Tim's Advice about Credit Cards

[patriot29]

Hello all. I think Tim's idea of using credit cards to completely eliminate cash is understandable. But, I have two questions about this.

1)Why does he need so many (4) credit cards? I'm a young guy, so maybe I just don't understand something, but is there a reason for needing 2 personal credit cards and 2 business cards?

2)Also, I plan on implementing this advice and getting a card or two for myself. What companies do people recommend? I am starting an online business, so would it be good to get a separate card for that, or just use 1 card for all my expenses at this point?

[Drewkerr]

Well you really don't need more than one. I imagine he could get by with one personal and one business.

If you lose one or have one stolen while you are out circumventing the globe it would be handy to have the second one until you get a new card.

[Drewkerr]

As far as business it can be easier to keep everything seperate. That can include credit cards, checking accounts etc.

Best of luck!

Drew

[final_id]

I'm looking forward to the time that I, too, can circumvent [sic] the globe! :)

[luv2trvl1]

As I begin to engage my VA's more, it's easy to see how having multiple Credit Cards makes sense. Not only to keep muse charges separate from your personal life and other businesses, but for easier monitoring and quick cancel options (with minimal negative splash effect), in case things go badly.

[Marcie]

Also we have AMEX & Discover for the cashback features, but have to keep a Visa on hand for places that don't accept those.

[Bippy]

I do a lot of stuff with disposable credit cards, pre-loaded gift credit cards with $25 or so on them. Greendot also has a pay-as-you-go credit card that can be VERY useful when dealing with a new vendor that you're not sure about.

If you're going to see if the new VA firm is going to really keep your card info safe, nothing works as well as having a spare amount on a card and just keeping and eye on it to see if they abuse that, right? :rolleyes: Actually a lot of identity and credit card theft in the US is at gas stations and restaurants, so I use them there. But before I'd trust a VA firm with more than about a grand, I'd do a dry run with a prepaid card.

The name of the game is "Limit your Liability", whoo hoo!

However, greendot and the visa gift cards, while useful for some of what I need them to do, are not as great for outside-of-US travel.

[SilverSurfer]

I have three cards:
1. debit card
2. credit card
3. joint credit card shared with my wife

I had multiple cards when I carried a balance. Since 2002 I stopped carrying a balance and I couldn't be happier with them. I was able to negotiate a great rate- 9%- that is permanent and not subject to change, but I haven't paid interest more than twice since 2002. Right now I'm in a "low" period where I'm saving money and not spending due to home repairs.

I would recommend if you have any balance at all that you pay it off immediately or consider what I did, I paid $1100 per month toward my debt until it was paid off. What happened was I thought I could charge everything (think computer, new glasses, air conditioner) and then pay, let's say, $500 off per month. After 5 years of that I had massive debt. If you have debt above, let's say, $5k, then pay more than $1000 off per month. You'll be happier scrimping and saving knowing you will hit zero than you will going out for lunch.

[final_id]

I have a Visa, a Master Card, and an American Express. Of these, I find the Visa the most internet-friendly by far. It is issued by Bank of America.

I don't like the MC. It is issued by Chase and has idiotic security features that prevent access from a variety of computers ("We note that you're not using the same computer as your last log-in session. Please re-confirm") unless you "re-confirm" your status by receiving a message which gives you a new verification code. Here's the stupid part. The way they send that code? By email or cell-phone. Which isn't secure. Duh. So, the GUARANTEE that you will be less secure, by going out of their way to reject your use of a new computer until after you've received a new code insecurely. I tried to inform them of this, but, ya know, little guy sends big corporation a note, into the void. This is why I don't have a Chase bank account: idiotic online restrictions, utterly unlike any other online presence I've ever dealt with.

The Visa is fine. It's my primary. It happens to be a AAA card, so I get about $3.50 a month back in "gasoline rebates." I'm thinking of getting an air-miles card, but I fly seldom, and I don't want to lose the whopping high credit limit (over $25K) that I have with my Visa. Bank of America bought out MBNA, which initially issued it to me.

The AmEx is OK, too. A bit wonky, it's a "credit line" card, not a credit card, in the sense that it has to be paid off in full every billing cycle or else you'll get a weird "loan" from them at bizarre rates. But I always pay off my credit cards every month anyway. I just am not in the habit of using the AmEx.

Never never never never patronize Bank One. They play fast and loose with account regulations, much to the detriment of their account holders. I had an account at a bank that was bought out by Bank One, once. It was called "Silver Checking." It's restrictions were pretty standard -- $1000 minimum balance, 5 checks, free ATM, etc. But because Bank One's own account structure included a high-powered investment account called "Silver Retirement," they transferred my old account into THAT structure -- $100,000.oo minimum, $5000.oo per month required new investments, etc. And then charged me $250 per month fees for not meeting the minimum balance. Which depleted my account to zero in exactly two months. They never sent notification of this change or requirement, instead forwarding all my mail to a PO box which my lawyers later determined was OWNED BY BANK ONE. It was clearly a deliberate ploy to purge less profitable customers and steal their smaller balances. If I could prove it in court I'd own them, but again, ya know, little guy sends letter to big corporation, into the void. I did file a suit with the Feds, but never heard back. I can't afford to hire a lawyer to track it down.

SO DON'T DO BUSINESS WITH BANK ONE.

Thank you, soapbox descended now. :)

[MariaG]

If you are into maximizing rewards and cashback, it sometimes pays to have multiple cards. Citi has a Driver's Edge card that is good for automobile-related expenses. Discover has good airline miles options.

Also, there is definitely a security advantage in having multiple cards with lower limits over 1 card with a big limit, especially if you are giving that info out to multiple outsourcing firms.

[James Grey]

If you are an “International Person” then you will need several credit cards

Besides using them for big ticket items like airplane tickets and hotels you may run into a financial problem and need money ASAP for several months (its not like you can stay on a buddies couch when you have financial problems if you are stuck in Timbuktu).

And if you are traveling overseas and see an opportunity to make a quick buck but you need some cash then having some credit cards will come in handy

Also not every card works everywhere when you are overseas – I will sometimes try 2 to 5 different cards before one works. Not sure why but I always run into that problem in Southeast Asia

You will also want 1 or 2 credit cards with only a 500 limit on them in case you end up needing to use one in a place that has high credit card fraud like Cambodia or anywhere in Africa

You will also want to keep your home country credit active (some expats neglect their credit). If you want to buy a rental property back home you will need to have good credit.

I have 10 credit cards – note: I don NOT keep a balance on them.

[Alex.Berger]

Another consideration - if you have two cards in each catagory it allows you to better sort your expenses. A previous poster noted using pre-paid cards, another alternative is to have one card that you use in more high risk instances - say for food and gas - and another that you use for safer transactions. Thus allowing you to watch one constantly, while periodically doing checkups on the other instead of constantly monitoring both.

[Michael]

The very best reason to have more than one or even just two credit cards is to help you establish a good credit rating with the three credit bureaus. Having a great credit score will enable you to utilize your muses to their fullest potential and will also open up many doors when applying for an account with a wholesaler or vendor.

You should have at least three credit cards (but not an excessive number, no more than five) with a balance of approximately 18% on all cards. Unlike what most sources tell you -- having a $0 balance on your cards is NOT a great way to get higher credit scores. In fact, having no balance shows that you don't actually know how to "manage" your credit to your benefit.

Most important, never max your cards out and make sure you never go over-limit. Even though it may seem counterproductive to keep your cards at 18%, you will see much better credit scores in the long run. Just make sure to avoid any credit card that has an annual fee attached to it. In addition, make sure you use all of your cards at least one time every six months. Cards that are considered "inactive" will not be of much help. Paying a bit of interest is a small price to pay for building excellent credit.

Here's an example of how to use three credit cards in a positive way -- all while helping your muses make you more money:

- Card 1 & 2 are used to 18% capacity each month to pay for PPC advertising via your muses' Google Adwords programs, plus MS Adcenter / Yahoo (Overture).

- Card 3 is used for your "everyday" expenses (up to 18%) of the credit limit, this allows you to keep track of your daily expenditures so you can keep on budget and make sure you are hitting your goals for your Dreamlines.

If you have a credit limit of $5,000 on each card 1 & 2, you will have approximately $1,800 available to use for your PPC programs (18% of $10k overall limit). By showing your ability to manage creditor debt -- the Fair Isaac (FICO) and other two credit bureaus (Experian & TransUnion) will interpret a higher range of credit scores in your favor.

In time, you can use your higher credit scores to request an increase in your cards' credit limits in order to have even more access to funds for your PPC programs (you may find that you will quickly exceed your available 18% as you create more and more successful muses). And, let's face it -- Google doesn't mind accepting your credit card(s) as payment for your Adwords accounts. :)

You can request a credit increase over the phone and even online with your card issuer, in fact, by managing my credit so well over the last few years, I have successfully had increases without having my credit pulled at all!

I'd recommend you get ahold of an American Express card, as well, if you don't already have one. Once you've done enough Google PPC charges each month on your American Express you'll be able to qualify for an AMEX Centurion (http://www.americanexpress.com/centurion/) card (you won't mind the $2,500 annual fee once you've achieved this feat, trust me). If you haven't seen one, it is also known as "the black card (http://en.wikipedia.org/wiki/Centurion_Card)" and is made of titanium. You'll be able to run all your muses' ad programs from it and not worry about hitting a credit limit each month. Plus the discounts and free flight upgrades are awesome. :cool:

If anyone needs any help or has more questions about credit, I'd be happy to assist when I can. (Please don't hesitate to ask, but don't look for a quick response... give me some time to get an answer back to you!)

PM me or contact me directly at michael@halfhourworkweek.com

[Mike Rhodes]

some great comments here

I use AmEx for all my PPC stuff (great airmiles)
& Visa for personal
with backup cards for travel

like the idea of small pre-paid cards for VA use - nice!

thanks,
mike