Your Credit Questions and Answers

Some extimates say 60% of Americans are living Paycheck to Paycheck.  It doesn't matter if they have $20,000 a year or $20,000 a month to live on. The reason many people are living paycheck to paycheck is they cannot stand to have a dollar in their pocket that is unspent. As an example in the grocery store she (my ex wife) had to have the most expensive cute little bottle of olive oil.  Was it better?  Well if it was more expensive it must be better.  As long as there was $3.89 in her bank account she had to spend down to the last ten cents.  When going shopping she knew, to the penny, how much was in her account so she could spend it all. It is Monday and she gets paid on Friday. With $38 in her account she orders takeout Pizza for $32 and gives a $5 tip.  On Tuesday she discovers she is out of gas and needs to borrow another $20 for gas to get to work just like last month. It is the continuous little decisions that keep paycheck to paycheckers without ca...

 Fees and Interest and Merchant Charges. Late Payment Fee, Over Limit Fee, Annual Fee, Cash Advance Fee, Very High Interest. The banks will offer you credit when you have proven that you can make payments.  Basically that is what your credit rating tells them. When you get a new credit card or loan it signals to the banks you are probably credit worthy.   Credit Card Companies lose money on their reward programs.  However they make 80% of their revenue from fees and interest that the majority of their customers are willing to pay.   The Average American has over $6,000 in credit card debt.  The average interest rate is between 20 and 24%.  This means the Average American pays over $100 per month in interest. Many people spend over $1200 per year on credit card interest. This is why the banks are so happy to offer you a credit card. Merchant Charges When you use a credit card the merchant will have to pay between 1.5% and 4%.  This means ...

 I was first introduced to airline miles by a friend who had just gotten a United Airline Chase Credit Card .   I signed up and started getting airline miles for all of my business purchases.  Just for signing up I received 50,000 miles.  I believe I had to spend $3,000 in the first three months to get the 50,000 points.  This was a great bonus, two free flights anywhere in the US for spending $3,000 which I would have spent anyway.   The annual fee for this card is $95 which is waived for the first year. It took 25,000 airline miles to get one round trip ticket anywhere in the US.  Short flights would only cost 20,000 airline miles. I used just this Chase United card for a couple of years and earned a couple hundred thousand Airline Miles on the purchases my business made.   More Chase Points Cards I applied for and got more Chase credit cards for points.  I got the first Chase Freedom card with no annual fee.  This ca...

Home loans have a different impact on your credit score than credit cards. Since most home loans last for 30 years after a few years they are an excellent credit reference. That is if you make your payments on time. The monthly grind of making the Home Mortgage Payment isn't much different after a few years than paying rent.  The rent increases over the years while your Mortgage payment will stay the same except for tax and insurance increases.  For many households the increase in house prices creates the largest family asset. The Home Loan is often the longest loan to show up on your credit report.  It also shows lenders you can make payments over an extended period of time.   The size of your Home Mortgage payment when compared to your claimed income when you Apply for a loan may also have a significant impact.  

 No Many people think that it will help your credit if you carry a Balance on your Credit Card.  This is simply not true.   The only things that change if you carry a balance on your card is you will pay a high rate of interest and you will pay interest.   You do not need to pay interest on your cards to keep them active and for them to have a positive effect on your credit score.   Use each of your cards a few times a year and pay them off in full at the end of the month and they will stay open and eventually have a positive effect on your credit score.  

 What is a Secured Credit Card? A secured credit card is a type of credit card that requires a cash deposit to be made when you open the account.  The deposit acts as collateral for the account, and the amount of the deposit is usually equal to the card's credit limit.   Secured credit cards are reported to the three major credit bureaus, so responsible making payments on time will help improve credit scores over time. Using a Secured Credit Card For most people a Secured Credit Card is used to start their credit journey or to start rebuilding their credit after a significant Credit problem. You must pay your Secured Credit Card bill on time.  Even though you made a $500 or $1,000 deposit to get your Card you must pay your regular bill on time.   Remember you will be rated by the Secured Credit Card Issuer on whether or not you make your payments within the allowed payment time. Normally you will have Twenty One to Thirty days to pay your bill from the...

I avoid using my debit card because I'm frugal. Instead, I rely on multiple credit cards that offer a 1% to 5% rebate on purchases. In contrast, using a debit card doesn't provide any rebate or financial benefit. Free Float Another reason I prefer credit cards is the free float they offer. When I use a credit card, the money for my purchase doesn't leave my checking account until 10 to 40 days later. With a debit card, the cash is deducted from my checking account within a day or two. Merchants typically pay a fee of 1% to 4% for credit card transactions, and most have already factored this cost into their prices. Some merchants, however, offer different pricing for cash versus credit card payments. Gas stations are a common example of this practice. Being frugal, I always opt to pay with cash if it saves me money compared to using a card. Cash Back (Credit Card Points) During a recent road trip through the western United States, I encountered several gas stations offering ...