<< <i>I'm not a big credit card user, but I have a question. Where does the "cashback" money come from? >>
I believe that the fees for that are borne by the card issuer. In my case/s it would be Bank of America for one card and Chase Bank for the other. For higher percentages at select merchants, the merchant may share that expense but I'm not real sure on that point.
<< <i>Onlygoldismoney, that's awesome. Can you give more details how youre netting 6% per year on your purchases? I'd be on that in a minute.Thanks.
With Chase promotions, like that free $300, it's reported and thus taxable. Just got my form saying that free $200 bucks for opening a checking acct wasn't free and added to my interest this year, a total of $202.46 was reported. I'm getting .01% interest..free money!! >>
They don't offer the $300 any more. I believe they send you a 1099 only if the amount is $600 or more so I assume they report to the IRS only if the reward amount is $600 or more. >>
Reward points and rebates aren't taxable since they are giving you your own money back.
<< <i>I'm not a big credit card user, but I have a question. Where does the "cashback" money come from? >>
I believe that the fees for that are borne by the card issuer. In my case/s it would be Bank of America for one card and Chase Bank for the other. For higher percentages at select merchants, the merchant may share that expense but I'm not real sure on that point. >>
I can answer that as a merchant. For any miles, rewards, points or cashback cards used in our business we pay a higher rate than if they were non-rewards cards. The issuers act like they're giving you free money, etc when in reality it is the merchants who bear the cost. In fact, they make money on the deal as many rewards card holders don't always redeem the points, miles etc. or fail to jump through the proper hoops to get their full x% cash back, etc... so the issuers make more on the back end. That's why virtually everyone offers such a card now.
Small purchases are paid with cash. Misc. expenses over about $20 (except for Costco), and business travel on Southwest air go on a Southwest card and rack up points for free travel for the family. Costco charges go on an Amex card that gives 2% cashback, 3% on gasoline. Business expenses go on a United card and rack up points toward seat upgrades and/or prizes from a catalog, while business stays at Hilton and Marriott also accumulate points toward family vacations. I kind of wish there weren't all these "loyalty programs" and everything was just cheaper, but I have other windmills to tilt at
I'm sure you guys are aware of this but either way I will say it, you do need to use your CC once in awhile regardless if you need to or not, I had 3 CC's that I never used and had a zero balance on them, one card got cancelled by the company for lack of use and I think it makes your credit score take a hit. I now use them at least once a month and payit off to avoid any interest charges
<< <i>I'm sure you guys are aware of this but either way I will say it, you do need to use your CC once in awhile regardless if you need to or not, I had 3 CC's that I never used and had a zero balance on them, one card got cancelled by the company for lack of use and I think it makes your credit score take a hit. I now use them at least once a month and payit off to avoid any interest charges >>
Even if you don't use it, a CC affects your credit score because a potential lender/creditor views it as possible debt and there is no assurance that you won't use it.
<< <i>I'm sure you guys are aware of this but either way I will say it, you do need to use your CC once in awhile regardless if you need to or not, I had 3 CC's that I never used and had a zero balance on them, one card got cancelled by the company for lack of use and I think it makes your credit score take a hit. I now use them at least once a month and payit off to avoid any interest charges >>
Even if you don't use it, a CC affects your credit score because a potential lender/creditor views it as possible debt and there is no assurance that you won't use it. >>
I thought it was better to have a higher credit to debt ratio, meaning it was good to have say 25k worth of credit with $100 debt rather than have no credit card at all.
"I thought it was better to have a higher credit to debt ratio, meaning it was good to have say 25k worth of credit with $100 debt rather than have no credit card at all."
That is my understanding also. Having credit cards does not lower your credit score, quite the opposite as you point out.
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<< <i>"I thought it was better to have a higher credit to debt ratio, meaning it was good to have say 25k worth of credit with $100 debt rather than have no credit card at all."
That is my understanding also. Having credit cards does not lower your credit score, quite the opposite as you point out. >>
It may not affect your score, but a potential creditor/lender views it as possible debt which to them may affect your ability to repay a loan. If you have a CC and don't intend to use it, get rid of it.
<< <i>"I thought it was better to have a higher credit to debt ratio, meaning it was good to have say 25k worth of credit with $100 debt rather than have no credit card at all."
That is my understanding also. Having credit cards does not lower your credit score, quite the opposite as you point out. >>
It may not affect your score, but a potential creditor/lender views it as possible debt which to them may affect your ability to repay a loan. If you have a CC and don't intend to use it, get rid of it. >>
Wrong according to myfico.com…keep credit cards open you are not using! This is from their website….
"Don't close the old cards that you're not planning to use any longer. I know this may seem counter-intuitive, but there's a fairly simple explanation. One of the most important factors in your FICO score is your balance to available credit ratio. Using all or most of your available credit can be a sign of looming financial stress. How does this ratio work? Let's say you have $5,000 in available credit and are using $1,000, this is better than if you had $1,000 in available credit and are using $500. The ratio in the first case is only 20%, but the ratio in the second is 50%. Closing an unused credit card wipes away some of your available credit and causes this ratio to increase."
Successful trades/buys/sells with gdavis70, adriana, wondercoin, Weiss, nibanny, IrishMike, commoncents05, pf70collector, kyleknap, barefootjuan, coindeuce, WhiteTornado, Nefprollc, ajw, JamesM, PCcoins, slinc, coindudeonebay,beernuts, and many more
<< <i>"I thought it was better to have a higher credit to debt ratio, meaning it was good to have say 25k worth of credit with $100 debt rather than have no credit card at all."
That is my understanding also. Having credit cards does not lower your credit score, quite the opposite as you point out. >>
It may not affect your score, but a potential creditor/lender views it as possible debt which to them may affect your ability to repay a loan. If you have a CC and don't intend to use it, get rid of it. >>
Wrong according to myfico.com…keep credit cards open you are not using! This is from their website….
"Don't close the old cards that you're not planning to use any longer. I know this may seem counter-intuitive, but there's a fairly simple explanation. One of the most important factors in your FICO score is your balance to available credit ratio. Using all or most of your available credit can be a sign of looming financial stress. How does this ratio work? Let's say you have $5,000 in available credit and are using $1,000, this is better than if you had $1,000 in available credit and are using $500. The ratio in the first case is only 20%, but the ratio in the second is 50%. Closing an unused credit card wipes away some of your available credit and causes this ratio to increase." >>
Completely agree, no chance you should get rid of a CC, I was told that it effects your credit negativaly. That being said it sounds like everyone here has made good decisions regardless if 1 CC gets taken or not, I personally dont think its a make or break thing regarding anyones credit should they chose to apply for anything.
<< <i>"I thought it was better to have a higher credit to debt ratio, meaning it was good to have say 25k worth of credit with $100 debt rather than have no credit card at all."
That is my understanding also. Having credit cards does not lower your credit score, quite the opposite as you point out. >>
It may not affect your score, but a potential creditor/lender views it as possible debt which to them may affect your ability to repay a loan. If you have a CC and don't intend to use it, get rid of it. >>
Wrong according to myfico.com…keep credit cards open you are not using! This is from their website….
"Don't close the old cards that you're not planning to use any longer. I know this may seem counter-intuitive, but there's a fairly simple explanation. One of the most important factors in your FICO score is your balance to available credit ratio. Using all or most of your available credit can be a sign of looming financial stress. How does this ratio work? Let's say you have $5,000 in available credit and are using $1,000, this is better than if you had $1,000 in available credit and are using $500. The ratio in the first case is only 20%, but the ratio in the second is 50%. Closing an unused credit card wipes away some of your available credit and causes this ratio to increase." >>
Sounds like a question to ask a loan officer. If you don't plan to borrow money it may not matter. I always heard that large lines of credit are held against you if you are seeking more credit.
Everything charged to CC and paid monthly, easily adds love 50K a year.
On the other note the credit score game is such a rigged game to say the least. When I paid off my mortgage 3 years ago my FICO score went DOWN ! I do understand why it did (now only CC revolving credit shows up on credit report)
When I was in college a learned a valuable lesson, Credit Cards should be treated just like cash, If you don't have the discipline pay them off every month they get expensive quick.
That being said Credit card rewards are fantastic. I haven't paid for a airline ticket in years, last year Southwest started giving me a free companion ticket whenever I fly, all for free, for stuff I would buy anyway. I think the rewards programs are great. Not spending money on travel allows me to increase my coin budget.
House is paid off, cars are paid off, cash is king - don't spend what we don't have. Of course our credit rating is in the crapper, but I don't give a chit.
Tir nam beann, nan gleann, s'nan gaisgeach ~ Saorstat Albanaich a nis!
The cash back comes from the damn merchants. When I used to have one in the store, I use to hate to the see them customers come in. First they chisel you to death on the price of say a silver round, then they slap the damn card on you, and then to make it worse, they have a cash back card which in turn the cc company hits you at a higher percentage. When I had the store it didn't take me long to get rid of that thing.
They call me all the time wanting me to take cc's , I told them heck no. this is a cash only biz.
I charge a lot and sometimes I pay it off and some times I don't, I just look ahead and decide. 10 years ago I had over 300k charged on credit cards, I tell you that will give you some sleepless nights. I spent about 5 years paying it off, now at any given time I may owe 0k to 10k on credit cards generally no more than I could pay to 30 or so days if needed. I have always been amazed at how much credit different credit cards have extended to me over the years, although they don't always play fair IMO.
With intrest so low it is appealing to go 1mil or more in debt and see where I end up 5 years down the road. The last 300k worked out well.
Mark NGC registry V-Nickel proof #6!!!! working on proof shield nickels # 8 with a bullet!!!!
Boy the pendulum has certainly swung in the other direction on credit card interest rates and total card debt from when we first discussed this.
Rates that were at (or near) zero (0%), to now having rates, for consumers with a very good credit history, of around 21% or even more for newly issued credit.
For all credit cards, the average APR in the fourth quarter of 2023 was 21.47%.
For cards accruing interest, the average in the fourth quarter of 2023 was 22.75%.
Debt balances in 2015 at around $700 to over $1,100 today and rising.
Boy how things change.
I charge somewhere in the neighborhood of $45-$50K a year. Balance paid in full every 2 weeks. I setup autopay on every bill possible and use the card everywhere that will except it. Granted up here in gods country there are more than a few merchants that are cash only and don't accept CC. I figure I'm going to spend the $$$ anyway, may as well get the cash back. I haven't paid interest or any fees on a CC since probably ~2004-2005. To be honest I have absolutely no clue what the current interest rate on the card is. RGDS!
P.S. With the recent developments of Costco selling the PM's and the ability to pay with no penalty via CC my average $45-50K looks to be quite a bit higher this year. THKS!
The whole worlds off its rocker, buy Gold™.
BOOMIN!™
@blitzdude said:
I charge somewhere in the neighborhood of $45-$50K a year. Balance paid in full every 2 weeks. I setup autopay on every bill possible and use the card everywhere that will except it. Granted up here in gods country there are more than a few merchants that are cash only and don't accept CC. I figure I'm going to spend the $$$ anyway, may as well get the cash back. I haven't paid interest or any fees on a CC since probably ~2004-2005. To be honest I have absolutely no clue what the current interest rate on the card is. RGDS!
P.S. With the recent developments of Costco selling the PM's and the ability to pay with no penalty via CC my average $45-50K looks to be quite a bit higher this year. THKS!
Comments
I knew it would happen.
<< <i>I'm not a big credit card user, but I have a question. Where does the "cashback" money come from?
Not sure exactly what you are asking but ...
My CC credits me cash (as if I sent them a payment) against my account balance each month.
That "cash back" I assume is my share of the $ from all the people that are not paying their balances in full each month.
Charles III Album
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Spanish Colonial Pillar Set
<< <i>I'm not a big credit card user, but I have a question. Where does the "cashback" money come from?
I believe that the fees for that are borne by the card issuer. In my case/s it would be Bank of America for one card and Chase Bank for the other. For higher percentages at select merchants, the merchant may share that expense but I'm not real sure on that point.
<< <i>
<< <i>Onlygoldismoney, that's awesome. Can you give more details how youre netting 6% per year on your purchases? I'd be on that in a minute.Thanks.
With Chase promotions, like that free $300, it's reported and thus taxable. Just got my form saying that free $200 bucks for opening a checking acct wasn't free and added to my interest this year, a total of $202.46 was reported. I'm getting .01% interest..free money!! >>
They don't offer the $300 any more. I believe they send you a 1099 only if the amount is $600 or more so I assume they report to the IRS only if the reward amount is $600 or more. >>
Reward points and rebates aren't taxable since they are giving you your own money back.
<< <i>
<< <i>I'm not a big credit card user, but I have a question. Where does the "cashback" money come from?
I believe that the fees for that are borne by the card issuer. In my case/s it would be Bank of America for one card and Chase Bank for the other. For higher percentages at select merchants, the merchant may share that expense but I'm not real sure on that point. >>
I can answer that as a merchant.
For any miles, rewards, points or cashback cards used in our business we pay a higher rate than if they were non-rewards cards. The issuers act like they're giving you free money, etc when in reality it is the merchants who bear the cost. In fact, they make money on the deal as many rewards card holders don't always redeem the points, miles etc. or fail to jump through the proper hoops to get their full x% cash back, etc... so the issuers make more on the back end. That's why virtually everyone offers such a card now.
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Liberty: Parent of Science & Industry
<< <i>I'm sure you guys are aware of this but either way I will say it, you do need to use your CC once in awhile regardless if you need to or not, I had 3 CC's that I never used and had a zero balance on them, one card got cancelled by the company for lack of use and I think it makes your credit score take a hit. I now use them at least once a month and payit off to avoid any interest charges >>
Even if you don't use it, a CC affects your credit score because a potential lender/creditor views it as possible debt and there is no assurance that you won't use it.
<< <i>
<< <i>I'm sure you guys are aware of this but either way I will say it, you do need to use your CC once in awhile regardless if you need to or not, I had 3 CC's that I never used and had a zero balance on them, one card got cancelled by the company for lack of use and I think it makes your credit score take a hit. I now use them at least once a month and payit off to avoid any interest charges >>
Even if you don't use it, a CC affects your credit score because a potential lender/creditor views it as possible debt and there is no assurance that you won't use it. >>
I thought it was better to have a higher credit to debt ratio, meaning it was good to have say 25k worth of credit with $100 debt rather than have no credit card at all.
<< <i>CC debit balance = $.00 >>
x 2
Charles III Album
Charles III Portrait Set
Charles IV Album
Charles IV Portrait Set
Spanish Colonial Pillar Set
"I thought it was better to have a higher credit to debt ratio, meaning it was good to have say 25k worth of credit with $100 debt rather than have no credit card at all."
That is my understanding also.
Having credit cards does not lower your credit score, quite the opposite as you point out.
<< <i>"I thought it was better to have a higher credit to debt ratio, meaning it was good to have say 25k worth of credit with $100 debt rather than have no credit card at all."
That is my understanding also.
Having credit cards does not lower your credit score, quite the opposite as you point out. >>
It may not affect your score, but a potential creditor/lender views it as possible debt which to them may affect your ability to repay a loan. If you have a CC and don't intend to use it, get rid of it.
<< <i>
<< <i>"I thought it was better to have a higher credit to debt ratio, meaning it was good to have say 25k worth of credit with $100 debt rather than have no credit card at all."
That is my understanding also.
Having credit cards does not lower your credit score, quite the opposite as you point out. >>
It may not affect your score, but a potential creditor/lender views it as possible debt which to them may affect your ability to repay a loan. If you have a CC and don't intend to use it, get rid of it. >>
Wrong according to myfico.com…keep credit cards open you are not using! This is from their website….
"Don't close the old cards that you're not planning to use any longer. I know this may seem counter-intuitive, but there's a fairly simple explanation. One of the most important factors in your FICO score is your balance to available credit ratio. Using all or most of your available credit can be a sign of looming financial stress. How does this ratio work? Let's say you have $5,000 in available credit and are using $1,000, this is better than if you had $1,000 in available credit and are using $500. The ratio in the first case is only 20%, but the ratio in the second is 50%. Closing an unused credit card wipes away some of your available credit and causes this ratio to increase."
<< <i>
<< <i>
<< <i>"I thought it was better to have a higher credit to debt ratio, meaning it was good to have say 25k worth of credit with $100 debt rather than have no credit card at all."
That is my understanding also.
Having credit cards does not lower your credit score, quite the opposite as you point out. >>
It may not affect your score, but a potential creditor/lender views it as possible debt which to them may affect your ability to repay a loan. If you have a CC and don't intend to use it, get rid of it. >>
Wrong according to myfico.com…keep credit cards open you are not using! This is from their website….
"Don't close the old cards that you're not planning to use any longer. I know this may seem counter-intuitive, but there's a fairly simple explanation. One of the most important factors in your FICO score is your balance to available credit ratio. Using all or most of your available credit can be a sign of looming financial stress. How does this ratio work? Let's say you have $5,000 in available credit and are using $1,000, this is better than if you had $1,000 in available credit and are using $500. The ratio in the first case is only 20%, but the ratio in the second is 50%. Closing an unused credit card wipes away some of your available credit and causes this ratio to increase." >>
Completely agree, no chance you should get rid of a CC, I was told that it effects your credit negativaly. That being said it sounds like everyone here has made good decisions regardless if 1 CC gets taken or not, I personally dont think its a make or break thing regarding anyones credit should they chose to apply for anything.
<< <i>
<< <i>
<< <i>"I thought it was better to have a higher credit to debt ratio, meaning it was good to have say 25k worth of credit with $100 debt rather than have no credit card at all."
That is my understanding also.
Having credit cards does not lower your credit score, quite the opposite as you point out. >>
It may not affect your score, but a potential creditor/lender views it as possible debt which to them may affect your ability to repay a loan. If you have a CC and don't intend to use it, get rid of it. >>
Wrong according to myfico.com…keep credit cards open you are not using! This is from their website….
"Don't close the old cards that you're not planning to use any longer. I know this may seem counter-intuitive, but there's a fairly simple explanation. One of the most important factors in your FICO score is your balance to available credit ratio. Using all or most of your available credit can be a sign of looming financial stress. How does this ratio work? Let's say you have $5,000 in available credit and are using $1,000, this is better than if you had $1,000 in available credit and are using $500. The ratio in the first case is only 20%, but the ratio in the second is 50%. Closing an unused credit card wipes away some of your available credit and causes this ratio to increase." >>
Sounds like a question to ask a loan officer. If you don't plan to borrow money it may not matter. I always heard that large lines of credit are held against you if you are seeking more credit.
On the other note the credit score game is such a rigged game to say the least. When I paid off my mortgage 3 years ago my FICO score went DOWN !
I do understand why it did (now only CC revolving credit shows up on credit report)
Brought to you by "Watch your P's & Q's "
<< <i>The more credit , the greater the temptation to take on debt.
Brought to you by "Watch your P's & Q's " >>
Great minds think alike, eh TwoSides.
That being said Credit card rewards are fantastic. I haven't paid for a airline ticket in years, last year Southwest started giving me a free companion ticket whenever I fly, all for free, for stuff I would buy anyway. I think the rewards programs are great. Not spending money on travel allows me to increase my coin budget.
They call me all the time wanting me to take cc's , I told them heck no. this is a cash only biz.
jim
With intrest so low it is appealing to go 1mil or more in debt and see where I end up 5 years down the road. The last 300k worked out well.
NGC registry V-Nickel proof #6!!!!
working on proof shield nickels # 8 with a bullet!!!!
RIP "BEAR"
*** OLD THREAD ALERT ***
Boy the pendulum has certainly swung in the other direction on credit card interest rates and total card debt from when we first discussed this.
Rates that were at (or near) zero (0%), to now having rates, for consumers with a very good credit history, of around 21% or even more for newly issued credit.
For all credit cards, the average APR in the fourth quarter of 2023 was 21.47%.
For cards accruing interest, the average in the fourth quarter of 2023 was 22.75%.
Debt balances in 2015 at around $700 to over $1,100 today and rising.
Boy how things change.
Data from Lending Tree
Charles III Album
Charles III Portrait Set
Charles IV Album
Charles IV Portrait Set
Spanish Colonial Pillar Set
I charge somewhere in the neighborhood of $45-$50K a year. Balance paid in full every 2 weeks. I setup autopay on every bill possible and use the card everywhere that will except it. Granted up here in gods country there are more than a few merchants that are cash only and don't accept CC. I figure I'm going to spend the $$$ anyway, may as well get the cash back. I haven't paid interest or any fees on a CC since probably ~2004-2005. To be honest I have absolutely no clue what the current interest rate on the card is. RGDS!
P.S. With the recent developments of Costco selling the PM's and the ability to pay with no penalty via CC my average $45-50K looks to be quite a bit higher this year. THKS!
The whole worlds off its rocker, buy Gold™.
BOOMIN!™
I try and keep mine under 2k a month.
Emphasis on try...
About $5,000 per month. I include health care premiums and most regularly occurring charges.
My monthly cashback is commonly $100 plus via Capital One. As others have noted, paying off the balance in full each month avoids interest charges.
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I wish I was that rich...
D's: 54S,53P,50P,49S,45D+S,44S,43D,41S,40D+S,39D+S,38D+S,37D+S,36S,35D+S,all 16-34's
Q's: 52S,47S,46S,40S,39S,38S,37D+S,36D+S,35D,34D,32D+S
74T: 37,38,47,151,193,241,435,570,610,654,655 97 Finest silver: 115,135,139,145,310
73T:31,55,61,62,63,64,65,66,67,68,80,152,165,189,213,235,237,257,341,344,377,379,390,422,433,453,480,497,545,554,563,580,606,613,630
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