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Q&A: How a new credit card can help your credit score

March 7, 2022 By Liz Weston

Dear Liz: I’ve received a notice stating that a retail credit card I’ve had for more than a decade will be converted to a Mastercard. I already have an American Express charge card and a Visa rewards credit card. I don’t need another credit card. But I’m concerned. Will the conversion hurt my credit scores? Or is having a credit card versus a retail card better for my credit scores?

Answer: Congratulations! Such conversions indicate you’ve been using the card and your other credit accounts responsibly. If you continue to do so, the new credit card could help your credit scores more than the retail card.

Although getting new plastic is both good and bad for your credit score, a credit card is typically factored into more FICO scoring variables than a retail card, said Ethan Dornhelm, FICO’s vice president of scores and predictive analytics.

“So to the extent that you have positive behaviors, it’s more likely to have a broader positive impact,” Dornhelm said.

The flip side is that if you mess up by missing a payment or running up big balances, those mistakes could have a greater effect on your scores, Dornhelm said.

Closing the account probably would be one of those mistakes, since closures reduce your available credit and in general should be avoided unless there’s a compelling reason, such as a too-high annual fee. The benefits that came with the retail card, such as discounts and free shipping, probably will transfer to the credit card, so you can continue to benefit from the account without worrying that it will hurt your scores.

Filed Under: Credit Cards, Credit Scoring, Q&A

Thursday’s need-to-know money news

March 3, 2022 By Liz Weston

Today’s top story: Why you should name a ‘trusted contact.’ Also in the news: How to pay off your car lease, and how COVID grants, relief programs impact 2021 business taxes.

Why You (and I) Should Name a ‘Trusted Contact’
Helping your brokerage, bank or insurer connect with someone who knows what’s going on in your life could protect your money and prevent financial catastrophe.

Ending Your Car Lease Is Tricky, But Can Still Pay Off
Despite dealers and carmakers making it harder to buy leased cars, you can make the most of your car’s equity.

How COVID Grants, Relief Programs Impact 2021 Business Taxes
Tax treatment for PPP loans and coronavirus grants varies state to state.

Filed Under: Liz's Blog Tagged With: 2021 business taxes, car equity, car lease, covid grants, covid relief programs, trusted contacts

Wednesday’s need-to-know money news

March 2, 2022 By Liz Weston

Today’s top story: How to choose a seat on a plane. Also in the news: Lock in your access to hotel refunds as travel remains iffy, and why your first credit card will likely not be a travel credit card.

How to Choose a Seat on a Plane
This basic component of air travel has become another way airlines tack on fees.

Lock In Your Access to Hotel Refunds as Travel Remains Iffy
Avoid third-party booking platforms and know the terms of your reservation to prepare for possible cancellation in case of travel interruptions.

Can Your First Credit Card Be a Travel Card?
Likely no, but you can offset travel costs by joining loyalty programs and opening a cash-back card in the meantime.

Filed Under: Liz's Blog Tagged With: hotel refund, plane seat, travel, travel cards

Tuesday’s need-to-know money news

March 1, 2022 By Liz Weston

Today’s top story: How one-income couples can remain equals. Also in the news: How to get your tax refund back ASAP, 7 financial scams, bubbles, and boondoggles, and Bogleheads, baby steps and other personal financial strategies you should know.

How One-Income Couples Can Remain Equals
Whether you previously had financial independence or now face the pressure of being a primary provider, it can be a tough adjustment. Being honest with your partner can help.

How to Get Your Tax Refund Back ASAP
While the IRS may always be behind, you can get ahead with these steps.

7 Financial Scams, Bubbles, and Boondoggles That Are Definitely Nothing Like Cryptocurrency and NFTs
You can’t learn anything about NFTs and crypto by considering history’s biggest pyramid schemes, scams, and bubbles. Nope, not a single thing.

Bogleheads, Baby Steps, and Other Personal Financial Strategies You Should Know
Here’s a primer on some of the most popular budgeting and investment strategies.

Filed Under: Liz's Blog Tagged With: financial scams, investment strategies, one income couple, tax refund

Why you (and I) should name a ‘trusted contact’

March 1, 2022 By Liz Weston

For the past few years, financial services companies have been bugging me to name a “trusted contact.” Banks, brokerages and insurers increasingly want to have someone to call or email in case they notice suspicious activity and can’t reach the account holder.

I ignored these requests. Trusted contacts are a great idea for older people experiencing cognitive decline, I thought, but that’s not me.

Then a younger friend developed early-onset dementia, and I realized we don’t always get enough warning to put such protections in place.

In my latest for the Associated Press, learn more about trusted contacts.

Filed Under: Liz's Blog Tagged With: trusted contacts

Monday’s need-to-know money news

February 28, 2022 By Liz Weston

Today’s top story: Mortgage Outlook in March. Also in the news: Balancing Hopes, Dreams and a Low-Paying College Major, Smart Money podcast on the tax, and how to safely tap home equity in a financial emergency.

Mortgage Outlook: Rates Could Keep Climbing in March
Mortgage rates are more likely to go up than go down in March.

Balancing Hopes, Dreams and a Low-Paying College Major
Liberal arts grads face longer odds compared with science, technology, engineering and mathematics degrees, but a well-chosen humanities major doesn’t have to be a vow of poverty.

Smart Money Podcast: The Tax Episode
Sean and Liz discuss deductions, credits and how to know when to call in a tax pro.

How to Safely Tap Home Equity in a Financial Emergency
Understand the costs and risks of borrowing against your home equity before tapping into it.

Filed Under: Liz's Blog Tagged With: financial emergency, Home Equity, low-paying college major, mortgage, Smart Money podcast

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