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Posted by on Nov 13, 2012 in Arts & Entertainment, Economy, Society | 1 comment

A Couple of Credit Tips (Thanks To Clark Howard)

Note: This is a repost of an earlier article, but with the holidays coming up I thought it worth a repeat

One of the talk shows I periodically listen to is the Clark Howard show. Howard is a consumer advocate and often provides some useful advice regarding how to protect yourself financially.

I have heard a couple pretty important tips in the last few weeks so I thought I would take a moment to pass them on. We at TMV not only like to offer endless recitations of our own opinions, from time to time we like to actually offer something useful.

So without delay, here goes my effort to pass on the wisdom of a far more skilled person (any errors are my fault, not his)

The first tip relates to how credit card companies deal with their account holders. Most of us have far more credit cards than we actually use. If you’re like me you have a couple cards you keep in your wallet and use all the time and 4 or 5 cards that sit in your desk drawer and hardly ever get used. These unused cards were obtained through some great offer but you never get around to using them.

For many years this was not a problem, companies were happy to keep the accounts open. It didn’t really cost them anything and they figured if they kept the line open then you might use the account and even better you might pay them some usurious interest.

But with the credit crunch these companies have become far more cautious about keeping dormant accounts active. They worry that the consumer will be overextended and unable to pay them back. So they are now adopting the policy of closing accounts and/or making major reductions in credit limits.

You might think this is no big deal, after all you never use the card anyway. But that would be wrong. A closed account (for whatever reason) is a major blow to your credit rating. In addition by reducing your overall available credit then you increase the percentage of credit used (even if you have a small balance). This is also a bad mark on your credit.

So what can you do ?

Well as Clark is fond of telling us, if you just use the account a couple of times a year, then you will keep that account active in the computers at the credit card company. I’ve decided to do that this year and have simply created a spreadsheet where I can note when I last used each account and then make sure they get used twice.

This spreadsheet also allows me to have a place to list all of my accounts with account numbers, phone numbers, etc so that if my wallet gets stolen I have a resource to use to call and cancel the cards. Needless to say I don’t keep this stored on my computer for security reasons, but I think it is a good resource to have (after all, if the cards are stolen, where do you get the number to call from).

Another important tip deals with protecting yourself from identity theft. There is only one sure way to make sure that nobody steals your credit and that is to obtain a credit freeze. Having a watch on your credit simply means that if someone tries to get credit on your account that you will be told after the fact.

A freeze on the other hand means that you have to give out a security code before any new credit is issued.

It takes a little time and costs a few dollars but it is well worth it.

Clark’s Guide is here

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Copyright 2012 The Moderate Voice
  • Here’s another tip. If any of your cards, especially the unused ones, have a high interest rate on them, call customer service, let them know you have other cards you can use (preferably from other banks) with lower interest, and ask for a reduction. Amazing how few people ask. You will almost always get a reduction. If it’s still not low enough, give it a few months without using the card and call back, telling them that you’re using other cards because of the high interest rate and ask again for a reduction. BTW, I pay off my cards monthly so as not to pay finance charges at all, but the company still gets its 5% from the vendor, so they still want me to use their card.

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