The consequence of the App-O-Rama strategy was that your credit score took a heavy beating as all the hard inquiries appeared. I wrote a guest post at Consumerist covering the difference between a hard inquiry and a soft inquiry, if you want the full details. While I never conducted an App-O-Rama, I was intrigued by the strategy and followed all the forum posts by people reporting back on their experiences.

So how does credit report bumpage come into play?

Credit Report Bumpage

Credit report bumpage is the natural sibling to an app-o-rama. For bumpage, you use a credit report/score service to make soft inquiries, or pulls, to try to bump the hard inquiries off the list of inquiries. When the hard inquiries fall off your list of inquiries, they are no longer a factor in your score and you should see an increase.

This doesn’t always work and does come with a little bit of investment risk. The risk known as “choppage.” Choppage is when the bureau goes into your account and “chops” off all the extra soft inquiries. It appears, at least based on the contributors, that Equifax is the most active in choppage. The “investment risk” is that you would have to sign up for these services, which are not free after a short trial, pay for them as you’re making the inquiries, and have nothing to show for it afterwards.

Below, I’ve listed the various services as well as which bureau they report to. All of this information was taken from the numerous postings of Fatwallet users on these two thread (I read through all the pages and tried to find what still works today, but there is no guarantee):

• Bumping and Bumpage: TU now bumps after Equifax? Reoccurring choppage
• TransUnion Bumpage is FInished, No More B*

This tactic takes advantage of a loophole that the bureaus know about and are trying to close. Some have responded faster than others, so as they say – your mileage may vary.

Credit Monitoring Services

Legend: EQ stands for Equifax, EX stands for Experian, TU stands for TransUnion. The information in the parenthesis after the service explains where inquiries could appear and then what the service is based out of. (All, TU-based) means it should report to all three bureaus and it is a TransUnion-based service.

• American Express CreditSecure (All, EX-based) – $11.99 a month after a 30 day trial. 24 hour and 1 minute pull frequency.
• Chase ID Protection (All, EX-based) – $11.99 a month with a 24 hour and 1 minute pull frequency.
• CreditKarma (TU, TU-based) – CK is the only free service of the bunch and you can pull every 24 hours plus one minute. The risk is that TransUnion flags your account and stops CK from pulling your score again.
• TrueCredit from TransUnion (All, TU-based) – $14.95 a month, you can pull your score on a monthly basis.
• National City Identity Protect (All, TU-based) – $8.95 a month, you can pull every 24 hours and 1 minute and it will report to all three bureaus. Link is to the Fatwallet discussion on how to sign up for the service.
• Privacy Matters 1-2-3 (All, TU-based) – It’s normally $29.99 a month but if you can after the trial, they’re likely to offer you an annual subscription for the monthly fee. You are able to pull your score on a monthly basis.

You might notice an absence of Equifax anywhere on that list. It’s because it appears that bumpage does not work on an Equifax report. Equifax Gold, their in-house service, will let you pull your score but it will just refresh the date on the pull making it useless for bumpage purposes.

The one strategy I thought might still work and be indefensible would be if you signed up for all of these services and made one inquiry each. You add in a few other services not on the list (they’re unsuitable for this strategy because you can’t make multiple inquiries on a flat monthly fee) like myFICO and you might accelerate the removal of some older hard inquiries. Any tried this?

If you have any updated experience using this tactic or if there’s a service I’ve missed, please leave a comment (you can do so anonymously if you’d like) so we can all learn.

(Photo: fosforix)

Credit Report Bumpage: Knocking Off Hard Inquiries from personal finance blog Bargaineering.com.

It made me wonder whether these types of loyalty credit cards are worth it. The ones that most immediately come to mind are the gas station credit cards where you get higher cash back or reward points when you use it at their gas station.

Brand Loyalty Cards

Let’s use the BP Visa Card as an example, here is the cash back schedule:

• 5% rebates on all BP location purchases
• 2% rebates on all eligible travel and dining purchases
• 1% rebates on all other eligible purchases

Except for the 2% on eligible travel and dining, the schedule matches what you would expect from a gas station reward card. You get 5% at their gas stations and 1% everywhere else. This is a good deal if you always buy gas from BP, it’s a less good deal if you don’t.

There’s a reason why they’re called loyalty cards – they reward brand loyalty. In the case of gasoline, where you have a commodity good, where the differences between each brand’s product is very small, loyalty cards aren’t as good because you may end up paying more than you should for something. Gasoline is the best example of this because if you see one gas station, chances are another will be right across the street.

Brand-Agnostic Affinity Cards

Then you have the case of my friend who has his Penn State branded card where he’s rewarded points based strictly on how much he spends, not where he spends. With brand-agnostic affinity cards, you have to review the catalog to see whether it’s financially prudent.

When I reviewed the Citi Thank You Network reward catalog, American Express Membership Rewards catalog, and Discover Cashback reward catalog, I found that the three were very different. You need to review the catalog yourself to find out the cash-equivalent value of the points to see what makes the most sense.

Do you use a brand affinity card or brand-agnostic card? If so, what card and why? Do you find it’s worth it or too much hassle? Has it affected your buying behavior?

Are Loyalty Affinity Credit Cards Worth It? from personal finance blog Bargaineering.com.

What is a cash advance?

A credit card cash advance is when you take your credit card to an ATM and withdraw cash. There are other scenarios but that one is the most common one people run into. The cash advance is not considered a regular purchase and its treated differently on the card, more on that later. Finally, your cash advance limit will almost always be lower than your credit card’s credit limit.

Why are cash advances bad?

Cash advances are bad for a variety of reasons. First, they’re not considered regular purchase charges on your credit card. The credit card will charge you a fee for the cash advance, something like of 3% of the withdrawn amount. They will also charge you a higher interest rate on the cash advance balance. On one of my cards, the purchase APR is 19.99% while the cash advance APR is 21.99%. Finally, there is no grace period on cash advance balances. You will be charged interest from the day you withdraw the money.

And to add insult to injury, the bank ATM you’re using will probably charge you their standard non-customer ATM fee, which can run several dollars. The credit card cash advance is the equivalent of the nuclear option, when all other options have failed.

When are cash advances OK?

If no one ever used a cash advance, they wouldn’t exist. So when is it OK to use a cash advance? When you need cash during an emergency and there are no other options. In Jane’s case, it didn’t seem like there were many options available because she didn’t have her debit card and her situation forced her to use cash. Sometimes you just have to pay the toll.

Turning credit into cash

If she had more time, I would’ve recommended that she try to find a grocery store. Many, but not all, grocery stores offer cash back on purchases. You could go into the grocery store, buy something small, and then get some cash back on the purchase. The grocery store will add the cash back onto your grocery bill and the credit card will treat it as a normal purchase.

While it would be easy to simply say – “Never ever get a cash advance.” What’s best and what reality deals you doesn’t always agree, so you have to be pragmatic and adapt to the situation. If you have no choice, just recognize the penalties of using a cash advance and be sure to pay off the advance balance as quickly as possible.

(Photo: timpatterson)

Avoid Credit Card Cash Advances! from personal finance blog Bargaineering.com.

I think there are two reasons they’ve pushed these features out. First, it’s great PR to have a credit card company offer features that help people pay down debt. Second, it’s great business to have a credit card company offer features that help people pay down debt because it means they are less likely to default on it! I read the August 2009 Nilson Report, a credit card industry trade magazine, and it listed Chase has having the most outstanding debt at nearly $166 billion. A good customer is a paying customer, not a bankrupt one.

The Blueprint program has four components: Full Pay, Split It, Finish It, and Track It.

Full Pay

When you don’t carry a balance, you get a grace period until the statement payment due date before interest begins accruing. When you carry a balance, you lose the benefit of the grace period. Once you make a purchase, interest begins accruing immediately. The Full Pay system lets you choose from fourteen “every purchases” categories that will be interest free as long as you pay them off in full each month.

For example, let’s say you have a $1,000 credit card balance that you’ve been paying down each month. Normally, if you bring your clothes to the dry cleaners and charge it to your card, interest accrues on that purchase. With Full Pay, you can select “Laundry/dry cleaning” as one of your Full Pay categories and that purchase amount will be added to your “BLUEPRINT payment.” As long as you make that BLUEPRINT payment, you don’t accrue interest on that purchase.

If you don’t make that BLUEPRINT payment but are still current, making your minimum payments, you’re OK as long as you don’t miss the Full Pay payment three out of any six month period.

The Full Pay Categories are:

1. Department Stores and Catalog
2. Dining
3. Drugstore
4. Entertainment
5. Gas and Convenience Stores
6. Grocery Stores
7. Health clubs and Membership
8. Laundry and Dry Cleaning
9. Office and School Supplies
10. Salon and Beauty Supplies
11. Transit
12. Utilities
13. Wholesale Clubs and Discount Stores
14. All blink Purchases

Split It

Split It let’s you take one large purchase and “split it” across several months of payments. They have calculators that help set your monthly payment amount based on how many months you want to take to pay it off. You don’t get any interest benefit from using Split It, they just do the math for you, calculating how much interest accrues and ensuring you pay it off within the specified time period.

While a nice feature, I don’t think you should be making large purchases on your credit card if you can avoid it. If you’re talking furniture, electronics, home improvement, or some other large purchase, you can usually find favorable financing options or go the old fashioned route – save until you can afford it.

That being said, having this feature is better than the options other credit card companies give you – which is nothing.

Finish It

Finish It is a lot like Split It except instead of looking at one large purchase, it looks at your entire balance. You tell the tool how much you want to pay or how quickly you want to pay down your balance and it does the calculations for you. Again, no interest benefit for setting up this program.

Track It

Track It will automatically categorize your purchases and let’s you set a budget for each category. It’s a bit like a light version of personal finance tools like Mint and Quicken (which I suppose are now going to be the same thing), but only for your Chase card. A nice little feature but I feel like this is like the toothpick on a Swiss army knife. Yeah it’s nice that it’s there, but how often do you pull out the knife to use the toothpick?

Conclusion

Overall, I think it’s great that Chase is offering up these tools to help people better manage their debt. I think that one of the best things you can do for yourself when you’re trying to achieve a goal, in this case paying down debt, is to establish a plan. Chase is offering just that.

What Cards Offer Blueprint?

Right now, the Chase Platinum, Chase Freedom, Chase Sapphire, and Slate from Chase all offer the Blueprint system. Right now, my vote would probably be to the Chase Slate card or the Chase Freedom.

Chase Slate currently offers 0% introductory APR and no annual fee. Chase Freedom sports a $50 cash back promotional offer after your 1st purchase plus 3% cash back on rotating categories, 1% on everything else with no limits. Also, no annual fee and the potential for an 0% introductory APR.

Chase Blueprint Payment Program Review from personal finance blog Bargaineering.com.

One of the tricky things about averages is that it’s hard to make an apples to apples comparison. If you’re 25 and have $5,000 in credit card debt, is that good or bad? It’s certainly worse than having no credit card debt, but what if you’re responsible for providing for a family? A single person with $5,000 in debt is “worse” than a family with $5,000 in debt, all in one person’s name, right? It’s questions like these that make the whole “average credit card debt” question, and others like it, so tricky.

Despite these difficulties, it’s still valuable to understand what the average is as well as what the various trends are. If nothing else, it’s fun too right?

Average Household Credit Card Debt

The Federal Reserve publishes a Survey of Consumer Finances every three years, the last Survey of Consumer Finances was done in 2007, and is updated based on inflation data every year. According to that report, the median household credit card debt was $3,039.70 in 2007. That doesn’t seem that bad right? Well, that’s the average when you include every household, even the ones without a single credit card. In 2007, only 46.1% of households carried a balance, which is a statistic I was surprised to see given all the talk about credit card debt (that may have been changed given the economy). When you include only families with credit card debt, the mean goes up to $7,300.

The fun part about the statistics is in the “other” types of information it reveals. For example, the vast majority of credit cards are bank credit cards. Of families with credit cards, 96.1% have a bank issued credit card. 56.7% have one issued by a store, such as Macy’s. Only 11.9% have a gas credit card.

OK, that wasn’t really that interesting, but this next part is.

Average Debt by Household Income

This is the median credit card balance based on the percentile of income:

• Less Than 20th Percentile: $855.30
• 20th – 39.9th Percentile: $1,896.20
• 40th – 59.9th Percentile: $2,632.20
• 60th – 79.9th Percentile: $3,103.90
• 80th – 89.9th Percentile: $4,573.50
• 90th – 100th Percentile: $6,303.40

Isn’t it surprising to see that the highest earnings have the highest median credit card balance? Now before you say that high earnings are just high spenders, if you look at the median values based on percentile of net worth, you see a similar, but not quite so pronounced, trend:

• < 25th Percentile: $3,042.40
• 25th – 49.9th Percentile: $2,491.70
• 50th – 74.9th Percentile: $2,843.50
• 75th – 89.9th Percentile: $3,846.70
• 90th – 100th Percentile: $4,999.30

The amazing part of these two statistics is that someone in the 90th to 100th percentile in income or in total net worth would still have credit card debt of just a few thousand. $5,000 – $6,500 in credit card is serious business to most people, but if you were in the 90th percentile… you would think that it’s small potatoes and something you’d get rid of just to be rid of it?

Average Debt by Age

Finally, before we go, we had to pull out the data for average credit card debt based on the age of the head of household. These results were not as surprising (to me anyway):

• Less than 35: $3,033.70
• 35–44: $3,277.10
• 45–54: $3,460.70
• 55–64: $2,939.50
• 65–74: $2,046.30
• 75+: $1,020.90

I love trying to guess relationships when ones probably don’t exist. I wonder if the decrease over age has to do with values about debt or concerns about retirement? I know older generations tend to shun debt and emphasize frugality, the Great Depression certainly played a role in that, but which of the competing interests dominated decision making?

Average Debt by Education

OK, OK, just one more. This is the data based on the education of the head of household.

• No high school diploma: $2,277.60
• High school diploma: $2,611.90
• Some college: $2,946.50
• College degree: $3,873.90

The more education you have, the higher your average credit card debt! You would think that the more educated you are, the more you’d understand how credit card works but it appears another factor comes into play. As the cost of education increases, students are turning towards more student loans and relying on credit cards to help pay for things like room, board, books, and tuition. The article is from 2009 and the data is from 2007, but I still think the argument holds a measure of truth.

What did you think of all this data? Anything surprise you? Anything not surprise you?

What is the Average Household Credit Card Debt? from personal finance blog Bargaineering.com.

Discover Rewards Catalog

Discover is the least sophisticated of the reward catalogs but one of the most rewarded. On most of their cards, you don’t accumulate points, you accumulate cash back. You can always convert the cash back directly into cash but you are given the opportunity to get a bonus if you convert it into something else such as some products, gift cards, or charity donations.

Discover’s product catalog is significantly smaller than other reward catalogs. As of this writing there were only 27 products, seven of which were different varieties of Apple iPod nanos, shuffles, and touches. It’s hard to say how their gift card selection compares, since it’s fairly sized and at least on par with other reward catalogs.

The Best Rewards

The best reward in the Discover catalog is, of course, cash. Since you accumulate your rewards in “cash,” the conversion is simple – you get a penny for each penny of cash back you’ve acquired. This gives values each penny at 1¢, which is far better than the 0.69¢ at Citi and 0.60¢ at American Express. One limitation of requesting cash or a statement credit is that the minimum redemption amount is $50.

Products

I looked at a bunch of products and none of them offered a good deal. Since your rewards are valued as cash, the decision is simple. If you can buy it cheaper on the street, it makes no sense to redeem your cash back for it in the catalog. In every case I looked at, I found the product cheaper by Googling the product name and picking a reputable vendor that appeared.

Gift Cards

However there are certain gift cards in the catalog that will give you a better than $20 to $20 gift card conversion. If you look through the catalog at restaurants, you will usually see a conversion rate better than 1¢. Sometimes they offer a $25 gift card for $20 in cash back rewards (Ace Hardware, Men’s Wearhouse, etc.) , sometimes it’s a $50 gift card for $45 (Chili’s, Olive Garden, Red Robin, etc.), and in rare cases it was doubled, a $40 gift card for $20 (Alamo Rent A Car, Princess Cruises, etc.). Fortunately you can see the rewards based on value (Double Your Reward, $30 for $20, $25 for $20, $50 for $45, etc.)

If you regularly shop at these places, it might be worth your while to redeeming your cash back rewards as a gift card as it values it at greater than 1¢ a piece!

The Best Value Rewards System

In terms of value per reward point, in this case it’s already cash back, you can’t beat Discover Card. In every other catalog, you had to convert points to a $100 gift card before you could get a penny a point in value. With Discover, you start at a penny a point and work your way up to as high as 2¢ in value at the Double Your Reward merchant gift cards.

What’s nice about starting at 1¢ is that you know your 1% or 5% in cash back rewards is actually 1% or 5%. If you have a Citi card, you have to discount it by 30% so 1% in points is actually worth only 0.7% in cash. If you have an American Express card, 1% is only 0.6% in cash rewards. No need with Discover.

Now we just need more places to accept it!

(Photo: thetruthabout)

Discover Card Rewards Catalog from personal finance blog Bargaineering.com.

Membership Rewards

The Membership Rewards program is the reward program for all American Express cards that offer points, rather than cash. With AMEX’s program, there is no limit to the number of points you can earn and they never expire. One big difference between this rewards program and others is that enrollment into the Membership Rewards program may come with a fee.

The Membership Rewards catalog is a lot like the Citi ThankYou Network’s catalog. There are plenty of gift cards, airline rewards, and travel perks; but there are a few “swankier” rewards at the upper tiers such as a business class round-trip ticket to Tahiti on Air Tahiti Nui (348,000 points) and a sub-orbital space flight for 20,000,000 points.

You can fly in space!

OK, now that we’re all worked up, here’s some more about the program. Let’s find out where the good deals are, if they exist, and whether this reward program is right for you.

Reward Specials

The “Specials” section is the American Express’s version of a sales section. Whereas the ThankYou Network had maybe a dozen items, Membership Rewards has more like fifty items in the list. There are products as well as gift cards and the specials aren’t necessarily just a discount on the points price. For example, there is a box of a dozen Srixon AD333 balls for 4,100 points. The special is that it’s a buy 1 get 1 free promotion, or 50% off. You can buy them from Amazon for $12.88 a box so the special isn’t such a great deal, but you get the idea.

As for point discounts, the discount is usually in the 15% range. An All-Clad Stainless Nonstick 10-Inch Open Stir Fry Pan that’s normally 17,500 points is now only 14,800 (15.4% discount). It’s not that awesome of a deal because you can buy it on Amazon for $120.

The Best Rewards

My personal favorite reward are Southwest Rapid Rewards points because I live near a popular Southwest airport, Baltimore-Washington International. I value a rapid rewards flight at approximately $300, which used to be how much the vouchers sold for on eBay (well, you bought the drink tickets and they included the voucher ). I never sold the vouchers personally because I would use them to fly to California, which is a minimum of $300 a ticket.

It takes 16 points to get a voucher and each point costs 1,500 Membership Rewards points. Doing all the math, that values a Membership Reward point at 1.25¢. That’s right, by converting points to a Southwest voucher, you are getting more than a penny a point. If you live near an airport that Southwest flies to, you can get a heck of a deal. In fact, if you get a voucher and use it on a flight of at least $240, then you are getting a penny a point of value (16 x 1500 = 24000).

What if you don’t live near a Southwest airport? No worries, most of the gift cards give you a penny a point of value even at the $10 gift card level. You can get an Old Navy GiftCard for only 1,000 points. A $25 California Pizza Kitchen gift card will run you 2,500 points.

Cash Rewards

Most reward networks give you the option of getting a cash check or a statement credit. American Express doesn’t offer a cash check or statement credit but they do offer the ability to pay for “everyday expenses” with Membership Rewards points at a rate of 0.60¢ per point. The only restriction is that it must be an everyday purchase, the system will indicate which expenses are eligible, and you have to pay for the whole thing with points at that rate. It’s a little bit of a discount over Citi’s conversion to a statement credit, valued at 0.69¢ vs 0.60¢, and it’s a little more restrictive.

It seems like a lot of effort, especially when you can just give statement credits without this extra infrastructure, but it’s an improvement over the past when you couldn’t convert points into dollars. You can learn more from this brief tutorial about the program.

My Rewards Math

As I mentioned in the Citi ThankYou Network review, I am always looking to get a penny per point. In the Membership Rewards program, almost every gift card will give you a penny per point conversion, which is great, and none of the products will, which is pretty standard.

Buying Points

American Express does not let you buy points, but it does let you borrow points against future spending. When you log in, you will see a “Available Points Advance” section at the top, which indicates how many points they will advance you for up to twelve months:

• 5,000 points for Membership Rewards Express
• 15,000 points for Membership Rewards
• 60,000 points for Membership Rewards First

All in all, I’ve been pretty happy with the rewards program because of the student loans. I don’t spend a great deal each month with my Citi card so I never had reason to review the catalog until recently. In the case of student loan checks, I had to call in to redeem the reward and always found their customer service to be fast and courteous. It’s an entirely separate call system set up specifically for the ThankYou Network, which probably cuts down on wait time.

If you have a Citi card, do you have a go to “reward” that you always redeem it for? I’m leaning towards some of the $100 gift cards like a Macy’s or Staples.

(Photo: Andres Rueda)

American Express Membership Rewards Review from personal finance blog Bargaineering.com.

ThankYou Network

The ThankYou Network is probably one of the most extensive rewards catalogs available, as it includes all the standard stuff like gift cards and statemetn credits, plus it adds in thousands of products. If you had enough points, you have over three hundred laptops to choose from! They have outdoor equipment, automotive supplies, home goods, music downloads, and basically anything and everything you could imagine. If you are green, you can even participate in American Forests’ “Plant a Tree program” at the cost of 4,800 points per twenty-five trees.

So let’s take a look at the program, see where the value is and where the fluff is, and try to find out if it’s a good program or not.

Rewards on Sale

Every week, a different set of products will be in the “Rewards on Sale” category. There doesn’t seem to be a theme to the rewards but each one is discounted off their regular price by about 17-20%. For example, in the week I looked at the Rewards on Sale section, I saw a Wilson Hope LX 16-Piece Women’s Golf Set for 29,000 points, down from 35,200 (17.6% off). There was also a Fisher-Price® TMX Cookie Monster for 5,100 points, down from 6,200 (17.7% off).

The Best Rewards

If I wrote this a few months ago, I would’ve said the best reward in the entire catalog is their student loan rebate check (if you have student loans). However, they recently (within the last few months I think), increased the price of student loan rebate checks to less than a 1¢ per point value, regardless of how much you spend. They put the reward on par with the mortgage loan check.

Now what’s the best reward in the Citi ThankYou network? I searched for a bit and found that only gift cards and charitable donation gifts give you a value of 1¢ per point. On charitable donations, you have to give at least a $50 donation to get the 1¢ per point rate. On gift cards, you have to buy at least a $100 gift card and not every store offers a $100 gift card.

There’s also one slight downside to the charity route – there’s only one charity available: The American Red Cross. Right now, you can get a $100 donation to the American Red Cross for 10,000 points.

Cash Rewards

Most reward networks give you the option of getting a cash check or a statement credit. With the ThankYou Network, you can get statement credits credited directly to your card’s balance. The cost of a $100 statement credit is 14,500, valuing each point at 0.69¢. It sounds like a bad deal until you realize it’s a better deal than most other reward networks. American Express recently instituted a system where you can pay “everyday expenses” with points at a rate that values each point at 0.60¢.

If you want a cash reward, $100 will cost you 16,000 points, valuing each point at 0.625¢. Whereas the statement credit is available in a variety of denominations, cash is only available in $50 (8000 points) and $100 (16000 points) amounts.

Another option is to get a Citi Gift Card, which is basically a debit gift card with a $100 value. The gift card costs 14,000 (0.714¢), making it better than cash and slightly cheaper than a $100 statement credit (0.69¢).

My Rewards Math

I am always looking to get a penny per point. When I look in the catalog, I see how much something costs in points, divide by 100, and then compare it with the price I could normally buy it for. For example, the Logitech X-540 5.1 Speaker System (Black) is available on the Citi ThankYou Network for 16,100 points. If I can buy it for less than $161, then I’d rather buy it than convert it. If I can’t, then this becomes a good deal.

The Logitech X-540 5.1 Speaker System (Black) is available from Amazon for $79.95. If I were to buy it from Citi for 16,100 points, I’m getting 0.497¢ per point, which is less than if I just opted for cash. It’s far less than if I opted for a $100 gift card.

I still use a penny per point as my benchmark because I feel I can find a gift card in the network that I will use. If you can’t, then you should be comparing the price of a product against a value of a statement credit (0.69¢). If the product gives you more than cash and you want it, then go with the product. Otherwise, take the cash and buy it yourself (and get even more rewards!).

Buying Points

Citi gives you the option of buying ThankYou points at the cost of $25 for 1,000 points, valuing each at 2.5¢ per point. As we’ve seen above, getting even 1¢ per point in value is difficult so you’re paying a significant premium for points. This is not a good deal.

All in all, I’ve been pretty happy with the rewards program because of the student loans. I don’t spend a great deal each month with my Citi card so I never had reason to review the catalog until recently. In the case of student loan checks, I had to call in to redeem the reward and always found their customer service to be fast and courteous. It’s an entirely separate call system set up specifically for the ThankYou Network, which probably cuts down on wait time.

If you have a Citi card, do you have a go to “reward” that you always redeem it for? I’m leaning towards some of the $100 gift cards like a Macy’s or Staples.

(Photo: thetruthabout)

Citi ThankYou Network Rewards Review from personal finance blog Bargaineering.com.

Over the next few days I’ll take a look at some of the catalogs of the most popular credit card companies. I’ll give you the lowdown on their products, where you can get the maximum value out of your points, and a closer look at how each system works so that you can decide on which card to use.

How to Review Reward Catalogs

Credit card rewards, or points systems, always favor the credit card issuer because they control the value of each “point.” It’s a lot like the Federal Reserve in the United States, they wield of lot of power because they can control how much money is in the money supply. Whereas the Federal Reserve does it by putting money into or taking money out of the supply, to affect interest rates, credit card companies can simply change the price of rewards in the catalog without you even knowing.

That’s not to say issuers are sneakily raising the prices and not telling you. With the Internet, if they were doing that then it would come out very quickly and it would be a PR nightmare. However, they can introduce new products at higher point prices and no one would have reason to complain.

The Poker Chip Syndrome

The real benefit of a rewards system over straight cashback is in what I call the poker chip syndrome. When you buy something with cash, you know exactly how much it is. When you buy something with points, it’s a little less clear. You tend to spend more because the price isn’t in hard currency.

Converting Rewards into Dollars

When you signed up for a rewards credit card, you probably did it because they offered a favorable rewards schedule right? Let’s take the Citi mtvU Platinum Select card, a card that I use. The Citi mtvU card offers me 5 rewards points for every dollar I spend on books, movies, music, and at restaurants.

In my mind, that’s a 5% reward. It’s not technically cashback but it’s still a 5% rewards card. It’s a 5% rewards card because I believe each Citi ThankYou Network point is worth a penny. When I go to look at the things I can get with points, I have to keep that in mind and buy things that are favorable to me on that conversion rate.

As we look at some of these networks, you’ll find that there are some networks where you can never get a penny per point value in any of their products. That’s the purpose behind these network reviews, to help you maximize the rewards and provide you with enough information, before you get a card, so that you don’t end up with reward points in a horrible system.

(Photo: Andres Rueda)

Credit Card Points Reward Catalogs Reviews from personal finance blog Bargaineering.com.

Read on to find out more about the major credit reporting agencies.

Equifax

Equifax is the oldest of the three bureaus, having been founded in 1899 as Retail Credit Company. It began as two brothers, Cator and Guy Woolford, keeping a list of customers and their creditworthiness for their local Retail Grocer’s Association. He would sell the book to other merchants in the association and credit reporting was born. They eventually settled on Atlanta, Georgia as their home and founded the Retail Credit Company.

By the 1960’s, when TransUnion was formed, Retail Credit Company was one of the largest credit bureaus with data on millions of Americans and Canadians. After years of criticism of the credit reporting industry in the 1960’s and 1970’s, Congress passed the Fair US Credit Reporting Act to regulate the collection, dissemination, and use of consumer information. It is believed that Retail Credit Company changed its name to Equifax to improve its image.

Equifax is based out of Atlanta, Georgia.

Experian

Experian began as CCN Systems in 1980, making it the youngest of the three bureaus. It’s only the first one founded outside of the United States, as its birthplace was in Nottingham, England. It acquired a US presence by purchasing TRW Information Services in 1996. TRW Information Services was a subsidiary of TRW, also one known as Thompson Ramo Wooldridge Inc., a conglomerate that included defense, which was acquired by Northrop Grumman in 2002.

CCN Systems was established by Experian’s former parent company, GUS, and was to provide internal credit checking services to other parts of GUS, most likely the Home Retail Group. In late 2006, GUS completed the demerger of Experian and Home Retail Group.

Experian is based out of Dublin, Ireland.

TransUnion

In 1968, TransUnion was created as the parent holding company of Union Tank Car Company. Originally they manually collected business intelligence information about consumers. One year later, they acquired the Credit Bureau of Cook County (CBCC), who collected consumer information on about 3.6 million people stored in 400 seven-drawer file cabinets, and a credit reporting agency was born.

As an aside, their story reminded me a lot of American Express, which started as a shipping company in 1850 and slowly morphed into a credit company by 1958. When they began shipping financial instruments for banks, they started to move into money orders and traveler’s checks in 1882, then credit cards by 1958. You go where the business takes you.

TransUnion is based in Chicago, Illinois.

Innovis

Did you know that there is a fourth credit bureau? It’s called Innovis, or CBCInnovis, but it’s believed that very few companies use them. They aren’t even mentioned on AnnualCreditReport.com, the website set up by the government for free credit reports. Innovis was founded in 1970 as Associated Credit Bureaus (ACB) and, after some renaming, acquired by CBC Companies in 1999. I don’t know much about them but I figured you should at least be aware they exist.

Innovis is based out of Columbus, Ohio.

A little background on the credit reporting agencies useful for those trivia nights!

History of Credit Bureaus: Equifax, Experian, TransUnion & Innovis from personal finance blog Bargaineering.com.

Your credit score is a number calculated from the information in your credit report. Your credit report will contain information about your loans, other credit obligations, and negative actions in public record (bankruptcy, collections, court judgments). It actually contains absolutely no banking information so closing, or opening in most cases, a bank account does not hurt or help your score.

In some cases, your credit score might be hurt if you open a bank account. The most common case is if you open a checking account with overdraft protection. Since the bank may be giving you a short term, the overdraft protection, they may do a hard inquiry to see how credit worthy you are. If you are concerned, always ask the bank if they pull your credit and whether it’s considered a hard inquiry or soft inquiry.

So does that mean my recent rash of bank account closings will have no effect? Not necessarily. As you may remember in my post about checking your specialty reports, there is a ChexSystems report that collects information about your banking activity. Banks may see my activity, frown upon it, and deny me a bank account in the future. Is that enough to stop me from simplifying my finances? Not at all.

Does Closing a Bank Account Hurt Your Credit Score from personal finance blog Bargaineering.com.

Every so often MyFICO, the consumer arm of credit score equation creator Fair Isaac Corporation, offers discount codes to some of their products. The product I’ve had the most interaction with has been the MyFICO ScoreWatch product, which has a 30 day trial, so I haven’t been keeping close tabs on the promotional codes lately.

The latest promotional code is valid until September 30th and it’s FinancialHelp25. It drops the price of all their products by 25%, making them:

• FICO Standard: Equifax – Normally $15.95, now only $11.96.
• FICO Standard: TransUnion – Normally $15.95, now only $11.96.
• Suze Orman’s FICO Kit – Normally $49.95, now only $37.46.
• myFICO ScoreWatch – A standing 30 day trial, $89.95 a year or $8.95 thereafter.

In the purchase process there will be a place to put in a promotional code, just enter FinancialHelp25 for 25% off.

FICO Standard

FICO Standard is one of their simplest products. You can get a FICO score from Equifax or TransUnion, a copy of your credit report, and a FICO Score Simulator. The normal price is $15.95 for one score from one bureau, so 2X $15.95 if you want both. When you order this product, you get to see your score and report for thirty days. This is good because if you’re planning a major purchase, it’s always good to check your score and this check will not hurt your score.

Suze Orman’s FICO Kit

Suze Orman’s FICO Kit offers more than just your scores, it includes a bunch of planning tools that can help improve your credit score. It comes with a debt eliminator, online vault for important documents, home and car loan coaching, email reminders for bills, and the FICO Score Simulator.

MyFICO ScoreWatch

MyFICO ScoreWatch is probably their more popular product because it gives you continuous access to your credit score. I’ve written a MyFICO ScoreWatch review which will give you much greater insight into the product.

MyFICO 25% Off Promotional Code: FinancialHelp25 from personal finance blog Bargaineering.com.

These aren’t steps you can use to boost your score 100 points overnight… those don’t exist. These are simply smart moves you can make, over and over again, that will ensure your score will be as accurate and as high as possible. And if anyone says they can boost your score 100 overnight, chances are it’s a scam (unless you have some egregious errors on your report!).

Review Your Credit Report

The easiest way to improve your score is to ensure your credit score is accurately calculated. Each year you can request your credit report for free via AnnualCreditReport.com, a website setup by the government to help you get your reports. By reviewing your report, you can get anything incorrect, positive or negative, removed from your report. Since your report and score affect more than your ability to get loans, it’s always important to keep it correct.

Dispute “Errors & Inaccuracies”

This is a secret tactic of many “credit card repair” services – they dispute everything negative on your account. The credit report industry works on voluntary reporting by creditors. Credit card companies don’t always report every late payment because it’s simply too much work for very little return. They usually only report it if it’s 30 or 60 days late.

What this also means is that sometimes they won’t respond whenever the bureau requests more information. If you dispute an error, the bureau has to go to the creditor to have them confirm the information. Sometimes they confirm it, sometimes they don’t. Sometimes they no longer exist. If they can’t confirm it, it must be removed from your report.

Focus on Making Timely Payments

35% of your credit score depends on your payment history, the largest factor of the five listed by Fair Isaac. Creditors don’t care if you have debt as long as you’re making timely payments! That’s why it’s so important to ensure that you make your payments early or on-time.

So many times we miss making an on-time payment for stupid reasons. We forget to put the check in the mail. We forget to hit confirm on the billpay screen. We forget because we’re on vacation. Set up a system so that you will never miss a payment because you forgot. I setup electronic billing so I am sent an email each month reminding me to check my statement. I also set a reminder in my phone to remind me when my bill is usually do, since the date itself drifts between a few days. Finally, once a month, when I do a financial check in, I poke my head into each of my accounts when I review the transactions for errors.

Pay Down Debt

The second largest factor for your credit score is how much you owe (30% of your score). The more you owe, the lower your score will be. You would do the same thing if you set up a credit score right? Someone who owes $10,000 in debt is riskier than someone who owes only $100, all else being equal. So a great way to increase your credit score is to pay down as much debt as you can.

Credit utilization is often mentioned in any discussion of debt because that’s the metric most understood. Credit utilization is simply the percentage of your credit limit you are currently using. If you have $1,000 in debt but a total credit limit of $10,000, then you’re utilizing 10% of your debt. The lower this number is, the better.

Stop Opening Credit Card Accounts

Want a free t-shirt? How about a frisbee? Or a blender? You’re dinging your credit score each time you apply for a new credit card. Lenders see it as a big red flag is someone is applying for a lot of credit cards, they think the applicant must really need all of this money otherwise they wouldn’t be applying for the cards!

In addition to credit cards, remember that any request for a loan will fall in this category. The application will result in a “hard inquiry,” which is an inquiry made by a creditor looking to make a decision. On the other side is a “soft inquiry,” which is an inquiry made by a creditor looking for information. If you request your own score, that’s a soft inquiry. When Citi requests it after you apply for a card, it’s a hard inquiry.

Don’t Close Credit Card Accounts

If you don’t use a card, stick it in your desk drawer. Don’t cancel it. A lot of times we feel tempted to cancel and cut up a credit card we don’t use because we don’t want to forget we have it. We don’t want it stolen or we simply want to be rid of it because we paid down the debt. Resist the temptation because when you close the credit card, you are hurt by the credit utilization number. Since the credit limit it taken from your total, the percentage of your total credit immediately goes up. It’s a bit of a moral hazard but that’s how the system works.

Don’t Pay For Credit Score Monitoring

A lot of people use services like MyFICO or other similar services that offer free FICO credit scores to monitor their credit score. I think it’s a mistake, if you are in debt, to continue to pay for the services after the free credit score. You should be taking that money and paying down your debt. Looking at your score won’t improve it, paying down debt will.

If you want to monitor your score, it’s best to use a free service like Credit Karma. They give you your TransUnion credit score, which isn’t technically your FICO score, but it’s still a credit score and you don’t have to pay.

Have I missed a good step to improve your credit score?

(Photo: thetruthabout)

7 Steps to Improve Your Credit Score from personal finance blog Bargaineering.com.

Begin by logging into your American Express account. On the Summary of Accounts screen, click on the link that says “See all Account Services.” It should be located in the right hand side under Manage Your Account. If you can’t find it, here’s a screenshot of how it looks on my account (blue box around the link):

The next screen will list your cards, click on the little yellow arrow to the left of the card. This will expand the account services for that card. Click on the Credit and Balance Transfers tab, it will be the third one. Under the Line of Credit label, there will be a smaller link that says “Increase your Line of Credit.”

After you click that link, you’ll be prompted to enter in the 4-digit security code on the face of your card. Once you enter those digits, you will be faced with this screen:

From here, you just need to enter in your desired credit limit (not the increase, but the credit limit you want) and your income. Click submit and you will either get a screen congratulating you on your new line of credit, available for use within 15 minutes, or you won’t. Don’t abuse this (do it once every six months) or you’ll get a call from AMEX’s Financial Reviews department for further confirmation (according to users of Fatwallet). There have also been reports that it’s simple as long as you keep the limit under $25,000.

Just as an FYI, to get the screenshots for this tutorial I actually requested a credit limit increase. I had a credit limit of $20,000 and was approved for an increase to $25,000 on my American Express TrueEarnings card.

Enjoy!

American Express Credit Card Limit Increase Tutorial from personal finance blog Bargaineering.com.

Here’s a harrowing tale of how Dan Godding, of Loveland, Colorado, is on the hook for $11,000 in fraudulent charges because he didn’t review his statement. Since he continued to make payments on the debt, and Bank of America’s fraud department failed to catch it, the charges are considered legitimate.

In our Foundation post on Credit Cards, we learned that the Fair Credit Billing Act protects consumers against fraud. If you discover your card missing and report the loss, you are at most responsible for $50 of loss (most issuers offer $0 liability, meaning you are responsible for nothing). If there is a fraudulent charge and you haven’t physically lost your card, you can report it and you are still responsible for, at most, $50.

The mistake, in this case, was that Godding made payments on the debt, thus validating it. The lesson here is that you should always check your credit card statements, and any other statements, for fraud. It takes no time at all and fraudulent charges will almost jump off the statement at you.

(Photo: restlessglobetrotter)

Always Check Your Credit Card Statements from personal finance blog Bargaineering.com.