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Archive for the ‘Credit’ Category

Most financial experts recommend having two to three credit cards – one or two primary card and another card in case something happens to the primary credit card (lost, stolen, etc.).

For my post-graduate life, however, I’ve only had one credit card. Although I’ve been thinking that one card isn’t quite prudent, I never actually applied for a second card.

Here’s why I love having only 1 card:
1. Ease of tracking: One card = 1 website, 1 deadline, 1 credit limit, 1 username, and 1 password to remember.

2. Concentration of reward points: I put all credit card purchases on 1 card, so I accumulate points relatively quickly. Eveyr 10,000 points = $100 Sephora card!

Here’s why I think I might need another card:
1. Emergencies happen: if I lose my credit card now, I’ll have to wait for the company to cancel and mail me a replacement card. In the meantime, I’d have to rely on my debit card (which I don’t like to use for purchases).

2. Better credit score (?): If I get another credit card, my total available credit will be much higher, but my total credit use will still be the same. So, my percentage of credit used will decrease, and that should have a favorable impact on my credit score.

What do you think? How many credit cards do you have?

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*And not be scammed.

1. Remember that there is only legitimate site to retrieve your free credit report: annualcreditreport.com. All the other websites with a variation on the name are NOT part of the government’s program that provides free credit reports.

2. For safety reasons, you should always directly type in the address into your browser. That extra 5 seconds of typing is worth it.

3. You are entitled to a total of three free credit reports per year, one from each of the three credit-reporting agencies (Equifax, Experian and TransUnion).

4. A credit report should not cost you any money. Your credit score (FICO) is separate from the free report you will receive, and does require payment.

5. Don’t fall for scams! During my apartment search, I’ve emailed a couple of listings only to be told that I need to provide my credit score just to see the apartment, and that if I don’t know my credit score I can handily get the information for free at PleaseScamMe.com.

Keeping tabs on my credit report is something I need to do better – I just pulled my first free credit report in more than a year! Thankfully, everything looked all right, so I’ll pull my other two credit reports later in the year. From now on, I plan to do a credit report pull every 4 months.

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I was talking to a friend about this, and I realized that I like to “spread out” my payments. For example, if my credit card bill is due on the 30th of every month, I like to make smaller payments throughout the month instead of the payment-in-full on the 29th or the 30th.

If my statement says $800, instead of paying the full $800 on the 30th, I might make 2 payments of $400 sprinkled throughout the month, or a payment of $300 and a payment of $500.

This method works better for my cash flow, as I don’t just look at the pile of money in my checking account and think, wow, I’m really flush, when really I just haven’t transferred that money to the CC yet.

What do you do?

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Today, a friend and I discussed the difficulty of really watching credit card spending. Like my friend, I put 95%+ of all my non-rent expenses on my credit card. We are both responsible credit users – we pay off our charges in full every month, and we use the card to get rewards like cash-back and gift cards. But we both agree that somehow, credit card spending seems to be subject to the “creep”, and the direction is often upwards.

The conversation got me thinking: am I prone to spend more paying with a credit card than I would be using cash?

card
Research says yes, and as much as I love my CC, I tend to agree:

Even though I don’t carry a balance month-to-month, a CC is just SO convenient that it’s easy to rationalize that “oh, it’s just an extra $20” and “oh, I’ll get rewards on it.” A $20 bill seems to be like a quite a bit of money. But a $880 credit card bill doesn’t seem that different from a $860 bill.

I don’t think I spend MUCH more using a credit card than I would using cash, but I’d be giving myself too much credit (heehee. pun intended!) if I insist that I haven’t been lulled by the CC into spending just a little bit more at times.

Still, I have no plans to give up the plastic. My credit card allows me added protection that I would not get with a debit card (virtual account numbers, low liability in case of fraud, etc.) and is way more convenient than cash. Besides, when my cash is gone, it’s gone. I have no idea where it went. At least with a CC, I have a statement and can keep track of my purchases.

Despite some valiant attempts in the past, I don’t really keep track of every penny either. My fixed expenses are what they are, and I have an idea of how much my credit card bills should be every month (below $800-ish) for me to make my savings goals. I have dollar-amount saving goals – as long as I make those, the rest of the money is mine to do as I will.

Do you think you spend more using a credit card?

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