Popular credit advice that's nonsense

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CarefulBuilder14
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Re: Popular credit advice that's nonsense

Postby CarefulBuilder14 » Sat Sep 12, 2015 6:50 pm

I've got another one. I will say that it's not inherently nonsense for average people, but it tends to be bad advice for the speaker and audience on credit forums where most people don't mind (or even embrace) some complexity to earn great rewards. I used to believe this one, but have seen it makes no sense for me (or most others here).

Some people like to compare Arrival+, Venture, QS, DoubleCash, and others by the annual fees and earn rates. They talk casually about putting $20k, $40k, $60k, $80k, etc. on one of those cards in a given year.

The inappropriate common advice in this case is:

"You only have to spend $X per year on Card Y to make up for the AF and even earn more than you would on Card Z." The implication is that credit geeks are going to be putting several tens of thousands a year on a Venture/Arrival+/something similar.

Those same people often have a few category cards, cobranded hotel or airline cards, and/or MR/UR/TY cards. Even if you have $100k of CC expenses a year (where the merchant doesn't surcharge, that is), how much spending is an Arrival+ actually going to get if you have 8 or 9 other, specialized cards? If your goal is to maximize rewards, it's going to sit there every time you can earn 3% cash with another card. If you have 10 cards, most of your spending can earn more than 3% cash!

There's nothing wrong with just wanting a signup bonus, a high CL, simplicity, a metal card, whatever...those can be valid reasons for getting a card. But the arguments about earning superior rewards on an ongoing basis just don't hold water for credit geeks.

I do know of one person who puts at least $100k a year on a Venture, but she's too overworked and busy to juggle a dozen cards or read about complicated travel programs.

And yes, I know the AFs can sometimes - but not always - be waived.
Keeping indefinitely: IHG, SchwabPlat, CSP, Discover, Freedom, ED, BCE, Hyatt
May close or PC: Prestige, Arrival, BrooksBros
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Might add: Proper business card, CSR, Ritz, Delta Gold, First Tech
Letting new accounts cool off since May


Nixon
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Re: Popular credit advice that's nonsense

Postby Nixon » Sat Sep 12, 2015 7:34 pm

Opening store cards via SCT is popular advice over on a certain website. ;)

This is horrible advice as the usual users of this typically go overboard and wind up with a bunch of turd cards with low limits.
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kdm31091
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Re: Popular credit advice that's nonsense

Postby kdm31091 » Sun Sep 13, 2015 7:41 am

Nixon wrote:Opening store cards via SCT is popular advice over on a certain website. ;)

This is horrible advice as the usual users of this typically go overboard and wind up with a bunch of turd cards with low limits.


All it does is set people back for "real" approvals later. It's ridiculous. Someone recently obtained 24 SCT cards. I am not a judgemental person at all, but it was a male and half of the cards with Victoria's Secret, Ann Taylor, all this crap that he was very unlikely to get any use out of -- but he was still applauded. I don't get it. SCT is not some way to get cards with no consequences. That AAOA is going to nosedive.

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Re: Popular credit advice that's nonsense

Postby JonE » Mon Sep 14, 2015 5:08 am

Nixon wrote:Opening store cards via SCT is popular advice over on a certain website. ;)

This is horrible advice as the usual users of this typically go overboard and wind up with a bunch of turd cards with low limits.


Boy, where to start with that place?

Plus isn't the shopping cart trick now a hard pull? I remember the panic thread when that was brought up, which I believe now reaches above 30+ pages.

I personally have never bought the idea that having 20+ cards with low to moderate limits is better than having 3-4 cards (up to 6 maybe?) with higher limits. I just think the less is more idea (as far as number of cards is concerned) works better if you have the available credit to back it up. And even if you don't you're more likely to see your limits raised if you have below a certain number of cards/relationships with credit card companies than you would if you had 20 or more. You're also less likely to get adverse action from someone like Citi or Chase if they see they're among a select group of companies you deal with.

To me anyway. ;)
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Re: Popular credit advice that's nonsense

Postby Vermonster » Mon Sep 14, 2015 9:41 am

Nixon wrote:Opening store cards via SCT is popular advice over on a certain website. ;)

This is horrible advice as the usual users of this typically go overboard and wind up with a bunch of turd cards with low limits.


They also tend to destroy any signup bonuses at a point that they aren't needed. Nothing like having 20 cards all with 0% at the same time.

I watched a woman at TJ max open a card to save 10%, on an $80 bill. She was so excited to save 10%...
Chase Freedom $9k~~Chase Sapphire Preferred $6.5k~~Amex Blue Cash Preferred $12.4k~~Citi Double Cash $4.7k

Nixon
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Re: Popular credit advice that's nonsense

Postby Nixon » Mon Sep 14, 2015 8:38 pm

Vermonster wrote:
Nixon wrote:Opening store cards via SCT is popular advice over on a certain website. ;)

This is horrible advice as the usual users of this typically go overboard and wind up with a bunch of turd cards with low limits.


They also tend to destroy any signup bonuses at a point that they aren't needed. Nothing like having 20 cards all with 0% at the same time.

I watched a woman at TJ max open a card to save 10%, on an $80 bill. She was so excited to save 10%...


All the more to hide your "1% UTLZ" under the rug. ;)
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Re: Popular credit advice that's nonsense

Postby CarefulBuilder14 » Mon Sep 14, 2015 11:13 pm

JonE wrote:You're also less likely to get adverse action from someone like Citi or Chase if they see they're among a select group of companies you deal with.

To me anyway. ;)

Less likely? Maybe...I don't know.

But I've definitely seen people get AA for opening too many cards, even when most or all of them were from generally-prime issuers.

Also, an usually low CL from a prime issuer can look bad. A $1k CL from Comenity or Synchrony doesn't mean much. That's common for those issuers, even for people with good credit.

But an unnaturally low $1k CL from Amex suggests Amex may be worried about something!

*In practice, not many credit analysts get into such detail, or get paid enough to care. The approval criteria tend to be simple.
Keeping indefinitely: IHG, SchwabPlat, CSP, Discover, Freedom, ED, BCE, Hyatt
May close or PC: Prestige, Arrival, BrooksBros
AA Platinum converting into Costco

Might add: Proper business card, CSR, Ritz, Delta Gold, First Tech
Letting new accounts cool off since May

Kevin86475391
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Re: Popular credit advice that's nonsense

Postby Kevin86475391 » Tue Sep 15, 2015 8:27 pm

CarefulBuilder14 wrote:I've got another one. I will say that it's not inherently nonsense for average people, but it tends to be bad advice for the speaker and audience on credit forums where most people don't mind (or even embrace) some complexity to earn great rewards. I used to believe this one, but have seen it makes no sense for me (or most others here).

Some people like to compare Arrival+, Venture, QS, DoubleCash, and others by the annual fees and earn rates. They talk casually about putting $20k, $40k, $60k, $80k, etc. on one of those cards in a given year.

The inappropriate common advice in this case is:

"You only have to spend $X per year on Card Y to make up for the AF and even earn more than you would on Card Z." The implication is that credit geeks are going to be putting several tens of thousands a year on a Venture/Arrival+/something similar.

Those same people often have a few category cards, cobranded hotel or airline cards, and/or MR/UR/TY cards. Even if you have $100k of CC expenses a year (where the merchant doesn't surcharge, that is), how much spending is an Arrival+ actually going to get if you have 8 or 9 other, specialized cards? If your goal is to maximize rewards, it's going to sit there every time you can earn 3% cash with another card. If you have 10 cards, most of your spending can earn more than 3% cash!

There's nothing wrong with just wanting a signup bonus, a high CL, simplicity, a metal card, whatever...those can be valid reasons for getting a card. But the arguments about earning superior rewards on an ongoing basis just don't hold water for credit geeks.

I do know of one person who puts at least $100k a year on a Venture, but she's too overworked and busy to juggle a dozen cards or read about complicated travel programs.

And yes, I know the AFs can sometimes - but not always - be waived.


That's a very good and IMO often overlooked point. People tend to act like this new card is going to be their exclusive card, and I suppose for some people it will be, but more realistically IMO - at least for me - it's simply going to get a small share of total spend. Personally speaking I have no desire - quite the opposite, I actively don't want - to spend exclusively on one card. So in deciding whether or not a new application is worth it, it would be foolish to act like it's going to become my new sole card. I have to actively ask myself how much I would realistically put on this one particular card, and indeed often I just don't think it's worth it on most AF cards. Sure if I got an AF Amex card for example, the rewards might easily outweigh the cost of the AF, but that's assuming I put all my spend through the new card, which I know I'm not going to and won't want to.

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Re: Popular credit advice that's nonsense

Postby dragon452 » Sun Sep 20, 2015 10:13 am

I mention this piece of bad advice given to people who are new to credit cards, or who haven't had a new one in many years: I've heard people tell others that if they get a Visa Signature or World Mastercard, they can ususally expect a "no preset spending limit" feature with the card (temporary lifting of the credit limit, of course). This is not so, in any way. A temporary raise in your credit limit is entirely up to your bank, and they don't do it just because you have a "Signature" Visa or "World" Mastercard. I have two very very old Chase accounts, and years ago, the spending limits were removed from both cards and being reported as "charge cards" (like American Express, Diners Club, Carte Blance). This was well before "Signature" and "World/World Elite) cards from the two networks appeared. And if you slip up even once and not pay down the overage with the next statement plus extra money to bring you back down under the regular limit, you're out...no more "NPSL". Thanks.

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Re: Popular credit advice that's nonsense

Postby kcm7 » Mon Sep 28, 2015 12:08 pm

Just heard another one this weekend.

A friend was complaining that she was "stuck" with a $95-a-year airline card because it was her first card, and "you're not supposed to cancel your first card." Does she at least use the card for benefits and miles? Nope. She's afraid to use credit for purchases (only uses debit) and doesn't fly that airline anymore. Has had the card for three years -- that's $300 worth of annual fees.
Cards:

-Capital One Quicksilver
-Barclaycard Arrival (no AF)
- US Bank (no rewards)
-IHG



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