Get smart with your money
Dear Liz: Does the reason for a credit card closure affect credit scores? I’ve had retailers close a card simply because it hasn’t been used for a period of time, not because I mishandled the account.
Answer: Credit score formulas don’t distinguish between accounts closed by the consumer and accounts closed by the issuer. The closed account can still ding your scores, but you won’t suffer an extra blow because the decision to close wasn’t your own.
This week’s top story: Mortgage rates will not fall in March. In other news: Rental housing prices 2024, why some millennials don’t want kids, and managing credit cards when you grew up in a cash-only household.
When Will Mortgage Rates Fall? Probably Not in March
Mortgage rates are expected to go down sometime in 2024, but the decline probably won’t start in March.
Will Rental Housing Prices Drop in 2024?
Rental inflation is slowing down, but prices are expected to stay elevated in 2024.
Why Don’t Some Millennials Want Kids? They Say It’s Too Expensive
A new NerdWallet survey finds that just 25% of millennials who don’t have kids plan to have them. A major reason why? The high cost of raising children.
Managing Credit Cards When You Grew Up in a Cash-Only Household
Debt-averse relatives may not understand your choices, but it’s OK to forge your own financial path.
Dear Liz: I have accumulated too many credit cards, sometimes to get bonus frequent flier miles. The frequent flier miles cards all have annual fees. I always pay cards in full each month.
My credit score is 800-plus every month. I have heard that your credit score is dinged when you close credit accounts. Is that true and by how much? How do you recommend reducing the number of credit cards?
Answer: Yes, closing cards can hurt your credit scores. The “how much” question is impossible to predict and will depend on your credit situation as well as how you go about reducing your card portfolio.
Keep in mind that there is no such thing as “too many credit cards” as far as credit scoring formulas are concerned. As long as you pay your bills on time and use only a small portion of your available credit limits, you can have lots of cards and great scores.
However, monitoring a bunch of different cards can be overwhelming. You also don’t want to keep paying annual fees for cards that aren’t delivering sufficient benefits.
If the fees are your primary concern, identify the cards you want to close and ask the issuers if you can get a “product change” to a no-fee card. This typically won’t affect your scores because the account is simply being transferred rather than being closed and reopened.
If you need to thin the herd, be aware that credit scoring formulas are sensitive to credit utilization, or the amount of your available credit you’re using on each card and overall.
If you have multiple cards from the same issuer, ask if the credit limit from the card you’re closing can be added to one of your remaining cards. Another option is to close only your lowest-limit cards.
You won’t want to close any cards if you’ll be looking for a major loan, such as auto financing or a mortgage, in the next few months. Hold off until after you’ve got the loan.
Also try to use up or transfer any points or miles you’ve earned on the cards you plan to close because those rewards may disappear at closure.
Dear Liz: My husband died last year and we have three credit cards in his name with me as authorized user. When applying for new credit, do I still use his name or my name now? And should I remove his name and put my name only on all accounts?
Answer: You’ll apply for new credit in your own name, using your own credit history and income. If your credit cards are joint accounts, you can simply ask the issuers to remove your husband’s name.
Here’s the thing, though: Few credit cards these days are joint accounts. Typically there is a primary cardholder and an authorized user. When the primary cardholder dies, credit card issuers usually close the account, often within a few weeks.
Issuers normally find out about the death from the person settling the estate or from the Social Security Administration. Social Security, in its turn, usually learns about the death from the funeral home or from the person settling the estate.
It’s possible there has simply been an oversight, but you’ll want to make sure your husband’s death has been properly reported to Social Security and his creditors. If you are an authorized user rather than a joint account holder, you may find the card issuers will work with you to get replacement cards although you may have to settle for a smaller credit limit if your income has dropped (which is unfortunately a common situation for survivors).
Credit card rewards help our family save money on groceries, gas and other necessities. We also use rewards for airline tickets, hotel rooms and airport lounge access.
We’re in good company. Most Americans have at least one rewards card, and nearly half of rewards cardholders are using their perks to help offset rising inflation, according to a 2022 Wells Fargo survey.
But a recent review of our cards revealed that some are no longer worth their annual fees or have been eclipsed by better offerings.
Credit card fees, reward rates and benefits change all the time. So do the ways we spend our money, which means a card that used to be a good fit may no longer work as well. Given all that, it’s not surprising that fewer than one-third of credit card users feel that they’re making the most of their rewards cards, according to J.D. Power’s 2022 U.S. Credit Card Satisfaction Study.
In my latest for the Associated Press, learn how to audit your credit cards for greater savings.
This week’s top story: Smart Money podcast on end of credit card rewards, and luxury credit cards. In other news: December mortgage rates, how high-interest ‘rent-a-bank’ loans sidestep state rate caps, and lifetime income.
Smart Money Podcast: The End of Credit Card Rewards, and When to Cancel Luxury Credit Cards
This week’s episode starts with a discussion about the potential end of credit card rewards.
December Mortgage Rates May Seek Calm After Turbulent Year
Interest rates on fixed-rate mortgages could stabilize or even drift lower in December.
How High-Interest ‘Rent-a-Bank’ Loans Sidestep State Rate Caps
Rent-a-bank loans are online loans that may charge triple-digit APRs in states that cap interest rates on small loans.
Save for ‘Retirement’? Generate Lifetime Income Instead
Money News & Moves: Also, Google pays for tracking us, and crypto isn’t broken.