Governor Gavin Newsom announced on Thursday an agreement that requires all California high school students to take a semester-long personal finance education course starting by the 2027-28 school year.
I’m not aware of any harms from using a no-fee credit card that you pay off in full each month. You get 1% - 5% back, and it’s easier to deal with fraudulent charges.
If you have a credit card with a $25,000 limit, that limit counts against your total even if you are not using it. For example, if it is determined that you can sustain mortgage debt of a maximum of $400,000 at current interest rates, you will not qualify for that amount because you also have an open credit card with an available balance of $25,000 at a significantly higher interest rate.
You fully missed the point. If you read comments around credit cards you’ll see that most people don’t understand the impact of credit cards on their ability to borrow. Yes, if you do not need five cards or $25,000 credit limit (or both), then you should absolutely start closing cards and reducing limits. People don’t understand that. They go buy a car and the loan rate is through the roof. They think that is how it is and never imagine that the rate might have been triggered by the three unused credit cards.
IMHO, you should always have one credit card with a limit just slightly higher than your monthly burn rate. You should use it instead of debit cards, and you should pay it off in full, automatically, every month well before it is due. Only one credit card. Again, just my opinion.
I have bought and sold over a dozen houses, my credit has been shit and I repaired it, and I have worked for a number of insurance related tech companies that evaluate your credit. What is considered when evaluating your viability as a borrower is your debt exposure. Credit cards are pre-approved debt. If you have $100,000 of combined available credit on credit cards, then you might as well be $100,000 in debt. This is especially true if you got these cards while you were in a higher income bracket than you are currently. If you had a nice job paying $125k but had to move and now make $95k, then those cards might represent a debt burden you might no longer be able to carry. That is a huge ding when being evaluated for credit.
EDIT: By the way, most people also believe that only the outstanding balance is counted. That is true for loans but not for credit cards.
Although you generally are solid in 2 to 4 range, the more important thing as it turns out is (aside from prompt payments) to make sure the credit limit is high. Those store cards with 300 limits are looked down upon.
I have about 10 of them because cancelling is considered bad. I product change to another card when the annual fee hits to avoid it, and generally get a few cards a year to take advantage of bonuses.
They still keep giving me 5 figure credit limits on every one, for reasons I can’t explain
If you don’t have self control, a credit card is a bad idea. If you do have self control, a credit card can make value for you just by spending on things you were already going to buy.
We had to take that class on our senior year many, many, many moons ago. Back then they taught us that having a credit card was good though. LOL!
I’m not aware of any harms from using a no-fee credit card that you pay off in full each month. You get 1% - 5% back, and it’s easier to deal with fraudulent charges.
If you have a credit card with a $25,000 limit, that limit counts against your total even if you are not using it. For example, if it is determined that you can sustain mortgage debt of a maximum of $400,000 at current interest rates, you will not qualify for that amount because you also have an open credit card with an available balance of $25,000 at a significantly higher interest rate.
Then decrease your limit, LMAO. It’s not that hard
You fully missed the point. If you read comments around credit cards you’ll see that most people don’t understand the impact of credit cards on their ability to borrow. Yes, if you do not need five cards or $25,000 credit limit (or both), then you should absolutely start closing cards and reducing limits. People don’t understand that. They go buy a car and the loan rate is through the roof. They think that is how it is and never imagine that the rate might have been triggered by the three unused credit cards.
IMHO, you should always have one credit card with a limit just slightly higher than your monthly burn rate. You should use it instead of debit cards, and you should pay it off in full, automatically, every month well before it is due. Only one credit card. Again, just my opinion.
Do you have a source for this? My understanding was only credit card balances mattered.
I have bought and sold over a dozen houses, my credit has been shit and I repaired it, and I have worked for a number of insurance related tech companies that evaluate your credit. What is considered when evaluating your viability as a borrower is your debt exposure. Credit cards are pre-approved debt. If you have $100,000 of combined available credit on credit cards, then you might as well be $100,000 in debt. This is especially true if you got these cards while you were in a higher income bracket than you are currently. If you had a nice job paying $125k but had to move and now make $95k, then those cards might represent a debt burden you might no longer be able to carry. That is a huge ding when being evaluated for credit.
EDIT: By the way, most people also believe that only the outstanding balance is counted. That is true for loans but not for credit cards.
Having a credit card is still generally considered good.
Key word is “a”, as in one.
Although you generally are solid in 2 to 4 range, the more important thing as it turns out is (aside from prompt payments) to make sure the credit limit is high. Those store cards with 300 limits are looked down upon.
I have about 10 of them because cancelling is considered bad. I product change to another card when the annual fee hits to avoid it, and generally get a few cards a year to take advantage of bonuses.
They still keep giving me 5 figure credit limits on every one, for reasons I can’t explain
A big ding to your credit score itself is actually a low amount of lines of credit, I think 10+ is considered “good” which is ridiculous
In the US at least, this is false.
Credit scores don’t measure how responsible with your money you are. They measure how much you’re willing to pay lenders.
My teacher in 2019 tried to convey this to us in economics class too. But to this day I still refuse.
If you don’t have self control, a credit card is a bad idea. If you do have self control, a credit card can make value for you just by spending on things you were already going to buy.