Credit cards and how you use them (finance pros)

[donnyj08]

Ok guys. Growing up my family never used credit cards to a large extent and that carried on with me into adulthood. I got my first card at 22 (us bank Hobby lobby card) and I always paid the balance off completely every month. I've since had auto loans ive paid off and a motorcycle loan ive paid off. I still have the old Hobby lobby credit card and use it the same as ever. Last year I bought a diamond (ring) on a 0% interest for 18 months card and have paid it off as well. This was extremely nice as I didn't have to pull thousands out of my savings. I basically used someone else's money for 9 months and paid off the balance.

My question for you guys is do you normally switch to the next best 0% card when available and just leave the others inactive? I've heard if i cancel my current card it will take a bunch of points off my credit. The way i understand it is i can apply for a new higher end card (i have excellent credit) and get a 0% for 18 month card and just leave my other accounts open with a $0 balance for basically forever and get the most benefit this way. is this true?

Im at a point I rarely need credit cards I only use them for fuel and online orders. basically out of convenience. What do you finance guys recommend? I was considering switching to a Citi Diamond preferred card as opposed to my old Hobby Lobby US bank card that originated as a starter card that I still have only with a much higher limit.

Advice from you finance professionals would be greatly appreciated.

 

[xshoex]

What your doing is perfect. If you get another card, leave your hobby card open and use it once a month for gas, and pay it off as you have been.

Not a finance guy, but im 23 with 725 credit + , 2 cards, one of which I do all my grocery shoppimg with and pay it off on payday, other card is strictly for my netflix automatic payment, also pay off immediately.

 

[Al]

Originally Posted By: donnyj08

Advice from you finance professionals would be greatly appreciated.

"Finance Professionals" as in Financial Advisors are designed to separate you from your money. Don't carry a balance..what more is there to say?

 

[Leo99]

Keep your accounts open. My credit score is 802 and one thing on my credit report rated "poor" is that I only have 9 accounts.

Another thing that is used to grade your credit score is credit utilization. You will probably never use it but it's nice to have deep credit reserves.

 

[donnyj08]

Originally Posted By: Leo99
Keep your accounts open. My credit score is 802 and one thing on my credit report rated "poor" is that I only have 9 accounts.

Another thing that is used to grade your credit score is credit utilization. You will probably never use it but it's nice to have deep credit reserves.



this is close to the answer im looking for. My utilization is only 8%. My score is 769. 0 late payments and 6 years of credit depth. Basically my main question was is there any harm in opening additional accounts? It seems there isn't as long as you don't carry a balance.

basically Im wanting to raise my credit score even higher but not accumulate more debt right now. The goal is to buy a home very shortly so im trying to get my Credit as high and tidy as possible.

 

[eljefino]

I don't give a patootey about my credit score.

I pay my bills in full every month, haven't wrecked my car/ made an insurance claim, and keep down a job and savings account.

The only thing you'd worry about is home buying, which I bet you could pull off. If you only get an "okay" rate you can always refinance later in life when your credit's better, and you could plausibly shake of private mortgage insurance if it turns out you have 20% equity at that point.

But, that said, locking in a 4% mortgage would be cool, too.

 

[Wolf359]

I go for the rebate cards. I used to have discover but stopped as they weren't accepted at as many places as before, not sure how they are now. I use a Fidelity card that gives 2% cash back on everything. If you're really into it, you can chase the ones that do 5% on certain items. It's easier for me to just pay a couple of bills each month than to paying several. I usually do 2 main cards, one with all the regular monthly bills like phone, electric and other subscriptions and the other for regular everyday and online purchases. The 2nd one is in case the card gets hacked so you don't have to change the credit card number on file with all the regular monthly bills. And you always get 2% cash back on all of them. As long as you pay off the full balance every month, you're fine. You don't need to close any cards. If you find that after 4-5 years you haven't used them, then maybe think of closing them. However I've had a few card for several years that I didn't use and after a while they closed them for me.

 

[Rolla07]

Clearly you are good at controlling spending by paying in full each month. Keep your old account open.

 

[gabriel9766]

I have 4 CC'S BOA, citi Dimond preferred, discover it card, and American express cash rewards. The American express and citi have a 13% APR and discover and BOA are about 20%. I use my BOA for gas (3% cash back) my America express is being used for my scratch i did on my car. Citi and discover or just here and there purchases. I pay all them off n full each time. The citi and A EXP have 0% apr for another yr.

 

[99Saturn]

Originally Posted By: donnyj08
Basically my main question was is there any harm in opening additional accounts?


Hard pull on your credit in the short term for each new card you open - will cost a some points.

I don't chase the next 0% promo - but I will typically sign up if I feel like there's a card that gives me a good point benefit when I use it and can add it to my normal spending pattern (Fidelity Amex & Citi Double cash 2%; Sallie Mae Barclays 5% on Groceries, Gas and Book Stores, etc.). For the most part my other cards sit, I wouldn't close them (no need to shorten your credit history).

 

[Wolf359]

Originally Posted By: 99Saturn
Originally Posted By: donnyj08
Basically my main question was is there any harm in opening additional accounts?


Hard pull on your credit in the short term for each new card you open - will cost a some points.

I don't chase the next 0% promo - but I will typically sign up if I feel like there's a card that gives me a good point benefit when I use it and can add it to my normal spending pattern (Fidelity Amex & Citi Double cash 2%; Sallie Mae Barclays 5% on Groceries, Gas and Book Stores, etc.). For the most part my other cards sit, I wouldn't close them (no need to shorten your credit history).


The hard pull only stays on your credit report for 2 years so it doesn't really matter unless you're buying a house.

 

[HTSS_TR]

I used to have 20-25 CC with total credit line over half mil but my credit score was a little above 840(probably 842-843) when I last refinanced my house in around 2004-2005.

Currently I have 5-10 cash-back cards with total credit line around $150-200k. I usually utilize less than 2-5% of my credit, and I setup auto-pay all my cards and all my other monthly bills.

My credit score is a little lower at around 82x, but still is very good.

I have some cards especially for rebate only, one of those cards is Discount Tire card for $60 rebate on buying a set of 4 tires. I only use this card to buy tires at America's Tire(same as DT elsewhere).

One thing you should do is setup auto-pay balance on due date, then don't worry about forget payment and incur late fees.

 

[xfactor9]

Since you're about to buy a house, you should be conservative with applying for new credit. You shouldn't close any account either, because your utilization-% will increase thereby reducing your score. Just wait until after you get the mortgage to apply for a new card. For now, try to reduce your utilization. You'll see your score drop even more. But there's a diminishing return; as you approach 1%, your FICO will rise less and less.

 

[gathermewool]

I use my credit cards for everything, from a coffee to major purchases. I pay the cards off each month and let them pay me hundreds each year in cash back. The interest rate means nothing if you pay off your balance each month, so an offer of 0% means nothing. If you've got debt that you need to lower the interest rate on, and you can get 0%, then by all means. That's a temporary fix, though.

 

[NormanBuntz]

If you're saving for a house and will be getting a mortgage, one important thing to consider is keeping a favorable debt to income ratio. Having a lot of available credit on cards you're not using can figure into the mortgage qualification process.

 

[Ethan1]

DO keep all your old accounts open to keep your "average age of accounts" up. Make sure to use each card once a year so it doesn't get closed for inactivity.

DO apply for any card which strikes your fancy if you're looking to build your credit; 12 to 15 tradelines is ideal in the eyes of lenders.

Citibank is terrible to work with. If you really want a Citi card, go for the Double Cash. If you were eyeing the Diamond Preferred because it looks cool, get the Chase Marriott Preferred (it's black stainless steel).

 

[Kuato]

Part of your credit score is the length of time that accounts have been open - so the USBank card is doing some good in that respect.

 

[blupupher]

As others have said, keep the old card. Do not go in a hunt for 0% interest since you pay the card off every month.
Find a rewards card that works for you and get that. Yes it will drop your score a bit, but not enough to really make a huge difference.
Also, on the old card, request a credit increase, it will cost you nothing but will give you a higher credit limit, but a lower utilization, which will help your score.

I currently have 3 credit cards. One is my primary card used for pretty much all in person purchases. It is a FRN credit card that I get around $60 worth of free gas a month with. Paid off every month.
My second card is a Citi card I have had for over 15 years. It is used only for online purchases or bill pay. Paid off every month. I am debating switching that one to the Citi Double pay for better cashback.
Third card is a Discount Tire card, only used once every 3 years or so when I need new tires. I save between $60-100 each time with their promo's when I buy tires using it, plus get 6 months interest free (but usually pay it off in 2-3).

Sounds like you are in good control of your spending, unlike most of the country

 

[Oldmoparguy1]

I have an Chase Amazon card. 3% on Amazon, 2% on gas & food, 1% on everything else. i use it like a check book, pay it off every month. It has a 19% interest, down from 23%. I also have a NC state credit union visa. it Has an 18k limit with with 8% interest. I use it for short term loans. Last summer I needed 12k in a hurry. Went to a teller window, gave her the card, asked for 12k and put in in the checking account. 5 minutes and and done. I paid it off over 6 months as the insurance checks came in. I paid a total of $106 in interest. NC credit union is state wide. Really good people to work with, If you are in the state, it's worth looking into.

 

[04SE]

Originally Posted By: Oldmoparguy1
I have an Chase Amazon card. 3% on Amazon, 2% on gas & food, 1% on everything else. i use it like a check book, pay it off every month. It has a 19% interest, down from 23%. I also have a NC state credit union visa. it Has an 18k limit with with 8% interest. I use it for short term loans. Last summer I needed 12k in a hurry. Went to a teller window, gave her the card, asked for 12k and put in in the checking account. 5 minutes and and done. I paid it off over 6 months as the insurance checks came in. I paid a total of $106 in interest. NC credit union is state wide. Really good people to work with, If you are in the state, it's worth looking into.


You paid 8% on a cash advance?

My credit union mastercard is also 8% on purchases but the cash advance APR is over 20%.