I’ve known that credit cards can be good and evil at the same time depending on how you use them. Now, the point of this post is to point out the Love and Hate relationship I have with them.

The things I LOVE about credit cards:

1. REWARDS
   • Who doesn’t love a good reward? Credit card companies love to induce your spending by rewarding you with frequent flyer miles, points to buy things, and cashback!  Who doesn’t love getting rewards?
2. CHARGE NOW, PAY LATER
   • I’ll pay off this nice <INSERT LAVISH OBJECT HERE>with my credit card and pay the rest later.
3. CONVENIENT
   • I don’t have any cash on me and I have to drive far to get cash from the ATM, nor do I want to pay the ATM fees.  Here’s my credit card instead. **SWIPE**
4. AMOUNT OF CREDIT
   • WOW. I just got approved for $16,000 for my credit limit! **Evil Grin On Face** Time to splurge!
5. EASY TO TRACK
   • I can check what I’ve been spending online!

Things I HATE about credit cards:

1. INTEREST
   • I despise monthly interest, but credit card companies need to make sure you’re going to pay them back.
2. CAN HAVE MORE THAN ONE
   • If you have great credit, be prepared for credit card companies to harass you any way they can to have them sign up for more cards.
3. OVERSPEND
   • If you don’t keep track of your spending… you’ll end up drowning in debt.
4. SNAIL MAIL SPAM
   • “Transfer your balance now 0% until 2011!”, “Sign up for a new card, get 10,000 points!”  I’m not a fan paper mail, waste of paper in my opinion and it makes you more viable to ID theft if you don’t dispose of them properly.

I’m hating my credit cards right now! **shakes fist in anger**

As they say.. it takes time to heal these “financial” wounds.  Everyone has different ways of trying to pay down their debt, however I find Snowballing credit cards the most effective way of “healing” your debt than consolidating it.  I came across this awesome free Snowballing Tool to give you an idea of how it works.

It’s been a while since I’ve posted up on here, but I got some great news! (or not so great…)

Looks like American Express and Chase decided to bump up my APRs after being locked in at the same low rate for so many years!  I pay my cards in full every month and there are some times I keep a balance on them and this is what I’m repaid with? Super LAME!

It looks like the Credit Card industry applied their changes before the Credit CARD act that kicked in recently.

The new act allows us, the Consumers, to have more protection when it comes to Credit Card companies trying to take advantage of us by undisclosed fees, rate increases, and unfair fee traps.

The act also requires full disclosure of all credit card contracts to be in “plain language” so the consumer understands what they’re signing up for. (Pretty much remove the legal complex jargon and replace it with plain English!)

Looks like the Credit Card companies are trying to save their asses from future penalties. Anyhow.. just had to vent.

In order to help raise your credit score, you need to kill off your 10-15 of your credit cards and narrow it down to around 2-3 cards.

“But cee.mo I like to shop at Macy’s and I have a frequent flyer card with so and so…”
What’s cool about credit cards today is that there are TONS of rewards type of cards. I don’t know about you, but I’ve managed to go from having 10 cards down to about 4 (Yea, I know that’s still a lot). Back in the day, I had cards for every occasion because they all had little perks [that's how the retail stores suck you in]. I was rockin’ Dell, PayPal, Amazon, Best Buy, NewEgg, you name it I probably had it.

After researching the tons of rewards cards out there, I’ve managed to “consolidate” those cards into cards that give me all-around benefits. Like I said before, I am a geek when it comes to technology and I had to have access to all of my resources [I was hooked on credit!]; I had balances on all of those cards. What I did to consolidate was to pay off every single one and kill them immediately until I narrowed down my card options.

“Why not just do a balance transfer?”
Balance transfers cost money and it really all depends on your situation. I remember a couple years back credit card companies were giving balance transfers away with incentives like “0% interest for 12 months” or “Free Balance Transfers and get 2% interest for 6 months”. Those days are long gone and balance transfers are not as good as they were a couple years ago. Using the balance transfer is another way of “extending” payments on your credit card debt. I would recommend using wisely and not relying on it on a constant basis because they do show up on your credit report.

Close off as many cards as you can and keep ones that actually have some benefit to you. I have a 2 Visa and 2 American Express cards now which all give me great reward benefits [plus you can get rid of that extra plastic in your wallet!]. However, I would highly recommend that you do NOT close off your oldest credit card. The oldest card is extremely important to the health of your credit score because when creditors look at your credit report, they want to see how far back your credit history goes. The longer your credit history, the better!

STOP USING YOUR CREDIT CARDS AND STOP APPLYING FOR MORE CREDIT!

Ahem…

Anyhow, back on topic. So basically do the step above for starters. Why? Because you won’t stop accumulating debt and it’ll just keep piling up right before your eyes.

If you’re still reading at this point, it looks like I’ve got your attention. So, what is the “Rule of 30″ you ask?

The Rule of 30 means keeping your debt below the 30% threshold. If your debt is above 30% on your credit cards, the “Big Three” credit reporting companies, TransUnion, Experian, and Equifax will bring your credit score down a couple of points. Always keep an eye out on how much credit you have and where you’re at with your spending.

For example:

Credit Limit: $5000
30% of $5000 = $1500

Constantly staying at or above $1500 on a monthly basis is not where you want to be.

“But wait, cee.mo what about if you’re paying them in full?”
That’s fine and by all means keep paying your cards in full! It’s financially right to do so, but the “Big Three and the Credit Score” likes to look at the balance on your previous statement. That’s just how it works and that’s how it is when you read your Credit Report. Hence, the Rule of 30.

What’s cool about the Rule of 30, is that you can spread the wealth among the other credit cards you have. Please don’t be stupid and go apply for 5 new credit cards after reading my previous statement. The purpose of the Rule of 30 is to keep your credit score healthy, so let’s not hurt that by pinging for more cards. As a matter of fact, you should be getting rid of your credit cards.

What I meant by “spreading the wealth” between your other credit cards is that when you have applied the 30% rule on one card, it doesn’t affect the other cards you have. This means you can have 30% on your Visa, 30% on your American Express, and 30% on your MasterCard. What I like to do is use the Rule of 30 as my max credit limit and if I’m going over the 30% mark I obviously stop using it.

“What if I have only one credit card?”
Then much props to you, because you didn’t fall into the trap everyone has fallen into. The only problem is if you’re hovering around the 30% mark, you’re going to look bad to the “Big Three”. If you’re in good standing with your credit card company, you can always call them for a credit increase.

So stick with the Rule of 30 and you’ll keep your credit score in good shape.