MONEY credit cards

3 Things You Should Never Buy With a Credit Card — and 1 You Always Should

wedding cake
Keller & Keller Photography—Getty Images/StockFood

Beware the "snowball effect".

From time to time we bring you posts from our partners that may not be new but contain advice that bears repeating. Look for these classics on the weekends.

Credit cards shouldn’t scare you; when used correctly, they’re actually the most rewarding form of currency available today.

Seriously, when’s the last time you were rewarded with airline miles for using cash?

And while it’s highly recommended that everyone should apply for a credit card as early as possible to begin the process of building credit, there are a few things you should simply not charge to your card. Generally, these are big-ticket items that might take you a long time to pay back. And when it takes you a while to pay back a credit card purchase, eventually you end up paying interest. A lot of it.

The single easiest way to fall into credit card debt is to make a big-ticket purchase and spend the next several months paying it back in very small increments. That’s what they call the “Snowball Effect” — wherein you make minimum payments, half of which go to interest – and it’s a legitimate credit killer.

The trick to staying out of credit card debt is to make small, semi-regular purchases and pay the entire balance every month.

With that in mind, here are three things you should avoid paying for with your credit card … and as a bonus, one purchase we ALWAYS recommend using a credit card for.

Hospital Bills

NEVER put your hospital bills on a credit card. Medical bills are expensive as it is; the last thing you want to do is add high interest fees to those bills, too.

The fact of the matter is you can get on a payment plan with lower interest rates if you need to pay back your medical bills over time. Credit card interest rates range anywhere from 10% to 30%; you can get a much better rate through a payment plan initiated through the hospital. So take the time to sort this option out before sticking it all on your credit card.

Student Expenses

Student debt is brutal, but the fact of the matter is student loan interest rates are, by and large, a lot lower than the average credit card interest rate. So it’s highly recommended that you don’t charge off some or all of that student loan payment since, ultimately, you’ll end up paying a lot more in the long run.

Along those same lines, it’s not recommended to charge your tuition bills. It’s MUCH cheaper (OK, maybe “cheaper” is the wrong word here — how about “less expensive”?) to take out a student loan or apply for a scholarship than it is to simply swipe your way through school.

Think about it: the average yearly cost to attend a public university is $22,261, according to CNN Money. Add 15% in interest to that and that’s another $3,300 — IN INTEREST ALONE.

Sorry for yelling, but hopefully you get the idea here: Keep the big-ticket items — especially the ones with lower interest options — off of your charge card.

Your Dream Wedding

Unless you’ve got a feeling your wedding gift-pile will be something akin to Henry Hill’s in Goodfellas (i.e. a pile of envelopes stuffed with cash), then it’s probably a good idea to scale back that dream wedding you had in mind to something more manageable.

I’m not married and I’m certainly not a relationship counselor, but it can’t be a good idea to begin your first days of marriage swamped in debt because you decided to fly in your entire extended family for a destination wedding.

Getting hitched is a celebration of love, not luxury. Stay within your means when planning your wedding and you’ll be more likely to enjoy your party.

That said, if you need to go into debt to fund the open bar, then we’ll make an exception.

(Just kidding. Kinda of.)

So, while we recommend putting the plastic away for the above purchases, there’s still one HUGE category of items we always recommend using your credit card for:

Online Purchases!

Why? Well, the dirty secret your bank doesn’t want you to know is that most credit card issuers offer better identity theft protection than that of the biggest banks. Not only that, but in the event that your credit card account is hacked, the damage will usually be limited because your credit card accounts aren’t synced with your personal bank accounts, savings accounts, etc.

Besides, the only credit card networks worth applying to have purchase protection, so you’re covered in the event of fraudulent charges. Not so with your debit card…

By using your debit card online often, you’re increasing the chance of foul play.

So you see, credit card purchases are actually recommended in some cases — especially if your card offers you cash back, rewards or miles.

Just be sure to keep the most expensive purchases — the ones that no matter how you slice it are simply out of your reach — off your charge card. By doing so, you’ll save yourself the burden of interest fees and debt for years to come.

Read next: 6 Perks a Sparkling Credit Score Will Earn You

This was a guest post written by Jason Bushey. Jason works at

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MONEY Kids and Money

5 Things New Grads Need to Hear From Their Parents (Even if They’d Rather Not)

college graduate with parents
Getty images

Young adults say they wish they had started saving sooner.

One of the hardest things about letting a newly licensed driver leave the house in your car is this: They don’t know what they don’t know (but if you taught them to drive, you may have some ideas). They will learn, perhaps the hard way, and you won’t be there to offer warnings and commentary.

Finances are a lot like that. You’ve taught them, they’ve graduated from high school or college and now they are entering the real world — and figuring out that there are some gaps in their knowledge. Maybe their parents didn’t tell them, or maybe they weren’t listening when the parents did, but here’s what newly minted adults — asked via social media — told us they wished they had known more about money.

1. Compound Interest

They now wish they’d put baby-sitting and lawn-mowing money into retirement accounts. The young adults who responded to our question were big believers in putting away money early. They just wish they’d known sooner.

2. How to Invest

They want to know what they should be doing with the money they sock away. Some wish they had known how to invest in college. Some of them remember hearing their parents or grandparents talk about getting crushed in the market during the recession. But by now, the markets have rebounded, and they know that those who held on when the ride got scary have been rewarded.

3. How Taxes Work

Some states have income tax, and others don’t. Some municipalities tax the money you earn. Sales tax can be twice in a new state what it was in one’s home state. Who knew? And is there a way to figure out how much to take home in one’s paycheck after the deductions? They wish they understood taxes a little better.

4. Credit & Credit Score Management

“My dad always told me never to get a credit card,” said one. “My friend actually told me that I needed it to eventually get a house, new car, etc. So I’m building credit now when I could have been doing that throughout high school and college.” Others said they are learning late about precisely what it takes to build or rebuild credit. (Interestingly, no one complained that parents didn’t warn them about debt — parents are presumably doing a great job there.)

Experts suggest checking your credit scores and credit reports regularly so that when you do decide to take on debt (perhaps to buy a home or car), you can qualify for the best rates. Regularly monitoring your credit can also clue you in to possible identity theft if there is a large, unexplained change in your scores.

5. Buying vs. Renting

Whether they’re shopping for a home, car or furniture, new grads want to feel confident they’re making a good decision. Some wonder if renting to own is a good compromise.

There are a good many resources online to help with understanding all of these topics, and the millennials who described the gaps in their knowledge seem fully capable of finding them. Still, it can be confusing because some of the information is conflicting or just plain wrong. And none of it answers the question, “Mom, Dad … what do you think?”

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MONEY credit cards

How to Raise Your Credit Score by Labor Day

The Paducah Tilghman High School Navy ROTC leads the Labor Day parade on Monday, Sept. 1, 2014 during the Labor Day parade in downtown Paducah, Kentucky.
John Paul Henry—AP The Paducah Tilghman High School Navy ROTC leads the Labor Day parade on Monday, Sept. 1, 2014 during the Labor Day parade in downtown Paducah, Kentucky.

The first step: know your weaknesses.

It’s summer, and now hardly feels like the time to “work” on anything. But some things — like boosting your credit score — can be worth some extra motivation. And if you’re looking to finance a large purchase after Labor Day, now’s the time to work on your score.

1. Know Your Weaknesses

First step: If your score is not where you want it to be, make sure you understand why. The biggest factor in scoring is on-time payments, which accounts for about 35% of your score. So if late payments have been a problem, your first move should be to make sure you pay on time going forward. Automated payments are one way to do this. If the idea scares you because you are afraid that an unusually expensive purchase could leave you without enough funds in your bank account, consider automating what is normally your minimum payment (or slightly higher, to accommodate an occasionally large purchase). That way, you avoid paying late and safeguard your score. A single late payment can cause your scores to drop significantly, so paying on time should be a priority.

2. Pay Down Debt

Second priority should be whittling away at those high credit card balances. Ideally, you want to avoid having a balance that is more than 20%-25% or so of your credit limit, and those with the best credit scores use less then 10% of their limits. If you are using 50% of the limit of one card, and 5% of two others, consider trying to reduce the balance with the high “debt usage” ratio (the one at 50% of the limit) first. (Other ways to get lower credit utilization is to ask your card issuer for a higher credit limit or to apply for an additional card. But you should be aware that applying for new credit can cause a small, temporary dip in your score.)

The good news about reducing balances is that you won’t have to wait long to see improvement in your scores. While the effect of late payments can linger for years, once you’ve gotten rid of a high balance, the fact that it was up there in the past shouldn’t hurt you since credit scores are calculated based on the information in your credit reports at the time the score is requested. You have two or perhaps three billing cycles before Labor Day. If your balances are typically higher than 30% of your credit limit, focus on moving the needle to below 30%. If you’re already there, shoot for less than 10%.

3. Don’t Rush to Apply for New Credit

Your credit age also figures into your score, so be cautious about opening new credit, which can reduce the average age of all your accounts. Account mix (whether you have more than one kind of credit — i.e. credit cards and a car loan) and account inquiries (as when you apply for credit) also count, but each factor affects only about 10% of your score, so your efforts are best focused on making sure you’re paying on time and that you are keeping your balances low.

Monitor your progress carefully. There are thousands of scores, and monitoring the same score month to month is the way to see how you’re doing.

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MONEY Opinion

How to Protect Our Kids’ Credit Now

Foreign Intelligence Surveillance Act
Bill Clark—CQ-Roll Call,Inc. Rep. Jim Langevin, D-R.I., participates in the news conference on Foreign Intelligence Surveillance Act (FISA) Improvement Legislation on Tuesday, March 25, 2014.

Children are particularly vulnerable to identity theft because they have little reason to access their credit histories.

An 18-year-old looking to purchase his first car.

A young woman applying for the student loan that will put her through college.

A foster youth aging out of the system and eager to get a place of his own.

These are exciting milestones in the lives of young people, turning points that mark new beginnings and the start of independence. Now imagine you’ve reached this crossroads only to discover that your identity had been stolen. Instead of the pristine, untapped credit record you’re expecting, you find years of charges, debt and defaults racked up by a criminal using your name and Social Security number.

It’s a scary thought, and not as rare as you may think. Identity theft has been the top consumer complaint received by the Federal Trade Commission for more than a decade, and those complaints increasingly involve minors or young adults tapping into their credit for the first time. The ensuing chaos and barrage of paperwork is a difficult maze to navigate for most adults, never mind young people who have not yet even opened their first credit card.

Children are particularly vulnerable because they have little reason to access their credit histories. By the time the discrepancies are discovered, the damage has been done. We must make it easier for parents to protect their children’s financial futures.

All children are vulnerable to identity theft, but foster youth are especially susceptible. Their personal information, including Social Security number, is passed through many hands, increasing the chances of abuse. Moreover, when they age out of the system, they often lack a parent advocate to fight on their behalf. As a co-chair of the Congressional Caucus on Foster Youth and someone who grew up with foster siblings, this is an issue about which I care deeply.

In 2011, I successfully incorporated a provision into the Child and Family Services Improvement Act mandating free credit checks for foster youth over 16 years old, giving them time – and assistance – to clear inaccuracies from their records before they aged out of the system.

I believe similar protections are necessary for all children, and I continue to call on my colleagues in Congress to enact a solution.

The Protect Children from Theft Act, which I introduced in April, aims to safeguard children from becoming victims of identity theft. The bill directs the Consumer Financial Protection Bureau to write a rule that gives parents and guardians the ability to create a protected, frozen credit file for their children. Placing a freeze on a credit report would prevent lenders and others from accessing a credit report entirely, which in most instances would stop an extension of credit. I hope that this legislation, if passed, would create a simple, easy-to-understand process for families to protect their child’s financial interests. New parents are consumed with many questions and concerns; diapers and teething likely take precedence over their child’s future credit score. We need a process by which parents and guardians have an easy, streamlined way to freeze a child’s credit.

As co-founder and co-chair of the Congressional Cybersecurity Caucus, I am well aware that cybersecurity is not a problem that can be solved, only managed. An often overlooked component to that management is resilience, being able to recover from an incident. We are all increasingly reliant on technology and the data that drive it; today, we trust a multitude of networks with personal financial data and private information, including health care records and, yes, even our Social Security numbers. If we want to benefit from the economic efficiencies of technology but still avoid identity theft, we need personal cyber resiliency so that we can recover when our data are compromised. We need to keep tabs on who has our personal information and what is at risk in the case of a breach. We need to check our credit scores, put alerts on our credit cards and work with our banks to ensure our financial information is as safe as possible. And we need to exercise the same vigilance for our children and their data.

I will continue to fight to protect children from identity theft to give them a fair shot when their time comes. Let’s share our good cyber habits with the next generation and make sure that when they are ready to buy that car, take out that student loan or sign a lease on that new apartment, identity theft doesn’t derail the milestone.

Read next: When Someone You Love Opens a Credit Card in Your Name

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MONEY credit cards

6 Perks a Sparkling Credit Score Will Earn You

Excellence pays off.

So you say you’ve got pretty decent credit.

You pay your car loan on time—90% of the time. And you meet your minimum monthly payments on all your credit cards, even though you’re close to maxing out a few.

As for that personal loan you got while in between jobs? You’re still chipping away at it—albeit five years later.

You may not have an excellent credit score, but pretty good is good enough, right?

Well, that depends on how you feel after running a few numbers: Going from a fair credit score (mid to upper 600s) to a good one (low 700s) to an excellent rating (mid 700s or higher) could save you thousands—even tens of thousands—over a lifetime in the form of more favorable interest rates and financing terms.

“You save money in many areas of your life by having excellent credit,” says consumer credit pro Beverly Harzog, author of “The Debt Escape Plan.” “And the higher your score goes, the more you’re going to save.”

Consider this example: According to calculations by, a 35-year-old woman living in Illinois with a credit score in the mid-600s will pay $269,033 in interest over a lifetime between her mortgage, auto loans and credit cards.

If her credit score was in the upper 600s/low 700s, that figure would go down to $229,085. With a score above 740, it drops to $208,491.

Translation: Having an excellent score potentially saves her $60,542 compared to having a fair one—and that’s no chump change.

Does that make you want to stop settling for “pretty decent”? If you’re still not convinced, read on to see how different areas of your financial life could get a boost, all thanks to a stellar credit score.

Sparkling Score Perk #1: Prime Mortgage Rates

Your mortgage is probably where you’ll reap the most savings with a high credit score because it’s likely to be the biggest purchase you’ll ever pay interest on—and the longest amount of time you’ll spend paying something off.

Early June data from found that the average consumer with an excellent credit score—in this case, 760 or higher—was eligible for a mortgage rate of about 3.74%. But those with a score in the next tier down—700 to 759—qualified for an interest rate of about 3.96%.

That less than a quarter of a percent difference may not seem like a big deal, but on a $200,000 mortgage over 30 years, it works out to an additional $9,130 in interest charges.

“That’s real money every month that you’re not able to save,” says John Ulzheimer, a credit scoring pro who’s worked for FICO®, Equifax® and

Gerri Detweiler,’s director of consumer education, offers up another way to look at it: “It may only be a few dollars a month [added to your mortgage], but the difference can become significant—in some cases enough to pay for a year or more of college, to take a really nice vacation, or to boost your retirement fund.”

Sparkling Score Perk #2: Preferred Auto Loans

While it’s easier to qualify for a good deal on a car loan than a mortgage, having a high score can still net you some substantial savings.

Consumers with excellent credit were able to get an auto loan at a 3.25% interest rate in early June, according to But those in the next tier down saw that figure jump to 4.61%.

“With the average person borrowing over $26,000 for a new car these days, that [difference] adds up,” Detweiler says.

Over a five-year loan, the higher rate on that $26,000 equates to an extra $958 in interest—money perhaps better spent on some fancy seat warmers.

Sparkling Score Perk #3: Better Credit Card Rates—and Rewards

When it comes to your plastic, May data from found that those with excellent credit were able to qualify for cards with an average annual percentage rate (APR) of 13%, while those with good credit got a 17% APR.

“[The savings] gets a little fuzzier [with credit cards] because, a lot of times, if you have good credit, you’re less likely to be carrying much of a balance,” Detweiler says.

But if you have, say, a $3,000 balance on your card and are chipping away at it by paying $100 a month, at 13%, it would take 37 months to pay that balance off, and you’d shell out $648 in interest. At 17%, it would take 40 months to pay off, with $934 in interest payments.

And if you’re receiving offers in the mail giving you a 0% introductory APR for the first 12 to 18 months, plus no fee on balance transfers, it’s likely because you have an excellent credit score.

“In my mind, that’s the best deal out there right now,” Ulzheimer says. “Someone who’s got poor or even average credit is not going to qualify. Those offers are for people who have elite credit.”

Other possible perks reserved for consumers in excellent standing: airline miles just for signing up, points for every dollar earned, and cash back on purchases—all of which can save you a pretty penny.

Sparkling Score Perk #4: Reduced Private Student Loan Rates

Thinking about finally going back to school for that MBA, but have concerns about the private loans you may have to take out to help cover tuition?

“[Your credit score] can have a massive impact [on student loan rates] because the way lenders look at pricing for their products is based on credit quality,” says Stephen Dash, founder and CEO of, a marketplace that connects lenders and students looking to refinance educational loans.

For instance, “if you’ve got a score that’s closer to 850, you’re more likely to fall into the lowest credit-risk bucket. On our platform that rate can be as low as 1.93%,” he says. “If you’re around a 620, you could be closer to 6%–7%. But every lender has a slightly different underwriting criteria, so it’s really important to shop around.”

And considering that the median borrower of a graduate degree takes out more than $57,000, those few percentage points stand to make a big difference over the life of a loan that could be anywhere from 10 to 30 years long.

Sparkling Score Perk #5: Better Small Business Financing

If you’ve got an entrepreneurial drive, a stellar credit score can help get your coffee shop/doggie day spa/marketing consultancy dreams off the ground, because until you build a solid business credit history, lenders will use your consumer score to determine your credit risk.

“When you’re starting a business, virtually any loan you get will involve a personal credit check and a personal guarantee,” Detweiler says. “It’s not until your business is well established—two years old, at a minimum, with significant revenues—that you can generally start to negotiate away personal guarantees and credit checks.”

And even if you have some business credit history, many community lenders may still weigh your consumer credit score more heavily—often to the point of excluding your business credit score, according to a January 2014 report from the Small Business Association.

Another perk of a strong credit score? It could make you eligible for more favorable business lines of credit.

“If you have average credit, you’ll have greater difficulty getting approved for a business loan, or you’ll likely receive a high interest rate,” Harzog says. ”So you’ll be paying interest, instead of putting that money into your business. You might qualify for credit cards, but your limit might be small and the rate might be high.”

And having a high business credit limit may be particularly important as you start out because “it gives you the flexibility to rescue temporary cash-flow issues with a lesser chance of negatively impacting your personal credit score,” she adds.

Sparkling Score Perk #6: Lower Insurance Premiums

You may not realize it, but another area of your financial life affected by your credit score is the premium you pay on your home or auto insurance.

While it’s not the exact same type of score that’s used to determine whether you qualify for a credit card, insurance lenders do factor in information found on your credit report. “The scores insurance companies use are insurance risk credit scores, which are based on your credit but also blend in claims data,” explains Ulzheimer.

That said, the higher your credit score, the more likely you are to land a lower premium. Based on 2013 data, found that drivers with median credit-based insurance scores—considered a fair score—paid 24% more for auto insurance than those with excellent credit. And those with poor credit paid a whopping 91% more.

The company found similar results for home insurance in a 2014 study: Those with a fair score could pay 29% more for their policies, while homeowners with a poor credit score could pay 91% more.

Perhaps most important? A higher score improves the chances you’ll actuallyget insurance in the first place.

“You can be denied coverage altogether [if you have a low score],” Ulzheimer says. “But if you have a solid credit score, it can push you from a denial to an approval.”

LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc., that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. Unless specifically identified as such, the individuals interviewed or quoted in this piece are neither clients, employees nor affiliates of LearnVest Planning Services, and the views expressed are their own. LearnVest Planning Services and any third parties listed, linked to or otherwise appearing in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.

Read next: 5 Weird Ways Credit Card Debt Can Hurt You

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MONEY Food & Drink

Should You Always Tip in Cash?

Getty Images Wait staff always prefer cash tips, but there are times when you may want to charge it instead.

Even a cash tip is not guaranteed to land completely in the server’s pocket.

You have two options for tipping at a restaurant: tipping in cash or including the tip on your credit card. (Notice that there is no third option to not tip at all. Don’t be a cheapskate.) Is it better to tip with cash or with a card? That depends on the perspective involved.

From the viewpoint of the server or person being tipped, cash is generally preferred. That is not just because a less scrupulous server may skip reporting some cash tips as income and evade taxes. Merchants have to pay a small fee to the credit card company for each payment that is processed. Some restaurant owners deduct a portion of those fees from your server’s tip, reducing the amount that you intended to leave for them.

There is also a time lag associated with the tips based on credit cards. The restaurant manager/owner must check the receipts and determine how much cash your server is owed for the tips on their shift. Servers may have to wait for some time after their shift is over to receive their tips, which can be troublesome if your server needs to be somewhere else quickly after work for a family obligation or second job. In other cases, the tips are added onto the paycheck, which can cause a cash-flow problem for your server.

Even a cash tip is not guaranteed to land completely in the server’s pocket. Some restaurants pool the tips to distribute them among the other supporting staff (such as busboys). In that case, you really do not have any control over how much of your tip is directed toward your server.

Auto-gratuities that are added to larger bills are more complicated from the restaurant owner/server viewpoint, based on the rule starting in January 2014 that auto-gratuities are considered service charges instead of a tip. That puts them in the category of regular wages and the restaurant must report them for payroll tax withholding.

From your viewpoint as the customer, how you tip generally does not matter, except when you are tipping on a service related to business purposes. In that case, the gratuity can have reimbursement consequences for you and tax consequences for your employer. Most employers have relatively strict guidelines on expectations for tipping and how they expect it to be documented.

From your employer’s perspective, a tip is a deductible business expense, but problems can arise when the tip is disproportionate and/or non-documented. Generally, businesses prefer that tips be applied to credit cards so that they have a record of it, but most businesses have a means of accounting for cash tips in expense reports. If you keep the amount reasonable and follow your employer’s system, then all should be well.

While we have used a restaurant as an example, these same principles can be applied to hotels, transportation, or any other place where a credit card can be reasonably used for a service tip.

As the customer, you can help your server in one of two ways: either ask if cash tips are pooled and present all of your tips in cash so you can make sure that your server receives the amount you intended to tip, or add an extra few percent to a credit-based tip. If you have ever worked as a server or in a job based on tips, you will know how grateful your server will be that you took the time to make sure that he or she was well compensated for their work.

Read next: 5 Amazing Strategies to Eliminate Food Waste and Feed the Hungry

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MONEY credit cards

The Trouble With Being a ‘Credit Invisible’

Getty Image

Forget about getting a loan.

Are you a “credit invisible?” The Consumer Financial Protection Bureau defines credit invisibles as those adults whose credit histories are so limited that they don’t have three-digit credit scores. According to the bureau, 26 million U.S. adults have no credit histories with national reporting agencies TransUnion, Experian, and Equifax and, because of this, no FICO credit score.

That’s a huge problem. Lenders today rely heavily on three-digit credit scores to determine which consumers are good lending risks. They also use these scores to determine the interest rates they charge on auto and mortgage loans. Consumers without credit scores, then, will struggle to qualify for credit cards, home loans, auto loans, and personal loans. And even if they do qualify for credit, they’ll pay far higher interest rates.

Why Credit Matters

Having a high credit score can even have an impact on what job you land and where you live. A growing number of employers are analyzing the credit of job applicants. And many apartment landlords do the same before deciding whether to rent to prospective tenants.

“Not having a credit score absolutely impacts your qualify of life,” said Steve Joung, founder and chief executive officer of Chicago-based apartment rental agency Pangea Properties. “If you have better credit, you can rent a nicer apartment. You can get in a neighborhood that is closer to transportation and to your job. Your apartment building might have more amenities that bring you happiness. The quality, condition, and location of where you live is a big factor in your overall happiness and satisfaction.”

Consumers build credit histories by paying bills such as mortgage, auto, or student loan payments on time. They also build a credit history by making regular credit card payments. Those consumers who don’t have student loans, auto loans, home loans, or credit cards? They might not generate any credit history.

Many consumers are surprised to learn that several payments they make are not reported to the credit bureaus. Payments to medical providers, utilities, and cell-phone companies are not reported, and don’t help consumers build a credit history. Up until recently, none of the three credit bureaus tracked on-time rent payments, either. That is starting to change, with Experian and TransUnion now giving landlords and renters the chance to report their monthly payments.

Consumers who don’t have enough credit history won’t have credit reports that are full enough to generate a three-digit credit score. They will struggle to qualify for any loan or credit program.

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MONEY credit cards

6 Credit Card Vows Every Newlywed Couple Should Make

uniquely india—Getty Images/photosindia

Never commit credit betrayal.

You might think new marriage survival is all about figuring out how to divide household chores, but marital money discussions are just as important as whose turn it is to do the dishes.

As these couples and experts share, setting up some credit rules after the wedding is the best way to ensure that plastic doesn’t put a damper on your post-honeymoon bliss.

1. Get the conversation going.
Although it helps if you have a handle on your partner’s finances before walking down the aisle, once you decide to co-mingle money in marriage, it really makes sense to talk about credit guidelines, says Kathleen Burns Kingsbury, a wealth psychology expert and author of “How to Give Financial Advice to Couples.” “Especially in the beginning of a marriage, you’re both more open,” she says. If you’re already working with a financial adviser, you can easily add credit cards to your meeting agenda.

Otherwise, you should start your own dollar discussion. “It may sound boring and dull, but spend 15-20 minutes once a month to check in on spending, savings, credit cards and debt,” says Kingsbury. If you’re the spouse who is more money conscious, you can say something like: “I’ve heard about some couples getting into trouble when they’re not talking about money, so I want to make sure this part of the marriage is cared for.”

You can even try to make the task more fun, says Jeff Motske, author of “The Couple’s Guide to Financial Compatibility,” by planning a “Financial Date Night.” “Couples can discuss their short- and long-term goals with one another at a favorite restaurant over a nice bottle of wine,” he says.

2. Set limits that work for you.
Paul Moyer, owner of, and his wife Amy (who are both personal finance coaches in Anderson, South Carolina) started having financial meetings in the very first month of their marriage.

“That is also when we laid down some ground rules for spending. With credit cards, we started with no spending that was not in the budget, and when we did spend money, if it was over $20 we had to consult with the other person,” he says.

No matter what amount you decide on (author Motske and his wife go as high as $400), you can follow the same principle. “Working together is the only way to make our budget work each and every month,” he says. “In fact, we have never really had a fight over money in 10 years,” says Moyer.

Setting limits doesn’t necessarily have to revolve around a dollar amount, says Kingsbury. What works for her own marriage is that she and her husband have come to understand what the other person values. “My husband and I spend a fair amount on skiing. But we’ve consciously decided we are allowed to spend that money for those experiences,” she says. If your hobbies don’t mesh, that’s fine, too, as long as each person is allowed some judgment-free flexibility to enjoy their own thing.

In addition, take the time to understand your partner’s spending style. “It’s important to be respectful about your partner’s money personality. Someone can come into the marriage thinking credit is only for emergencies. Another might use credit for everything to earn points,” says Kingsbury. An honest conversation is more productive than finger-pointing, she adds.

3. Share statements.
In their three years of married life, Amanda and Chad Harmon of Provo, Utah, have moved “from ‘proving’ themselves to trusting each other,” says Amanda. Because her job is with a credit card security company, SecurityMetrics, she instinctively is on watch to protect her personal credit accounts from being hacked.

“When hackers test the authenticity of stolen credit cards, they often make small purchases at fast food restaurants or gas stations. I want to make sure I catch any type of fraudulent activity,” she explains.

Her method is to save every single card receipt. “It was a pain at first and took a few months to get my husband on board, but now we save all our receipts in a little basket and have a mini finance meeting at the end of each month to reconcile the receipts with our credit card statements,” she says. That way, not only are they guarding against fraudulent purchases, but they each know what the other spends during the month.

Kingsbury says that the Harmons’ strategy is smart. “In my marriage, I’m the one who pays the bills, but when the bill comes in, my husband and I review it and have a conversation,” she says. Ideally, no matter who is in charge of sending payments, both members of the couple should look over the statements.

Motske and his wife take statement sharing a step further by using what he calls the “three-highlighter method” to identify any excessive spending that might be taking place, and ultimately avoid bitter arguments later. “Use three different colored highlighter pens to differentiate a) necessary expenditures; b) those that you really wanted; and c) frivolous ones,” he explains. Seeing your spending habits in living color helps both of you make better decisions moving forward, and achieve financial goals together.

4. Don’t downplay secret spending.
In our society, it’s almost become a sitcom punch line that spouses go on spending sprees behind each other’s backs. What may start out innocent enough — maybe a sale that you couldn’t pass up and then just “forgot” to mention — can quickly grow into a pattern of credit betrayal. “Secret spending breaks down one of the pillars of a relationship — trust,” says Motske. “A lack of trust here soon spills over into other areas of your relationship, which can ultimately erode the bond between you.”

When you consider that a March 2014 Money magazine poll found that the No. 1 source of money arguments was “spending too much on frivolous purchases,” you can see why some spouses opt to avoid conflict by hiding their credit use. Of course, once you go down that path, now you’ve done something worse by lying to your partner.

5. Make future credit decisions as a team.
Another rule to have once you’re married should be regarding new credit accounts. Because lines of credit can be opened as an individual, it can be tempting to just go ahead and do so any time a retail store asks if you want to apply for a card, but that approach can be dangerous.

“As a rule, we do not take out new credit,” says Moyer. “The only time we even consider new credit is if we are making a large purchase (appliances, furniture, etc.), and the store offers us a reasonable percentage off to get a credit card with them,” he says. In those cases, the Moyers make sure they have the cash on hand to pay off the new card immediately.

Having a similar guideline in place for your marriage can help prevent debt from getting out of control.

6. Nip problems in the bud — together.
Not every marriage starts off debt-free, and credit card balances can creep up, but how you handle such situations can set the tone for your marriage. “Be compassionate if your partner has credit card debt. Chances are they didn’t intend to get in over their head financially,” says Kingsbury. Ask questions to find out how it happened, and make a plan to pay off the credit cards as a team, she suggests. If you feel you need assistance to deal with debt to meet your bigger financial goals as a couple, then get help. “Finding a skilled couple-friendly adviser can be important step in a marriage,” says Kingsbury.

Read next: Are You and Your Partner a Money Match?

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5 Weird Ways Credit Card Debt Can Hurt You

credit card crushing woman
Stephen Swintek—Getty Images

It's not all about the money -- it's how the unpaid bills mess with the rest of your life.

Personal finance experts remain divided on whether using credit cards is a good idea, but the verdict on credit card debt is clear: It’s bad, and eliminating it should be a top priority. The talking heads usually use financial facts and figures to back up their advice, arguing that credit card debt is expensive and damaging to our FICO scores.

All this is true, but credit card debt is also harmful in nonfinancial ways. For instance:

1. It’s depressing.

Most people agree that credit card debt is a drag, but it turns out it may actually be contributing to a clinical mood disorder for some. A 2015 study published in the Journal of Family and Economic Issues establishes a link between unsecured, short-term debt (like credit card debt) and symptoms of depression. This association was especially strong for the following subgroups:

  • People between the ages of 51 and 64
  • People with no postsecondary education
  • People who were not “stably married” during the time of the study

Even if you don’t fall into one of these categories, paying off credit card debt could improve your emotional state. If financial factors don’t motivate you to bring down your balance, let the prospect of a little extra cheerfulness be your driving force.

2. It could raise your blood pressure.

People with high blood pressure are often advised to keep their worries to a minimum, but if you’re grappling with debt, this can be hard to do. A 2013 study from Northwestern University proves this out; in a survey of existing longitudinal data, researchers found that young adults with high debt-to-asset ratios reported greater levels of stress than their peers with lower debts.

These adults ages 24 to 32 also had higher blood pressure levels, suggesting there may be an inverse relationship between debt and this important measure of heart health. You get only one ticker, so do it a favor and get that credit card debt paid down.

3. It’s linked to weight problems.

Back in 2008, it was much easier for college kids to get credit cards than it is today. Consequently, a study was able to be conducted that year on how credit card debt affects the health of young adults, the results of which were published in the American Journal of Health Promotion. More than 23% of the students surveyed had credit card debt levels above $1,000, and researchers found that this was associated with a variety of negative health implications, including obesity.

It’s hard to say from this data alone that credit card debt causes obesity, or that eliminating your debt will help you in your weight loss efforts. But it’s probably safe to say that paying off your debt won’t hurt your waistline either, so why not give it a shot?

4. It could disrupt your relationship.

It probably seems intuitive that debt could cause a rift in your romantic relationship, but the consequences of frequent financial fights might surprise you. A 2009 study showed that spouses who fought about money once a week were almost one-third more likely to get divorced than couples who fought about money less frequently, The New York Times reports.

This data doesn’t call out credit card debt specifically, but most people who have merged finances with a significant other can recall at least one instance when a credit card bill caused a disagreement. To play it safe, cut your balance as much as you can and keep your partner in the loop before making a purchase that could push you into debt.

5. It may be standing between you and your dreams.

The average household has $7,327 in credit card debt as of June, according to a NerdWallet study. In some parts of the U.S., that’s enough for a down payment on a modest home. It could also be seed money for a business, or a semester’s tuition at a state university.

The point is, credit card debt is more than just a financial burden — it might also be a roadblock to achieving one of your dreams. By paying it off, you’re freeing up a lot of cash that could be put to better use.

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How to Get Bank Alerts on Your Phone

Peathegee Inc—Getty Images/Blend Images RM

They're the best way to stop fraudsters.

If you haven’t already signed up to get alerts on your mobile phone from your credit card issuer, what are you waiting for?

Mobile alerts can tell you within minutes if your card is used in another country or if your payment is overdue. They can save you the embarrassment of being blocked at the cash register if a transaction seems suspicious by asking you via two-way text if the purchase is legitimate. And as I recently learned firsthand, they can help you catch fraud almost instantly.

I had just started receiving mobile notifications of every transaction on my American Express card when a transaction I didn’t recognize for $748 popped up. I immediately got on the phone. Sure enough, it was fraud. And even though AmEx hadn’t flagged it as a suspicious transaction, I was able to shut it down right away because I saw it.

That’s the beauty of mobile alerts and notifications, said Mark Schwanhausser, director of omnichannel financial services at Javelin Strategy & Research: “It’s a way to involve the customer and deputize them, because they often know better than the banks if something is legitimate or not.”

The alerts can also help you manage your personal finances by alerting you before a payment is due, if your balance goes over a specific amount or if you’re close to your credit limit. About four in every 10 consumers today have received some kind of alert from a financial institution, according to a Javelin report published in April. The company predicts that number will rise to more than half of U.S. consumers by 2019.

However, the report said most banks aren’t doing enough to promote their alerts, that it’s confusing and difficult for customers to enroll, and the alerts are “remarkably difficult” to turn on. “Finding alerts settings is akin to a Where’s Waldo’ search,” the authors wrote.

Since the issuers may not make it easy, here’s what you need to know to sign up:

How do you want to get your alerts?
You can get alerts through email, text message or “push notifications” that pop up in the status bar or notification tray of your cellphone. Email alerts are still the most common, according to Javelin, with 36 percent of consumers receiving them, compared to 22 percent for texts and 14 percent for notifications. Here are the pros and cons of the different types:

  • Email: Every bank surveyed by Javelin offers email alerts, and this type has been around the longest. The problem, of course, is that some folks don’t have email on their phones. Even if you do, you may not check it regularly. “Fraudulent transactions happen fast,” said Julie Conroy, research director at Aite Group. “A thief will do a little testing and then go to town, so it’s important to catch fraud as quickly as possible.”
  • Text message: About 95 percent of banks allow their customers to receive at least some financial alerts via text. Because we’re conditioned to give texts our immediate attention, this type of alert is a good choice for news you consider urgent. “Since you use texts to communicate with people, it might be annoying to get a text for every transaction,” Conroy said. “Also make sure you consider whether you’re going to incur charges for texts.” Some banks offer two-way texts that pop up instantly on your phone if you try to make a transaction that looks suspicious. If you respond that the purchase is legitimate, your card will go through instead of being blocked at the point of sale.
  • Push notification: This is the type of notification that I received from American Express. They pop up on your phone’s lock screen, in the banner at the top of your phone or in your “notification tray” even when you’re not using your card’s mobile app. They are more likely to get your attention than an email, but they’re less obtrusive than a text. Fewer than half of banks offer these, but Javelin predicts they will surpass text notifications as the No. 2 form of alert by 2019. Fueling that prediction: 45 percent of consumers surveyed said they think push notifications from their bank would be valuable, even though only 14 percent receive them.

When do you want to get an alert?
Signing up for at least some mobile alerts should be “a no-brainer choice for the customer,” said Brian Riley, principal executive adviser at CEB TowerGroup. “You don’t necessarily need an alert for every transaction. But everyone should want some type of notification,” he said.

Most issuers allow you to customize the type of notifications you receive and how you get them, so you can make sure you don’t get too many. “Typically there’s a control panel that says, ‘Text me or email me based on these specific conditions,'” Riley said. You can also turn them on or off anytime.

Some alerts are designed to enhance security; others help you stay on top of your personal finances. Here are some options you may see:

Security alerts:

  • Suspicious transaction: When issuers suspect fraud, they automatically try to contact you. But federal law requires them to get permission before they can notify you via text instead of calling you or sending an email.
  • Card-not-present transaction: This notifies you anytime a purchase is made without a swipe, so it’s mostly Internet transactions. “These transactions are much more vulnerable to fraud because all they need is your account number, not your actual card,” Riley said, “so this option should be first on your list.”
  • Gasoline transaction: Gas stations are another hot spot for thieves; you’ll be notified anytime a purchase is made at one.
  • International transaction: Because a lot of fraud originates overseas, this can be a good way to catch fraud if you rarely travel abroad; you can turn it off when you leave the country.
  • Transactions over a preset amount: You can choose to be notified of every transaction over a specific dollar amount. If you choose $0, you’ll be alerted to every transaction; set a higher dollar amount to minimize the number of alerts.

Personal finance alerts:

  • Available credit: Sent when your credit falls below a specified amount you set.
  • Balance: Sent anytime your credit card balance exceeds an amount you set. This can be particularly useful if you have multiple people using your card or if you’re trying to stay within a budget.
  • Low balance: An alert if the balance in an account linked to your debit card falls below a specified amount.
  • Payment due: Notifies you a specified number of days before a payment is due.
  • Missed payment: Sent if no payment was received by the due date.

How to sign up
Banks are cautious about automatic enrollment, Schwanhausser said, because “they don’t want their customers to feel like they’re being spammed or overwhelmed.” Most send automatic security alerts via email (or through a call to your home phone) anytime your personal information or settings are changed or if they notice suspicious activity.

To start getting text messages or push notifications to your cellphone, you have to proactively sign up. Though it can be difficult to enroll, it’s worth doing simply so your bank can reach you quickly on your cell if it detects suspicious activity. “It’s also a lot more convenient for you to hit reply to a text and say, ‘Yes, this was my transaction,’ or ‘No, it wasn’t,’ than to get an email about something and have to take the time to call in,” Conroy noted.

Every card has a slightly different process, but here are the basic steps to start getting text message alerts:

  • Log in to your card’s website.
  • Look for something in the menu that says “manage alerts” or “go to alerts.” If you don’t see the word ‘alerts,’ you may have to click on “Profile” or “Settings.”
  • Look for an option that will allow you to put in your mobile number, change your contact information or add text messages.
  • Because federal law requires you to opt in to receive text, you’ll have to activate the service by entering a code that the bank will send as a text.
  • Most issuers then list the types of alerts you can receive and how you want to receive them (email or text). Make your choices and then hit save.

To start getting push notifications, follow these steps:

  • First, find out if your card issuer offers the service. Javelin’s report in April said the following financial institutions were using push notifications, but more banks are adding them every day: American Express, Bank of America, M&T, BBVA compass, Regions, Chase, USAA, Citibank, Wells Fargo and Fifth Third.
  • Download the institution’s mobile app.
  • In most cases, you can add push notifications through an app menu option that says something like “Manage alerts.” If you don’t see it as an option in the mobile app, you may have to add push notifications through the card’s website. Call the phone number on the back of your card if you’re having trouble.
  • Once enrolled, you may still have to change the settings on your phone to “allow notifications” from your bank’s mobile app. On most phones, you can go to settings and look for “notifications.” Some, including iPhones, let you decide whether to turn on sounds and badges with the notifications.

After my own experience with fraud, I took the time to turn on mobile alerts for all of my active credit cards and bank accounts (it did take some time and a few phone calls). To keep my messages box from filling up, I elected to receive texts only for news I considered urgent: suspicious activity, a low balance or a payment missed. But I’m receiving push notifications on my phone for most other transactions, and so far, I haven’t minded the extra communication. In fact, I take comfort in knowing that if fraud happens, I’ll catch it quickly.


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