Credit Card Conundrum

[Animorph]

I like keeping at least one VISA and one MasterCard, just for those very rare cases (Costco and a trip to Germany long ago come to mind) where only one of them is accepted.

I use two cards regularly, both Fidelity VISA's. One for everyday use and one for automatic monthly subscriptions and other bills that can be paid by credit card. The everyday card has been replaced two or three times after strange charges appeared. The monthly payments card has not had that problem. Costco had a problem with my card last time. Not sure why, but always good to have a spare.

I have an airline card that was about break even with fees and cash benefits. Also no foreign transaction fees, which has been handy when traveling and online ordering. But if we don't travel by air a little more it probably won't be worth it. This is one I would consider canceling to avoid the fee. It is my only card with a yearly fee.

I have an Amazon card that is used only for Amazon purchases, with nice discounts.

Then I have a couple of older cards that I never got around to canceling. One is now ignored. One I keep active with one automatic monthly bill payment. No fees, so it costs me nothing to hang on to them. I keep them stashed away at home rather than carrying them around.

 

[TechLead]

Chase Sapphire Preferred

One of the few cards that gives you Rental Car insurance (Collision Damage Waiver) almost anywhere on this planet. Limit is I think 75k (Pretty high)

It has an annual fee of 95 USD. Well worth it if you rent car in US or during international travel.

 

[Sunset]

My car insurance covers rental cars in the USA.
Many people's auto insurance already covers rentals, worth checking out.

Issue with many coverage (CC or auto) is the lack of coverage for what is claimed by rental car company as missing rental time while car is being fixed.

 

[kgtest]

They look at your income, and your ability to repay your debt.

They might note that one of the cards is towards its limit, but if your debt to income is reasonable it would not matter.

I have like at east 12 to 20 open at one time, I've bought homes and refinanced...but my income was always decent so they didnt blink with my lower monthly debt to income levels. In other words they knew I was low risk debtor since I had lots of room to take on more.

That is the most important thing. That and enough cash to close on hand,

 

[Bamaman]

We use 2 credit cards--one as a backup when we travel. Same with the ATM--one as a backup only used when we travel.

Trying to cash flow numerous credit cards is just too difficult, even if they rebate one European flight per year.

 

[FANOFJESUS]

Yes, my bank provides a debit Mastercard for ATM access, and I used it at gas stations and on Amazon also. But otherwise, hardly at all, and I had no credit cards.

Ok that was what I thought. A person really does not need a credit card. A debit card will work great. Just a few extra $$ if you do have a cash back credit card. Now they are coming out with cash back debit cards.

 

[EastWest Gal]

Ok that was what I thought. A person really does not need a credit card. A debit card will work great. Just a few extra $$ if you do have a cash back credit card. Now they are coming out with cash back debit cards.

A debit card could give a hacker access to your entire bank account. A credit card gets hacked, you're only out $0-50. I had a credit card number hacked overseas, and the credit card company refused the charges (from out of the country, not where I was). I had a new card within two days.

I have two cards. I use one, the other is a backup and has no fees overseas (of course we're going this year.) My main card is a miles card. I use it for everything, even my Cobra payment. By the time we travel again, we'll go to Europe first class, round trip.

 

[OldShooter]

A debit card could give a hacker access to your entire bank account. ...

Sort of true. A debit card does not have the legal protections that a credit card does, but most issuers (maybe all) indemnify the card holder against fraudulent use. Mine is from Schwab and is covered by their broad blanket indemnification.

Any concern, check with the issuer to determine their indemnification policy.

 

[Sunset]

Sort of true. A debit card does not have the legal protections that a credit card does, but most issuers (maybe all) indemnify the card holder against fraudulent use. Mine is from Schwab and is covered by their broad blanket indemnification.

Any concern, check with the issuer to determine their indemnification policy.

Sure, but your bank account is now empty as the debit card withdraws your money, while the issuer works on your case.

While a Credit card fraudulently used, didn't touch your bank account, so you have all your money while the issuer works on your case.

 

[OldShooter]

Sure, but your bank account is now empty as the debit card withdraws your money, while the issuer works on your case. ...

Low probability event, easily handled. The ability to use ATMs worldwide without being charged CC interest as a "cash advance" is far more important to me than that small risk. YMMV.

 

[Sunset]

Ok that was what I thought. A person really does not need a credit card. A debit card will work great. Just a few extra $$ if you do have a cash back credit card. Now they are coming out with cash back debit cards.

I get a LOT more than a few extra dollars, so far this year, without travel, I've collected $825 in real money.

By using my Credit card for groceries alone, I have collected $110 in cash.

Basically I get around $1,000 per year from credit cards.

 

[Sunset]

Low probability event, easily handled. The ability to use ATMs worldwide without being charged CC interest as a "cash advance" is far more important to me than that small risk. YMMV.

I was talking USA centric.

I agree, in the case of getting cash while in a foreign country, I'll use my Schwab debit card.

Everywhere else I use my CC worldwide, unless they only take cash.

My connected Schwab account has limited funds in it, so even if emptied, I could get cash via another bank.

 

[CRLLS]

If you have ever been in a foreign country and had a CC denied at the hotel due to some data link being temporarily out, or you forgot to notify them you were travelling, You will appreciate having a 2nd or even a 3rd card.

Another time I had a Discovercard not accepted by a hotel clerk at check in because they didn't recognize the logo/name. All I had to do was turn over the card and show the "PULSE" (or maybe it was the "Diners Club"?) logo and all was OK! They ran the card and it worked just fine.

I have only 3 CC's active now. I just cancelled my 4th, an airline CC that cost me an annual fee but got me one companion fare per year and free checked luggage. I still have miles on the airline's frequent flier that I probably never use again. DS just left Alaska, probably forever.

 

[Chuckanut]

Crlls, you may wish to donate your Alaska Air miles to a charity rather than have the expire unused n

 

[Chuckanut]

Sort of true. A debit card does not have the legal protections that a credit card does, but most issuers (maybe all) indemnify the card holder against fraudulent use. Mine is from Schwab and is covered by their broad blanket indemnification.

Any concern, check with the issuer to determine their indemnification policy.

I see your point, but after my own experience and those of others who tried to get deposits refunded based upon the company’s stated policy, and finding they did not honor the policy when the going got tough, I prefer to have the law on my side by using an actual CC.

 

[CRLLS]

Crlls, you may wish to donate your Alaska Air miles to a charity rather than have the expire unused n

My miles are on Alaska Air mileage plan which is different than the cancelled Alaska Air CC. IIRC, their miles do not expire, and can be used on American Airlines. So I checked:

Mileage Plan miles do not expire, and may be left in your account as long as the Mileage Plan program exists. However, if there is no activity (earning miles or using miles) on your account for 2 years, the account will expire and your miles will be deleted.

So I guess I'll have to do something before Aug 2021. But then I checked again and due to Covid-19:

Your current Mileage Plan status will be extended through December 31, 2021.

Thanks for rattling my cage and getting me check my plan. Good idea about the donation.

 

[OldShooter]

... I agree, in the case of getting cash while in a foreign country, I'll use my Schwab debit card. Everywhere else I use my CC worldwide, unless they only take cash. ...

Now I'm confused. You do carry one of these dangerous cards?!!? What you describe is exactly what we do when traveling. Debit cards for the ATMs and credit cards or cash for everything else. I don't recall that I have ever had to dispute a charge made while traveling but I think it would be easier with a credit card, so that's our normal means of payment.

Domestic US I use my debit card almost daily. I have a fairly illogical aversion to borrowing money and tend to feel that a credit card charge is a sort of borrowing where a debit card is like paying cash. It costs me in "points" of course.

 

[teetee]

Playing the reward points and air miles games were dumb of me. Thankfully I left it (along with credit score worshipping and borrowing) after I realized the fastest way to accumulate wealth is earning, saving, and investing. The rest is just a distraction.

If you are bored, there are tons of other hobbies that give satisfaction and useful skills. Churning credit cards is not worth it. It is just a scheme that the credit card companies want you to participate so you can practice spending more which is opposite of saving and therefore has negative impact of your wealth building.

 

[rk911]

Playing the reward points and air miles games were dumb of me. Thankfully I left it (along with credit score worshipping and borrowing) after I realized the fastest way to accumulate wealth is earning, saving, and investing. The rest is just a distraction.

If you are bored, there are tons of other hobbies that give satisfaction and useful skills. Churning credit cards is not worth it. It is just a scheme that the credit card companies want you to participate so you can practice spending more which is opposite of saving and therefore has negative impact of your wealth building.

yup! ^^^^

 

[Sunset]

Now I'm confused. You do carry one of these dangerous cards?!!? What you describe is exactly what we do when traveling. Debit cards for the ATMs and credit cards or cash for everything else. I don't recall that I have ever had to dispute a charge made while traveling but I think it would be easier with a credit card, so that's our normal means of payment.

Domestic US I use my debit card almost daily. I have a fairly illogical aversion to borrowing money and tend to feel that a credit card charge is a sort of borrowing where a debit card is like paying cash. It costs me in "points" of course.

Seems we are somewhat similar after all:

So traveling, both you and I use CC for normal spending and debit cards for cash.

Within the USA, you prefer to use debit cards. I prefer to use CC. We both have some aversion to debt, my aversion is probably less than yours.

 

[sengsational]

yup! ^^^^

I was right with you guys up until a few years ago....totally not worth it.

Then there was a true "value proposition" that came up when I was planning some travel. All I had to do was apply online, get instantly accepted, then buy my travel arrangements with the card. For that, I got $800 worth of points and reimbursements. First year of annual fee was waived. Then I cancelled the card before the next annual fee. Too easy.

But as with any addiction, it became problematic; the offers got smaller, the price for not making the right chess move, higher. Now I'm almost back to where I started...totally not worth it.

 

[Katsmeow]

If I was applying for a mortgage soon I would not close cards. In fact, when we did refinance early in the year I did not close any cards near that time. I also didn't take out any new credit while applying.

Some will say that number of cards hurts your credit score. In most cases unless you literally never use your cards I think it is better to keep cards.

Let's say you have 5 cards with $50000 in credit available. You pay your full bill everyone month. But the month before you applied for the mortgage the card you use the most had $3000 in charges on it. Note: These are all new charges that you will pay in full. Your total percentage of credit used is less than 10%.

Let's say, though, you decide you don't need all those cards and you close two and you now have $25000 in credit. You spend the same $3000. You are now using more than 10% if your available credit which will have a negative effect on credit score.

I kept all my cards while applying for the loan. If you want to close some later, do it afterwards.

 

[Sunset]

Whenever I spend a lot on a CC, example a cruise. I know I don't have to wait until the statement is created to pay.

I log into the CC site, see my high charges, and pay some or all it right away. For someone worried about high utilization of their credit line, this is a way to avoid that issue.

I still enjoy the benefit of using the CC, instead of writing a check, and I get the points.

 

[sengsational]

If you're looking at "card count", that's only important if you're concerned about the slight increase in "life complexity" in brings.

As mentioned, credit utilization (the sum total of outstanding balances as it relates to the sum total of available credit) is important. Also the sum total of available credit as compared to "income", which I put in quotes because it's kind of an imaginary thing*.



* portfolio that throws off 3% vs portfolio that grows 3% and has 3% withdrawals, no difference.

 

[tenant13]

Playing the reward points and air miles games were dumb of me. Thankfully I left it (along with credit score worshipping and borrowing) after I realized the fastest way to accumulate wealth is earning, saving, and investing. The rest is just a distraction.

If you are bored, there are tons of other hobbies that give satisfaction and useful skills. Churning credit cards is not worth it. It is just a scheme that the credit card companies want you to participate so you can practice spending more which is opposite of saving and therefore has negative impact of your wealth building.

You haven't been doing it right The only way it makes sense is if you DON'T spend more than you normally do and NEVER pay interest - your charges must be settled monthly. Which is not that different than paying cash for everything - except not actually carrying it in your pocket. Fairly easy if you're fiscally responsible adult. I assume we all are on this forum?

I have 15 cards right now (it changes periodically) and use them at different places depending on what benefits they offer. Amex Green gives me $10 off my phone bill, Chase Freedom pays 5pts/1$ spent at Amazon, Chase Reserve pays 10pts/1$ for Spotify and Netflix... etc. These are all purchases I make anyway - why not let banks sweeten the deal? Obviously this is not about $10 savings - I was doing it to fly in business and first class for peanuts (I won't say "free" since premium travel cards have annual fees) and stay in expensive hotels that I normally consider overpriced.

Last year I flew in JAL first class from NY to Tokyo for $5.56 and 72k AA miles and came back in business via Europe on Thai airlines and Lufthansa (maybe 80k Chase UR points?). In 2018 I went to HKG and SE Asia in Finnair business. A year before that, I was in South America... I still have 500k Chase UR points, 300k Amex MR points and 400k AA miles in my accounts. And my credit score (not that I care) is 820. Will those perks be worth anything if travel comes back? Who knows but accumulating these points didn't cost me anything...

It's a harmless hobby that actually creates value - unlike other hobbies that cost money - and it certainly doesn't prevent anyone from investing or creating wealth in any ways.