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reots
Posts: 107
Registered: ‎12-05-2008

Re: Dead end credit cards vs Keep forever credit cards

[ Edited ]

To make the most of those cards:

 

Charge at least one thing to each of them every month for 24 months.

 

Don't ever be late

 

Don't ever go over limit, in fact try not to go over 30% of the limits

 

Don't apply for new cards until you have  a 2 year average age of accounts on all your existing cards

 

At the end of two years pay them all to zero, cancel all but two of them, have only one of those two report a small balance on the statement and then apply for good cards

 

A 2 year average age of accounts on multiple trade lines, no new inquiries, combined with 2 open accounts reporting puts you in a nice sweet spot for applying for new cards

Message Edited by reots on 03-04-2009 10:00 PM
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Contributor
reots
Posts: 107
Registered: ‎12-05-2008

Re: Dead end credit cards vs Keep forever credit cards


shalane85 wrote:

Orchard Bank AF 59 CL 300 opened June 2005

Capitol One AF 29 CL 500 opened December 2007

Capitol One AF 59 CL 750 opened July 2008

Macys CL 100 opened February 2009

Credit One Bank AF 69 CL 250 opened February 2009 DO I EVEN NEED THIS CARD?


Out of all those cards you only really needed to take the first 2 to 2 years of ontime payments to build your credit. By applying for credit so frequently with such a short history you kept lowering your average Age of Accounts, often right before you had enough Average age to work in your favor. Had you just kept to those first two cards until Dec 2009 and applied in Jan 2010, you most likely would have broken into the 4 figure credit lines or better.

 

Good news is the damage isn't permanent, and all you have to do is wait and let your current accounts age while building two years of on time payments. You don't need that Credit One, but unless you can get it off your credit report after closing it there isn't much you can do until it get older. I would cancel it if they will refund your fees 

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score_building
Posts: 3,509
Registered: ‎01-10-2008

Re: Dead end credit cards vs Keep forever credit cards

[ Edited ]

Creditcardskeptic wrote:

OK...so just to be clear...a good card:

 

1. Is one that can grow with you, meaning, CLIs

2. One that has minimal or no feess

3. Doesn't require you to put up a deposit for a CL or a higher deposit for a higher CL

4.  A respectable CL

 

Anything else...Im new to the game here.  I have recently acquired 2 cards:

 

USAA total rewards (MC) , 15,000 limit

Edward Jones Rewards (MC) , 7,000 limit

 

How do these two rank?


1.  growth (CL) flexibility (product change) rewards (features) APR (how balances are treated) zero/low intro purchase rate and/ or BT offers.

2.  ideally fees, if any, will be more than recouped by the card's rewards/ perks/features

3.  only low tier cards sometimes charge a fee for CLI

4.  so long as the card has growth potential (eg. macy's) CL can grow rather quick, rendering the starting CL somewhat irrelevent.  still most prefer a higher CL where available. 

Message Edited by score_building on 03-05-2009 08:34 AM
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Contributor
reots
Posts: 107
Registered: ‎12-05-2008

Average age of Accounts

[ Edited ]

To illustrate what happened to your Average Age of Accounts by frequently applying.

 

Had you stuck with the first two cards and waited until June 2009 to apply for new credit

 

(48+18)/2=32 or 2 years AAoA

 

Had you just kept the first three cards you had until June 2009

 

(48+18+11)/3=25 or 2 years AAoA

 

With all 5 cards you have now, by June 2009

 

(48+18+11+4+4)/5=16 or 1 year AAoA

 

In the short term you've hurt your chances at applying for good credit, in the long term your AAoA will be pimped out by having multiple accounts to raise your average age, giving you less of a credit hit when you eventually open new trade lines.

 

You have about another 8 months or so until you should apply for credit, in the meanwhile don't load up on inquiries for cards you most likely won't want to keep.

 

Message Edited by reots on 03-04-2009 10:17 PM
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haulingthescoreup
Posts: 28,115
Registered: ‎04-01-2007

Re: Dead end credit cards vs Keep forever credit cards

[ Edited ]

Creditcardskeptic wrote:

...Anything else...Im new to the game here.  I have recently acquired 2 cards:

 

USAA total rewards (MC) , 15,000 limit

Edward Jones Rewards (MC) , 7,000 limit

 

How do these two rank?



Those are great cards. If you don't want to get any more, those should do you.

One virtue of having five or so cards, if you get them from different banks, is that it gives you some insulation from bank weirdness. When we started talking about this a year or so ago, people rolled their eyes, but look at the mess now.

I'm reasonably confident in USAA not going nutso. They recently raised APR's across the board, but they were kind enough to give people a two-month warning, an industry first as far as I'm aware.

The Edward Jones card is a BofA/FIA card, and as we all know, BofA is in a world of hurt. I don't know how vulnerable your card is to future AA.

If you want to start researching back-up banks, just in case, I'd suggest US Bank and Chase.

Oh, and yes, you summarized the qualities of good cards very nicely. I might add a 5th point --that the issuing bank is not about to go under. :smileytongue:


edit: cna't splel
Message Edited by haulingthescoreup on 03-05-2009 04:18 AM
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shalane85
Posts: 286
Registered: ‎06-19-2008

Re: Dead end credit cards vs Keep forever credit cards

Wow I didnt realize how I affected my Average age on my accts. I thought I might be helping my credit. I think I will take the advice of not apping for anything for 24 months. I plan to not carry a balance on anything excpet the cap 1 card with the highest cl. But I plan to pay that off monthly before they report. I appreciate all the advice.

 

This may sound crazy but I was thinking about closing the credit one card. But............ did you see the way that card looks? Its so pretty.:smileytongue:

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score_building
Posts: 3,509
Registered: ‎01-10-2008

Re: Dead end credit cards vs Keep forever credit cards


shalane85 wrote:

Wow I didnt realize how I affected my Average age on my accts. I thought I might be helping my credit. I think I will take the advice of not apping for anything for 24 months. I plan to not carry a balance on anything excpet the cap 1 card with the highest cl. But I plan to pay that off monthly before they report. I appreciate all the advice.

 

This may sound crazy but I was thinking about closing the credit one card. But............ did you see the way that card looks? Its so pretty.:smileytongue:


i find nice looking cards appealing too, quite a few do.  and i have to agree, i was kinda surprised to see how nice some of their cards look.  i don't think you're crazy at all.

 

sure, keep the physical card... but dump the high maintenance issuer (and the poor terms they offer) ASAP.

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gigi5
Posts: 767
Registered: ‎08-11-2008

Re: Dead end credit cards vs Keep forever credit cards

I Have three "Dead End" Cards; Premier CL $200.00  Tribute $500.00 & Continental Finance $375.00.  I have had them for 18 months now.  I have NEVER been late, I pay two weeks before the due date on each card.  I have never asked for more credit with them and I have refused extra cards (Premier).  I had to eat the annual fees and the monthly fees.  But, I had a purpose to get my credit off of Life Support.

 

I am currently looking for a home to purchase and shopping arounds for better credit cards ( I get preapprovals from Chase and BofA all the time)  I waiting to close and breath after I get use to my mortgage payment then I'll dump all three.

 

I wrote this to say they may be dead end to some but they help me get pass "Go".

 


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haulingthescoreup
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Re: Dead end credit cards vs Keep forever credit cards

That's exactly what they're for! (and congrats, btw.)

I call them "training wheels" cards, like the extra wheels they put on when you're learning to ride a bike. They're a great help to get you started, but they are what they are, and when you don't need them any more, you take them off and go on your way.

They're not meant to grow.
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
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karbon86
Posts: 38
Registered: ‎11-06-2008

Re: Dead end credit cards vs Keep forever credit cards

I would agree that all of them are dead end cards due to the lenders and the annual fees.  You should be making money off your credit cards with cash back and no annual fees.  Like stated they might be the only option for some people to help them get to the better cards if used properly but eventually they hit the "dead end" and can't take you further like the other cards.

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