Interesting viewpoint on credit cards

[JustCurious]

Back on topic, I do not know how your credit score can go to zero? I have not had any assets,debts or credit in the USA for the past 15 years and maintain a credit score in the 760-790 range. Every few years when it drops below 770 or so I make it a point (when I am in the USA) to buy a few $100 worth of junk at Kohl's & Ross. They always offer me a credit card and a 10-20% discount on that initial purchase. I then pay off the credit card at the same cashier and walk out. there is an immediate bump to my credit score that lasts a few years. Eventually, Kohl's & Ross cancels the card for lack of use, rinse and repeat.

Your credit score goes to zero when you close all credit accounts and do not open any new ones and do not use credit of any kind for a period of time, I think 10 years?

 

[purplesky]

I'm a DR fan. I enjoy his patience with people and hearing about Millionaires and their stories. Simply entertainment. Somewhat helpful at the end of the day. But as many of you we use CC's.

It occurs to me that the stores need to build the CC fee into their pricing. We pay for those fees whether we're using cash or CC. So, might as well us the CC for the rewards to get something for what you're going to pay anyway.

BTW - if you spend a lot (helps if still traveling for business) and like to travel domestically / Caribbean and live in a SWA town. There is no better card than the Chase Visa SW card. Companion pass get's our "rewards" up to the 12% level.

The Southwest Airlines card? I had that card I guess about six or seven years ago and since I didn’t fly enough I ended up canceling it because of the annual fee.

I just recently flew on Southwest and I almost signed up for it again to get a $200 credit.

According to Clark Howard that’s considered one of the best airline cards.

 

[NYEXPAT]

Your credit score goes to zero when you close all credit accounts and do not open any new ones and do not use credit of any kind for a period of time, I think 10 years?

If you had really bad credit, foreclosures, judgements, etc before you closed those accounts, it would still only get you down to 300-400. After about 7-10 years and those things came off your record, your score would move up some.

Before I moved to Peru, I had in the 800's. never looked at it until about 7 years ago when I noticed I was in the 760's with no open CC's and I think a 7 year history. That concerned me as I will be moving to the USA with my family and will have no income other than SS and will need to have a good score to rent an apartment for a few years.

 

[dixonge]

A little personal anecdote: for DW's 60th birthday one of the gifts I gave her was $600 in cash, to spend however she wanted. She had never had that much in cash at one time for herself.

How does one get to that age, especially when being part of an 'early' retirement, and not have had $600 in discretionary cash to spend at some point

 

[NYEXPAT]

How does one get to that age, especially when being part of an 'early' retirement, and not have had $600 in discretionary cash to spend at some point

A "tight leash"!

Actually, I transferred all my assets to my Wife years ago. Up until SS started rolling in 2 years ago, she would give me $1,000/mth for spending money. She has since cut me off as I can't risk my bank account going over 10K or I have to file an FBAR.

 

[purplesky]

If you had really bad credit, foreclosures, judgements, etc before you closed those accounts, it would still only get you down to 300-400. After about 7-10 years and those things came off your record, your score would move up some.

Before I moved to Peru, I had in the 800's. never looked at it until about 7 years ago when I noticed I was in the 760's with no open CC's and I think a 7 year history. That concerned me as I will be moving to the USA with my family and will have no income other than SS and will need to have a good score to rent an apartment for a few years.

You should sign up for Credit Karma. Its free and millions of people use it without issue. They will email you if anything changes with your credit.

They update your credit score and credit snapshot weekly. You will be able to see all your open and closed accounts and see your score weekly.

Credit Karma is a great tool. Unfortunately Dave Ramsey doesn't want you to use it because he preaches the FICO score is a scam. It is not.

Try renting an apartment without a credit score. No thanks.

A credit score of 300 is basically zero. You are screwed at that point credit wise.

 

[Amethyst]

I must have been 24 when I got my first CC. It was a Master Charge which I got through a local bank where my salary was being direct-deposited; that meant I wasn't charged an annual fee.

They would not give me a card until I had been with my employer a full year and had a salary of at least $15K. At the one-year point, I got my first step increase to slightly over $15K and off to the bank I went! Such a relief not to have to write checks to buy clothes, to be able to buy an airline ticket, etc. Plus, I wanted to establish credit in my own name; against the dim distant day when I would apply for a mortgage.

I knew enough not to carry a balance or pay a late fee. These seemed very basic, obvious matters, even to unsophisticated me.

For many years, when paying in a department store line, I noticed a significant gender difference: All the men used credit cards, while the women (except me) paid by check. (I hated the line at the discount cosmetics store - all women - all check writers!) Suspect it's not that different today, except that the women use debit cards instead of checks now.

 

[Sunset]

A "tight leash"!

Actually, I transferred all my assets to my Wife years ago. Up until SS started rolling in 2 years ago, she would give me $1,000/mth for spending money. She has since cut me off as I can't risk my bank account going over 10K or I have to file an FBAR.

Wow... you REALLY want to stay under the radar.

Good thing your wife hasn't run off with the pool boy.

 

[NYEXPAT]

Wow... you REALLY want to stay under the radar.

Good thing your wife hasn't run off with the pool boy.

No pool for me. I live in the Penthouse on the 16th floor overlooking the Pacific Ocean. I have room for a pool on my 700sq/ft terrace, but with the weekly tremors, the water would be sloshing around my bedroom and destroying my Brazilian cherry floors!

As has been noted here many times a "great spouse" is integral to any good plan.

 

[king smoothie]

DR has helped a lot of people and his program is great for getting people out of debt. For the most part people who have to be told what to do, who have been superconsumers their entire adult life. For some he helps, many, it becomes a religion and Dave has engineered his program to make devoted followers. The perfect DR follower is one that has been living beyond their means for as long as they can remember, are drowning in debt. They have trouble seeing a way out. Others have told them how to get out, but it doesn't resonate. They are offered financial peace at a low price or even free. The course is usually facilitated by those who are already on board and some who have successfully completed at least a few of the baby steps. These people are often his acolytes and they fiercely defend all things Dave. Baby steps sounds easy. Follow everything exactly, in order no deviating. If you go to a DR forum or just talk to acolyte it is very weird. They don't drive cheap beaters. They drive Dave cars. They don't get second jobs. They get Dave jobs. Dave says pay off your credit cards. Don't transfer your balance, that isn't Dave approved. Dave says build an emergency fund. Dave says save up to buy things. Apparently no one thought of these things before Dave (that part is really odd because he says a lot that his ideas are nothing new) What, you want to put money in a traditional IRA, no that is the devil, Dave says only do Roth IRAs. How much do you save for retirement, 15%. Until you have paid for your kids college and pay off your mortgage. Then you can do more. Oh, I have a financial question, does anyone know what Dave says about.... Dave says CDs are bad don't buy CDs. Ever. Don't buy bonds, all of your retirement has to be invested in stock and it has to be allocated his way. Oh, still confused about investing? Looking for an advisor? Dave happens to have Dave approved advisors, who pay a small fee to be in his network.
In all fairness most of the people who listen to him and have taken his classes aren't like that and he has helped many more people than I have. But people that can't think for themselves drives me nuts in case you were wondering.

 

[athena53]

Wow... you REALLY want to stay under the radar.

Good thing your wife hasn't run off with the pool boy.

DH and I had the same arrangement- actually, he existed on less! I liked investing and he wasn't interested; I'd been married to a financial train wreck and it had made me even more of a control freak than I had been before. When we married and he sold his home, he handed me the $100K proceeds and told me to put them into my account. Every month when his SS check arrived, he'd write me a check for all but a few hundred $$ in his account- I invested that, too. It wasn't that he was irresponsible or a spendthrift- he was really the opposite. I even added him as an Authorized User on my credit cards to keep his credit rating good and so that we could both rack up Frequent Flyer miles and/or hotel points to the same account.

We lived well and traveled well. He died in late 2016 and even though the will left everything to me, I've provided some help to my stepson and to my BIL- both are finite and they're amounts DH and I discussed. I wanted them to get some benefit from DH's thrift.

A little OT, but I wanted to add another example of a good man who cheerfully ceded the finances over to his wife but was not "on a tight leash".

 

[Amethyst]

Mr. A. hated managing finances, and gladly handed it all over to me. Didn't criticize when I made learner's mistakes, just said I was doing a better job than he would have done. He said his mom managed the money and gave his dad an allowance (both of Mr. A.'s parents had died before he and I met, so I never got their side of this story).

With credit cards and online ordering, the concept of an "allowance" seems a bit outdated, anyway. Couples definitely need to talk about their spending and discuss larger purchases, but the handing over of $20 bills is kind of 20th century.

 

[athena53]

With credit cards and online ordering, the concept of an "allowance" seems a bit outdated, anyway. Couples definitely need to talk about their spending and discuss larger purchases, but the handing over of $20 bills is kind of 20th century.

I agree- DH and I, without even discussing it, would run any major purchase past the other before pulling the trigger. Our "Major" threshold was probably low given our finances, but it worked for us. I can't think of any time when one wanted to buy something and the other disagreed, but the communication beforehand was important.

 

[Nemo2]

I agree- DH and I, without even discussing it, would run any major purchase past the other before pulling the trigger.

One divorce, one widowhood, current great marriage.......at no time was/is the decision making any other way except discussion and joint agreement.

 

[Danmar]

One divorce, one widowhood, current great marriage.......at no time was/is the decision making any other way except discussion and joint agreement.

Agree. It does seem like a good idea though to have an amount that doesn’t need to be discussed. My DW has her own source of income which she can spend as she wishes, no questions asked. In my case, I don’t really have the same ability since my income is the basis for paying household expenses. Big expenditures always discussed before hand. Works well for us.