Ask Liz Weston

Get smart with your money

Q&A

Q&A: Retail cards are often easier to get than credit cards

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Dear Liz: You recently answered a question from someone who was rejected for a credit card because of a lack of credit history. Years ago, my wife was rejected for similar reasons. She signed up for a card with a local retailer, then successfully reapplied for the credit card six months later. Maybe the industry has consolidated enough that this won’t work anymore, but it did then.

Answer: Retail cards are often easier to get than credit cards, although these days people also can start their credit histories using secured cards or credit-builder loans. Secured cards offer a credit line equal to a deposit made to the issuing bank. With a credit builder loan, the borrowed amount is stored in a savings account or certificate of deposit that the borrower can claim after a set number of monthly payments.

The original questioner already had a credit history, however, along with high credit scores. The issuer that rejected their application cited a lack of an installment loan history. In other words, there was no mortgage, student, auto or personal loan showing on their credit reports. That’s not something that typically would keep someone from getting approved for a credit card, hence the recommendation that the questioner call the issuer and ask for a reconsideration.

Q&A: Closing accounts won’t help your credit scores

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Dear Liz: I have an 834 credit score, with three credit cards. I don’t carry debt or pay annual fees. I’m considering closing one of my cards and replacing it with one available through my credit union. Is it worth the hassle?

Answer: Closing accounts won’t help your credit scores and may hurt them. If there’s no compelling reason to close a card, you might consider leaving the account open and using the card occasionally to prevent the issuer from closing it.

You also might want to rethink your stance on annual fees. These days, few cards without annual fees offer rewards, while many cards offer rewards that more than offset their fees. If you’re new to the rewards card world, consider getting a simple cash-back card. If you’re interested in travel benefits, look for a card that gives you points that you can transfer to frequent traveler programs.

If you’re determined to close the account and open another, apply for the new card first since the closure may drop your scores.

Q&A: Avoid deducting personal expenses

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Dear Liz: I am the sole owner of a condo. I am getting ready to realize a dream of mine by traveling around the world. I will be gone indefinitely. Thus, I am thinking about renting out my condo. I know I get a write-off for repairs on the unit, cleaning supplies, etc. What about the storage unit where I will need to store my things from my unit. Can I write off the storage unit?

Answer: Congratulations on your upcoming adventure! You’ll have excitement enough without defending yourself in an IRS audit, so avoid deducting personal expenses such as a storage unit.

The IRS says you can deduct the “ordinary and necessary” expenses for managing and maintaining a rental property. That includes mortgage interest, taxes, operating expenses, depreciation and repairs.

“If the storage unit was used in conjunction with the rental activity, such as storing maintenance supplies for doing work on the rental property, a deduction could perhaps be justified,” says Mark Luscombe, principal analyst for Wolters Kluwer Tax & Accounting.

However, you won’t be around to do that work, so deducting the storage unit isn’t going to fly.

Q&A: To qualify for Social Security survivor benefits

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Dear Liz: I am 85 and have been living (unmarried) with a man since about 1977. We have always filed our tax returns separately and now we both collect Social Security. I have been told that when one of us passes, the other cannot collect the deceased one’s benefits. We have been thinking about getting married and would like to know if there is a time regulation involved.

Answer: You generally must be married for at least nine months to qualify for Social Security survivor benefits. Keep in mind that the survivor will collect only the larger of a couple’s two checks; the smaller benefit goes away.

So marriage could benefit the lower earner financially, and give the higher earner peace of mind, knowing that their lower-earning partner will have access to the larger benefit. Marriage has a number of other financial and legal benefits, including the ability to make decisions for your spouse should they become incapacitated.

Marriage would end your ability to collect a divorced spousal benefit from a previous spouse, however. If either of you have been married before and the marriage lasted at least 10 years, investigate whether you might qualify for a larger benefit based on that partner’s work record. If the previous spouse has passed, you may qualify for a divorced survivor benefit. Unlike divorced spousal benefits, divorced survivor benefits don’t end at remarriage as long as you’re 60 or older when you remarry.

Q&A: Great credit, but rejected for a credit card. What gives?

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Dear Liz: I recently applied online for a credit card and was rejected, as my credit reports were frozen. I thawed them and applied again, only to be declined again. I received a letter stating that the rejection was because I have no installment credit history. I have no debt, credit scores in the mid-800s and $2 million in retirement accounts. Our paid-for home is valued at approximately $1million. This makes zero sense.

Answer: Federal law requires credit card issuers to send the “adverse action” letter you received to explain why your application was denied. But that letter doesn’t have to be the last word.

You can call the issuer and politely ask that your application be reconsidered. Most credit applications are evaluated by algorithms, rather than people. Getting a human involved can make all the difference, so you’ll want to get this person on your side. Be friendly and polite.

Mention all of the factors in your favor, such as a steady income and a (presumably) long history of handling credit cards responsibly. Explain that you don’t have an installment loan, such as a mortgage, because your home is paid off. If you have an existing relationship with the issuer, such as other credit cards or bank accounts, mention that as well.

There are no guarantees you’ll be successful if you ask, but you’re guaranteed not to get the card if you don’t ask. Good luck!

Q&A: The ins and outs of what counts for probate

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Dear Liz: The value of our car, furniture and personal items is well below the $185,000 that currently triggers probate in California. We no longer own real estate. Am I correct that investment and bank accounts that have designated beneficiaries do not count toward the probate limit?

Answer: Yes. (Your car doesn’t count either, by the way.)

Most states have simplified procedures for smaller estates. California’s limit, which is raised with inflation every three years, was set at $184,500 on April 1, 2022. What’s counted for probate purposes depends on state law, and California excludes cars, boats and mobile homes, as well as bank accounts owned by multiple people, property that transfers directly to a spouse and real estate outside California.

Other property that avoids probate includes life insurance proceeds, death benefits and accounts that have named beneficiaries. Real estate can avoid probate if it’s held in joint tenancy or is transferred using a transfer-on-death deed. Property in a living trust also avoids probate.