- 1 How do Credit Card signups affect your credit? – Part 2
- 2 About Unknown Credit Card Charges
- 3 6 Ways My Family Scores Free Travel With Credit Cards
- 4 Who Invented the First Bank-Issued Credit Card?
How do Credit Card signups affect your credit? – Part 2
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So in the first part of this series, we talked a little bit about how applying for (and having) multiple credit cards affects your credit. The short answer is that in the “happy” scenario, where everything goes well, it won’t affect your credit score very much at all.
But there are a couple of scenarios when it probably doesn’t makes sense. So when would I NOT recommend getting involved in travel hacking?
- If you aren’t sure what you’re doing. The fastest way to screwing something is up is not having a good idea of what is going on. Having said that, if you’re looking for help or advice, you can check out the Beginner’s Guide, or also feel free to contact me on Share or . I’m always happy to help out. The most important thing is that YOU are comfortable with what you’re doing. Start slow, and only participate as much as YOU feel comfortable with.
- If you have outstanding balances on any existing cards, or you can’t or don’t pay off your balances in full each month. Any gains you get from travel hacking will be more than eaten up by interest charges.
- If you’re not organized enough to track your spending. We’ll talk a little more about this in a future post, but not being organized will cause you to do things like miss payments (racking up interest / late fees), or not hit the spending target on a CC (causing you to not get the bonus). I mean, I consider myself pretty organized (you should SEE my spreadsheet ) but I’ve had a few problems with this anyways
- Another time I would recommend waiting would be if you have any impending big purchases, like a car or house. Even a slight dip in your credit could cost you several points on your interest rate, and you don’t want to have to pay that premium for the next 30 years…
Regarding that last point, I’m reminded of a story someone told me the other day. Several years ago, the US Mint was trying to get the new Presidential $1 coins into circulation, so they had a promotion where you could order them online for free shipping. This guy mentioned that he had gotten a great deal on a cash advance from his credit card, so he took a big portion of his credit limit ($5000? $10000? I’m not sure) and bought the dollar coins, then used that money to buy a CD. The balance transfer fee was 1% and the CD was yielding 3% (numbers totally made up to tell the story but I’m sure they’re in the ballpark), so he figured this was a risk-free way to earn a few hundred dollars.
All was well, until his car broke down and they had to buy a new one. As we discussed last time, one of the more important factors in your credit score is how much of your available credit you’re using. Because all his was tied up in the CD, his score dropped fairly significantly, and he was not able to get a good rate on his car loan. There went the hundreds of dollars he was making. In the end, he was able to refinance after his CD matured and was not terribly worse for the wear, but it is a good reminder that if you have any upcoming major purchases, you should wait to start this game. It took a long time for us to refinance our house, for various reasons, but it finally closed in December 2012, and I did my first major credit card signups in January of 2013.
Okay, so enough about that. Assuming none of the gotchas above apply to you, where do you start? Do you even know what your credit score is? You can get your report periodically from the government, and there are other services out there that purport to offer “free” scores, usually with a catch where you get charged if you don’t cancel on time or something like that.
One place that I have found and that I use is called Credit Sesame.
I signed up for them back about a year ago and have been very pleased. You do have to give basic information to them, as well as answer questions to verify your identity, but the important thing is that you do NOT need to put in a credit card, and there is no charge. I believe they make money from providing you with links to sign up for credit cards and home loans and such. The score they provide is only from one of the 3 bureaus (Experian I think?), so it’s not going to give you exactly what banks or other places might see, but it’s going to be in the same ballpark.
Here’s what my report looks like
I hope it’s not a major faux pas to post my credit score, but I wanted to give you guys an idea of the kind of report that they give out (for free). Now, it should be fairly clear which 2 months were the ones where I signed up for multiple credit cards , but you can also see that it has recovered both times. It is about 20 points lower than it was a year ago, but I think those can be explained by just random fluctuations. I also enjoy the first little checkmark they give me, which is a direct effect of my having so many credit cards .
Credit Sesame is a great tool to just keep an eye on where your credit score is, and to make sure you’re in the right shape for travel hacking. I’ve signed up both for myself and Carolyn. Disclosure: I do receive a commission if you sign up for Credit Sesame through my link. As always, your support is appreciated.
About Unknown Credit Card Charges
If you don't recognize a charge, there are several reasons this may have occurred.
Need to view your complete order history?
Keep in mind the following common scenarios for unknown charges:
- At the end of the Amazon Prime free trial or annual membership period, your card will be charged $99 automatically for the next membership period. If you didn't intend to convert your membership to a full 12-month membership, you can cancel your Amazon Prime membership on the Manage Your Prime Membership page. If you haven't placed an Amazon Prime-eligible order, you are eligible for a full refund
- A bank has placed an authorization hold for recently canceled or changed orders. When you place an order, Amazon contacts the issuing bank to confirm the validity of the payment method. Your bank reserves the funds until the transaction processes or the authorization expires, but this isn't an actual charge. If you cancelled your order, the authorization will be removed from your account according to the policies of your bank. To remove an authorization, contact your bank to clarify how long they hold authorizations for online orders.
- An order was placed by a family member, friend, or co-worker with access to your card number.
- Additional cards are associated with the credit or debit account.
- A back-ordered or pre-ordered item shipped.
- A gift order shipped.
- An order was split into multiple shipments or sent to multiple shipping addresses.
Note: This will appear on your statement as separate charges.
6 Ways My Family Scores Free Travel With Credit Cards
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I travel a lot, but I don't pay for most of it. In fact, my family and I often fly in business or first class. I used to look for coupons for 50 cents off of this or a couple of dollars off of that — but today it takes a few hundred dollars worth of travel savings to get me to raise an eyebrow. This is the lifestyle of a travel rewards aficionado. (See also: 5 Best Travel Rewards Credit Cards)
What You Need to Know About Earning Free Travel
Earning free travel with rewards credit cards is legitimate, ethical, and profitable for all of the parties involved. Like many, my passion for reward travel was born of necessity. At first, I was just addicted to traveling in a style beyond my budget. Later, I married into a family that lives, in large part, on the other side of the globe. It didn't take a calculator to realize that the three of us weren't going to be able to visit my wife's family every year or two at a cost of about $5,000 in airfare. Moreover, after enduring coach seating for 30 hours in the air, round trip, we felt like the airlines should be paying us.
Contrast that scenario with our most recent trip this September. We traveled on award tickets business class to see family in Tel Aviv and enjoyed a week long stopover in Italy on the return. In Milan, we used hotel awards to stay for free in a suite that normally costs over $400 a night. After touring Lake Como and the Italian countryside, we returned home to Denver satisfied that we had not just visited family, but actually had a vacation as well. Other reward trips we have taken in the last year include Brazil, the island of St. Thomas in the Caribbean, and more domestic excursions than I can count.
1. Take Advantage of Frequent Flyer Mile Promotions
US Airways offered a 250% bonus, at one point, for certain purchases made through their frequent flyer program partners. Reward travel enthusiasts like me quickly figured out that a certain product that normally returns 40 miles per dollar spent would now earn an additional 120 miles per dollar during this promotion, for a total of 160 miles per dollar spent. In fact, the miles were worth far more than the product itself!
I spent $3,000, and earned nearly 500,000 US Airways miles without stepping foot on an airplane. It was those miles that were redeemed for the three business class, partner award seats to the Middle East with a stopover in Europe. At 120,000 per ticket, we even had over 100,000 miles left over. Finally, the product itself was donated to charity for the tax deduction. Other recent promotions have included opportunities to buy and transfer miles at discount rates and offers that require earning miles from a selection of partners.
2. Find Credit Card Sign Up Bonuses
We are all incredibly lucky to live in a country where credit card issuers compete so hard to earn your business that they are tripping over themselves to offer the most valuable sign up bonuses. This year, my wife and I each earned 100,000 miles as sign up bonus during a promotion that lasted a few months. Travel credit cards often offer sign up bonuses worth $500 or more. It's an easy way to jump start your collection.
Does this hurt our credit score? Not at all. In fact, we always qualify for the most favorable mortgage rates. Our scores may suffer a few points at any given time due to too many recent inquiries, but we also have a large amount of available credit, reducing our utilization ratio. Keep in mind that this strategy is only wise for those who normally maintain excellent credit and who don't view these cards as an invitation to spend more or incur debt.
For those whose credit card is simply a method of payment, not a means of financing, each dollar spent equals more miles. We always use our credit cards when they are accepted. Just by paying for our usual expenses on our credit cards (and paying them off in full each period), we rack up points quickly and consistently. Again, this strategy is not for anyone who ever carries a balance as interest payments will far exceed the value of the miles earned.
Being bumped is the lingo for earning voluntary denied boarding compensation. When an aircraft is oversold, some travelers will volunteer to take a later flight in order to receive hundreds of dollars of compensation. The key to being bumped is to book flights that you know are oversold, don't check luggage, and to be the first on the list of volunteers when the gate agents arrive.
When companies experience service failures, customers can earn valuable compensation if they play their cards right. Although poor customer service is more common in the airline industry, it does happen at hotels from time to time. Those who take the time to write a brief, polite, email to their travel provider will frequently receive vouchers and/or frequent flier miles for their troubles.
6. Use Miles and Points Creatively
When trying to use frequent flyer mile programs, most people focus on the earning side of the equation. This is important, but no less so than finding the most strategic redemption opportunities. Finding the most valuable awards is an incredibly complex game, but if I had to sum it up in one word, it would be "Partners.9quot;
Remember my 500,000 US Airways miles? The only way I was able to redeem them for our most recent trip was through their airline partners. In this case, we flew Star Alliance partners Continental and Lufthansa, without taking any US Airways flights. In an extreme example, I once transferred points from a credit card to miles with Japan's ANA airlines, to redeem an award on one of their partners, South African Airlines.
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Thanks! Great article with some tips I haven't heard a million times before. Excited to read your future columns!
Welcome to Wise Bread Jason! You have a beautiful family. I love that photo of you and your daughter. You with your Super Hero Dad walk and her with her little girl skip. =)
I'm generally a pretty smart credit card user. Always paid monthly debt in full, never use it as an excuse to buy things I can't afford. Have focused mostly on cash back because they seem like the best bang for the buck. But now that I want to travel more these articles might come in handy. Like Smarcus said, I'm excited to see more great tips in the future.
Agree with other commenters that your family looks adorable. Noticed in the last pic you had to get up from breakfast to take that picture.
Ah dads. Always taking pictures and never fully enjoying the vacation. lol
Great post. One thing worth mentioning is to book awards travel plenty of time in advance, particularly if you are going first class. I use AA miles (through partner Hawaiian) every year to fly first class for early December travel to the Big Island. I literally have to book my flights in early January to get the following December first class seats on the Hawaiian flights. Seems like the airlines are allocating fewer seats for air mile travel (in my experience).
I always thought that the travel credit cards had so many limits and miles expired so quickly that unless you're jetsetting every where, you'll never be able to utilize them. Glad to hear that they actually work through normal use.
My family is scattered all across the US so I make really good use of my travel reward credit cards, especially around the end of the year for all the get togethers!
Welcome Jason! Awesome article! Some really useful tips I'll have to start implementing!
Great article with awesome tips! And your daughter is adorable!
I never know what to put in my complaint letters. I start off being too mad to write anything coherent. But when I cool down I forget to write it at all.
Do you have some kind of template that always works for you?
Buying certain products for the large number of airline miles always makes me think Adam Sandler piling his cart full of pudding in Punch Drunk Love. You seem a bit more down to earth. =)
How often do you find you're able to get bumped? I've tried a few times, but it's never worked out for me.
Thanks for the tips, Jason! I don't travel much myself, but a friend is planning to surprise her parents with a trip to Europe to celebrate their anniversary next year. I'm definitely sending her here. =)
Welcome to Wise Bread! Like everyone else, I'm looking forward to maximizing the bonuses on my credit cards.
That breakfast looks delicious! Welcome to Wise Bread, Jason. I have a ton of questions for you. like "is it worth the effort?" and "how many credit cards do you have to carry?" Looking forward to more posts from you!
Thanks for all the great feedback. A few thoughts:
First, booking awards early is preferred, but don't count out the possibility of booking late. Many airlines open up awards space over time or even at the last minute. Case in point, we will be visiting my parents over Thanksgiving on award tickets, just booked in the last few weeks, so nothing is impossible.
Re: Sarah As for complaint letters, the content is almost irrelevant, as many airlines (especially Delta) don't even read the letters. They just shoot off a generic response and give you miles. Just mention you were unsatisfied for any reason, even if the letter is just two sentences. In fact, if I had the job of reading complaint letters all day, I might be thrilled to read only the shortest ones, and reward them for their brevity alone as some people write pages and pages.
Re: Meg. The sub-plot about miles in Punch Drunk Love is actually based on TRUE STORY! Google "Pudding Guy" and you will learn about David Phillips. I actually met him last weekend and heard his story. I am sure stories like his will be something that I will be writing about here in the future.
As for bumping, that might be the tip I use least these last few years, as I was always traveling on a tight schedule to maximize limited vacation time. Now, my time is less limited, and I might try it again. When I used to travel on business, I would pick an airline with many flights to my destination, and then book the first of several flights that would get me there on time. On some occasions, they would overbook each flight, and I would get bumped multiple times before I went anywhere. There is a lot of luck involved, but like a game of poker, it is what you do when you have good cards that matters.
Re: Greg. Finally, the last picture is actually just an appetizer before dinner at an "Agritourismo" in Italy near Parma. These are farm houses that you stay in and eat locally grown foods. That is prosciutto de Parma, melon, eggplant, tomatoes, Ricotta, and of course, Parmesan cheese. The melon, eggplant, and tomatoes were grown a few feet from where we were eating, and later, we later visited the farms where the others were produced. As for "Is it worth it?". You tell me. I once boarded a 12 hour flight, and sat in a lie flat seat in business class. In this aircraft, the economy class passengers passed my seat on the way to theirs, just as I was reclining and looking at the menu. The stares were piercing and the jealousy was palpable. Several asked "How did you get to be so lucky?" Or, "Why do you get that seat?" Embarrassed, I could only respond, "Collect miles". We had three business class seats to Israel and Italy on this last trip, and it cost us far less than coach, so yes, it was worth it. As for the number of cards I carry. I use only about 4-6, although I occasionally have more that I got just for the bonus.
Who Invented the First Bank-Issued Credit Card?
Mike Randall • July 7, 2016
Ah, the ubiquitous credit card. Considering how these little pieces of plastic have helped to shape the consumer landscape for nearly six decades, do we really give them enough respect? (You thought I was going to say credit, didn’t you?)
We seldom give more than a passing thought to using a credit card for everything from dinner at our favorite restaurant to paying for gas at the pump. But have you ever wondered who invented the first credit card?
Seen above, a page from a 1965 brochure for the Charg-It Card.
While there are many claims to this distinction, it’s widely agreed the idea for the first “universal” credit card was thought up by John C. Biggins, a banker and innovative credit promoter, in 1946.
At the time, Biggins was working for the Flatbush National Bank in Brooklyn, New York and decided to try an experiment in providing credit to the local community around his bank. He promoted his new concept which he called “Charg-It” as a way for local stores to offer credit to patrons of the bank.
As the issuer of the cards, the bank would pay the stores and assume responsibility for collecting the debt from the Charg-It card holders.
Thus the universal credit card was born.
To help us understand what a truly novel concept this new credit card was, we’ve got to take a brief look back at the history of credit.
While merchants have been allowing consumers to buy on credit for hundreds of years, it was always a direct relationship between the seller and buyer. Even in the early part of the 20th century, department stores, oil companies and others issued cards that were only good for purchases at their locations and were almost always payable in full upon receipt of the bill.
Now, however, the bank was agreeing to pay the merchant and would “lend” money to the consumers who used the Charg-It card … with interest of course.
While Biggins’ groundbreaking idea was implemented on a very small scale – only open to residents and merchants within a few blocks of his bank – the idea quickly caught on.
A small savings and trust in Patterson, New Jersey was the next to implement third-party credit card payments in 1950, and by the middle part of that decade, mother local banks had joined in with similar plans.
It wasn’t until 1958, though, that the first national credit card issuer joined in with their own entry – the American Express Card. In its first year, nearly half a million members signed up for the Amex card, and it was being accepted at more than 30,000 locations.
So the next time you reach for that convenient card in your wallet to buy something on credit, consider the history of that little piece of plastic … and maybe give a little nod to John C. Biggins.
Almost 60 years later, there are now plenty of exciting credit cards to choose from. Why not open a new one today?
Photo sources: Bankrate
Editorial Note: Opinions expressed here are the author's alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.