Ask Liz Weston

Get smart with your money

Credit Cards

This week’s money news

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This week’s top story: Weekly mortgage rates dip, home price gains soften. In other news: New digital nomads on the block: families, why you should consider train travel in Europe, and 3 steps to take after transferring a balance to a new credit card.

Weekly Mortgage Rates Dip, Home Price Gains Soften
The drop brings the 30-year fixed rate to about where it was two weeks ago and slightly under May’s monthly average of 7.01%.

There Are New Digital Nomads on the Block: Families
As the cost of living rises in many places, full-time family travel can cost about the same as staying put.

Why You Should Consider Train Travel in Europe
You can easily travel through Europe by train because of its well-developed route network.

3 Steps to Take After Transferring a Balance to a New Credit Card
Moving the debt is just the first step. Have a game plan for paying down the balance before the interest-free period ends.

Q&A: Is getting old reason enough to cancel some credit cards?

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Dear Liz: Recently, someone asked if closing a credit card would be worth the hassle and you responded that there is no compelling reason to do so and in fact, it might hurt your credit scores. As an older person, I can think of two good reasons: theft and fraud. Many of us of a certain age no longer carry a mortgage or other debt. But, I am finding it harder to keep track of my finances. I would like to cancel three of my five credit cards for that reason.

Answer: You misquoted my response. What I actually wrote was, “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.”

Wanting to reduce your risk is reason enough to close a card account. All of us would be smart to consider simplifying our finances as we get older, says Carolyn McClanahan, a certified financial planner and physician in Jacksonville, Fla.

You also might think about who could help you manage your finances as the task gets more difficult. A legal document called a power of attorney allows you to name a trusted person to take over should you become incapacitated. You can familiarize this person with your finances and consider giving them online access to your accounts so they can help you spot fraud, theft or missed due dates. Involving them now, when you can help guide them, is generally better than waiting for a crisis and hoping they can figure everything out on their own.

Q&A: More credit score drama over a missed payment

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Dear Liz: You responded to a woman who was concerned that a missed payment had hurt her credit score. My situation is also about a missed payment. In fall 2018, I received a dunning letter from a bill collector. I did a ton of research because I never received the bill that ruined my previously stellar credit rating (840). My rating sank by 200 points even after the retailer involved acknowledged that I never received the bills. Their office showed all the bills, although addressed correctly, were returned as undeliverable. The executive with whom I had lots of interaction wrote all the bureaus explaining the error was the retailer’s. The credit bureaus did nothing to restore my credit rating. It has been six years and I continue to pay in full on time as I had for the 45 years before 2018. My payment behavior has done little to improve my low score. Maybe 2025 will bring relief, as that will be seven years since the collection letter.

Answer: Your situation offers the opportunity to clarify a few things that confuse many consumers.

The first and most important: We are responsible for paying our credit card bills whether we receive those bills or not. Mail goes astray, emails wind up in junk folders, but if there’s a balance on our credit cards we’re supposed to pay at least the minimum when the due date rolls around. As mentioned in the previous column, setting up automatic payments can prevent missed payments. At a minimum, you should mark your calendar with your cards’ due dates and submit your payments, preferably electronically, in time to avoid late fees. Having online access to your credit accounts can help you track balances, and you can set up email or text alerts to remind you to pay.

Next, the executive you talked to either didn’t understand the credit reporting system or wasn’t entirely frank with you. The credit bureaus’ files reflect what creditors tell them. It’s a dynamic system, with information constantly being updated. If the retailer agreed that the late payments shouldn’t be reported, then it should have stopped reporting the erroneous information. Instead of corresponding with the bureaus, the executive should have been talking to the retailer’s finance arm.

If the executive provided you with a copy of the letter sent to the bureaus, however, you can use that to correct the record. Dispute the late payments with the bureaus and use the letter to back up your claim.

By now, your scores should have regained most of the ground lost to this unfortunate incident. If that’s not the case, something else is wrong with your credit reports. You should request free copies of your reports from AnnualCreditReport.com and scrutinize them closely. (If you’re asked for a credit card, you’re on the wrong site.)

This week’s money news

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This week’s top story: 7 surprising facts about credit cards. In other news: Weekly mortgage rates rise again, look to last-minute scholarships when you can’t control FAFSA delays, and best cities for freelancers and self-employed workers 2024.

7 Surprising Facts About Credit Cards
Card issuers have a lot of leeway in terms of when and how they can make changes to your account. Some changes may be unwelcome, but others can work in your favor.

Weekly Mortgage Rates Rise Again, While Home Sales Increase, Too
Mortgage rates have climbed five weeks in a row and are now at their highest levels since the week before Thanksgiving.

No Financial Aid Package Yet? Look to Last-Minute Scholarships
You can’t control FAFSA delays, but you can control whether you research and apply for scholarship awards to lower your college costs.

Best Cities for Freelancers and Self-Employed Workers 2024
These 10 metro areas have a relatively large percentage of self-employed workers, relatively low state income tax rates and more.

Q&A: Can my credit score really be marred over $20?

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Dear Liz: I have had great credit for years. Late last year, I somehow overlooked a $20 payment due from one of my credit cards. My score dropped by more than 50 points, from about 815 to 765. I quickly paid the $20 and contacted the issuer. They told me they were required by law to report my delinquent payment, which I found out was not true. I went back and forth with them, but they would not do anything to help. I did file an inquiry with one of the credit bureaus, but I was told there was nothing they could do without the issuer’s cooperation. I spoke with someone in the issuer’s corporate offices, but he could not have cared less. It turns out that this hit on my credit could last seven years — and all over $20. I charge thousands of dollars every year on credit cards and pay the balance every month. Is there anything else I can do to restore my credit to the previous levels?

Answer: The federal Fair Credit Reporting Act does require creditors to report accurate information to the credit bureaus. However, some people say they’ve been able to get their accidental late payments removed by writing “good will” letters to their issuers. These letters explain what happened, emphasize the customer’s previous record of on-time payments and politely request the issuer extend some good will by removing the one-time lapse from their credit reports.

Your issuer is under no obligation to grant your request, and some categorically say they won’t. But it can’t hurt to try.

You also can use this incident as a reason to review how you pay your credit cards. Setting up automatic payments to cover at least your minimum payment will ensure this doesn’t happen again. Keep an eye on your credit utilization as well. Aim to use 10% or less of your credit limits. If you find it difficult to keep your charges below that level, consider making multiple payments each month to keep your balance low.

The unexpected drop in your credit scores was painful, but the good news is that you still have great scores. This oversight is unlikely to have any lasting effect on your financial life. And if you continue to use credit responsibly, your scores will improve over time.

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.