Friday’s need-to-know money news

Today’s top story: AARP credit card holders endure bumpy move to Barclays from Chase. Also in the news: 5 steps to level up your side hustle, how much it really costs to drive a new car, and one couple’s journey to tame their debt.

AARP Credit Card Holders Endure Bumpy Move to Barclays From Chase
Barclays apologizes for long call hold times, card transition woes. Issuer beefs up call support.

5 Steps to Level Up Your Side Hustle
Growing your side gig into a legit business requires research, planning and organization.

How Much Does It Really Cost to Drive a New Car?
A 5% increase in car ownership costs means your budget should include more than the monthly payment.

How I Ditched Debt: Pandemic After Payoff Tests Couple’s Resilience
One couple’s journey to tame their debt.

Q&A: How a card switch affects your credit score

Dear Liz: I have one American Express card and two Visa cards, all of which I have held for many years. I received notice that my American Express card was being converted to a Visa card. I do not want a third Visa card but have no choice. For credit score purposes, will this conversion appear to be a closing of my old card and an application for a new one? Obviously, closing a long-held credit card and applying for a new one will affect my excellent credit score, which is 830. If I decided to apply for a new American Express card, how would that impact my score?

Answer: Conversions from one issuer to another can have a temporary negative impact on your credit scores as one account is closed and another opened. The effect should be minor as long as you have other open, active accounts.

Within a month or two, the new account should show the same history as the old one, and your scores should recover. (You have more than one credit score, by the way, and your scores change all the time. As long as they’re generally above 760 or so, you should get lenders’ best rates and terms.)

The type of card usually matters less than the benefits associated with the card. If those benefits are useful to you and are enough to offset any annual fee, consider keeping the card. Its long history and credit limit are likely helping your scores.

That doesn’t mean you have to keep a card you really don’t want. The fewer cards you have, though, the more careful you probably need to be about closing one.

You can still add an American Express or other card to your portfolio. Adding a new card typically dings your scores less than five points. The effect is temporary, and the new account could contribute positively to your scores over time.

Tuesday’s need-to-know money news

Today’s top story: What 6 money pros wish they’d known about credit cards. Also in the news: A new episode of the Smart Money podcast with Michelle Singletary, 3 ways to thrive with teenage workers in a tight job market, and when it can be a good idea to co-sign for your young adult.

What 6 Money Pros Wish They’d Known About Credit Cards
These certified financial planners wish they’d gotten comfortable using credit cards earlier than they did.

Smart Money Podcast: Getting Ahead of Your Next Money Crisis With Michelle Singletary
An interview with the author of “What to do With Your Money When Crisis Hits”

3 Ways to Thrive With Teenage Workers in a Tight Job Market
Capitalize on off-hours, nurture fresh skills and embrace newness to make the most of young workers in your business.

When It Can Be a Good Idea to Co-Sign for Your Young Adult
A look at the pros and cons.

Q&A: Lowering credit limits

Dear Liz: You recently answered a question about a woman who asked her credit card issuer to lower her credit limits. While it’s true that lowering your credit limit on a card can have a negative effect on your credit scores, it may be needed to leave credit room for new cards, as your total credit across cards vs. your annual income is considered. And of course your credit score won’t suffer when balances are paid down before the statement date.

Answer: Credit scoring formulas calculate your credit utilization based on the amount of credit you’re using on the day that the card issuer reports your account to the credit bureaus each month. That’s usually, but not always, the balance as of the statement closing date. Making a payment just before that date often lowers your credit utilization and can help your scores.

So yes, making a payment before the statement closing date can offset the negative impact of lowered limits. However, it would be rather foolish for an individual to request lower limits thinking that a credit card issuer might prefer them to have less credit. Typically, healthy credit limits are a sign you’re managing your credit well. Even if a credit card issuer might look askance at your available credit, you won’t know exactly where to draw that line. Credit card issuers have different policies on how they set credit limits, and they typically don’t broadcast how those decisions are made.

Thursday’s need-to-know money news

Today’s top story: Smart strategies for fighting back against inflation. Also in the news: Easing into credit cards with a simple cash-back card, Medicare and dental implants, and these 6 psychological biases may be holding you back from building wealth.

Wary of Credit Cards? Ease In With a Simple Cash-Back Card
No-fee, flat-rate cash-back cards offer useful rewards and benefits as beginners learn about credit cards.

Smart Strategies for Fighting Back Against Inflation
Plan purchases carefully and trade variable-rate debt for fixed interest rates to help offset rising prices.

Does Medicare Cover Dental Implants?
Original Medicare doesn’t cover dental implants, but you may be able to find coverage elsewhere.

These 6 psychological biases may be holding you back from building wealth
How to overcome them.

Friday’s need-to-know money news

Today’s top story: What to do if your refund is delayed and your bills aren’t. Also in the news: Former Simple customers undergo a rough transition to BBVA, why a credit card’s looks aren’t everything, and how to keep health insurance after losing your job.

What to Do If Your Refund Is Delayed and Your Bills Aren’t
The IRS is running behind.

Former Simple Customers Undergo Rough Transition to BBVA
Things haven’t gone smoothly.

Why a Credit Card’s Looks Aren’t Everything

How to Keep Health Insurance After Losing Your Job
A look at the options.

Thursday’s need-to-know money news

Today’s top story: You may qualify for free or cheaper health insurance now. Also in the news: Big banks join effort to ease path to credit cards, 3 ways technology can help minority-owned businesses recover, and the 12 states ending the extra $300 per week in unemployment benefits.

You May Qualify for Free or Cheaper Health Insurance Now
The latest coronavirus relief package made health insurance free or significantly less costly for millions of people.

Big Banks Join Efforts to Ease Path to Credit Cards
Large lenders are participating in a pilot program allowing them to share bank account information with the credit bureaus, easing access for credit card applicants.

3 Ways Technology Can Help Minority-Owned Businesses Recover
Start by embracing e-commerce.

These 12 States Are Ending the Extra $300 Per Week in Unemployment Benefits
Find out if yours is one of them.

Wednesday’s need-to-know money news

Today’s top story: What to do if a credit card issuer lowers your credit limit. Also in the news: Paying off credit cards takes money and the right mindset, how to rethink home and travel if your job is now remote, and when to expect that $3600 in child tax credit checks.

What to Do if a Credit Card Issuer Lowers Your Credit Limit
Your main option is to ask your issuer to reconsider. But there are also some steps you can take to mitigate the effects of a cut and minimize the risk of future ones.

Paying Off Credit Cards Takes Money and the Right Mindset
The right frame of mind is key.

How to Rethink ‘Home’ and ‘Travel’ if Your Job Is Now Remote
Your first thought might be to become a digital nomad or buy a new house to take advantage of your flexible work.

When to Expect That $3,600 in Child Tax Credit Checks
Coming this summer.

Monday’s need-to-know money news

Today’s top story: How much car insurance do you really need? Also in the news: As major credit card issuers pull back amid COVID, startups stepped in, reboot your budget to prepare for reopening, and when to expect a refund for your $10,200 unemployment tax break.

How Much Car Insurance Do You Really Need?
Too little car insurance and you’re financially vulnerable. But too much, and you’ll overpay. Here’s what to know.

As Major Credit Card Issuers Pulled Back Amid COVID, Startups Stepped In
Some products that were launched or expanded in 2020 don’t bother with credit checks at all and instead look at your income and bank account. They also charge no interest.

Reboot Your Budget to Prepare for Reopening
As states ease COVID restrictions and vaccinations pick up, here’s why it’s time to take a look at your finances.

When To Expect a Refund for Your $10,200 Unemployment Tax Break
What will happen if you filed your taxes before the new stimulus.

Q&A: Paying taxes with plastic

Dear Liz: I am selling a rental property that I have owned for several years. I know I could do a 1031 exchange, which would allow me to put off the tax bill by investing in another commercial property. But I just want out. I’ll pay the capital gains tax and invest the rest of the proceeds. I am considering paying the taxes by credit card and taking on the 3% premium to get rewards points offered through the card issuer. Is this a dumb idea, or does it have some merit?

Answer: The companies that process federal tax payments have processing fees of just under 2%, not 3%. You’ll still want to make sure you get more value from your rewards than you pay in fees, and that’s not a given. If your card offers only 1.5% cash back, for example, charging your taxes doesn’t make a lot of sense. But the math changes if you can get more than 2% in rewards, or if you could use the charge to help you meet the minimum spending requirements for a new credit card with a generous sign-up bonus.

If you do charge your taxes, you’ll obviously want to pay the balance in full before incurring any interest.