Everyday from August 10th through the 16th we will be talking about credit cards. Read all seven posts for a basic understanding of earning miles and points with credit cards.
You probably already have several of these cards in your portfolio and don’t even realize it. Here is the problem…
You are sold on the idea that if you are near your credit limit and you make a purchase that would send you over what you were approved for (notice I did not say credit limit), your purchase will be approved and an embarrassing moment may be avoided. That is a no preset limit card.
When the statement comes you must pay all the amount over what you were approved for (again, I did not say credit limit) in addition to the minimum monthly payment on the amount you were approved for.
Here is the rub, that negatively effects your credit: The highest amount you have ever had outstanding on the credit card is typically what is reported to the credit bureau as your credit limit, when in reality, it is only the highest amount you ever had outstanding.
Here is a good example; You receive a no preset limit card from Chase Bank for a United Airlines card (double check to be sure this is true) and the first month rack up $2000 on the card. Let’s assume your no preset limit amount is $10,000.
You pay off the card successfully in month #1 and the second month rack up only $1,500 in charges. Here is what the credit report may see:
- Current balance $1,500
- Credit Limit $2,000
It appears to other lenders that you have a credit card with Chase Bank that is approved for a $2,000 credit limit and you are at 75% usage already. It is not true, but that is how it is reflected on your credit report.
If you have balances on your credit cards over 50% of your credit line or credit limit, it is a serious negative on your credit report. Try to never be in over 50% at any one time. Of course on Business cards, which we know don’t reflect on your personal credit report in most cases, you can push that to about 85-90% before you will be negatively effected from my past experience.
If I were in your shoes right now, I’d be calling my credit card companies to see if my credit cards are no preset limit cards. And if they are, ask how you can switch them to cards with real credit limits. And it is always easiest to do this after you have received your sign up bonus
Remember, your credit is a very valuable asset. Do not abuse it.
Citi Prestige® Card
- Annual Fee: $450 fee
- Foreign Fees: No
- Card Type: Bank
The increase to 50,000 ThankYou points for the Citi Prestige card may be a signal that Citi wants back in the game, big time. The sign-up bonus has just been increased to 50K points from the previous 30K offer. An added benefit is a $250 annual air travel credit each calendar year -- so, if you sign up in April, you'll receive the credit this year, and again in January of next year -- which more than covers the $450 first year fee. When you add in lounge access for you and up to two of your guests, you’ve added another $400+ in value. One more benefit worth mentioning is the fourth night free for any four-night hotel stay booked through Wagonlit Travel. And lastly is the $100 statement credit when you sign up for Global Entry and pay for it using the Prestige card. Don’t forget the ever-growing number of airline transfer partners that work with the ThankYou points program.
- $250 Air Travel Credit each year
- Complimentary 4th Night for any hotel stay
- Earn 50,000 bonus ThankYou® Points after $3,000 in purchases made with your card in the first 3 months the account is open.
- Points are redeemable for an $800 flight on American Airlines or US Airways®, a $665 flight on any other airline or $500 in gift cards.
- Transfer points to a variety of travel loyalty programs from airlines to hotels.
- Earn 3x points on Air Travel and Hotels
- Earn 2x points on Dining at Restaurants and Entertainment
- 1 ThankYou® Point per $1 spent on other purchases