MONEY credit cards

How Does Amazon’s New 5% Cash Back Card Measure Up?

Amazon Prime
Alamy

Amazon has a new store credit card that offers Amazon Prime members 5% back on qualifying purchases. But how does it compare to the competition?

Amazon and Synchrony Bank released a new credit card offer for Amazon Prime customers last week, offering 5% cash back on qualifying purchases and even promotional financing for orders over $149.

The store credit card is a credit product you may be familiar with at bricks-and-mortar retailers. Often, these cards offer a discount at sign-up, and promises of exclusive discounts or or coupons in the future. With the 5% cash-back offer on all purchases, is the new Prime card a good fit for frequent Amazon shoppers?

How This Card Works

Subscribers to Amazon’s Prime service are eligible to receive 5% cash back on qualifying Amazon.com purchases as a statement credit. Or, they can receive a variety of promotional finance offers. For example, cardholders will pay no interest on charges of $149 or more if the balance is paid in full within six months of purchase. Otherwise, the standard interest rate of 25.99% will apply. In addition, new applicants will receive an Amazon.com gift card loaded into their account instantly upon approval.

This card is offered by Synchrony Bank, and is not affiliated with any payment network, so it is only valid for purchases from Amazon. Applicants must be members of Amazon Prime, which costs $99 per year and includes free two-day shipping and access to their streaming video and music services. There is no annual fee for this card, but cardholders must be current Amazon Prime subscribers to receive the 5% discount or the promotional financing offers.

There are other store cards and credit cards that also allow you to save money on Amazon purchases. Here are a few offers so you can weigh your options.

Amazon.com Rewards Visa Card From Chase

Chase offers this card that earns 3% back for purchases from Amazon.com, 2% back at gas stations, restaurants and drugstores, and 1% back on all other purchases, and is accepted anywhere Visa is. New cardholders also receive a $30 Amazon.com gift card applied to their account at the time of approval. There is no annual fee for this card.

Sallie Mae MasterCard From Barclaycard

This card offers 5% cash back on the first $250 cardholders spend each month on gas and grocery purchases, and the first $750 spent each month on eligible book purchases. Interestingly, Amazon.com is coded as a book store, a legacy of their early origins as just a book retailer. Cardholders earn 1% cash back on all other purchases, and there is no annual fee for this card.

SimplyCash Business Card From American Express

Another strategy for getting discounts from Amazon purchases is to use Amazon gift cards, which can be purchased at some office supply stores. The SimplyCash Business Card from American Express offers 5% cash back for purchases at U.S. office supply stores and on wireless telephone services. It also features 3% cash back on a category of your choice including airlines, hotels, car rentals, gas stations, restaurants, advertising and shipping, and on all other purchases. There is no annual fee for this card.

Blue Cash Preferred Card From American Express

This card offers 6% cash back on up to $6,000 spent each year at U.S. supermarkets, which often sell gift cards for Amazon. In addition, this card offers 3% cash back for purchases from select U.S. department stores, and 1% cash back on all other purchases. There is a $75 annual fee for this card.

Before you apply for any credit card, it can be helpful to check your credit standing so you can target your search to credit cards that fall within your credit range. You can get two of your credit scores for free on Credit.com, and they’re updated every 30 days.

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

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This article originally appeared on Credit.com.

MONEY credit cards

Can You Pay Your Mortgage With a Credit Card?

best travel rewards credit card
Robert Hadfield

Sometimes, lenders allow you to pay one debt with another, but there are a lot of things to know before you charge a mortgage.

You can use a credit card to pay many kinds of bills, and if you have a rewards credit card you pay in full every month, you can use those payments to increase your rewards. It’s a common strategy.

Still, just because you have the ability to pay a bill with your credit card doesn’t mean it’s a safe tactic. Some consumers are tempted to use their credit cards to make mortgage payments, if they have that option, because large transactions generate more rewards, but doing that might actually cost you, rather than save you money.

It’s not very common to have the option to pay your mortgage with a credit card, but if you have the ability to do so, you’ve probably wondered about the risks and rewards of paying a loan with a credit card.

What to Ask Your Lender

If you can use your credit card to pay your mortgage, find out if there are fees associated with the transaction. Credit card transactions can be very expensive to process — it depends on the card you’re using — so the lender may charge you that fee so they don’t have to foot the bill

If there’s a fee, compare that to the rewards you might earn by charging your mortgage payment. Say you’re using a card that offers 1.5% cash back on all purchases — any processing fee exceeding 1.5% means you’re paying to pay your mortgage.

You should also ask how that transaction will be processed. A Reddit user recently posted about paying a mortgage with a credit card, and the payment went through as a cash advance on the card. Cash advances start accruing interest as soon as the transaction clears, which means they can get extremely expensive. Also, cash advances generally carry a higher interest rate than normal credit transactions, hitting you with a double-whammy of higher interest that starts accruing immediately.

Should your lender not charge fees in excess of your rewards, and if it codes the mortgage payment like a regular credit transaction, the strategy could work in your favor.

At the same time, you may set yourself up for some serious financial damage if you miss a payment on the card and have to pay interest on what might end up being a very large balance. You can see how your mortgage is impacting your credit scores for free on Credit.com.

More from Credit.com

This article originally appeared on Credit.com.

MONEY identity theft

These Are the Only Data Breaches You Really Need to Worry About

social security card breaking up into bits and floating away
Yasu+Junko—Prop Styling by Shane Klein

Every day seems to bring news of another hack that compromises your personal data. While you can't afford to get complacent, you don't need to panic about every leak. Here's how to know when to worry and what action to take.

At this point, you can bet a hacker has made off with some of your personal information. The number of data breaches hit an all-time high in 2014, according to the Identity Theft Resource Center. An estimated 86 million records—including credit card and debit card numbers—were compromised, with Kmart, Home Depot, and Staples among the companies that saw the greatest data spillage.

Perhaps the worst scare yet, however, came in early 2015, when health insurer Anthem reported that hackers accessed its customers’ Social Security numbers—pure gold to an ID thief. “This one is a nightmare,” says Ed Mierzwinski of advocacy group U.S. PIRG.

But you may be too weary to heed the wake-up call. Almost a third of Americans who receive breach notifications ignore them, privacy research group Ponemon Institute has found. While you can’t panic over every breach, you also can’t afford to get complacent. How much to worry and what action to take depend on what data you learn have been compromised.

YOUR SOCIAL SECURITY NUMBER

How much to worry: A lot. A fraudster could apply for credit in your name, and you could spend years repairing your records, says Paul Stephens of the Privacy Rights Clearinghouse.

What to do: Check your credit reports ASAP for unusual activity. You’re entitled to one free copy per year from each of the credit bureaus (Equifax, Experian, TransUnion) via AnnualCreditReport.com. At minimum place a free 90-day fraud alert with one of the bureaus, which will inform the other two. This alert tells lenders to confirm your identity before extending credit.

A better move: Freeze your credit, preventing anyone from getting loans in your name. On the downside, you’ll pay up to $10 per credit bureau to place a freeze and up to $12 per bureau to lift it when you apply for new credit. A hassle, yes, and costly. “But for someone worried about ID theft, it’s the best $30 you can spend,” Stephens says.

A PASSWORD

How much to worry: Depends on what kind of site was hacked and whether you reuse passwords (61% of people do, identity protection firm CSID found).

What to do: Ideally, you’d change your password on the breached site and all others on which you used the same code. But if the idea of that much work leaves you paralyzed, the least you need to do is change codes for the most critical accounts (like email and financial sites), says Joseph Bonneau, technology fellow at the Electronic Frontier Foundation. And where it’s an option, set up two-factor authentication, which requires you to input an additional piece of information to log in. That will make it harder for hackers to break into your account next time a password is compromised.

YOUR CREDIT CARD NUMBER

How much to worry: Very little. When criminals steal just a credit card number, you’re not liable for any fraudulent charges, notes Chi Chi Wu of the National Consumer Law Center. With a debit number, you’re not liable for unauthorized charges you report within 60 days of getting your statement, and often banks will make you whole even if you don’t report until later. (The laws are different when a card itself is stolen, but, again, many issuers have zero-liability policies.)

What to do: Simply read your statements carefully, says U.S. PIRG’s Mierzwinski. Call the issuer if you see charges you don’t recognize, he says, “though usually your bank calls you first.” Don’t assume credit monitoring—which many breached businesses offer to customers for free—will do the job for you, Wu says. The services only tell you when a lender checks your credit, not when charges are run up on an existing account.

OTHER PERSONAL INFORMATION

How much to worry: Very little. Criminals can’t commit ID theft with just your name, birth date, or email—though they may try to “phish” for more info by posing as legitimate businesses.

What to do: Stay vigilant. Avoid clicking on links in emails. And when a financial institution calls, hang up and call back. Better to seem rude than get rooked.

 

TIME

It’s Unbelievable We Still Haven’t Learned This Lesson

pieces of credit card in hands
Roy Hsu—Getty Images

At $57 billion, it's an expensive one

You’d think the Great Recession would still be fresh enough in everybody’s minds that we’d be going out of our way to avoid putting ourselves through the financial wringer once again.

Nope.

We’re piling on credit card debt at a dizzying pace and experts warn we’re barreling towards a tipping point. The website CardHub.com’s annual study of credit card debt just came out last week, and the numbers are sobering.

In 2014, we piled on $57.1 billion in new credit card debt — a record number that’s 47% higher than the debt we added in 2013. After pulling back in 2009 and 2010, Americans have added a total of almost $180 billion in credit card debt in just a few short years.

Typically, the first quarter of each year sees a big pay down in credit card debt, as we leave the indulgence of the holidays behind (and probably make a few New Year’s resolutions about being more financially disciplined.) We started of 2014 behind the eight-ball by not paying off as much as we had in previous years, and just kept racking up those balances.

On average, every American household carries nearly $7,200 in credit card debt. That figure hasn’t been this high in five years, and it’s still climbing. “The average household’s credit card balance… is growing dangerously close to the $8,300 tipping point previously identified by CardHub as being unsustainable.,” the study warns.

That’s bad, but there’s another factor it’s likely all of these charge-happy American consumers aren’t taking into account: When lawmakers passed the CARD Act in the recession’s wake and prohibited credit card issuers from hiking rates for any old reason, the card companies pretty much en masse switched their customers from fixed-rate to variable-rate cards so they’d be able to raise rates when the prime rate increased.

In all fairness, it’s been pretty easy to overlook the prime rate of late, because nothing’s happening. It’s been sitting at a rock-bottom, near-zero level for years now, with any increase contingent on the Federal Reserve raising its benchmark rate, a move they’ve been reluctant to make — until recently.

With the unemployment rate improving and other signs of renewed economic vigor trickling in, economists expect the central bank to start raising rates sometime this year. And when that happens, the cost of servicing all that credit card debt is going to rise. Households who are just treading water making minimum payments are going to have to pinch pennies from somewhere else just to stay afloat.

How much rates will go up is the $64,000 question. Some think it will be a fraction of a percentage point, but others predict it could go up 1% or 2% this year. “I expect short term rates to rise during 2015, and hence credit card interest rates to rise,” Brigham Young University finance professor Hal Heaton tells CardHub.

In relative terms, that’s still a low rate, but if we’re adding rather than subtracting debt at the same time — which CardHub also predicts we’ll do — this could spell trouble for a lot of borrowers.

Read next: 5 Bad Money Habits You Can Break Today

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MONEY Credit

Your Genes Might Affect Your Credit Score

150311_FF_DNAMoney
Jon Boyes—Getty Images

Your credit score isn't controlled by any one cause, but your genes may be a key factor.

There is the standard list of factors that influence your credit score: payment history, outstanding balances, the types of credit that you use and so on. But what you probably don’t realize is that your genes may also play an important role. Yes, your biological wiring might make you more likely to be more risk-seeking and take on more debt, which could lead to a lower FICO score.

I came across this intriguing discovery while researching my book Coined: The Rich Life of Money And How Its History Has Shaped Us. I wrote the book because I was working at a Wall Street investment bank during the credit crisis, and I wanted to know what leads people to make bad decisions with money. I learned that there are many things that guide our financial decisions, including our genes.

To understand how genes could sway our decisions, I asked a neuroeconomist. Neuroeconomics is an emerging and interdisciplinary field in which brain scans and other technologies are used to understand how we make financial decisions. Brian Knutson, a neuroeconomist at Stanford University, explained a study that he conducted with two colleagues, Camelia Kuhnen and Gregory Samanez-Larkin, on the link between our genes, financial decisions and even life outcomes.

They started with the multi-part question, “Do genes influence cognitive abilities, do they shape the way people learn in financial markets, or do they determine risk attitudes?” They concentrated on a gene known as 5-HTTLPR because it had been identified in previous studies as playing a role in how we make financial decisions. Specifically, they wanted to know whether there was causation between people who have a variant of this gene, possessing a short or long allele, and their financial outcome.

In the trial, they selected 60 individuals from San Francisco to participate. The participants shared demographic information such as their age, marital status and ethnicity. They also provided personal financial information such as their occupation, income level and debts. Some participants also disclosed their FICO scores. All participants had their DNA collected via cheek swabs for an analysis of whether they possessed the short or long alleles. Participants were then presented a series of financial decisions like how to allocate $10,000 across stocks, bonds and cash.

It turned out that those with short alleles made more conservative financial decisions than those with long alleles. Participants with short alleles allocated less money in equities and more in low-performing assets like cash. Moreover, in real life these participants had fewer lines of credit than the others. Those with two short alleles had higher FICO scores, some 93 points, than those with a long allele. FICO scores typically range between 300 and 850, so a swing of 93 points, or 17%, is statistically noteworthy.

Before concluding that genes were the reason for the variance in behavior, the researchers considered other possible factors: income, wealth and financial literacy. But they didn’t find that any of these things were meaningful in explaining the outcome of their study. Ultimately, they settled, “Overall, these results indicate that individual variation in the 5-HTTLPR genotype influences financial choice.”

Their conclusion is in line with other academic studies that find there are genetic determinants for financial decisions. For example, researchers compared the investment portfolios of fraternal and identical twins. They found that almost one third of the divergence in asset allocation might be attributable to genetic factors. Indeed, twins that were frequently in touch invested in a similar manner. But identical twins who grew up separately also demonstrated similar financial decisions. The researchers explain, “We attribute the genetic component of asset allocation—the relative amount invested in equities and the portfolio volatility—to genetic variation in risk preferences.”

However, Knutson and his colleagues sound a cautionary note: not all participants acted in accordance with how their genes might predict. Just because several studies reveal that genes appear to play a role in determining the financial decisions, doesn’t mean that they are the only things that matter. Even if someone is biologically wired to be risk-averse, they might demonstrate risk-seeking behavior depending on the situation. For example, say someone in her late 20s who is predisposed to risk aversion is setting up a retirement account. She has also taken two online courses that recommend more aggressive investing early in one’s career, so she decides to be more risk-seeking, and invests more money in stocks than bonds. In this case, knowledge triumphed over genetics.

That genes can influence our credit scores is an intriguing finding of neuroeconomics. Maybe one day, credit reports won’t just outline our borrowing and repayment history but how it deviates from expected behavior based on our genes.

More from Credit.com

This article originally appeared on Credit.com.

TIME deals

Visa Replaces American Express as Costco’s Credit Card

A Visa Inc. credit card sits on top of credit and debit cards arranged for a photograph in Washington on Jan. 29, 2014.
Bloomberg/Getty Images A Visa Inc. credit card sits on top of credit and debit cards arranged for a photograph in Washington on Jan. 29, 2014.

Costco announced that the retailer’s credit card network will be handled by Visa next year, an announcement that comes weeks after it sideswiped Visa rival American Express in a move that ended a 16-year relationship with the retailer.

The retailer, 19th on the Fortune 500, said Citigroup would be the exclusive issuer of Costco’s co-branded credit cards while Visa will be replacing American Express as the credit card network for Costco in the U.S. and Puerto Rico beginning April 1, 2016. Costco, known for issuing sparsely worded press releases, provided few details about the deal with Visa.

The Costco business is a big coup for Visa, as Costco is one of the nation’s largest retailers. Shares of American Express dropped last month after the credit card company announced that its exclusivity deal with the wholesale club retailer was set to expire at the end of March in 2016. As WSJ reported previously, the agreement had driven a big chunk of business for American Express. But when the arrangement ends, millions of customers will be forced to use a different credit card when shopping at Costco.

Losing Costco’s business will dent results at American Express, as that business generated about 8% of the company’s worldwide billed business in 2014. Over 70% of the spending on those accounts occurred outside a Costco warehouse, so business was widely spread. American Express said it did try to win the business, but ultimately it was “unable to agree to terms that would have provided attractive returns for our company and our shareholders.” American Express warned it could book a restructuring charge and potentially cut costs if it isn’t able to generate enough business from other products to offset the lost business associated with the Costco co-branded portfolio.

MONEY credit cards

5 Ways Your Credit Card Can Be Stolen Right Under Your Nose

woman using ATM machine at night
Maciej Toporowicz—Getty Images/Flickr

Card thieves have many techniques for stealing your data without you noticing.

There are several things people freak out about when their wallets or purses have been stolen: knowing a thief has your ID (and your home address), losing irreplaceable gift cards or cash, and having to cancel your credit cards. That’s usually the first thing people do — call their banks — but it’s easy to act quickly when you realize you’ve been robbed. Sometimes, it’s not that simple.

Thieves steal credit and debit cards all the time without taking the physical card. The most common kind of card theft results from data breaches. Last year, millions of U.S. consumers had their cards replaced after their information was compromised in one of the massive cyberattacks on retailers, even if their cards didn’t show unauthorized activity. People have gotten used to the idea that data breaches are inevitable, but there are lots of daily activities that put your cards at risk for theft, without you noticing.

1. Drive-Thru

A Pennsylvania woman was recently arrested for allegedly swiping customer cards on a personal card reader while she worked the drive-thru at a Dunkin’ Donuts, WFMZ reports, reportedly using the information to create duplicate cards and charge more than $800 to the accounts.

That’s not the first time a story like this has popped up, and it’s likely to happen again, because the situation presents an easy theft opportunity to drive-thru workers: Customers hand over their cards and usually can’t see what the cashier is doing with it on the other side of the window. It’s not like you should avoid the drive-thru for fear of card theft, but it’s one of many reasons to regularly check your card activity for signs of unauthorized use.

2. Restaurants

How often do you see your server process your dinner payment? Usually, he or she takes your card away from your table and completes the transaction out of your sight. Many restaurant workers have taken advantage of this situation to copy customers’ cards and fraudulently use the information.

3. On the Phone

People are pretty trusting when making orders over the phone, assuming that whoever takes the order is entering the credit or debit card number, expiration date and security code into a payment system, not just copying it down for their own use. On the flip side, it might not be the person on the other end of the call you should worry about — plenty of people read their card information aloud within earshot of strangers, making it easy for someone nearby to write down the numbers.

4. RFID Scanners

Most radio-frequency identification (RFID)-enabled credit and debit cards have a symbol (four curved lines representing a signal emission) indicating the card has the technology for contactless payment. If you have one of these cards, you have the ability to use tap-and-pay terminals found at some retailers, because your card sends payment information via radio frequencies, received by the terminal.

That same technology also allows thieves to use RFID scanners to copy your card data if they get close enough to it and your card isn’t protected. If you’re not sure your card has RFID technology, call your issuer, and if it does, use signal-blocking materials and products to protect it.

5. Card Skimmers

Thieves have been installing copying devices at gas pumps and ATMs for years: They tamper with card readers to install skimmers that copy your card data when you swipe it, so a thief takes your credit or debit card information while you complete an otherwise routine transaction. Experts advise you look closely at card readers for signs of tampering, use ATMs serviced by your bank and check your card activity regularly for signs of fraud.

That’s really the best way to combat credit card theft: Watch closely for it. With online banking and mobile applications, it’s easy to check your accounts every day, making it more likely you’ll spot something out of the ordinary than if you only looked at card activity once a week or so. You can also check your credit score for sudden changes, which can be a sign of fraud or identity theft. You can get two of your credit scores for free every 30 days on Credit.com.

MONEY Debit Card

What Happens If I Swipe My Debit Card as “Credit”?

person swiping credit card
David Woolley—Getty Images

The answer may surprise you.

It’s a question we’ve all heard when shopping: “Credit or debit?” It seems straightforward, just the cashier asking you what type of payment card you’re using, but there’s actually a lot more history to that question than you might think.

Debit and credit transactions are processed differently: Here’s how MasterCard explained it in an emailed statement to Credit.com: When you use a debit card and your PIN (personal identification number), the transaction is completed in real time, also known as an online transaction — you authorize the purchase with your PIN and the money is immediately transferred from your bank account to the merchant. With a credit card, or using a debit card as credit, it’s an offline transaction.

“The funds for offline transactions are deducted after the merchant settles the purchase with the credit card processor and typically take 2-3 days to be reflected in your account balance,” MasterCard says.

Issuers used to charge merchants different fees for accepting credit cards than for accepting debit card transactions with a PIN. Before the Dodd-Frank Wall Street Reform and Consumer Protection Act was passed, Sen. Dick Durbin added a provision, now called the Durbin Amendment, that restricted interchange fees to 12¢ per transaction. By the time the bill was signed into law, the cap was set at 21¢, much lower than the previous average of 45¢ per transaction. (On Jan. 20, the Supreme Court declined to hear retailers’ challenge to that 21¢ cap.)

With the cap on interchange fees, banks saw their revenue source for things like debit card rewards and free banking dry up, which is why you’re unlikely to find those things these days.

“There’s several thousand community banks and credit unions, what the act refers to as unregulated, who can actually charge greater interchange on transactions,” said Nick Barnes senior vice president of retail banking at ACI Worldwide, a payments system company. The Durbin Amendment only impacted financial service providers with $10 billion or more in assets. “That’s why you go to these tiny banks you’ll still see free banking and debit rewards.”

Should You Choose Debit or Credit?

Credit cards and debit cards are very different products, each with their own advantages and drawbacks that should influence when and how you use them. As for hitting the “credit” button when you’re using a debit card: It doesn’t really matter.

Other than the changes banks may have made as a result changing interchange fees, choosing to use a debit card as credit doesn’t really impact you. You often have the choice to use your debit card with or without the PIN, and how you use it is a matter of personal preference. Running a debit card as an offline transaction still ends up doing the same thing — taking money from your checking account — and it doesn’t help you build credit, like using a credit card does.

More from Credit.com

This article originally appeared on Credit.com.

Read next: Why You Need to Get a Credit Card

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MONEY

Here’s How Your Credit Score Stacks Up

overhead view of hand holding credit card and using laptop
John Lamb—Getty Images

More than 75% of Americans have a credit score below 700.

As lessons learned during the Great Recession become more distant, consumers are increasingly spending money again on everything from clothes, to cars, to condos, and the bills are piling up, especially for consumers who took a lump or two to their credit score over the past few years.

Climbing again

The amount of money Americans owe on revolving loans, such as credit cards, has marched from a post-recession low of $837 billion to $882 billion in October. Motor vehicle debt reached an all-time high of $943 billion in the third quarter, and the amount of money borrowed from banks to buy property has climbed for six consecutive quarters.

That may be good news for credit card companies like Discover Financial DISCOVER FINANCIAL SERVICES DFS 0.39% and banks like Wells Fargo WELLS FARGO & COMPANY WFC 1.2% , but it may not be good news for consumers, who are discovering that lenders are focusing more attention than ever on credit scores compiled by companies like Equifax EQUIFAX EFX 1.48% . Those credit scores determine whether or not a credit card or loan will be approved, and what interest rate the borrower will be charged.

How do you stack up?

According to the credit tracking firm Credit Karma, more than 75% of Americans have a credit score below 700.

That’s not good news given that banks are likely to offer their best terms to borrowers with scores that are above those levels.

Those better terms can mean less money from the borrower up front, and far lower interest rates that can produce thousands of dollars in savings over time.

For example, according to myFico, a borrower with a credit score below 660 who is taking out a five-year loan of $20,000 to buy a new car would pay an annual interest rate of 10.385%, or $5,724 in interest over the life of the loan. If that same person had a credit score north of 720, the interest rate would be a paltry 3.245%, which works out to total interest payments of just $1,693.

That $4,031 difference in interest payments is a lot of money, but that isn’t the total financial impact of a lower credit score. Investing that $4,031 for 30 years in something like an index fund that returns a hypothetical 6.5% per year would result in an extra $26,662 in retirement savings, which means a lower credit score could mean the difference between pocketing an extra $26,000, or spending an extra $4,000.

Making changes

If you’re one of the many who have a credit score below 700, there’s no time like the present to begin making changes that could have a major impact on your retirement savings.

Rating agencies like Equifax are continuously updating credit scores, and as a result, changes made today can have a positive impact quickly.

One way to give a boost to a credit score is to reduce the balance carried on credit cards to below 30% of each card’s credit limit. Credit card utilization has a big impact on credit scores, so making an extra monthly payment, or paying a bit more than the minimum payment every month can pay off fast.

Consumers may also want to contact their lender and ask them to forgive a late payment. If there are only one or two late payments on the account’s credit history, and the borrower’s history has otherwise been good, lenders may be willing to make a one-time adjustment. Borrowers may also want to ask their lender if they’d be willing to bump up their credit card limit. Lenders probably won’t do that for borrowers with credit scores at the low end of the range, but for those with scores closer to 700, they might. If so, bumping up the credit limit could improve the credit utilization ratio used to calculate the borrower’s credit score, too.

Finally, consider keeping a bit of cash handy for day-to-day purchases, rather than using a credit card. That can go a long way toward making sure credit balances don’t sneak their way higher, and setting up automatic payments through your lender may help avoid late payments and related fees that can really hurt credit scores, too. While these tips won’t fix credit scores overnight, they should go a long way toward healing any lumps to credit suffered in the past.

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital’s clients may or may not have positions in the companies mentioned. Todd owns Gundalow Advisors, LLC. Gundalow’s clients do not have positions in the companies mentioned. The Motley Fool recommends Wells Fargo. The Motley Fool owns shares of Discover Financial Services and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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MONEY Debt

4 of the Weirdest Reasons People Have Gone Into Debt

Girl surrounded by stuffed animals
Maarten Wouters—Getty Images

These cautionary tales show how NOT to handle your finances.

For more than a decade, I’ve worked in the field of debt resolution, helping thousands of people overcome their debt issues. Most clients come to me in debt due to what I would call “typical” reasons for falling into debt. This includes loss of income or unexpected medical issues in the family, which become difficult to manage when there are bills to pay. However, sometimes we see some unusual situations that led to debt, which I call “doozies.” Here are some doozies that top the list.

1. The Child Spoiler Client

A few years ago, I had a client with a large amount of credit card debt. So as we usually do with clients, we discussed the reasons for the debt. He put his chin down, looked away and said, “Really, this is because of my child, she’s my only child and I just can’t say no.” These expenses included private school at 5 years old, and horseback riding lessons at almost $2,000 a month. The compulsiveness – or, really, obsession – with his only child had put him into debt. He was spending more money on her every month than his mortgage and car payments combined.

My Advice: Stop the horses! Overspending will put you in debt, whether for you or others. Learning to say no, instilling good spending habits and limits will keep you off that pony ride.

2. The Dream Wedding Client

A couple came to me shortly after their wedding. They said they had a lot of credit card debt, and had expected to be able to pay it off after the wedding. When they told me they had $75,000 of debt, I asked how the amount got to be so high. They said they felt that their wedding was important to them and they never budgeted the expenses and just assumed they would rely on gifts to pay off those expenses from the wedding. They told me that they didn’t expect some of their relatives to be so “cheap” with gifts and as a result they received less money than they expected. They then fell short on paying the bills.

Furthermore, falling behind on your payments will also hurt your credit score, which causes a number of issues, including making the cost of debt more expensive for you over time. (You can see how your debt is affecting your credit scores for free on Credit.com.)

My Advice: Take a tier off of the cake! Make a budget and stick to it. Never rely on future money to pay off bills.

3. The “Don’t Tell My Spouse I Have Debt” Client

I was a bit surprised when one client came to me and said, “My husband doesn’t know about this debt so you cannot call my house or send any paperwork there.” This scenario really isn’t that uncommon. One partner has debt and the other has no idea about the debt or if they do know, they don’t know how much is really owed. These clients have even given me lists of times we can call and alternate addresses to send paperwork to. For these clients, the trend to keep secret debt often starts early on in the relationship where one has a credit card outside the relationship and begins to spend and not tell the other. This infidelity continues until the one partner simply doesn’t have the funds anymore to pay the bills and they are forced to come to us to resolve it for them secretly.

My Advice: Avoid financial infidelity at all costs. Communication is a key element in any good relationship, and talking to your partner openly and honestly about finances is no exception and can actually keep you out of debt.

4. The House Flipper Client

A few years ago I had a steady stream of clients who came to me after they lost money in attempts to flip houses in places like Florida and Vegas. They told me that their friends made money doing this so they thought they’d try it, too. My flippers believed that they could purchase a cheap house in a short sale and invest in improvements and then sell the property for a profit. While this is a great idea if you’ve budgeted for time post-construction if the house doesn’t sell, it can jam you financially if you don’t have the money to pay the bills until the house is sold. Which is exactly what happened to them when the market fell out. They couldn’t sell the house in a short time and they were left with a house they couldn’t afford and mounting debt.

My Advice: There are lots of good ideas to make money, but before making any attempts, make sure you’ve done your homework and are prepared to handle the worst-case scenario.

Remember, maintaining good financial health can come down to good old-fashioned common sense. So many of these “doozies” could have been avoided had many of these people simply taken the time to stop, think about what they were doing, and focus on the reality of spending and budgeting.

More from Credit.com

This article originally appeared on Credit.com.

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