When you think of your credit score, you may not consider how this number is calculated or how your actions play a role. Simply put, every credit score is made up of certain criteria, and each criteria can cause an increase or decrease in credit score. With credit utilization being one of the things that can impact your score, it may be time to learn how to manage your credit utilization.
In order to successfully manage your credit utilization rate, you’ll need to understand what it is and how it can negatively or positively impact your life.
What is credit utilization rate and how is it calculated?
Credit utilization rate is a number used to compare the amount of debt you owe to the amount of credit you have available. By dividing the amount of credit that you use by the amount of credit available, you can determine your credit utilization rate. The more of your available credit you use the higher your credit utilization rate.
For example, if you have several credit cards, one with a credit limit of $500, one with a credit limit of $200, and another with a credit limit of $300, your total available revolving credit amount is $1,000. If you use $400 of the $1,000 of available credit, your credit utilization rate will be 40%. Whereas if you were to use $100 of your available credit, your credit utilization rate would be 10%.
Why does your credit utilization rate matter?
Credit utilization is one of the many factors that can affect your credit score. It actually makes up 30% of your FICO credit score, which means it is one of the most important factors that influence your credit score. Depending on the number, creditors and lenders may or may not approve your application. This is because your credit utilization rate is another way for creditors and lenders to measure your ability to manage your finances.
If you have $2,000 of revolving credit available to you between one or multiple credit cards, in order to keep your credit utilization at or below 30%, you’ll want to use no more than $600 if you don’t want to see your credit score drop significantly.
Managing your credit utilization
Since your credit utilization rate accounts for 30% of your credit score, you want to pay close attention to this number to ensure it doesn’t start to negatively impact your score. This is especially true when you want to improve your score to increase your chances of being approved for things that require good credit such as applying for a home loan or apartment.
You can successfully manage your credit utilization rate by:
Increasing your credit card limit
Paying your credit balance in full instead of just the minimum balance
Keeping credit accounts open even when there is little to no use
Pay down debts
Actively monitor your credit usage
Keep in mind that the goal of managing your credit utilization rate is to keep it at 30% or less. This doesn’t mean that you have to completely stop accessing your revolving credit, but you want to do so responsibly if you don’t want to see your credit score suffer.
For credit repair assistance and financial advice, contact Credit Absolute today for a free consultation!
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
To open your own credit card, you must be at least 18 years old. A common misconception is that the minimum age requirement varies by state, but this is not the case. Opening a credit card at a young age can seem overwhelming, but understanding the steps and benefits of doing so will help you through the process.
Can You Get a Credit Card Under the Age of 18?
While 18 is the minimum age to be the primary holder of a credit card, there is a way that those under 18 can still use one—a parent or guardian can make their child an authorized user on their credit card account. An authorized user is an individual who can use a credit card without being responsible for the bill, and you’ll need to submit a request to the credit card company to add your child as a user.
Also note that some credit card companies issue a minimum age requirement for authorized users, while others do not.
By doing so, you give your child a head start in building credit for themselves. This will become useful when your child is ready to qualify for a loan or apply for their own credit card. Becoming an authorized user will also help them establish healthy credit practices early on. Make sure your child knows how to properly use their card, because as the primary cardholder, you’re still responsible for the bills.
How to Apply for a Credit Card as a Teenager
Applying for a credit card as a teenager is a similar process to that of an adult, but with a few exceptions. To get a credit card, you must initially apply. Based on your credit history, credit score and personal financial information, you’ll be either approved or declined. As a parent, you can become a cosigner to help your child get approved for a card if they haven’t had much experience building credit yet.
Getting a Cosigner
A cosigner is someone that agrees to take responsibility if the primary cardholder can’t pay off their outstanding balance. Applying with a cosigner (presumably with good credit) can help you get approved and even a higher credit limit. Keep in mind that some credit companies don’t allow cosigners, so you may need to do a little research beforehand.
Best Credit Cards for Teenagers
With so many credit card options, it’s easy to feel lost when deciding which one to apply for. Consider applying for a card that is made for younger people and first-time credit applicants. These cards are designed for users that may not have a high stream of income or any preexisting credit. The following are a few cards that are popular for first-time credit applicants:
College credit card: These cards are designed for college students without experience in building credit. Since pursuing an education is often quite pricey, student debt makes it harder to get approved for a normal credit card. College credit cards typically offer users low fees, low interest rates and perks such as money back when using their card. Although it’s easier to get approved, you are still required to show proof of income and enrollment in school.
Secured card: This card requires an initial cash deposit in order to use the card. Think of it as a prepaid credit card. The amount of your cash deposit acts as your credit limit. As a result, secured cards typically also have higher interest rates than normal credit cards. Even with a cash deposit, all activity put on a secured credit card still impacts your credit score.
Store credit card: Some retailers also offer credit cards. While these cards are mainly for customers to shop at the specific store, the card can also be used for purchases elsewhere. These cards are easier to acquire since they often don’t require a specific credit score. Store credit cards intrigue customers by providing exclusive discounts and rewards, but beware as they often come with high interest rates.
Tips on Getting Approved
Getting approved for a credit card as a teenager can be difficult, since you likely don’t have significant preexisting credit or income. Both of these factors highly impact whether an applicant will get approved or denied for a card. The following are some tips on getting approved as a young user:
Take into consideration all forms of income. When your application asks for your income, you can include much more than just your income from a part-time job. You can also include student loans and parental allowance as income.
Consider getting a part-time job. Having a stable salary will show credit card companies that you have the ability to pay off your card.
Add a cosigner if your credit card allows you to. As mentioned above, this will help the company see that you have someone to rely on for your spending habits.
Apply for a card designed for young adults. College credit cards and secured cards are a few great ways to get started with building credit. Both cards are designed for those who may not have previous credit.
How to Build Credit at a Young Age
Building credit is always important since it takes time. Having good credit will open up more doors for you down the line. The time you dedicate to building your credit early will pay off when you’re applying for a loan, buying a car or making a big financial decision in the future.
When Is the Best Time to Build Credit?
The best time to build your credit is as early as possible. The length of your credit history impacts your credit score by 15 percent. By starting at an early age, your credit score will be positively impacted in this regard. As a general rule of thumb, seven years of credit history is ideal for building good credit. If you’re unsure about opening up a new line of credit, consider speaking to a financial advisor first.
Everyone’s financial situation is different, so it’s a good idea to know what will work best for you before getting started.
Best Practices When Building Credit
Building and keeping up good credit can be new for those who haven’t had much experience yet. The following are some best practices for doing so:
Apply for a credit card. You can’t build credit without a form of payment that affects your score. Do your research and find a card that you have a good chance of being approved for.
Be responsible with your spending habits. Having a credit card can positively impact your score if you use it responsibly. Be careful not to overspend—it can feel like you have unlimited funds if you’re new to using credit. Make sure you can pay off your balance in full to avoid a negative impact on your credit.
Keep utilization low. A general rule of thumb is to use no more than 30 percent of your card’s spending limit at a time. This will show lenders that you can be smart with your spending habits.
Make on-time payments. Late payments hurt your score immensely. Payment history actually affects 35 percent of your overall score. If you can’t make full payments at the card’s due date, at least pay off the minimum amount due on your balance.
Why You Should Build Credit Young
Building good credit doesn’t just happen overnight. It takes years of smart moves and healthy practices to build a solid foundation. If you wait too long to start building, you’ll have a harder time when applying for loans or engaging in other financial decisions later.
Starting young also helps establish good credit practices from the very beginning. By doing so, you’ll be less likely to engage in activities that hurt your credit down the line. It can be easy to damage your credit, but hard to repair it. By learning this now, you hopefully won’t need to do much damage control later.
Although 18 is the required age to be a primary account holder on a card, there are still ways to start building credit at a younger age. This can be very beneficial for the future, as long as it’s done right. We know the process of applying for a card and building credit can be stressful at times—visit our credit repair blog to learn more about credit best practices.
Reviewed by Kenton Arbon, an Associate Attorney at Lexington Law Firm. Written by Lexington Law.
Kenton Arbon is an Associate Attorney in the Arizona office. Mr. Arbon was born in Bakersfield, California, and grew up in the Northwest. He earned his B.A. in Business Administration, Human Resources Management, while working as an Oregon State Trooper. His interest in the law lead him to relocate to Arizona, attend law school, and graduate from Arizona State College of Law in 2017. Since graduating from law school, Mr. Arbon has worked in multiple compliance domains including anti-money laundering, Medicare Part D, contracts, and debt negotiation. Mr. Arbon is licensed to practice law in Arizona. He is located in the Phoenix office.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Credit cards are a great way to purchase the things you need now but want to pay for later. While it is possible for credit cards to be used to your advantage, irresponsible usage can negatively impact cardholders in a number of ways.
Whether you are a credit cardholder or plan to apply for one in the near future, it is important to know the pros and cons if you want to protect your financial health.
Pros of Credit Cards
Build credit: Your credit card provider will report your monthly payments to the credit bureaus. The credit bureaus will use this payment information to calculate your credit score, so your credit card can potentially help you build credit and increase your credit score. However, if you want your credit card to have a positive impact on your credit, you’ll want to ensure you pay attention to the due date and how much you are paying on the balance due.
Click here to learn how credit cards affect your credit score
Earn rewards/points: Certain credit cards offer consumers rewards or points when they make purchases. For example, some credit card companies will offer cardholders 10 points for every $1 that is spent. Once a certain amount of points is reached, the cardholder can redeem the points for cash, gift cards, airline miles, hotel stays, and more.
Convenience: Not everyone has cash available to make their daily purchases. Like a debit card, a credit card is easily accessible when you need to pick up groceries from the store, coffee from your favorite cafe, or food for the family pet. You can also easily track those purchases and monitor your spending using the online account portal, which is something you can’t do with cash.
Cash advances: Cash advances are available to cardholders who want to use cash rather than their card. Cardholders should note that this access to cash does come at a price, so they should expect to pay interest on a cash advance.
Cons of Credit Cards
Increased debt: When you open a credit card account, you are adding to your debt. As you swipe your card for each purchase that you make, the amount you owe will steadily increase. For some people, as their debt increases, it becomes difficult for them to keep up with payments. Missing a credit card payment will ultimately affect them in other ways, including a decrease in your credit score, so maxing out your card isn’t always the best idea.
Fees: Credit cards have a number of fees associated with them. You have to be careful because while some fees can be easily avoided, there are fees you will be charged no matter how you decide to use your card. For example, most cardholders will be expected to pay an annual fee, which will vary depending on the credit card. However, late fees and over-limit fees can be avoided if you keep track of your card balance and payment due date.
Interest: When your credit card bill comes due, part of the balance you owe may include interest, which is based on your credit score. Basically, if you purchase an item and do not pay the entire balance before the due date, you will have to pay interest for that purchase. This means that a purchase of $50 could end up costing you $75.
Although credit cards have a bad reputation, there is a right and wrong way to handle this responsibility. Proper management of your credit card is key if you want to get the most out of it. And even though there are some disadvantages to having a credit card, the good outweighs the bad when you use your card responsibly?
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
There’s no right or wrong answer to the question of how many credit cards to have. More importantly, you should aim to understand what affects your credit score, and how the number of cards you have plays into your ability to responsibly manage your credit.
How Many Credit Cards Should I Have?
Is three cards too many? Should I apply for another card? What should I do if I have too many credit cards? How many cards do people with good credit have? If you’re asking these questions, you’re not alone.
According to FICO as reported by CNBC, cardholders with “exceptional” credit scores—above 800—have an average of three open credit cards. Ultimately, the perfect amount of credit cards for you comes down to what you’re comfortable with and what you can realistically manage.
Here, we’ll discuss some instances when you may want to consider adding another card—and when to hold off. Remember to consult your financial advisor if you’re ever unsure of the best move.
When to Consider Adding a Card
If you have zero cards or one card: Having a variety of credit accounts is important. This means incorporating a mix of things like credit cards, auto loans, mortgages, and student loans. If you don’t yet have a credit card, consider applying for one to diversify your mix.
If you only have one, it may be beneficial to add another to show lenders that you’re capable of managing multiple accounts and paying them on time.
If you have no trouble managing accounts: Some people have a hard time keeping track of multiple credit cards. If you’re able to stay organized and keep track of relevant account information, having multiple credit cards will be a less risky move. As long as you’re paying all your accounts on time, you shouldn’t have a problem with three or more credit cards.
If you’re not earning rewards or benefits: Maybe you’re still using the first credit card you ever applied for years ago. If it doesn’t have a cash back or other rewards program, you may be missing out on free money. Additionally, if your credit score has improved in recent years, you may be able to apply for a card with a lower interest rate.
When to Hold Off on Adding a Card
If you have debt: According to a 2019 survey from CNBC, approximately 55 percent of cardholders have debt. Instead of adding another card—increasing the temptation to rack up a hefty balance—consider shifting your priorities to paying off debt. A smaller debt load has psychological benefits and increases your chances of getting approved for a line of credit in the future.
If you’re struggling to keep track of your cards: If you’re finding it hard to remember payment due dates or keep track of balances, it’s probably a sign you’ve reached your credit card capacity. Staying organized is the key to success with multiple credit cards.
If you’re about to apply for a loan or mortgage: If you’re planning on applying for a large or important line of credit, hold off on taking any action that could affect your credit score. Lenders like to see that you have a steady credit history, and applying for a new card may cause a temporary dip in your score.
Does Having Too Many Credit Cards Hurt Your Credit?
No, the number of credit cards you have doesn’t directly impact your credit score. Whether you have seven cards or one, two basic principles of good credit management remain important: monitoring credit utilization rate and limiting hard inquiries. These factors do have the potential to substantially impact your credit score.
Pay Attention to Credit Utilization Rate
One of the main benefits of having multiple credit cards is that your combined total credit limit will increase. This is very useful when you’re aiming to stay below the recommended 30 percent credit utilization rate, or the percentage of your total credit limit currently in use.
For example, having only one card with a $3,000 limit doesn’t give you much leeway in terms of how much you can charge. If you were to charge the full $3,000, you would max out your card and likely lower your credit score. However, if you were to add two more cards with the same limit, your total credit availability would now be $9,000.
This would allow you to charge up to a total of $3,000 while still staying at or below the recommended 30 percent credit utilization rate.
Like all things, it’s best to find a balance. Adding multiple cards too quickly in order to boost your total credit limit may trigger hard inquiries.
Limit Your Number of Hard Inquiries
A “hard inquiry” is a notation on your credit report caused by an official request by a lender to view your credit report. Hard inquiries typically occur when you apply for a credit card, loan or mortgage. They have the potential to lower your credit score, especially if you incur too many in a short amount of time.
A single inquiry may only lower your score by a few points. However, if you have very few credit accounts or a short credit history, the effects may be more substantial.
If you’re looking to apply for multiple credit cards, space them out over a period of six months or longer. Only apply for cards you know you’ll be approved for—or better yet, get preapproved. This means that a credit card issuer may approve you for a card based on income requirements and won’t have to pull a hard inquiry.
In addition to monitoring credit utilization and limiting hard inquiries, remember to keep other credit management best practices in mind:
Pay at least the minimum balance—on time and every time—for all of your credit cards.
Keep a good mix of credit accounts—cards, auto loans, a mortgage, and student loans, are a few examples.
Build a long history of good credit management by keeping accounts open.
Is It Better to Cancel Unused Credit Cards or Keep Them?
If you have a pile of credit cards that have gone unused, it may be tempting to cancel the accounts. However, this is typically more detrimental than it is beneficial. To build a long history of good credit management, aim to keep your credit accounts open.
Use your cards every once in a while—even if it’s just for small purchases—to avoid them being canceled. Since credit card issuers aren’t all required to notify consumers of a card cancelation, an unexpected cancelation may result in a credit score dip.
When to Consider Canceling a Credit Card
If the card is newer: If you absolutely need to cancel a credit card, it’s better to close a newer one than an older one. Since length of credit history accounts for 15 percent of your credit score, you’ll want to keep old cards with a long payment history. With newer cards, you haven’t built up that history, so canceling may not be as detrimental to your score.
If the card has a lower limit: Whenever you cancel a credit card, your total available credit will decrease, which in turn will also decrease your utilization rate. This is the main factor that lowers people’s credit scores after canceling a card.
Canceling a card with a low total credit limit will put you at the least amount of risk for going over the 30 percent utilization rate. And if you do cancel, make sure your utilization rate on your other cards is low.
If the card has high fees: Cards with annual fees or extremely high interest rates may be making it more difficult for you to make regular on-time payments on all of your cards or pay off other debts. Even though canceling a card may result in a temporary dip in your credit score, it’s best to consider your overall financial health and debt load.
Always consider what’s best for your unique situation—and if you’re ever unsure, consult your financial advisor. Improving your credit score, especially when you have multiple cards, can seem like a daunting task. If you don’t know where to start, Lexington Law can help. Explore our credit repair services to see if they’re right for you.
Reviewed by Cynthia Thaxton, Lexington Law Firm Attorney. Written by Lexington Law.
Cynthia Thaxton has been with Lexington Law Firm since 2014. She attended The College of William and Mary in Williamsburg, Virginia where she graduated summa cum laude with a degree in International Relations and a minor in Arabic. Cynthia then attended law school at George Mason University School of Law, where she served as Senior Articles Editor of the George Mason Law Review and graduated cum laude. Cynthia is licensed to practice law in Utah and North Carolina.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Amazon, and Home Depot, and Target, oh my! Online spending is certainly on the rise in the midst of the global pandemic of 2020. As if online shopping wasn’t already an obsession for many, couple it with quarantine, and you’ve created an online shopping monster!
In fact, according to FinancesOnline, the United States is the leading country in the world for average e-commerce revenue per shopper!
It’s Real Cash
One of the reasons it is so easy to just click “Buy Now” and type in your credit card information is because it just doesn’t seem real. Without physically counting out the cash and handing it over and receiving just a few cents back in return or swiping the plastic, it does not feel like you are truly spending your money.
Essentially, it is much more difficult to conceptualize spending real paper money when you type in the numbers on the back of your credit card, especially if your computer has already saved your credit card information on there!
According to NPR, 78% of shoppers typically shop online to avoid waiting in line.
Below are a few tips to help to make this problem a little better for you and to help minimize your online credit card spending and purchases.
Stop Saving Your Credit Card Info
It will amaze you how much more time you have to think about the purchase you are about to make and if you really need that item in the time that you have to spend getting up from your computer or phone, searching for your wallet, typing in the credit card information, and putting the card back in your wallet and back where it belongs. This means no more impulse buying from bed, the bathroom, or the car. It helps to make yourself aware of the cost.
Avoid Online Pressuring Tactics
It’s out there: online sellers and marketplaces utilize many tools, subliminal messaging, and tactics to make you purchase online. If you pay attention, many “flash sales” actually run a lot longer, if not indefinitely, than they are advertised for. In other cases, some websites have a time limit on how long an item can be in your shopping bag. This makes you feel a false urgency to buy it right away. More often than not, if something sells out, it will be restocked.
The best tip to avoid being pressured into purchasing something is to keep in mind that if you are not actively searching for something specific, do not purchase it! If you stumble across something cool but do not necessarily need it, it is not worth racking up more charges on your credit card.
Get Organized: Budget
It sounds cheesy, but setting a budget in your spending specifically for online shopping sets boundaries in your head. You can even open up a separate account with a specific amount of money in there (a secured card) or you can conduct placing a spending limit on your credit card. It is important to sit down and take a look at your income and how much you have available for online shopping.
Minimizing your spending on credit cards, in general, is a very wise way to manage your finances. As a general rule of thumb, you should not be spending money that you do not have unless it is a necessary cost. Dialing in your online spending will allow extra funds in your pocket and can help to ensure that you do not find yourself in debt.
The pandemic-related recession has altered many job descriptions. For Haley Jones, a 24-year-old resident of Michigan, the coronavirus changed the needs of her company, and as she adapted to meet them, her responsibilities were no longer confined to her marketing specialist role.
“I graduated with a marketing degree, no medical experience at all, and I ended up having to scrub in at our surgery center and help patients get prepped for anesthesia,” Jones says.
After adding those kinds of new hats, Jones felt that her responsibilities had outgrown her entry-level salary and position, so she requested more compensation.
Your role may also merit a salary discussion, even in uncertain times. Here are some strategies to help you achieve the ideal salary.
Research the market
Understanding the market for your job is critical, according to Lindsey Pollak, author of the upcoming book “Recalculating: Navigate Your Career Through the Changing World of Work.”
“You can look at websites like Glassdoor, Salary.com and PayScale and see what’s standard,” she says.
These websites offer a minimum and maximum salary range that you can reference to give your boss a realistic request. Pollak also suggests networking with professional associations in your industry and asking about the appropriate salary range for the job in your particular city.
Tally up your contributions
If you’re working remotely, Pollak suggests being more self-promotional about big wins. With many distractions in the pandemic, your boss may not know the extent of your contributions.
Jones created a slideshow presentation with links to her work, a list of tasks completed and her overall impact on the company. Her boss shared the presentation with others weighing in on her salary request.
“If you want someone to do something for you, make it as easy as you can for them to say yes,’’ Jones says.
Dive as far back into your contributions as is necessary or gather evidence up to the last annual or midyear review. And be as specific as possible.
Lay the groundwork for the conversation
Be strategic as you plan the conversation. Gauge your level of confidence at every step.
Put it on your supervisor’s radar. Give your boss a general but serious reason for the meeting. Pollak suggests saying that you want to have a “career conversation” about your role and future at the company.
Time it right. Don’t plan such a conversation after the company announces a terrible quarter or when your boss is in a bad mood, says Joel Garfinkle, executive coach and author of the book “Get Paid What You’re Worth.”
Practice until you’re confident. Jones built confidence by rehearsing in front of her mirror and loved ones.
Be intentional with your environment. If it’s a video call, use sticky notes to remember key points. In an office environment, Jones leaned on slides and hard copies to move the conversation along.
If you need further guidance, Pollak suggests connecting with a college’s career center for advice, whether that’s your alma mater or a community college. Even if you never attended college, your local community college may offer resources.
Maintain control of the conversation
Don’t allow emotions or nerves to steer the conversation away from your goal. Remember three key points for your discussion:
Lead with gratitude. Jones began by thanking her employer for many learning opportunities, then pivoted to her excitement about the company’s future and her role in it.
Know when to stop talking. Get comfortable with silence. “Say the amount you want and then stop talking,” Pollak says. Don’t negotiate against yourself by saying that you’d like a $15,000 increase, but you’re willing to settle for $8,000.
Focus on the value for your employer. Don’t phrase your request around reasons why you need a raise or promotion. Be aware of economic impacts to your company and its priorities, and keep the focus on how you’re saving the company money or contributing to its bottom line.
Be prepared for the response
If your employer can’t meet your request this time, all isn’t lost. You have promoted your work and carved out the path for the next conversation, according to Garfinkle. You can also consider negotiating for non-monetary benefits.
“Maybe it’s a title change, or they’ll pay for an executive coach, or they’ll provide some training, or additional benefits or retirement contributions,” Garfinkle says. “There are other things you can get that might be beneficial for you.”
If your employer is willing to offer a pay increase or an alternative, get it in writing. Send a thankful email to your boss summarizing the conversation and alert them that you’ll be following up on the next steps.
In the case of a firm “no” or “not right now,” let your boss know that you would greatly appreciate the chance to revisit the conversation in the future.
Following up is key with any response. Jones followed up twice in a month, once via email and another time in person. Eventually, she was promoted to marketing director and received $5,000 more than the maximum amount she requested.
This article was written by NerdWallet and was originally published by The Associated Press.
Once a month, I fold down the seats of my minivan and head to that most magical of shopping meccas, Costco.
The warehouse club has everything my family of seven needs and at prices that can almost never be beat. Giant bags of chips for the same price as a small bag at the supermarket? Yes, please.
After years of shopping at Costco, I’ve fine-tuned my shopping strategies, but not before making a few mistakes first. Here are nine gaffes you’ll want to avoid yourself.
1. Sticking with Kirkland Signature products
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Don’t get me wrong. There are plenty of Kirkland Signature products that offer great value and quality. However, Costco’s house brand isn’t always the best deal. Some items rate as only mediocre in product rankings. For help sorting the wheat from the chaff, check out:
2. Assuming you need a membership
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While a membership gets you all the deals, there are actually a number of ways to shop at Costco without paying a fee. These include shopping online, filling prescriptions and, in some states, buying alcohol.
3. Only buying goods
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Sure, your local Costco location can rotate your tires, but there are so many more discounted services available that you may be missing. These include insurance products, identity theft monitoring and your next dream vacation, as we detail in “18 Surprising Things You Can Buy at Costco.”
Next time you’re in the store, pay attention to the display by the customer service desk to see more of what’s available.
4. Sticking with the cheaper membership
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You may already be a little iffy about paying to shop somewhere, but you could be making a mistake if you stick with the regular membership. While the executive membership costs twice as much — $120 per year — it comes with 2% cash back on all your purchases, up to $1,000 a year. That means if you spend at least $500 a month at Costco, the more expensive membership pays for itself.
5. Missing out on sales
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Costco offers monthly member-only savings on a variety of items both online and in their warehouses. While the retailer sends member-only savings booklets in the mail, you can easily see those discounted products online as well. It pays to check these out before heading to the store because some sale items can be tucked away in the aisles and aren’t prominently displayed.
6. Shopping on the wrong days
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Weekends are notoriously busy, and you could find yourself in a sea of people all jostling to buy the same items that are on your list. I’ve also been told by employees that the start of each sale cycle is when crowds swell to their largest. Shopping on weekdays or later in the sale cycle is your best bet for enjoying a quiet store. There is also often a week between sales periods and that can be a good time to stock up on purchases that don’t go on sale.
To find out Costco’s current sale cycle, check the member-only savings book that Costco mails out or visit the retailer’s member-only savings webpage. The current sale, for example, started Feb. 3 and ends Feb. 28.
7. Never shopping online
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If you’d rather not fight the crowds, many warehouse sale items can be bought online for a slightly higher price. Plus, Costco has many online-only deals for members. I tend to shop Costco’s website most often during the holidays. The website offers affordable gifts, and, as an executive member, I get 2% back on all my purchases.
8. Not buying gift cards
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Costco offers significant savings on gift cards. For example, my local warehouse sells $100 worth of gift cards to a local theater for $75. There are also restaurant, retail, gaming and travel gift cards to be found in stores and online.
9. Forgetting the return policy
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Fortunately, if you do buy an item that leaves you less than impressed, you can generally return it for a full refund. That’s thanks to Costco’s Risk-Free 100% Satisfaction Guarantee. Don’t make the mistake of overlooking this money-saving perk.
Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.
Chase is using a new and expanded definition of “cash-like transactions,” which for Chase credit card holders refers to purchases that trigger the penalties of taking a cash advance. Cash advance rules can vary by card, but they often include expensive fees and interest while also disqualifying the purchase from earning rewards, such as cash back, points or miles.
A common example of cash-like transactions, sometimes called “cash equivalents,” would be using a credit card to take out cash from an ATM.
To some extent, Chase is just making explicit its current definition. The changes take effect at various dates, mostly in early- to mid-April 2021.
What’s changing
Chase in recent years has rejected some types of transactions, such as funding an account for online gambling and purchasing cryptocurrency from an exchange. That remained true as Chase implemented its new definition of cash-like transactions.
But if Chase eventually allowed those transactions, they are now clearly identified as cash-like transactions and would be considered cash advances.
In its notification to cardholders, Chase said cash-like transactions include, but are not limited to, four categories:
Currency exchange and other forms of payment: Travelers checks, foreign currency, money orders, wire transfers, cryptocurrency, other similar digital or virtual currency and other similar transactions.
Gambling: Lottery tickets, casino gaming chips, racetrack wagers and similar offline and online betting transactions.
P2P payments: Person-to-person money transfers and account-funding transactions that transfer currency.
Third-party bill-pay services: Includes bill-payment transactions not made directly with the merchant or their service provider.
Some of those things, such as lottery tickets, were already considered cash-like transactions in Chase’s previous cardholder agreements. The new definition expands and clarifies what Chase means by cash-like transactions, it said.
Missing from the list is explicit mention of certain popular payment systems, such as PayPal, Apple Pay, Google Pay, Venmo, PayPal Key and Plastiq. A Chase spokeswoman said all of those “could” be classified as a cash-like transaction. However, purchases of goods and services from a business using a third-party payment service are not cash-like transactions and would not have the associated fees, she said.
So, for example, using a Chase card to fund an in-person retail transaction via Apple Pay or an online purchase via PayPal at checkout would not be a cash-like transaction.
Charitable donations made with a Chase credit card are treated as purchases and would not be cash-like transactions, she said.
Why the definition matters
Generally, a cash-like transaction could have these downsides:
Cash advance fee. This is a one-time fee charged when you take your advance, usually 3% to 5% of the amount.
Higher interest rate. Many cards charge a higher annual percentage rate for cash advances than for regular purchases.
No grace period. If you pay your balance in full monthly, your credit card usually gives you a grace period of at least 20 days to pay off your purchase before you’re charged interest. Cash advances, though, start to accrue interest from Day One.
Lower credit limit. Some credit cards have a separate cash advance credit limit, which is lower than the overall credit limit.
No credit card rewards. Your spending on a cash equivalent probably doesn’t qualify for rewards, such as cash back, travel points or miles. Similarly, it won’t count toward your required spending to earn a sign-up bonus.
What to do if you’re nervous
If you’re concerned about being socked with cash advance fees, you can call the number on the back of your card and request that Chase reduce your cash advance limit. That way, if a purchase turns out to be a cash-like transaction, it will be rejected if it’s over that limit instead of being assessed fees.
If you don’t like Chase’s changes to the definition of cash-like transactions, you can reject them up until the day before they take effect. But then Chase will close your account.
What Chase offers as alternatives
Cash advances are an expensive way to get cash. But Chase offers another way to access your credit card’s line of credit besides making purchases, if that’s your goal.
My Chase Loan
My Chase Loan is like a bank loan. Once approved, you receive a deposit directly into your bank account. You have a set amount of time to repay the loan, and you’re charged a variable interest rate, depending on the Chase card you are using for the loan.
Costco is filled with ways to save, but it is easy to overlook some of the less-obvious perks.
So, if you are thinking about joining Costco — or if you are a member who simply isn’t versed in the lesser-known bargains to be found when warehouse club shopping — the following tips will help you wring more savings from your membership.
1. Know the return policy
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Costco has one of the most generous return policies around. So, if you’re ever unhappy with a purchase for any reason, at any point, you generally can and should ask for a refund or replacement.
There are a handful of exceptions to the policy. Check them out at the Costco website.
2. Fill your prescriptions
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You don’t have to be a member to use Costco pharmacies, as we detail in “7 Ways to Shop at Costco Without a Membership.”
So, check out the Drug Directory on the Costco website to see whether Costco pharmacies stock the medications you or other members of your household take. If they carry a medication, call your nearest Costco pharmacy for prices.
You may find lower prices than what your local pharmacy chain store charges for the same medications. For certain generics, you might find that Costco’s prices are even cheaper than your insurance copay.
3. Buy booze
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Buying liquor at Costco or most any other warehouse club is generally a great way to save money. In fact, savings on alcohol are among the best reasons to purchase memberships at one — although you don’t necessarily need a membership for that.
As we note in “10 Best Buys at Warehouse Clubs“:
“The best thing about buying alcohol at a warehouse club is that, in some states, you don’t even need a membership. Depending on your state laws, you may be able to walk in and buy discounted libations without paying an annual fee.”
4. Use Ibotta
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While Costco does not accept coupons, the free mobile app Ibotta offers cash back on purchases from Costco.
If you don’t already have the app, download it and select Costco from the list of retailers to see what cash-back offers Ibotta is offering for Costco purchases currently.
5. Scope out the ‘warehouse savings’
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Costco offers periodic discounts — on top of its already low prices. The retailer refers to them as “warehouse savings,” but they are essentially sales.
Costco offers a new batch of warehouse savings roughly once a month. So, always check out the retailer’s Warehouse Savings webpage before driving to your local club or buying anything online.
You will also find warehouse savings marked on shelves in your local club, as pictured above, although you will have to hunt for the deals if you don’t look them up online.
6. Buy discounted tickets and gift cards
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Check out Costco’s gift cards and tickets webpage. You will find a swarm of savings on everything from restaurant meals to video gaming.
7. Purchase new tires
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My family buys all of our tires at Costco, and we love that they throw in free balancing and rotation. Plus, instead of drinking stale coffee while waiting in a stuffy room for our cars to be serviced, we can grab a cheap bite to eat and cross several items off our shopping list.
8. Feed your family dinner on the cheap
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The Costco food court is a great place to grab an inexpensive bite to eat. Where else can you get a hot dog and refillable soda for a mere $1.50? My family of four likes to head there on Friday nights to enjoy a large pizza — it’s only $10.
9. Book a vacation
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Members can rack up savings when they book their getaways through Costco Travel. It offers discounts on:
Vacation packages
Cruises
Hotels
Rental cars
Executive Members at Costco can save even more, earning an annual 2% reward on Costco Travel purchases.
10. Get free health care screenings
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Usually, Costco offers free health care screenings to make sure your family remains in tip-top condition. Available screenings include those for:
Osteoporosis
Heart health
Diabetes
However, screenings have been suspended due to COVID-19. So, you’ll need to be patient to cash in on this perk. When screenings return, you will be able to find a schedule of upcoming screenings on Costco’s website.
11. Buy gas
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Being a Costco member also pays at the pump. Many locations have gas stations that offer competitive prices. Some people buy a Costco membership for the gas savings alone.
Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.
Beginning March 1, 2021, as part of the hotel chain’s new Bonus Journeys offer, Hyatt loyalists will have the following opportunities for elevated rewards:
Earn 2,000 bonus Hyatt points for every two qualifying nights spent in an eligible Hyatt property. Nights do not need to be consecutive.
World of Hyatt Credit Card holders will earn an extra 500 bonus points for every two qualifying nights, for a total of 2,500 bonus points.
Earn up to one free night award at a Category 1-4 Hyatt hotel after 10 qualifying nights.
The promotional window runs through June 15, 2021. You must register for the promotion by May 15, 2021, in order to qualify. There is no limit to the number of bonus points you can earn from qualifying nights in the promotional period. Both paid and award stays count as qualifying nights.
If you are planning some Hyatt stays during this time frame and don’t hold the World of Hyatt Credit Card, you may want to consider adding it to your wallet. New applicants who are approved will receive this bonus: Earn 30,000 Bonus Points after you spend $3,000 on purchases in your first 3 months from account opening. Plus, up to 30,000 More Bonus Points by earning 2 Bonus Points total per $1 spent in the first 6 months from account opening on purchases that normally earn 1 Bonus Point, on up to $15,000 spent.
Hyatt tops our list for best pandemic response
Though Hyatt has a smaller footprint of hotels when compared with bigger competitors like Marriott and Hilton, loyalists love the hotel chain for its outstanding service and rewarding loyalty program.
In NerdWallet’s analysis of hotels that have handled COVID-19 the best, Hyatt topped the list. It has implemented a number of customer-friendly change and cancellation policies, plus Hyatt ranked well in terms of social distancing and health policies.
This new Bonus Journeys promotion is the latest in a line of rewarding promotions for Hyatt loyalists during the pandemic. Hyatt has also slashed the requirements needed to reach Elite status by 50% in 2021.
Credit cards are a great way to purchase the things you need now but want to pay for later. While it is possible for credit cards to be used to your advantage, irresponsible usage can negatively impact cardholders in a number of ways.
Amazon, and Home Depot, and Target, oh my! Online spending is certainly on the rise in the midst of the global pandemic of 2020. As if online shopping wasn’t already an obsession for many, couple it with quarantine, and you’ve created an online shopping monster!
