This post is meant to relay information humorously. It is not meant to under-mind those with serious problems I may be making lite of in this post. Please look at the point (and not my attempt at humor). I do not know of any FA and what I attempting to portray is a realization of my personal potential errors so others don’t.
I recently had a dilemma that I thought might be of benefit to the community. When to use cash back verses when to use a zero percentage interest card? I must give some details to make my situation more plausible. I have no need for current credit (the next year or so); therefore, a FICO score hit is not as important (as obvious from my recent score drops). Nevertheless, I was a FICO freak and worried about my scores incessantly. Virtually every decision I made (paying a bill, buying groceries, etc.) references the affect it would have on my FICO scores. I was out of FICO control and eventually joined FICO Anonymous (FA).
Like with everything we do at FA we take FICO events “one decision at a time.” I recently had a quandary that put my FICO sobriety to task. I needed a new set of gutters and downspouts on my house (hurricanes and all in FL). I could have used my QS card and receive 1.5% cash back OR I could have used my USAA 0% interest card until 03/20. Lack of extra funds demanded something would suffer so what to do?
Now in my FICO stupor I immediately said, pay for the repairs using my cash back. That way the bill will actually cost me 1.5% less. Then I can recoup another 18.25% on my total tax bill for damage making the total cost even less (based upon my taxable income). That will be a whopping bunch of bucks-savings and my FICO score will not change a bit. I’m nowhere near 8.99% on that card and my total utilization.
To conclude my brainstorming idea, I said I could then transfer that QS debt to my 0% USAA card. Brilliant, except for the transfer fee. No matter, a quick calculation revealed it would be only a few bucks difference – go for it!
I called my sponsor to relay my exuberance. As any good sponsor would query, she asked; “Well Y, why do you feel the need for the 8.99% value? You said you don’t need additional credit for a while, so why are you doing this?” I started jabbering about utilization and cash back until she shut me off. She said, “Where is the financial benefit Y. FA is not about a score in any given month, it’s about living a credit life worth living. Your obsession for a score is costing you money. Even if it is one cent, your FICO obsession is still costing you.”
I was floored. But as any good sponsor (with years of FICO sobriety will relate) she explained to me that the fiscally logical thing to do would be to put the complete bill on the 0% interest card and take the hit for going into the next bracket. In the long run, I would save money and could still use the excess credit on the other cards if needed in an emergency.
I have discovered that credit is an oxymoron. We all on the forum know this intrinsically. If you use credit, then your score goes down; age your accounts and your score goes up – it’s the basics. The true value of credit resides in the situations when you have it and don’t need it. Then you can use it to your advantage and FORGET ABOUT IT for a while – maybe a long while.
FICO food for thought.
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