5 Things You Didn’t Know About Credit Cards
If you are like most Americans, you probably have several credit cards, and you have been using these products throughout most of your adult life. Yet for all their popularity, cardholders tend to know remarkably little about these products. To illustrate this fact, here are five things that you probably didn’t know about credit cards and your credit score:
- Just because you pay your balance in full, it doesn’t mean you have no debt. The smartest way to manage your credit cards is to always pay each month’s balance in full and on time. But even if you do this, your credit report will still show debt. That is because the reports are generated based on your current balance. And as far as the credit agencies are concerned, it is still money you own and it still represents debt.
- Applying for a new credit card won’t hurt your credit score. Just a single inquiry on your credit report will have a negligible effect on your score. Only those who open many cards in a short period of time should be worried.
- Opening a new credit card account may actually raise your credit score. When a new account is opened, the cardholder is granted a new line of credit. For a given amount of debt, this will lower your debt to credit ratio which can slightly improve your credit score.
- You can get the same sign-up bonus over and over again. Many cardholders assume that once they have reaped a generous sign up bonus, they are ineligible to receive it again. However, reward travel experts have learned that if they wait one and a half to two years before re-applying, most banks will actually award these bonuses again and again.
- You can negotiate the annual fee. Each year when cardholders are billed their annual fee, they probably think that they must either pay it or cancel their card. In fact, they can contact their credit card issuer and ask to have it waived. Sometimes their request will be granted, but other times cardholders will only be offered bonus points or miles. And while it is rare for a good customer to be denied any compensation for continuing to keep the account open, it can never hurt to ask.
If you were to own five cars that you used every day, you would probably be considered an automotive expert. But those who have as many credit cards rarely learn much about these products. By understanding some of the lesser known facts about credit cards, you can start leveraging them to your advantage.
Picture by FreeDigitalPhotos.
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