A Method For Improving One’s Credit Score 

​ A method for improving one’s credit score is by paying down the outstanding credit card balance before the end of the credit card’s billing cycle.  Say one owes $2,000 on a credit card that has a $5,000 credit limit.  Waiting until after the billing cycle closes will show $2,000, or 40% of open credit balance usage.  Such will affect one’s credit score, even if the $2,000 is paid in full.  On the other hand, paying the $2,000 just before the close of the billing cycle, showing no open credit balance usage, will help to improve one’s credit score.  Even partial amounts can help, wherein paying per the above example $1,000 before the close of the billing cycle will show 20% instead of $40% of open credit balance usage, which will still be helpful in raising a credit score. Making more than one payment per billing cycle is easier thanks to online banking, and is typically allowable with most credit card account providers. 

Perhaps One is Better Off Using a Credit Card Rather Than a Debit Card

​Credit cards offer benefits and safety that debit cards can’t quite match…see immediately below.  

Using a Credit Card as a “Faux” Debit Card

​ This simple idea has a few useful advantages.  It involves using a credit card where one would ordinarily use a debit card, and paying off the credit charges with the funds that the debit card would ordinarily use to pay a merchant for goods and services.  One advantage concerns rewards (cash back, points, miles) that the credit purchases would generate, which are typically “better” rewards than what a debit card account would generate.  A more meaningful advantage is where by not using a debit card, hackers stealing account numbers will not have direct access to one’s cash account, wherein should a hacker steal a cash account number from a merchant and liquidate a victim’s cash account, difficulties emerge, such as “bounced” payments for legitimate transactions.  On the other hand, should a hacker steal a credit card number, the credit card issuer takes care of the fraud, thereby holding the cardholder harmless, wherein restoring a debit cardholder is a bit more involved.  In any event, having a credit card number stolen instead of a debit card number just seems less of a personal violation, and one which is less aggravating to remedy.  

Convenience Checks drawn on Credit Card Accounts are Highly Inconvenient to One’s Financial Health

​ Every so often, credit card companies mail “convenience checks” to cardholders.  In all actuality, cardholders receiving convenience checks are typically reliable customers, as those with poor credit scores are typically excluded from such offers.  In any event, as with credit card cash advances, the interest rates charged against convenience checks are higher than interest rates charged on credit card purchases.  As with credit card cash advances, convenience checks should be used only as a desperate last resort, as they are highly inconvenient to one’s financial health. 

One Way that Debit Cards are Absolutely Superior to Credit Cards…

​ There is one way that debit cards are absolutely superior to credit cards, and that is with regard to accessing cash from ATM machines.  Using one’s debit card with the right ATM machine (one that doesn’t charge a fee for withdrawals) enables one to withdraw money fee-free.  On the other hand, using a credit card to withdraw money from an ATM machine results a“cash advance” against the credit balance of the credit card account.  Cash advances should be reserved for only the most desperate of situations, as not only are cash advances charged at high interest rates, but unlike actual point of sale credit card purchases, there is no “grace” period, as the high interest is assessed from the date of the cash advance.  Also, the interest rate charged on the cash advance is typically higher than interest rates charged on credit card purchases.  Furthermore, issuers can charge a one-time fee for the cash advance.  As such, cash advances on a credit card account should only be used as a last resort. 

The Hazard of Credit Cards with Zero Percent Financing

​ Zero percent financing is becoming more and more prevalent among merchant credit cards, known in the industry as “closed loop” credit cards, as these credit cards are typically used for purchases only at a particular branded merchant, or 

​at a particular group of related merchants.  An example would be a credit card that can only be used for purchases at a tire store for tires and related products or services, wherein the credit card would not be eligible for use as a general-purpose credit card at, say, a grocery store or a clothing store.  In any event, these zero percent credit cards are great as long as the periodic payments are in good standing; however, missed payments or defaults will trigger accumulated interest at rates that are at seemingly usurious levels.  Such “closed loop” merchants find such penalties to be highly lucrative, assuming of course that customers in such a situation don’t default entirely.  In fact, it’s a worthwhile bet that many end users have an absolutely inaccurate idea, in terms of actual dollars and cents, of the potential financial liability of these zero percent offers. In any event, a consumer needs to understand the hazards of such zero percent implementations, wherein consumers with less than optimal financial discipline might do better forgoing such offers.   

Do the Math on Credit Card Balance Transfer Offers

​   Credit card accounts often feature Zero Percent balance transfer offers, wherein once a cardholder transfers an outstanding credit card balance from a different financial institution, the cardholder will enjoy a zero percent rate on the transferred balance for a given time interval.  This seems great, especially if the rate at the different prior financial institution was high.  Unfortunately, the balance transfer typically requires a balance transfer fee of around three percent, wherein transferring a $5,000 balance results in a $150 balance transfer fee, which is approximately 1 ½ months of interest at a 22.99% annual rate.  In this situation, a balance transfer fee of $150 for a zero percent interest rate for 12 months would be preferable to paying approximately $1150 for 12 months of interest on $5,000 at 22.99%; however, such becomes a losing situation if one were able to pay off the $5,000 in less than the 1½ months of interest it would take to pay the $150 balance transfer fee.  In instances of interest rates lower than the above cited 22.99%, the break even point for the $150 balance transfer fee would be longer than 1½ months (approximately 3 months using a 11.99% interest rate), so it is important for one to understand personal payment time horizons, and to “do the math” accordingly.  

“No Signature” Face to Face Credit Card Transactions

​ One may be curious about getting ready to sign for a credit card purchase at a point of sale, only to be told by the sales associate that a signature was unnecessary.  The fact that the point of sale transaction is face to face is a determining factor that enables the major credit card associations not to require a signature for most kinds of point of sale transactions that are at or below a predetermined amount.  American Express and MasterCard do not require signatures for most merchant categories if the dollar amount of the transaction is up to and including a limit of $50, whereas the upper limit for a Visa transaction is $25 for most merchant categories, except for discount stores and grocery stores/supermarkets merchant categories where the upper limit is $50, wherein Discover Card has an upper limit of $25.  These “No Signature” transactions are intended to reduce the friction at the cash register by enabling quicker point of sale transactions, which is especially welcomed by busy merchants. 

Debit Cards – Pin Number Versus Signature

​ In many implementations using debit cards at a point of sale, a customer presenting a debit card will be asked by a merchant “debit” or “credit”, wherein “debit” requires the customer to enter a “PIN” (personal identification number) that is generally four digits long, whereas “credit” requires that the customer to enter a signature.  Why the difference? With the PIN, the debit card transaction is processed via the Automated Clearing House (ACH), which is a vital system in the banking system of the United States of America, and handles trillions of dollars of financial transactions a year.  However, using a signature, the debit card transaction is processed by the same Visa/MasterCard proprietary system that handles Visa/MasterCard credit card transactions, wherein these credit card transactions also require a customer signature.  Signature debit card embodiments were once highly lucrative for card issuers, as merchants would be charged possibly several times more “interchange” for signature transactions (which was based on a percentage of the transaction amount) versus the “flat” PIN rate.  Due to acts of Congress and litigation, interchange rates for signature card transactions have been slashed, and are considerably more in line with merchant fees related to PIN transactions.  As one would expect, whatever reward programs related to signature debit card transactions have been greatly reduced as a result of the slashing of related signature debit card transaction interchange fees. 

Keeping Appraised of New Credit Card Offerings

​ Just as cell phones and laptop computers seem to become obsolete with each passing week, benefits on one’s credit card also become outmoded.  After all, it is hard to look at one-percent cash back cards that have annual limits on rewards with the same enthusiasm as before now that there are cash back cards offering 1½ percent (and better) rewards with no annual limits.  Do understand that pursuing a new card has it issues, such as dinging one’s credit score, and potentially worsening a debt trap for those that are so inclined to overspend.  Also, there is a very real possibility that the new card will have a lower credit limit than one is normally accustomed to, which might discourage one from using it.  Furthermore and unfortunately, one has to commit to the credit score “ding” before one can learn what the determined credit limit is, wherein requesting a increase in an unsatisfactory credit limit leads to a second ding on the credit score…sometimes you just can’t win. 

Saying “No” to Rental Car Insurance

​ Ever get a nice deal on a car rental, only to be sucker punched by an insurance surcharge for collision loss or damage on the rental?  What many car renters may forget is that their credit card provider provides such insurance up to a certain amount as a credit card benefit. While such benefits are very much appreciated, the cardholder does need to confirm that a credit card selected for the car rental does indeed have such rental insurance, wherein no mitigating circumstances or conditions void such insurance.  Also, a car renter needs to be very much aware of a maximum amount the credit card provider insures for, and select a car model whose value is covered by the maximum amount.  In other words, it is prudent to avoid renting a $250,000 Ferrari when the credit card issuer only insures vehicle theft or damage up to $50,000, although it is reasonable for 

​an exotic car rental company to have catastrophic safeguards in place.  

The Indignity of Applying for a New Credit Card Offering with One’s Current Credit Card Provider     Imagine someone looking at his credit card account online, and clicking on new credit card offerings from the same credit card provider just to see what’s what.  Low and behold, there is a new credit card with “better” benefits that are in every way superior to the current card, wherein the current card might not even be offered anymore to prospective new cardholders.  The problem with certain, if not many, credit card providers is that an individual that has been an exemplary customer with a flawless payment history of many years still has to supply the application department with all of the application information from scratch.  This is a disgrace to a loyal customer, wherein the customer is treated no better than an absolute stranger.  Imagine owning a business and treating loyal customers without any familiarity, or without any sincere regard for the quality patronage the customers have provided over a number of years.  Unfortunately, card issuers imagine, and practice, the unimaginable. That said, one should not be surprised that, when applying for a new credit card from the same provider of one's current most-used credit card, one will need to supply name, address, social security number, telephone number, income, etc., and that one's same provider will perform a credit check that “dings” one’s credit score, wherein the provider doesn’t refer one iota to one’s current credit card account, and doesn’t particularly care about one’s excellent customer history.  Also, one should not be surprised when the credit limit on the new card offering is not comparable to what was developed over time on the current credit card.  Superior treatment is where a customer’s good standing is fawningly acknowledged, and the customer is given the opportunity to be presented with a new card with the new card benefits that has the same account number, expiration date, and credit limit as the current credit card.  If one can’t get preferable service as a long term and excellent customer, then perhaps one should go to a competitor, just because one can.