What's in your wallet?

[D4fan]

Sounds like a lot of folks are getting some good benefits from their credit cards.

The key is to pay off your cards monthly and don’t get too allured by the points and benefits and spend beyond your means.
If you have a balance of $1,000 on your cards at 25% interest, you’ll pay over $20 per month in interest.

Great point. Rewards are there to entice you to use their money instead of yours, make sure it's just using theirs and not borrowing theirs.

Recently we made a purchase of rather significant cost at a small furniture retailer. I looked at the invoice and had a hunch they may have padded the total a few percent to cover the likelihood I would be using a credit card to pay them for said items. Following my hunch, i asked how much of a discount I could get for paying cash? He offered me a 4% discount, which was a few hundred dollars. It made zero sense at that point to use the card, we instead paid cash getting the instant rebate.

I found myself in The Original Mattress Factory store a few days later, and thought the same thing might work there? So I asked, and was told their percentage fee charged by the card companies was less than 1% so they would not offer me a discount. So I pulled out a Chase card that pays 2% and had him charge it to that one. This left me pondering the transaction, and if what he told me was true? How can Visa afford to pay me 2% on a purchase that they collect less than that on the transaction? Perhaps it is as simple as enough people pay way more in interest that it works out for them.

 

[soccerdad72]

How can Visa afford to pay me 2% on a purchase that they collect less than that on the transaction? Perhaps it is as simple as enough people pay way more in interest that it works out for them.

I think it really is that simple. For every card holder like you (and me) that pay off their cards monthly, there's probably 5-10 others who carry a balance on their cards.

 

[pcbuck]

Great point. Rewards are there to entice you to use their money instead of yours, make sure it's just using theirs and not borrowing theirs.

Recently we made a purchase of rather significant cost at a small furniture retailer. I looked at the invoice and had a hunch they may have padded the total a few percent to cover the likelihood I would be using a credit card to pay them for said items. Following my hunch, i asked how much of a discount I could get for paying cash? He offered me a 4% discount, which was a few hundred dollars. It made zero sense at that point to use the card, we instead paid cash getting the instant rebate.

I found myself in The Original Mattress Factory store a few days later, and thought the same thing might work there? So I asked, and was told their percentage fee charged by the card companies was less than 1% so they would not offer me a discount. So I pulled out a Chase card that pays 2% and had him charge it to that one. This left me pondering the transaction, and if what he told me was true? How can Visa afford to pay me 2% on a purchase that they collect less than that on the transaction? Perhaps it is as simple as enough people pay way more in interest that it works out for them.

Very smart.

A lot of people don’t have your discipline as far as paying the full bill every single month.

 

[pcbuck]

I think it really is that simple. For every card holder like you (and me) that pay off their cards monthly, there's probably 5-10 others who carry a balance on their cards.

It seems like the younger generation doesn’t have a problem spending 5-10 K on a vacation despite not having the money to pay it off.

I know someone who rented a Slingshot while on vacation at Myrtle Beach and still haven’t paid off the bill for it. From TWO years ago. SMDH.

 

[pcbuck]

I think it really is that simple. For every card holder like you (and me) that pay off their cards monthly, there's probably 5-10 others who carry a balance on their cards.

I was thinking about this statement recently and decided to look into it.
Americans carried a balance on 56% of all active credit cards in the 3rd qtr of 2022 according to the American Bankers Association. The average interest rate was over 20% APR.
According to Lending Tree Ohio is #38 in the US (with #1 being the most) with $6,394 of average credit card debt. Connecticut was the highest with $9,408 and Kentucky the lowest at $5,408. If a hypothetical Ohioan had credit card debt of $6,000 every month of the year, they would be paying about $100 in interest every month.

 

[Sykotyk]

I have the Marriott Bonvoy AmEx card. For me, the $80 annual fee about offsets the benefit. I don't have the Brilliant one. Problem is, I'm really cheap traveling, so I'm not going to be getting expensive rooms where perks and discounts apply. And I don't charge enough monthly to get ridiculously high points to use. I also just don't like using points in general and having to plan my purchases to get the most, etc. I need a room, i book a room. I get a ton of free rooms through Hotels.com or go with the cheapest from Priceline.

My two best cards for points etc is Discover and Double Cash Citi card. 2% on everything and 5% on some stuff (though it changes throughout the year). Discover is just a good cashback card.

 

[pcbuck]

I have the Marriott Bonvoy AmEx card. For me, the $80 annual fee about offsets the benefit. I don't have the Brilliant one. Problem is, I'm really cheap traveling, so I'm not going to be getting expensive rooms where perks and discounts apply. And I don't charge enough monthly to get ridiculously high points to use. I also just don't like using points in general and having to plan my purchases to get the most, etc. I need a room, i book a room. I get a ton of free rooms through Hotels.com or go with the cheapest from Priceline.

My two best cards for points etc is Discover and Double Cash Citi card. 2% on everything and 5% on some stuff (though it changes throughout the year). Discover is just a good cashback card.

The cash back cards are good in that they don't have an annual fee. It's also easy to get the rewards (automatically) and you don't have to do a lot of planning or research.

You do a lot of travel for high school football. Do you always drive or do you sometimes fly?

 

[Sykotyk]

The cash back cards are good in that they don't have an annual fee. It's also easy to get the rewards (automatically) and you don't have to do a lot of planning or research.

You do a lot of travel for high school football. Do you always drive or do you sometimes fly?

Virtually never fly. I have. Just don't.

 

[LCL]

In my wallet? $40 and some change. A bank card, driver's license, insurance cards, a Kroger Card, a couple of business cards. That about does it. Used to carry Social Security card, but thats probably a bad idea.

 

[irish_buffalo]

 

[Zunardo]

Used to carry Social Security card, but thats probably a bad idea.

Eh, probably.

Think I quit carrying mine 25 years ago? Back then our employee ID badges had our SS numbers prominently displayed. One day a co-worker complained about that as a privacy issue. I'd never thought twice about it. Even my OSU student badge had that number on there. Wasn't long afterward USPS issued everybody a unique 8-digit ID number to use in lieu of SS, so I put mine away for safekeeping.

 

[pcbuck]

In my wallet? $40 and some change. A bank card, driver's license, insurance cards, a Kroger Card, a couple of business cards. That about does it. Used to carry Social Security card, but thats probably a bad idea.

The credit card game isn’t for everyone, but if you’re willing to spend the time and have a lot of discipline it can be very beneficial.
I’ll probably post my update on my progress at the end of next month or the end of September.

 

[OhioBobcatFan06]

I think it really is that simple. For every card holder like you (and me) that pay off their cards monthly, there's probably 5-10 others who carry a balance on their cards.

Have you seen the fees these card companies charge merchants?

 

[crudog]

The credit card game isn’t for everyone, but if you’re willing to spend the time and have a lot of discipline it can be very beneficial.
I’ll probably post my update on my progress at the end of next month or the end of September.

I, personally, find no value "coupon" shopping and remembering which card to use in which instance. There is stress involved even if you don't recognize it immediately. I have used no credit cards in 19 years and have been debt free in that time. I pay with a debit card or cash only and don't buy anything I cannot pay for on the spot.
In my minimal ways, I no longer carry a wallet (yes, even that bothered me ). My cell phone cover has a pocket for my driver's license and debit card if an establishment does not accept Apple Pay.
I do not preach what others should do. The above protocol simply makes my life that...simple.

 

[pcbuck]

In my wallet? $40 and some change. A bank card, driver's license, insurance cards, a Kroger Card, a couple of business cards. That about does it. Used to carry Social Security card, but thats probably a bad idea.

Earlier in this thread D4fan posted about how he saved $1800 in gas in 1 year with his Kroger card. I would assume that’s a credit card but it’s certainly worth a look if you shop mostly at Kroger.

 

[LCL]

Earlier in this thread D4fan posted about how he saved $1800 in gas in 1 year with his Kroger card. I would assume that’s a credit card but it’s certainly worth a look if you shop mostly at Kroger.

Its a rewards card. There are certain items you buy that give you points towards fuel savings. It also lowers prices of items in store. There might be an item thats $5.99, then under it will be a yellow tag indicating the price with your Kroger card. Every 100 points you earn shopping gives you 10 cents off.

 

[Mr. Slippery]

Its a rewards card. There are certain items you buy that give you points towards fuel savings. It also lowers prices of items in store. There might be an item thats $5.99, then under it will be a yellow tag indicating the price with your Kroger card. Every 100 points you earn shopping gives you 10 cents off.

Kroger is 1 of the things I greatly miss from the short time I lived south of Route 30. I had one of those cards.

Same idea at Giant Eagle with their Advantage card. I've heard of construction companies that will go to Giant Eagle to buy gift cards for Lowe's, Home Depot, etc. to pay for their big orders at those stores. In the process, they rack up a ton of rewards points to stock up on cheaper gas at the GetGo station and can use that gas to power some of their equipment.

 

[Mr. Slippery]

I, personally, find no value "coupon" shopping and remembering which card to use in which instance. There is stress involved even if you don't recognize it immediately. I have used no credit cards in 19 years and have been debt free in that time. I pay with a debit card or cash only and don't buy anything I cannot pay for on the spot.
In my minimal ways, I no longer carry a wallet (yes, even that bothered me ). My cell phone cover has a pocket for my driver's license and debit card if an establishment does not accept Apple Pay.
I do not preach what others should do. The above protocol simply makes my life that...simple.

As a much younger person, I had a goal to get through life without needing a credit card. That mentality didn't last long after I realized a couple years into college that a credit card was going to be my best tool for establishing some credit history. There is always the possibility of an emergency, too. I pay the full balance every month which generally isn't much anyway as I'm not a huge earner and therefore not a huge spender.

 

[pcbuck]

As a much younger person, I had a goal to get through life without needing a credit card. That mentality didn't last long after I realized a couple years into college that a credit card was going to be my best tool for establishing some credit history. There is always the possibility of an emergency, too. I pay the full balance every month which generally isn't much anyway as I'm not a huge earner and therefore not a huge spender.

Smart man. Having really good credit has helped me a lot with getting better interest rates for my house and cars if needed.

The key, as mentioned earlier, is paying off the balance in full. The credit card companies are still making money off you (through the retailers), but not nearly as much.

 

[pcbuck]

Smart man. Having really good credit has helped me a lot with getting better interest rates for my house and cars if needed.

The key, as mentioned earlier, is paying off the balance in full. The credit card companies are still making money off you (through the retailers), but not nearly as much.

It's easy to say you'll get better interest rates but that doesn't really mean anything to most people.
I'll give an example with real life numbers.

A person is buying a $400,000 house with 20% down. The loan would be for $320,000. Assume that he wants to purchase with a 30 year fixed mortgage. I used 20% down to avoid paying PMI
If his FICO score is 780+, the rate would be 6.13% (APR would be 6.34%) with a monthly payment (principal and interest) of $1,944. The total payment for 30 years would be $699,840.
Drop his FICO score to 720 and his rate would go up to 6.50 % (APR of 6.72%). Doesn't sound like much but the monthly payment (P and I) goes up to $2,023 for a total payment of $728,280 over 30 years.
Drop his FICO score even further to 650 would increase his rate to 7% (APR to 7.24%). The monthly payment goes up to $2,129 for a total payment of $766,440.

In this scenario the person would save from $28,440 to $66,660 for the life on the loan just by improving his credit score. Some home lenders even waive the PMI for really high credit score buyers, even if they don't pay 20% down.

 

[eastisbest]

You lost me at "$400,000" lol.

That's ok, I can just move the decimal point one left.

 

[pcbuck]

If you've ever been declined on a credit card application, it may not be for a low FICO score.
Credit card companies often decline even high score applicants due to too many new credit cards approvals over a short period of time.
You may think, well my credit score is 815 so I won't be declined. Score doesn't matter in this instance.

The most well known situation is the Chase 5/24 rule. In order to be approved for a new Chase credit card, you have to have less than 5 card approvals over the past 24 months. These 5 aren't just with Chase but with all the banks combined. So if you have 3 new credit cards in the past 2 years and are thinking about applying for a Chase card and a Capitol One card, apply for the Chase card first. If you apply for the Capitol One card first, you'll be auto-declined for the Chase card.
American Express will only let you have 5 different Amex cards at once (Business + Personal). They'll only allow 2 approvals every 90 days.
Bank of America has the 2/3/4 rule. They only let you apply for 2 cards in 2 months, 3 cards in 12 months, and 4 cards in 24 months. This applies to BOA cards only.
Capital One only allows 2 Capital One branded cards at once and only 1 approval every 6 months.

A lot of these rules came about because consumers recognized the value of the sign on bonus given by the credit card companies and would apply to many cards at once or in a short period of time.

 

[tom 48]

What's in your wallet?​

 

[D4fan]

Earlier in this thread D4fan posted about how he saved $1800 in gas in 1 year with his Kroger card. I would assume that’s a credit card but it’s certainly worth a look if you shop mostly at Kroger.

Yes, that is a credit card through US bank. As we enter the second year of the card we drop from .55 / gallon discount down to .25/gallon discount, just for using the card. We still get the Kroger fuel points as well, so our maximum total discount on fuel went from $1.55/gallon ( .55 card discount and 1.00 Kroger discount = 1.55) down to $1.25/gallon.

It's easy to say you'll get better interest rates but that doesn't really mean anything to most people.
I'll give an example with real life numbers.

A person is buying a $400,000 house with 20% down. The loan would be for $320,00. Assume that he wants to purchase with a 30 year fixed mortgage. I used 20% down to avoid paying PMI
If his FICO score is 780+, the rate would be 6.13% (APR would be 6.34%) with a monthly payment (principal and interest) of $1,944. The total payment for 30 years would be $699,840.
Drop his FICO score to 720 and his rate would go up to 6.50 % (APR of 6.72%). Doesn't sound like much but the monthly payment (P and I) goes up to $2,023 for a total payment of $728,280 over 30 years.
Drop his FICO score even further to 650 would increase his rate to 7% (APR to 7.24%). The monthly payment goes up to $2,129 for a total payment of $766,440

In this scenario the person would save from $28,440 to $66,660 for the life on the loan just by improving his credit score. Some home lenders even waive the PMI for really high credit score buyers, even if they don't pay 20% down.

My wife has all of the credit cards we carry in her name. We tend to delay purchases until we can pay cash for even the large items, such as vehicles or realestate. So ,we began building a home in 2022 and due to cost increases of over 40% needed to borrow some money to finish the home. Wife's credit score came back right where we expected it would score wise, but mine came back as not enough information to generate a score. Went to several banks and each said expect to pay an extra 2% for my non score. Finally one bank allowed us to just use her score if we put the house in her name only. No problem on my part, anything to save 2%. Now to try and figure out how to generate a score for myself.

I really appreciate your insight on this topic PCbuck. Assume you work in the credit industry?

 

[D4fan]

It seems like the younger generation doesn’t have a problem spending 5-10 K on a vacation despite not having the money to pay it off.

I know someone who rented a Slingshot while on vacation at Myrtle Beach and still haven’t paid off the bill for it. From TWO years ago. SMDH.

This comment was what I was actually looking for when I got back on this thread this morning. We were discussing spending and vacations with extended family last evening. We ran the gambit, from borrowing to take a 5-10k vacation, to in my case, never taking what anyone else deemed to be a vacation because budget for a vacation is $500 and that usually gets us 300 miles or less away from home for three or four days maximum.

Borrowing for vacation seems counterintuitive to me, I thought vacation was something you earned as a reward for hard work, not something you do to force you to work hard?

Years back I recall a few co workers who actually took out HELOC loans for vacation, borrowing against their equity. But today, seems many people do not blink an eye over putting themselves in debt through a credit card for a week of fun.

 

[EHS 2001]

I've heard of construction companies that will go to Giant Eagle to buy gift cards for Lowe's, Home Depot, etc. to pay for their big orders at those stores. In the process, they rack up a ton of rewards points to stock up on cheaper gas at the GetGo station and can use that gas to power some of their equipment.

I do the same thing with gift cards from Kroger whenever I can plan ahead before a big purchase. For example, I purchased a $500 Amazon gift card at Kroger before buying a new TV. Thanks to a 4X fuel points promo we got 2000 points and my American Express card offers 5% cash back on grocery store purchases which got me another $25.

 

[PantherProud]

I do the same thing with gift cards from Kroger whenever I can plan ahead before a big purchase. For example, I purchased a $500 Amazon gift card at Kroger before buying a new TV. Thanks to a 4X fuel points promo we got 2000 points and my American Express card offers 5% cash back on grocery store purchases which got me another $25.

Nice. We just bought a new car and put the full $2500 you can charge on a card to get the points.

 

[pcbuck]

This comment was what I was actually looking for when I got back on this thread this morning. We were discussing spending and vacations with extended family last evening. We ran the gambit, from borrowing to take a 5-10k vacation, to in my case, never taking what anyone else deemed to be a vacation because budget for a vacation is $500 and that usually gets us 300 miles or less away from home for three or four days maximum.

Borrowing for vacation seems counterintuitive to me, I thought vacation was something you earned as a reward for hard work, not something you do to force you to work hard?

Years back I recall a few co workers who actually took out HELOC loans for vacation, borrowing against their equity. But today, seems many people do not blink an eye over putting themselves in debt through a credit card for a week of fun.

Once again you're showing how discipled you are which is very commendable. Many people don't blink an eye to charging their vacations on their credit card and accumulating a balance or on their HELOC. Using the HELOC wouldn't be too bad up until this latest run of interest rate hikes. Personally, I pay for my trips when they are due but try to book the flight and hotel/cruise in different months in order to ease the pain a bit.

I'm not in the credit industry but am very interested in this topic and have done a lot of research.

 

[pcbuck]

Nice. We just bought a new car and put the full $2500 you can charge on a card to get the points.

That's smart. The last 2 times I bought a car I didn't finance, and they didn't let me put anything on a credit card. I may have to ask the question differently next time. I'll also have to make sure they don't charge a convenience fee to use the card.

 

[pcbuck]

If you are paying for your credit card by check and don't have any online access, you are missing out on some nice offers.
My Amex, Chase, and Citibank cards all have offers that you can only activate online (app or website).

For example, on my Amex card I've gotten $25 back on two different occasions buying from Fanatics, $30 back from Cole Haan, and 5000 Amex points by renting a car from Hertz. On my Chase Southwest card, I've gotten 10% off purchases at Panera, Five Guys, and Nike.