April 18, 2008
The word on the street is that credit card issuers have wised up and started cancelling the accounts of individuals that stage an App-O-Rama. In case you’re not familiar with the term, an App-O-Rama refers to applying for a bunch of credit cards in rapid succession in hopes of getting them all approved before the credit inquiries show up on your credit report. This is generally viewed as an effective way of loading up on credit card signup bonuses as well as 0% credit card offers.
Frankly, I don’t blame them…
If I were a credit card issuer and I saw someone apply for eight of my cards in rapid succession, as one FatWalleter did shortly before his accounts were cancelled, I’d think that they were either: (1) trying to harvest a bunch of promos, (2) in financial trouble and trying to load up on credit before their world comes tumbling down, or (3) stealing someone’s identity. In any case, I wouldn’t view them as a valued customer.
[Source: FatWallet via Consumerist]
Posted in Credit Card News 3 Comments »
April 16, 2008
As you are no doubt aware, I’m a huge fan of making the most out of your credit card experience. To this end, I wanted to pass along a little tip for getting the most out of credit card bonus offers…
While there are a number of credit card signup bonuses floating around out there (that link takes you to a list of $1,200 worth of such offers), you can actually make many of these offers even more generous with minimal effort.
How, you ask? Easy…
Simply turn off your popup blocker before clicking through to the application page. Next, instead of applying for the card, close the window. You’d be surprised at the number of times you’ll get a popup offering you an additional bonus (typically an extra $50 or 5000 points) just for reconsidering and submitting an application.
Go ahead, try it.
While it might not work for every offer, it can add 30%-50% to your take when it does.
Posted in Credit Card Tips, Signup Bonuses 2 Comments »
April 14, 2008
Good morning and welcome to the 135th Carnival of Debt Reduction.
Before we jump into the carnival itself…
If you’re new to Credit Addict then welcome! If not, then welcome back!
For those of you that aren’t familiar with Credit Addict, this site is an outgrowth FiveCentNickel. It was launched just three and half months ago, during which time I have been slowly (but surely!) building up content. If you’d like to get a feel for what Credit Addict is all about, I encourage you to poke around the archives.
You might also be interested in subscribing to the site feed (via RSS or e-mail). It’s a full-text feed, so you’ll get every single word delivered straight to your desktop.
With that said, let’s get to the Carnival…
Editor’s Choice
Jim presents “Curb Spending by Writing Goals on Credit Cards.”
paidtwice presents “I’ll Do What I Want With My Economic Stimulus Check.”
The Happy Rock presents “Debt is the Symptom - Fix the Problem.”
PT presents “How to Prioritize Your Debts for Payoff.”
broke grad student presents “An Illustration of Why Saving Money is Harder Than Spending Money.”
Read the rest of this entry »
Posted in Debt Reduction, Link Love 7 Comments »
April 12, 2008
Credit Addict participated in two carnivals this week. Here they are along with links to our articles that were included in each.
The Carnival of Personal Finance included “Beware of Falling Credit Limits.” Also included was “The Best High Yield Online Bank Savings Accounts” from fivecentnickel.com.
The Best of Me Symphony included “Pay Your Taxes With a Reward Credit Card?” Also included was “Common Tax Deductions” from fivecentnickel.com.
Posted in Link Love No Comments »
April 9, 2008
Have you ever been tempted to take advantage of an interest-free offer from a retailer? Just think… You’ve saved and saved for that new bedroom set, and now they’re offering you a chance to leave that money in your high-yield savings account so you can keep earning interest for 12 (or more) months while enjoying your new furniture. Sounds great, right?
Well… Maybe. While these “same-as-cash” offers can be a great way to save a few bucks on your purchase, you have to be very careful not to trigger an avalanche of interest payments. As it turns out, most of these offers have an extremely high interest rate (upwards of 20% or more in many cases) that is simply being waived if you pay it off during the interest-free period. But if you don’t kill off your debt, you’ll likely end up on the interest that has been accruing over the full period.
Consider the following… You make a $3,000 purchase under a 12 months, same-as-cash offer. At the end of twelve months, you’ve nearly paid off the full amount. You only owe another $200. No big deal. Even though it’s 20% interest, your balance is only $200, and it won’t take long to kill it off. Right? Wrong.
In most cases, failure to pay off the debt in full during the interest-free period means that you’ll wind up paying back interest equating to 20% on the full amount. Not such a good deal now, huh? Moreover, in many cases this interest avalanche can be triggered by a single late payment during the interest-free period. Thus, even if you fully intend to pay it off before the interest kicks it, it’s still possible to get caught unaware and wind up paying through the nose.
As with anything, be 100% sure to read the fine print.
Posted in Debt Reduction 3 Comments »
Carnival of Debt Reduction Coming Soon
April 9, 2008
This is just a quick note to let you know that the Carnival of Debt Reduction will be hosted here at Credit Addict next Monday. If you’ve recently written about debt reduction, please consider submitting your post for consideration. Submissions are due by Sunday @ 5:00 PM Eastern.
Posted in Link Love No Comments »
April 7, 2008
As important as your credit score is, would you be willing to sell a piece of it in return for some free cash? The reason I ask is that there are tons of great credit card offers out there, but every time you apply for one, your credit score takes a bit of a hit. The good news is that the negative effects are usually short-lived.
Here’s a quick breakdown of the risks:
Applying for a new card triggers a “hard pull” of credit reports, which means that other creditors will be able to see that you’ve applied for credit. Not surprisingly, a flurry of applications can have a negative effect on your apparent credit-worthiness (and thus your credit score) as it looks like you’re in financial trouble and trying to borrow to stay afloat. Fortunately, such effects typically wear off within months.
What about the length of your credit history? It’s a well known fact that your credit score is based, in part, on the age of your accounts. Obviously, opening a bunch of new accounts will decrease the average age of your credit lines, and could therefore negatively impact your credit score. That being said, the length of your credit history only accounts for 15% of your credit score, so the risks here aren’t grave.
Finally, credit utilization… Higher % utilization (i.e., the percent of your available credit that is currently outstanding) reduces your credit score. Thus, if you’re applying for a bunch of 0% balance transfer offers in hopes of borrowing against them and stashing the proceeds in a high-yield savings account, you can expect your credit score to take a relatively large hit. The good news here is that, once you pay off the balances, your utilization will fall and you’ll be good to go.
Interestingly, if you’re mainly applying for cards to snatch up the signup bonuses, the credit utilization portion of your credit score might actually benefit. After all, you’ll have more available credit without correspondingly higher balances while these accounts are open. And if you eventually cancel them, you’ll return to the pre-application utilization level; hence, there will be no long-term effect.
So… Is it worth it?
Ultimately, that’s up to you to decide. You certainly don’t want to want trash your credit score right before you need it. You also need to be careful if you’re carrying balances, as you don’t want to inadvertently trigger an interest rate increase. Then again, with over $1000 dollars worth of credit card bonus offers floating around out there, it’s awfully tempting.
Posted in Credit Card Tips, Credit Scores No Comments »
April 4, 2008
The other day I wrote about how to improve your FICO credit score. I was therefore quite interested when I saw that Jeremy at GenXFinance had compiled a list of 15 tips for improving your credit history and FICO score. Given the importance of your credit score in everyday life, it’s well worth taking good care of it.
What follows is a quick rundown of his suggestions. For more details, please check out the original article.
1. Pay your bills on time
2. Don’t bounce checks
3. Start small
4. Visit local lenders
5. Apply for a secured credit card
6. Apply for a loan or credit card with a co-signer
7. Review your credit report once a year
8. Review your credit report before requesting a major loan
9. Avoid letting account be turned over to a collection agency
10. Avoid having judgments filed against you
11. When denied credit, review your credit report
12. Avoid frequently switching employers
13. Avoid frequent changes in residence
14. Work to increase your income
15. Work to decrease your debt
In case you’re curious, I’ve also put together a rundown of the factors that influence you credit score. You might also be interested in reading “Six Reasons You Should Review Your Credit Report,” and “Five Ways to Hurt Your Credit Score.”
Posted in Credit Card Tips, Credit Reports, Credit Scores No Comments »