when the free/low interest period runs out.

With careful management and planning it is possible to pay back your debts without accruing interest. A person must stick to the plan and not be tempted by the other offers of the issuer.

Thanks Les, for explaining the Balance Transfer details about credit cards.

MR

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Credit Cards Cannot Be Used To Buy Certain Things!

June 3rd, 2011

In the article on the Smartmoney.com website called: What Your Credit Card Won’t Let You Buy, the article makes the following statement:

To the surprise of consumers, major credit card companies are making decisions about what they can and can’t buy with their credit cards. What’s off-limits? Legal purchases like gambling chips and donations to at least one controversial non-profit organization; in some cases, buying p.0.rn.0.s is also restricted, and so, increasingly, is medical p.0.t.

I’ll be honest, I’m not 1005 sure how I feel about credit card companies arbitrarily deciding that they will let the consumer purchase or not. After all, it’s has a bit of the big brother flavor that we all hate but seem to experience more and more in our lives. That said, credit offered by credit card companies is not money or earnings gained by the credit card user, so why not? We live in a capitalistic country so if one company doesn’t do something, usually another companies tries to compete in that niche if it is profitable.

So now that we’ve established that we really don’t have the rights to the money offered by the credit card companies, let’s use an example to make better sense of borrowing money on credit. Let’s say you have a friend that asks you for money to help buy a car, then later you learn that he didn’t buy the car but instead went out and bought p.0.rn online. Now a month later he comes back to you and asks for more money for a car because he needs it for work. This time you tell him that you’ll loan him the money, but that the money must be used to buy the car. Now what if he again goes out and buys more p0rn online? Wouldn’t you want the money that he used to be used for the reason that you lent him the money? Wouldn’t you want him to use the money you lent him for a beneficial use versus repeatedly being use for something addictive or that would make the chances unlikely that you would be able to collect the money that you lent?

IMHO, the bottom line is that credit card company is offering you a service. They are not giving you money away for free and they want to make a profit on their service. If they couldn’t be profitable, they would soon go out of business. So since it is their business, I think they should be able to determine how the money is spent.

I guess in a world where the law says that you must wear a seat belt, I don’t really see the credit card company’s restrictions as being much of a rights violation.

The credit card argue that they are protecting themselves from the federal government coming back and punishing the credit card companies for the purchases that their clients make. Based on the attitude of the government towards this industry, they actually may have a valid point here.

Hidden Benefits

What if the restrictions in place from certain credit card (mainly American Express), help us to curve our additions? Perhaps such restrictions would even enabling us to preserve our financial state of well-being, in addition to making it harder to purchase our addictions? Perhaps this is really a win-win in disguise? However I have to wonder what is next? Cigarettes, alcohol, firearms, certain foods?

Ways Around the Credit Card Company’s Policy.

The simplest way around this problems is to use your credit card company’s card to purchase cash. After it is cash, they can no longer track what the money is being used for.

With so many people in the financial community complaining about credit card companies, what do you think about this relatively unknown restriction on the use of credit cards?

I’m looking forward to your comments,

MR.

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Goodbye Citi Diamond Preferred Credit Card, Breaking Up Is Hard To Do

May 9th, 2011

The Citi Diamond Preferred card and I have been going steady for more than 6 years, and I was very happy with the card, we had a great time together going on vacation and spending time and money on great enjoyable products such as new computers, TVs, and other life enhancing appliances and toys. When my son was injured as a toddler, you (Citi Diamond Preferred Credit Card) were there to help me cover the cost.

So when I say that you were a gem (a diamond to be exact), it was no understatement.

Unfortunately, you changed your colors on me (from Black to Blue), and the way that you’ve been treating me, well, I can no longer tolerate!

It pains me that after 6 solid years, you now treat me like someone new just coming through the door to your house. The fact that you now only reward me 1% (unlike the max of 5% when you were a diamond card) for the times that we spend money together.

After numerous calls to you trying to straighten our relationship out, you just bounced me around having people speak for you instead of you talking yourself, is very irratating. My last attempt to resolve our spat, involved you transfering me to talk to people from Europe (I think), Asian, India and some other represenative that I couldn’t identify because they (mistakenly?) hung up by accident?

I’ve been good to you, Citi Diamond Preferred Credit Card, even writing love letters to and about you in “My Best Credit Card: Citi Diamond Preferred“ and “Citicard Diamond Preferred Card Update“.

I’ve always paid you back after borrowing money from you, and always within a month’s time frame! I’ve proudly showed off your black sleek looks to those that comment on what a cool card you were! I really thought you had it going on in during those particular moments!

But the way you turned colors on my and the way you treat me like someone new, I can’t stand anymore. So goodbye, we are no longer going steady and I will drop you after a few months, just enough time to get your out of my system!

Good day Citi, I wish you well…

-MR (Sad)

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Tags: citi diamond preferred card city preferred card goodbye citi

Citicard Diamond Preferred Card Update

April 6th, 2011

During “The Great Recession“, one of my favorite credit card the “Citi Diamond Preferred” card seemed to have discontinue the Best Buy $100 gift card for 10,000 points option. In fact, they seemed to discontinue most of the $100 gift cards for 10,000 points options! Instead they seemed to be offering a $25 gift card for 3,5000 points and other less beneficial deals. So as you can imagine, I was very disappointed!

Well, I’m happy to say that they have included the $100 gift certificates for most (if not all) of the companies in the program again, but you have to be on your toes!

If you just go to the thankyou.com site that Citicard uses, you have to dig a little to get to the $100 for 10,000 point option! If you just glance at the gift cards offered, there only seems to be the “$25 for 3,500 points” option! The trick is that you have to go to “View Details“, the click on the denominations pulldown box to select the $100 for 10,000 option!

Tricky Thankyou Rewards Site

So what did I decided to do with the now my now once again valuable points?

Well, now that I can get a decent value for my points, I decided to cash out 70,000 points for $700 so we can finally buy a 50 inch HDTV (note, I still have $500 leftover from the previous “thankyou rewards” order for Best Buy cards).

In addition, if things go as planned and the credit card companies don’t discontinue their rewards program, I should have enough points to buy a new computer system by the end of the year.

The best thing is that these purchases are effectively free! The money I spend with my Citi Diamond Preferred card was on things that I would have purchased anyway! By using my credit card, I receive a discount in the form of reward points with each purchase!

Now some may say, that they would rather have cash, and I’m definitely cool with cash! But, at the same time, by using this rewards programs, I have to spend the points instead of saving the money like I typically would. Now as long time readers may know… I have an unusual problem with not spending money. But by using the thankyou rewards program, I have to spend the points that I saved on fun stuff, or at least on something! So for me, this is a win-win, because it’s spending without the money coming out of my checking account!

UPDATE: I should mention that if you have this card or if you decide to go with this card, you should only use it to order gift certificates, and in denominations that are $100 for 10,000 points! Any other options is subpar in my opinion!

Today (4/8/2011) I got replacement cards for my City Diamond Preferred card a year earlier than expected, and surprise, the card is now called “Citi Preferred”. Apparently, the lost the diamond…

The new cards are blue instead of black. So much for the cool looking black card.

I hope others that have a citi credit card that use the Thankyou rewards site find value in my little tip! Do you have any additional tips on any credit card?

-MR

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Tags: Citi Diamond Preferred citi diamond preferred card Citi Preferred credit card update thankyou thankyou rewards thankyou tip