Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
I was surprised to learn recently that regardless of “tread-wear” tires need to be replaced at a time interval set by the manufacturer - usually about 6 years - a year or so longer with some premium brands. The reason is that the sidewalls deteriorate over time and could cause a blowout. This was pointed out to me when I had my old 2005 pickup in for routine servicing a year or two ago. The mechanic pointed to extensive visible cracks in all of the sidewalls. The tire treads were lightly worn. I drive the old truck only about 1,000 miles a year, but often heavily loaded. The tires were probably 10 years old. Of course I replaced all 4.
Per @msf’s experience with an oil change - I encountered the same resistance a few years ago when I took the old pickup in for an annual oil change at a local “quick lube.” The guy claimed the oil looked “clean” on the dipstick and at first declined to change it. Eventually, I convinced him to do so. For us old-timers that seems indeed odd. We were taught (I believe correctly) that an oil’s “appearance” is not an accurate way to to access its condition or need to be replaced. And it seems especially peculiar a vehicle service center would voluntarily turn down a chance to make a dollar. I’m wondering if perhaps there’s been some pressure applied by the EPA to encourage or coerce oil change outfits to do this visual inspection with the goal of reducing the amount of waste oil, which presents environmental challenges (though I believe it can be recycled).
”Do I receive compensation for observing that the risk is water condensation?:-)”
As the old expression goes, ”a penny for your thoughts …”
msf stated: Somewhere around 2015 Fidelity switched from MasterCard to Visa.
musical chairs....CapitalOne is forcing users from an early expiring Visa to Mastercard. Cap1's highly marketed user changes\benefits? "New Card Number" hidden bonus: users gifted ~1 month to manually remove and replace all their billpays and visa linked subscriptions.
I'm actually considering CapitalOne because of that change. I want a backup card for foreign travel - no foreign transaction fee and preferably a MC (since I've got a Visa card for travel). Now that Capital One has switched, it meets my requirements.
Fidelity’s card has arrived. Plenty of available credit. Haven’t gotten around to activating it yet. The paperwork that came along says no interest on purchases until around the end of December 2025. Have contracted to have a major landscape / outdoor infrastructure project done this summer. Around $20K - but could go a bit higher. I called the contractor today and they will take the card and do not charge a convenience fee. Sounds too good to be true,
Being very conservative (and taking a simplistic look), 20K invested for 12 months @ 5% = $1,000 Then there’s the 2% cash-back that will go into my CM account. That’s another $400
So it looks on the surface like an easy $1400 gain on a 20K charge. More importantly to me, it would allow time to stagger distributions from my IRAs (the ultimate funding source) over a 12 month period. Not worried about a potential near-term “hit” to credit rating, as I rarely use credit.
- What I don’t know is whether there are minimum monthly payments required starting with month #1. I would certainly expect there are. Any thoughts what that monthly payment might be on a 20K balance?
- Re the 2% “cash back” … Is that by chance considered taxable income?
- Exactly when does that 2% cash-back get deposited anyway? End of monthly billing cycle? Would it still work even along with the free credit offer?
- If you returned an item 60 days after buying it for a merchant refund back to your card, would Fidelity need to go into your CM account and withdraw the 2% cash back credit?
And thank you to all of you for all the ideas and suggestions the thread generated!
Cash back is not generally considered income, though the $1400 in interest certainly will be.
In most states, insurance companies use credit ratings to determine rates or even whether they'll renew your policy. Not just auto but homeowner policies. The good news is that you are in one of the few states where this is illegal.
However, this could be a result of correlation, not causation. Poorer neighborhoods tend to have higher homeowner rates, and lower income households tend to have lower credit ratings.
Thanks @msf. Excellent information. Credit score is typically around 800. I could be wrong, but doubt it would take a big hit. I still have another Elan card that’s been paid in full every month since first issued about 20 years ago. No auto loans / installment debt. Small 3.15% mortgage. Your articles provide good food for thought. I knew there was some connection between credit & insurance but was unaware of the extent.
When I tried doing the credit app online I hit a snag. So it was done over the phone. I really had my doubts whether the 18 months interest-free offer was for real.
Had built up a cash surplus inside the IRAs over past month or so thinking I’d pay off the work with a check. Today I put much of it back to work in the diversified portfolio. Fortunately, most markets haven’t moved much over past 30 days.
There’s a bit of a trade off. I won’t be using the card for “everyday purchases” anytime soon. For most people, I suspect, the 2% on everything they buy would be a greater “prize” over a year than what I’m planning to do.
Yes, the $1000 interest would be taxable, except it will be earned inside tax deferred / tax exempt IRAs by not having to withdraw monies a year earlier. My hypothetical example was kind of fuzzy on that.
While the contractor says he doesn’t currently charge a fee for CC payments, that could change. No guarantee until the work is completed / paid for. Some physicians in the area have a “courtesy fee” if you pay with a CC. Another contractor who did some work for me recently says he charges a 5% fee if you use a card.
I don't know if this applies to your situation or not but one common "gotcha" on many "No fees or Interest for the First X Years" is that interest and fees will accrue over the X time span if the credit charge account is not paid off before the end of that X time.
Also once you start receiving Billing Statements and they show a minimum amount due I would strongly suggest that you make that payment amount. Not worth the risk of a checkmark on your credit score.
To Mark's point, you should be able to set up a monthly auto payment to cover the minimum amount. In that way you wouldn't have to worry about missing a payment and getting "gotcha'ed". FWIW. I know I can do that with my Capital One card, though I haven't bothered with auto pay. I like to look at the account every few days anyway to make sure I recognize all the charges.
I don't know if this applies to your situation or not but one common "gotcha" on many "No fees or Interest for the First X Years" is that interest and fees will accrue over the X time span if the credit charge account is not paid off before the end of that X time.
Also once you start receiving Billing Statements and they show a minimum amount due I would strongly suggest that you make that payment amount. Not worth the risk of a checkmark on your credit score.
Thanks @Mark. That all sounds very likely. I’d expect one can make those monthly payments with a simple transfer of assets from their Fidelity Cash Management account to Elan, who services the Fidelity card. There’s already some linkage established. In order to qualify for the 2% cash-back on purchases, you have to allow them to deposit the cash in a Fidelity account. (I selected CM). I’m pretty meticulous about stuff like that. Double-check for sure!
I’ll activate the card tomorrow and then quickly charge $100 gas on it just to get an early feel for how things operate: billing cycles, minimum payments, how to make a payment, etc. I’d expect it to be a few more weeks before the project begins. But once done, I’ll be eager to charge it to the card before the contractor decides to impose any fees.
All my liquid assets (except for 1 muni bond fund) are in IRAs - mostly the Roth variety. So why pull $20,000 out a year earlier than need to? The required RMD on the Traditional will be taken late in the year. It goes into the household budget and supplements SS & pension income. Helps support the “travel” expenses.
I have one of those payment holiday cards that requires only minimum payments every month, which I am guessing is about 1% of the account balance. The balance increases every month because I keep charging it to that card.
I did not set this card on auto pay to make sure I am not at the mercy of system failures. I manually pay the minimum immediately after the minimum due is known.
I did not know carrying a large balance on credit card dings your credit score. This credit card balance is the only borrowing I have. I have always paid off my credit cards before the due date and I continue that practice with all my other credit cards. Now, that you guys mentioned it, I checked my credit score and it did drop (by 7%) from the time I got that credit card, which may have resulted in my home owners' and auto renewals to go up as much as they did:55% and 20%, respectively, with no claims ever. If any of those premium increases relate to the deferral of payment on the credit card, that is too steep a price to pay for me for some measly opportunity benefit of interest income, which after tax is even more expensive, not to mention the complexity it adds to my life.
Yes, that kind of steep insurance increase is an eye-grabber. Let us know if you are able to confirm a link between the insurance increase and credit. I’m thinking probably not.
My general reading suggests one’s credit score is partially based on the % of their available credit that they are using. Lower is better. For that reason credit experts recommend not closing unused accounts, but keeping them open by making occasional small purchases and keeping them running to maintain highest possible score.
I have posted in the insurance thread that anecdotally I have observed that home, auto, and health insurance premiums are worse for poorer zip codes - that is based on my personal experience of living in different zip codes and also by comparing with other family members who live in different zip codes. But I did not know that it is a widely known thing. Again, I will read links in @msf post above.
If I were to move again, I am definitely moving to as richer a zip as I can afford, rather than what I need.
I have posted in the insurance thread that anecdotally I have observed that home, auto, and health insurance premiums are worse for poorer zip codes - that is based on my personal experience of living in different zip codes and also by comparing with other family members who live in different zip codes. But I did not know that it is a widely known thing. Again, I will read links in @msf post above.
If I were to move again, I am definitely moving to as richer zip as I can afford, rather than what I need.
Yes, that kind of steep insurance increase is an eye-grabber. Let us know if you are able to confirm a link between the insurance increase and credit. I’m thinking probably not.( But I specialize in denial).
There is no way for me to confirm causation of insurance increases to credit score, other than to make conclusions from reading whatever links you guys post. When I shopped for a new home insurance, I was required to give my DOB. I asked the agent why he needs my DOB when I am making a single upfront payment and he said his system will not allow him to quote without the DOB. I did not know what correlation there is between age and home insurance. (My presumption is that they need to check credit history if you are paying premiums in installments.)
I already confirmed that my credit score dropped ~ 7% (the only change in my life is carrying balances on that one credit card). That is a good enough motivation for me to pay off. I want to keep a high credit score so I can use it, if I need to, for something meaningful and not for deferring credit card payments for 18 months.
I Just looked into the alerts in my Experian account and see that after the second statement period close date for that CC, the credit rating dropped from Exceptional to Very Good. In many months, after I started that credit card account, the FICO score has been dropping about 10 points per month. June change is not posted yet. At this rate, by Fall, the rating can go to Good (<740) from Very Good.
Starting last month, Experian has been alerting an increase in balance in that credit card as soon as the CC statement period closed, which tells me Experian thinks it is a concern for them (Your BANK OF AMERICA account balance increased to $XX,XXX.00). Whether that is a correct assessment by the credit system or not, I am not one to quarrel with the weather. "Law or Not" is the operative phrase here for me.
For me to pay off seems to be a good answer. I can increase the credit score back and shop for home insurance again.
Edit: I read links in @msf post. I decided to pay off the CC. Please do not assume your situation will be similar to mine. Please do your DD. I do not want my posts resulting in financial draw backs (incl opportunity costs) for others. I am inclined to suggest you take advantage of opportunities but monitor (unlike me) and adjust as necessary after that.
Edit: I read links in @msf post. I decided to pay off the CC. Please do not assume your situation will be similar to mine. Please do your DD. I do not want my posts resulting in financial draw backs (incl opportunity costs) for others. I am inclined to suggest you take advantage of opportunities but monitor (unlike me) and adjust as necessary after that.
Well said. No argument. Everybody’s situation is different. Thanks for sharing.
Unfortunately, once a high balance is captured by the credit agencies, that high balance and the corresponding high credit utilization will stick for years. A quick or early payoff may not reverse that.
Just an FYI - I am using about 10% of my total credit limit but 50% of that one card. I had previously asked and had CC companies decrease my credit limit, not knowing what percentage of available credit one is using is important.
Any way, I think I have exceeded my usefulness for this thread. So, expect this to be my last post.
I'm confused, not that it matters. When you say you 'pay off' a cc, or not pay it off, you mean pay the balance in full every month so there're no charges or interest and you're all set? Or do you mean something else, such as pay the required min and roll the rest to the next month at 23% or whatever? (If so, anyone here would have 'adviser advice.')
I may have been hallucinating, but I thought I recently saw my fico score at some site or other to be 879 or something, which I thought was not possible; and when I check it at BoA just now it's at 850, which I thought was the max. whatev.
"FICO® Scores. FICO creates auto scores and bankcard scores specifically for auto lenders and card issuers. Industry scores aim to predict the likelihood that a consumer will fall behind on the specific type of account, and the scores range from 250 to 900."
Various sources suggest a max use of 30% of all of your available credit. More than 30% debt / credit line is likely to ding one’s credit score (and potentially impact insurance premiums). Sounds like there’s really no such thing as “free money”. One hand giveth … another hand taketh away.
FICO is corrosively sad; they serve up big errors to the reporting oligopoly when needed most, or needed not at all.
3 years after early retirement, FICO show : my home address of ~3 moves ago which is ~9 years old. my highest score ever....not much room left. all this despite opening a new bank and credit card after retiring.
what are the repercussions of getting all these things wrong? none, just like the business credit raters.
(quasi-correction) presumably FICO serves up the score based on the rating agencies data, even if wrong. but they do utilize complementary and supplementary data as 'checks' and likely weights in the algorithm, so not data-free themselves.
Managed to charge exactly $100 on the new card yesterday. $83.83 bought a (very good) bottle of single malt + tax. $16.17 went for motor fuel. The plan is to study the card’s workings (billing cycles, due dates, minimum payments, 2% cash-back feature, login procedures, etc.). Should be in good shape before putting the card to work.
Comments
Edmunds Commentary: How Old / Dangerous Are Your Tires?
Per @msf’s experience with an oil change - I encountered the same resistance a few years ago when I took the old pickup in for an annual oil change at a local “quick lube.” The guy claimed the oil looked “clean” on the dipstick and at first declined to change it. Eventually, I convinced him to do so. For us old-timers that seems indeed odd. We were taught (I believe correctly) that an oil’s “appearance” is not an accurate way to to access its condition or need to be replaced. And it seems especially peculiar a vehicle service center would voluntarily turn down a chance to make a dollar. I’m wondering if perhaps there’s been some pressure applied by the EPA to encourage or coerce oil change outfits to do this visual inspection with the goal of reducing the amount of waste oil, which presents environmental challenges (though I believe it can be recycled).
”Do I receive compensation for observing that the risk is water condensation?:-)”
As the old expression goes, ”a penny for your thoughts …”
Somewhere around 2015 Fidelity switched from MasterCard to Visa.
musical chairs....CapitalOne is forcing users from an early expiring Visa to Mastercard.
Cap1's highly marketed user changes\benefits? "New Card Number"
hidden bonus: users gifted ~1 month to manually remove and replace all their billpays and visa linked subscriptions.
i envision a forced switch to Discover in our future.
Being very conservative (and taking a simplistic look), 20K invested for 12 months @ 5% = $1,000
Then there’s the 2% cash-back that will go into my CM account. That’s another $400
So it looks on the surface like an easy $1400 gain on a 20K charge. More importantly to me, it would allow time to stagger distributions from my IRAs (the ultimate funding source) over a 12 month period. Not worried about a potential near-term “hit” to credit rating, as I rarely use credit.
- What I don’t know is whether there are minimum monthly payments required starting with month #1. I would certainly expect there are. Any thoughts what that monthly payment might be on a 20K balance?
- Re the 2% “cash back” … Is that by chance considered taxable income?
- Exactly when does that 2% cash-back get deposited anyway? End of monthly billing cycle? Would it still work even along with the free credit offer?
- If you returned an item 60 days after buying it for a merchant refund back to your card, would Fidelity need to go into your CM account and withdraw the 2% cash back credit?
And thank you to all of you for all the ideas and suggestions the thread generated!
In most states, insurance companies use credit ratings to determine rates or even whether they'll renew your policy. Not just auto but homeowner policies. The good news is that you are in one of the few states where this is illegal.
https://www.experian.com/blogs/ask-experian/which-states-prohibit-or-restrict-the-use-of-credit-based-insurance-scores/
OTOH, law or no law, here's NerdWallet's table of how much credit scores relate to home insurance, even in those states where using those scores is illegal.
https://www.nerdwallet.com/article/insurance/credit-score-home-insurance-rates
However, this could be a result of correlation, not causation. Poorer neighborhoods tend to have higher homeowner rates, and lower income households tend to have lower credit ratings.
https://www.propertycasualty360.com/2021/05/06/low-income-homeowners-pay-more-for-insurance-in-most-states/
https://www.federalreserve.gov/econres/notes/feds-notes/are-income-and-credit-scores-highly-correlated-20180813.html
When I tried doing the credit app online I hit a snag. So it was done over the phone. I really had my doubts whether the 18 months interest-free offer was for real.
Had built up a cash surplus inside the IRAs over past month or so thinking I’d pay off the work with a check. Today I put much of it back to work in the diversified portfolio. Fortunately, most markets haven’t moved much over past 30 days.
There’s a bit of a trade off. I won’t be using the card for “everyday purchases” anytime soon. For most people, I suspect, the 2% on everything they buy would be a greater “prize” over a year than what I’m planning to do.
Yes, the $1000 interest would be taxable, except it will be earned inside tax deferred / tax exempt IRAs by not having to withdraw monies a year earlier. My hypothetical example was
kind offuzzy on that.While the contractor says he doesn’t currently charge a fee for CC payments, that could change. No guarantee until the work is completed / paid for. Some physicians in the area have a “courtesy fee” if you pay with a CC. Another contractor who did some work for me recently says he charges a 5% fee if you use a card.
Also once you start receiving Billing Statements and they show a minimum amount due I would strongly suggest that you make that payment amount. Not worth the risk of a checkmark on your credit score.
All my liquid assets (except for 1 muni bond fund) are in IRAs - mostly the Roth variety. So why pull $20,000 out a year earlier than need to? The required RMD on the Traditional will be taken late in the year. It goes into the household budget and supplements SS & pension income. Helps support the “travel” expenses.
I have one of those payment holiday cards that requires only minimum payments every month, which I am guessing is about 1% of the account balance. The balance increases every month because I keep charging it to that card.
I did not set this card on auto pay to make sure I am not at the mercy of system failures. I manually pay the minimum immediately after the minimum due is known.
I did not know carrying a large balance on credit card dings your credit score. This credit card balance is the only borrowing I have. I have always paid off my credit cards before the due date and I continue that practice with all my other credit cards. Now, that you guys mentioned it, I checked my credit score and it did drop (by 7%) from the time I got that credit card, which may have resulted in my home owners' and auto renewals to go up as much as they did:55% and 20%, respectively, with no claims ever. If any of those premium increases relate to the deferral of payment on the credit card, that is too steep a price to pay for me for some measly opportunity benefit of interest income, which after tax is even more expensive, not to mention the complexity it adds to my life.
I will read later the links in @msf post.
I will think about this over the weekend but my first reaction is to pay off that credit card right away.
My general reading suggests one’s credit score is partially based on the % of their available credit that they are using. Lower is better. For that reason credit experts recommend not closing unused accounts, but keeping them open by making occasional small purchases and keeping them running to maintain highest possible score.
Thanks for sharing @BaluBalu.
Yes, @msf provided excellent links
If I were to move again, I am definitely moving to as richer a zip as I can afford, rather than what I need.
dI already confirmed that my credit score dropped ~ 7% (the only change in my life is carrying balances on that one credit card). That is a good enough motivation for me to pay off. I want to keep a high credit score so I can use it, if I need to, for something meaningful and not for deferring credit card payments for 18 months.
I Just looked into the alerts in my Experian account and see that after the second statement period close date for that CC, the credit rating dropped from Exceptional to Very Good. In many months, after I started that credit card account, the FICO score has been dropping about 10 points per month. June change is not posted yet. At this rate, by Fall, the rating can go to Good (<740) from Very Good.
Starting last month, Experian has been alerting an increase in balance in that credit card as soon as the CC statement period closed, which tells me Experian thinks it is a concern for them (Your BANK OF AMERICA account balance increased to $XX,XXX.00). Whether that is a correct assessment by the credit system or not, I am not one to quarrel with the weather. "Law or Not" is the operative phrase here for me.
For me to pay off seems to be a good answer. I can increase the credit score back and shop for home insurance again.
Edit: I read links in @msf post. I decided to pay off the CC. Please do not assume your situation will be similar to mine. Please do your DD. I do not want my posts resulting in financial draw backs (incl opportunity costs) for others. I am inclined to suggest you take advantage of opportunities but monitor (unlike me) and adjust as necessary after that.
Well said. No argument. Everybody’s situation is different. Thanks for sharing.
Any way, I think I have exceeded my usefulness for this thread. So, expect this to be my last post.
Thanks @YBB. I shall keep that in mind.
I'm confused, not that it matters. When you say you 'pay off' a cc, or not pay it off, you mean pay the balance in full every month so there're no charges or interest and you're all set? Or do you mean something else, such as pay the required min and roll the rest to the next month at 23% or whatever? (If so, anyone here would have 'adviser advice.')
I may have been hallucinating, but I thought I recently saw my fico score at some site or other to be 879 or something, which I thought was not possible; and when I check it at BoA just now it's at 850, which I thought was the max. whatev.
"FICO® Scores. FICO creates auto scores and bankcard scores specifically for auto lenders and card issuers. Industry scores aim to predict the likelihood that a consumer will fall behind on the specific type of account, and the scores range from 250 to 900."
From Experian
Here’s a shorter one that perhaps adds a little more:
Credit-Based Insurance Scores Aren’t the Same as a Credit Score. Understand How Credit and Other Factors Determine Your Premiums.
Various sources suggest a max use of 30% of all of your available credit. More than 30% debt / credit line is likely to ding one’s credit score (and potentially impact insurance premiums). Sounds like there’s really no such thing as “free money”. One hand giveth … another hand taketh away.
3 years after early retirement, FICO show :
my home address of ~3 moves ago which is ~9 years old.
my highest score ever....not much room left.
all this despite opening a new bank and credit card after retiring.
what are the repercussions of getting all these things wrong? none, just like the business credit raters.
presumably FICO serves up the score based on the rating agencies data, even if wrong.
but they do utilize complementary and supplementary data as 'checks' and likely weights in the algorithm, so not data-free themselves.
ty