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Thursday, February 01, 2007

Credit Card Ambivolence and Other Meaningless Drivel

How many credit card offers do you get in the mail in any given month?
I get a lot. I usually get between three and five of them per day. I think that is a lot. Credit cards don't bother me a whole lot. I have never been much of an impulse shopper. Yes, I know my balance is high. It's the highest it's ever been. But I also have a high income, so it's not really that bad. The balance on my credit cards has never been much more than a tenth of my annual income. I don't think that's too high.
I know that there have been a lot of people who have gotten in some pretty serious credit card debt, so that is what worries me. It seems like one of those things that kind of creeps up on you.
I know I could opt out of prescreened offers for credit, but I never have. I actually enjoy getting credit card offers in the mail. I read the terms that they offer, too.
That's how I got such good cards. I have a different card for different needs. I have one that is zero percent interest on purchases. I have one that is zero percent interest on transfers. I really like one of the banks who gave me a credit card. Every month on your online statement they tell you your credit score and also what you can do to improve it. So I see my transunion score every month for free. It also keeps a chart so you can see which way it is headed. I was amazed at how wildly mine is bouncing around. There's about a fifty point range that it keeps jumping all over.
But my favorite CC is Amex. My Amex is a really good deal. Zero percent on everything, plus 1% cash back, and they gave me twenty five dollars and a high interest savings account to sign up. Plus I can carry a balance on it, even though it's one of the green ones, and then it's still at zero percent. That's the CC that I don't feel guilty about using, because I pay it off on payday and it's cheaper than cash, because of the cash back.
And since impulse buying isn't really my weakness, it doesn't bother me.

What bothers me the most about credit cards is that they are so eager to get your business. That means that they know that they will make their money back in the long run. For example, when you pay for something with a credit card, they charge the vendor a percentage and then they turn around and charge you interest. So they win twice. Even the Amex that I use charges the vendor, and I heard that Amex charges the most fee to the vendor out of all the CC's.

So I've been feeling a bit ambivolent lately about credit cards.
On the one hand, they make things really easy when it comes to managing my finances.
If I need to make a major purchase I can do so without having to have that much cash. So if my AC went out or I needed a new roof on my house I could handle it.
But on the other hand, I really hate being in debt. Even if all of my debt were interest free I would still hate it.

I haven't cut up all of my credit cards like most of the financial advice people tell you to do, mostly because I still intend to build a house, and I want my credit score to be as high as possible. I admit that I don't know as much about credit scores as I should. My Transunion score goes from about 710 to 760, depending on how much balance I am carrying on my debt. Right now it's 720.
My understanding is that that is a good score. I expect that as I pay everything off over the next few months it will go higher.

Does anyone know how high of a credit score I should have if I plan on buying some acreage and building a house? I plan on saving for a year of two first and putting a good chunk of money down on it. Is there a "magic number" that the banks want your credit score to be for you to get a preferable rate? I don't know what my other credit scores are, because I am waiting until after it's been a year since I checked them so that I can check them for free.


At February 02, 2007 6:54 PM, Blogger NIUiceprincess said...

i'm glad you posed this question as I would like to know too. My fiance and I will be buying a condo later this year or earlier next year...and would like to get a good rate as we could get. I hope other people reply.

At February 27, 2007 10:08 AM, Blogger yellow said...

A score over 700 is great!

At March 28, 2007 7:58 PM, Anonymous along came Jones said...

Texas is a whole other country so I may be slightly askew on this. A score over 700 should get you through the door, the higher the better, have at least 3 months worth of mortage payments in the bank more is always better especially at this time. Its been a while since this was posted hope it helps.


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