Category: Credit Cards

credit cards

Credit Cards: How I’m Winning

Posted on by kaitlyntessmer

If you’ve followed my story, you probably know that I’ve been very anti-credit cards for the past 5 years. I’ve been following Dave Ramsey’s Debt Snowball to pay off my student loans, build an emergency fund, save for retirement, and prepare for a downpayment on a house. For those of you who aren’t familiar, the name Dave Ramsey is synonymous with being anti-credit and anti-debt. While following Dave Ramsey has been a great way for me to get ahold of my finances and set myself up for success, a few months ago something changed. I decided if I wanted to buy a house someday with an affordable interest rate, I was going to have to play the credit game.

I knew the two fastest and easiest ways to build a credit were (1) taking out an auto loan or (2) applying for a credit card. Since my 2006 car is still alive and kicking, knock on wood! I decided the best route for me to build my credit was to apply for a credit card. While the average American has $6,375 in credit card debt, I’ve been able to avoid going into debt, and instead reap the cashback rewards. By combining basic human psychology with a little trial and error, I’ve been able to win the credit card game, here’s how I’m doing it.

Choosing the Right Credit Card

Before I opened my first credit card, I did a lot of research. I knew I was going to avoid store credit cards at all cost. In college, I worked for Gap and I know how useless it is to have a store credit card. Store cards offer the best deals and rewards for shopping that particular brand. Store credit cards charge a lot of interest for carrying a balance. Plus, they subconsciously encourage you to overspend with a particular store brand in order to reap the rewards.

Being the Frugal Millennial, I try to be brand agnostic. That’s not to say I don’t favor certain brands and stores, but rather than forcing myself to shop at one particular store all the time, I always do my research to make sure I am getting the best deal. I know myself well enough that if I had a store credit card I would be tempted to shop at that store more often, even if I wasn’t getting the best deal. With this in mind, any store-specific credit card was not an option for me, sorry Amazon.

No Annual Fees

In order to choose the best credit card for me, I headed to Nerd Wallet’s website. My number one requirement was that it didn’t have an annual fee. Call me old-fashioned, but I was not about to pay an annual fee to carry around a piece of plastic. To pay $99 or even $69 per year to swipe a magnetic piece of plastic is ridiculous.

I know some of you out there are going to tell me there are amazing credit cards that carry annual fees. I’m sure there are, but those cards are not for me. I spend very little. In fact, I calculated what my annual rewards would be if I kept my normal spending habits. Any rewards that I would earn would be offset by the annual fee. In order for me to maximize my rewards, I needed to find a card that did not have an annual fee.

Cashback

After I filtered through cards without annual fees, I looked for credit cards that offered cashback. I wanted to be in charge of how I earned and used my rewards. I didn’t want to be limited to airline miles which often expire and are tied to one airline. In essence, I wanted straight cashback on every purchase.

Beyond that, I didn’t want the cashback to be determined by rotating categories. I know myself and basic human psychology. If I chose a card that used rotating categories to reward my spending, I would alter my spending habits to fit within those categories so that I could earn more cashback. I needed to find a credit card that fit into my lifestyle, not the other way around.

My Favorite Credit Cards

After doing hours of research, I narrowed my top choices to the following list. Keep in mind, all of these cards offered cashback and $0 annual fees.

My top choice was the Citi Double Cash Card. This card offers 1% cashback on all purchases and an additional 1% cashback when you pay the bill, for a total 2% cashback. Plus, it was a nice incentive to pay the card off in full every month and earn the additional 1% cashback right away. If you’re a regular Frugal Millennial follower, you know that I applied for and was rejected from the Citi Double Cash Card.

My second choice was the Fidelity Rewards Visa Signature Card. I liked this card because it offered an unlimited 2% cashback on every purchase with no annual fee. Even more, your cashback could be added to your existing Fidelity investment account. Check out how much more you would earn over time by investing your cashback rewards.

My third option was the Chase Freedom Unlimited card. With this card, I would earn 1.5% cashback on each purchase. While the cashback amount isn’t as high as the Citi Double Cash or Fidelity Rewards Signature Visa, in the grand scheme of things 0.5% was going to be a difference of an extra few dollars a year.

Winning with Credit Cards

Create a Budget

I talk about the benefits of budgeting constantly on my blog. If you want to win with money you need to create, and stick to, a written monthly budget. I’ve had roughly the same monthly budget for the last 3 years. I know exactly how much money I can spend each month in order to have fun and build wealth. When I opened my first credit card I didn’t change my spending habits. As I mentioned, my spending habits are so consistent that before I even opened my credit card, I calculated how much I would earn annually in cashback rewards. That way, I wouldn’t be tempted by the allure of earning more cashback by spending more than I normally would.

Being frugal doesn’t have to be boring. As long as you save and budget, you can afford anything.

By sticking to my regular monthly budget and not altering my spending habits, I have not only been able to pay off my credit card in full, every month. But I have also been able to continue to build wealth. I’ve been able to avoid the credit card trap that so many Americans fall into and it started by creating and sticking to a written monthly budget.

Use One Card

You know the saying, “keep it simple, stupid”? That’s how I try to keep my finances. The more you complicate things, the more likely you are to make errors. I only have one credit card and put all of my purchases on it. I don’t worry about using a specific card for travel purchases, another card for gas, and yet another for groceries. It’s too complicated to remember which card to use for what and even more complex to remember which card needs to be paid when.

If really stop to think about how much more cashback you would earn by using multiple cards it’s probably marginal. Unless you’re a big spender, it’s probably not going to be worth the time and hassle to use multiple cards.

The Credit Card Game in a Nutshell

I consider managing finances like playing a game. At the end of the day, there are winners and losers. If I’m able to spend wisely and budget accordingly, I consider myself a winner. On the other hand, the months when I let myself spend frivolously and overspend (yes, I am human), I consider myself a loser. By sticking to a written monthly budget and choosing a credit card that fit into my existing lifestyle, I have been able to avoid credit card debt and instead reap the rewards. In essence, I have been able to win with credit cards.

Stay Frugal. Stay Fiesty.

 

Should You Get the Venmo Debit Card?

Posted on by kaitlyntessmer

Among the many FinTech companies looking to edge their way into our everyday lives, Venmo has unleashed a new debit card. Following suit from companies like Square, the Venmo Debit Card is looking to make waves in the financial sector.

Who Can Get the Venmo Debit Card?

According to TechCrunch, only a few select users have access to the Venmo Debit Card right now. Because the card is still in beta, Venmo is still working out the kinks. If you’re eligible to test out the Venmo Debit Card, you will see the offer in your Venmo Account. The invitation appears at the top of your Venmo feed.

What Can I Do With Venmo’s Debit Card?

You can use Venmo’s Debit Card the same way you would use any other debit card and you can use it anywhere Visa is accepted. Which, in this day and age, is pretty much anywhere that accepts credit cards. You can use Venmo’s physical debit card at stores, restaurants, gas stations, grocery stores, etc. The only difference is that this debit card is linked directly to your Venmo account. And you’ll also have to link your Venmo Debit Card to your bank account. If you don’t have enough money in your Venmo account to cover the cost of the purchase, Venmo will pull the balance from your bank account.

What Can I Do With Venmo's Debit Card?

Should I Get the Venmo Debit Card?

Once Venmo releases the card to the general public, you will have the option to decide if you want to order one. According to TechCrunch, the major drawback to the card is “the card design is really, really ugly. It’s literally a picture of a ball of pizza dough with some white flour sprinkled on top”. According to TechCrunch, Millennials care about the design of their debit card and would never opt for such an ugly card. I have to disagree, the design of a card should be the last reason on your list. If you only choose cards based on their design, we need to talk.

I’m interested to see what Venmo will say once they release this card to the general public. At this point, because there are no major benefits to this card, I wouldn’t recommend grabbing one for yourself. Adding another debit card to your wallet only increases your risk for fraud. What happens if you lose your wallet at the bar or on the train? You have yet another card linked to your bank account that you need to remember to cancel. The best financial advice I’ve ever received is “keep it simple, stupid”. No need to complicate your life by adding yet another card to your wallet.

Top 5 Reasons Your Credit Card Application Was Rejected

Posted on by kaitlyntessmer

Getting denied for a credit card sucks and can really be a blow to your confidence. I was recently denied for the Citi Double Cash Credit Card and didn’t understand why Citi Bank would deny my credit card application. After doing a lot of research I discovered why my credit card application was rejected and put together the top 5 reasons your credit card application was denied. I hope you find these tips for reversing your credit card application denial helpful and are able to implement them and get approved for the credit card you want!

You Didn’t Fill Out The Application Correctly

The first reason your application may be denied is if you didn’t fill it out correctly. If you forgot your Social Security number or you made a typo in that, your application is probably going to be automatically get denied. The great thing is that if you get denied for either misfiling out the application or because your credit is frozen, it’s a super easy fix, all you have to do is call the company that you applied. If you applied for a Citi credit card, call Citi up, explain to them what happened, tell them you were surprised by the denial and they’ll usually explain to you that there was some sort of error on your application. They can go ahead and process it again and hopefully get you that approval.

You Don’t Earn Enough Money

The second reason you may be denied that credit card is because you don’t earn enough money. Most credit card companies don’t list what the minimum income that they require but if a $500 credit limit is going to put you in major debt, it’s likely you’re not earning enough money to be able to afford that credit card. Although credit card companies prefer for you to carry a small balance (so they can charge you interest) they want to avoid having you default. If the credit card company feels you may have trouble paying back the balance it makes you a pretty big risk and they will likely deny your credit card application.

The best thing you can do if you get denied because you don’t earn enough income is to wait, get a second job or a promotion or some extra way to earn money and then go ahead and apply again once your income is higher.

You Have a Negative Mark on Your Credit Report

The third reason your credit card application may have been denied is because you have something negative on your credit report. So if you’re denied because you have a negative mark on your credit report, the first thing that you need to do is to go ahead and check your credit reports. You can actually get a free report from each of the 3 credit bureaus: Equifax, Experian, and Transunion every single year (thank you federal government for making this a law!).

To access your free credit report,  go to annualcreditreport.com and request your free report. Keep in mind, you only get one free report every year and they don’t show your actual credit score on those reports. If you want to see your actual credit score, you have to pay for that with each of the 3 bureaus. Getting your free credit report will show you what credit card companies are seeing when they pull your report and will show you if there are any negative marks.

If you’re denied because you have something negative on your credit report, you can call the credit card company’s reconsideration line. Every major credit card company has a reconsideration line and you can call them up and try to explain the negative mark and see if they will go ahead and approve your application after talking with you.

Credit Card Reconsideration Lines (Phone Numbers)

American Express Reconsideration Phone Number

1 (877) 399-3083

Bank Of America Reconsideration Phone Number

1 (866) 458-8805

Barclay’s Reconsideration Phone Number

1 (888) 232-0780

Capital One Reconsideration Phone Number

1 (800) 625-7866

Chase Bank Reconsideration Phone Number

1 (888) 270-2127

Citi Bank Reconsideration Phone Number

1 (800) 695-5171

Discover Reconsideration Phone Number

1 (888) 676-3695

US Bank Reconsideration Phone Number

1 (800) 947-1444

Wells Fargo Reconsideration Phone Number

1 (866) 412-5956

You Have Too Much Debt

The fourth reason your credit card application may have been denied was because you have too much debt. When a credit card company looks into you and decides whether or not they want to extend you credit they’ll look to see how much available credit you have and how much of that credit you’re actually using. If you have $10,000 of available credit and you’re using $5,000 of it, your utilization ratio is 50% and that’s a really high ratio for credit card companies. Most credit card companies want to see your utilization ratio below 20%.

If you’re denied because your utilization ratio is too high and you have too much debt; wait, pay off your debt, and apply again. One thing to note, credit card companies keep your application open for about 30 days. If you’re able to pay off your debt to get your utilization ratio below 20%, call the credit card company’s reconsideration line and see if they will reconsider your application without requiring you to apply again.

Your Credit History Isn’t Long Enough

The fifth reason your credit card application may have been denied was because your credit history isn’t long enough. If you’re just starting out and you’ve never had any credit cards or loans, car loans, student loans before you have zero credit history and that’s really worrisome to these credit card companies. You’re a really high risk because credit card companies don’t know how you’re going to behave.

It is nearly impossible to have a credit card company reconsider your application if you were denied because your credit history isn’t long enough. Trust me, I’ve tried. You’ll have to apply for an easier to obtain a credit card.

If you’re a student, student credit cards are pretty easy to come by and that could be a great option for you. These days student credit cards even offer you cash back and actually have pretty good rewards. Check out ValuePenguin’s list of the best credit cards for students. If you’re not a student and you still have no credit history or your credit history isn’t long enough, try looking into a secured credit card. Check out NerdWallet’s list of the best-secured credit cards of 2017.