Ask Liz Weston

Get smart with your money

Liz Weston

Q&A: Refreshing an old credit card

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Dear Liz: I have and use three credit cards, two of which offer cash-back rewards. The third has no rewards program, so I would like to get rid of it and replace it with a new card that offers cash back or miles. But I’m afraid if I cancel this card my credit score will take a hit, especially since the card has a big chunk of my overall credit limit. What do you suggest?

Answer: You can ask the issuer for a “product change,” which allows you to swap one card for another without closing your account. Typically, your history with the old card is simply transferred to the new one, as is your credit limit.

The new card must be from the same issuer and you usually won’t qualify for any sign-up bonuses. But you won’t risk damaging your scores by closing one account and applying for another.

Research the issuer’s offerings and know which card you want before you call. This is usually a fairly routine process, but if you encounter any resistance, just mention that your other option is to cancel the card. If you’ve been a good customer, the issuer probably will want to keep your business.

A product change also can be a good idea if you want to switch from a rewards card with a high annual fee to one with a lower fee, or no fee. Any rewards you’ve already earned may not be transferable, so be sure to ask.

Q&A: Don’t file an amended return after the stimulus tax break. The IRS is begging you

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Dear Liz: You might want to inform your readers that they do not need to file an amended return if they filed before Congress passed its most recent stimulus plan, which excludes the first $10,200 of unemployment benefits. The IRS will automatically recalculate their taxes and refund the taxes paid on that amount of benefits.

Answer: In fact, the IRS is begging people not to file amended returns. (An exception, the IRS has said, is for those who the tax reduction would make newly eligible for the earned income tax credit or other tax breaks for lower income people.) The agency is still processing a backlog of returns and correspondence while issuing a third wave of stimulus payments and gearing up to send monthly child credit payments to millions of families.

You may need patience, however. The IRS has promised to refund any taxes paid on the first $10,200 of unemployment benefits earned last year, but has said the money will go out “this spring and summer.”

Thursday’s need-to-know money news

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Today’s top story: The high price of money shame. Also in the news: Will travel costs change as more vaccines roll out, how to tell if your credit card is worth the annual fee and snags hit free COBRA health insurance for the unemployed.

The High Price of Money Shame
Simply naming the emotions you feel about financial mistakes is a step toward breaking the cycle and taking control.

Will Travel Costs Change as Vaccines Roll Out?
With travel demand likely to increase, the price of flights and hotels will also rise if travelers wait to book.

How to Tell If Your Credit Card Is Worth the Annual Fee
Look for ways to offset the fee.

There are some snags in free COBRA health insurance for unemployed. Here’s what you need to know
A provision in the latest stimulus package nixes people’s monthly COBRA premiums for six months.

Wednesday’s need-to-know money news

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Today’s top story: How to budget for a new home so you don’t end up house poor. Also in the news: Why (and how) to renew your passport now, even if you’re not traveling soon, once-rare cell phone protection is now a common credit card perk, and should you plan for $50,000 in student loan forgiveness?

How to Budget for a New Home So You Don’t End Up House Poor
Before buying a home, figure out how much house you can truly afford, including a budget for maintenance and repairs.

Why (and How) to Renew Your Passport Now, Even If You’re Not Traveling Soon
The State Department is processing applications slower than usual, so you’ll want to apply early.

Once-Rare Cell Phone Protection Now a Common Credit Card Perk
Cell phone insurance is the kind of perk that can benefit both the cardholder and the card issuer. Here’s why and what to know about it.

Should You Plan for $50,000 In Student Loans Forgiveness?
Is there reason for optimism?

The high price of money shame

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The U.S. suicide rate has risen dramatically in recent years, and certified money coach Tammy Lally of Washington, D.C., is convinced money shame is a contributing factor.

Lally’s brother died by suicide in 2007 after receiving a foreclosure notice. Shortly afterward, Lally’s mortgage business collapsed in the Great Recession. She says she went from driving a Mercedes and living in an oceanfront house to filing for bankruptcy.

“It blew me away, the level of pain and sadness that I was experiencing,” Lally says. “I didn’t tell anybody. I was pretending like nothing was going on.”

In my latest for the Associated Press, the origins of money shame and what can be done about it.

Tuesday’s need-to-know money news

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Today’s top story: Will travel costs change as vaccines roll out? Also in the news: How to pick the right credit card for a major purchase, why your dog needs liability insurance even if they’re perfect, and how to save money by knowing your credit card’s closing date.

Will Travel Costs Change as Vaccines Roll Out?
With travel demand likely to increase, the price of flights and hotels will also rise if travelers wait to book.

How to Pick the Right Credit Card for a Major Purchase
That big-ticket item could earn you loads of rewards, or you could snag a lengthy no-interest period to pay off the purchase.

Why Your Dog Needs Liability Insurance Even if She’s Perfect
Personal liability, umbrella and animal liability coverage can keep your finances safe if your dog hurts someone.

Save Money by Knowing Your Credit Card’s ‘Closing Date’
Payment due date vs. closing date.