Jim Paulson Maximizing Credit Card Bonuses
The Zoom call this week was presented by Jim Paulson, and it was about his experiences with using credit cards for more than just an easy way to make a purchase.
Credit card companies are very competitive and when one considers the monthly interest rate on unpaid balances, it is understandable. A credit card purchase is a short-term loan, and the banks that issue the cards, make next to nothing in profit with people that pay their monthly balances in full.
As many more responsible people will do, he had no credit cards and chose to pay his bills in cash or with his debit card. This was fine until he started to travel more and got frustrated as he found he could not get a reservation with a motel room without a credit card or could not rent a car.
He realized he had to get a credit card to make life easier. He called a bank and started the process of getting card, and within minutes he was granted a card with up to $20,000 credit line. Not the same as getting a personal loan from a bank.
He talked about going to buy a car and was anxious to get it purchased before end of year. He called his bank and asked for the limits to his debit card and when told it was $20,000 increased it to the max. He went to a dealer with $10,000 cash and his debit card.
He was sitting, getting ready to buy the car when the dealership offered him an attractive low interest loan, which he took. He made double monthly payments and paid off the car within a year. This gave him a much better credit rating which also enabled him to be more attractive to other card companies.
This was important to him, as he had had limited credit history for a long time as he was a cash or debit payer. By buying the car the way he did he reestablished himself as a responsible credit risk.
Having established better credit, he was becoming more adventurous. From a client he learned the manipulation of using the cards to get benefits that would save him a lot of money.
He talked of having a client seeking to buy a home, and with a limited line of credit called his credit card company to have his limits raised. With no late payments and a relatively clean card, it would be easy to get the limits raised, which would instantly give him a better credit rating and possibly qualify for a lower rate. All of this takes a few minutes of time on the phone and costs nothing. What this does is shows a much lower utilization of credit and a better credit score. None of this works, however if one runs up the debt and cannot pay it for a for too long a time.
Pick a Card That Works to your Lifestyle
For people that are consistent with their recreation, there will always be card offered that are theme oriented, or business oriented. He spoke of his son getting a Marriott credit card, which is through JP Morgan Chase, as his company preferred for him to stay at Marriott property when traveling. This is not uncommon for companies when they want an image to project. The benefit to his son was not only an accumulation of hotel points, which the son could use to vacation with his family and stay at hotels that were beyond his normal budget.
From my personal experiences with Marriott, any money spent using the Marriott credit card entitles the user to 2X the dollar value in points. For purchases made that are Marriot connected, that jumps to 6X the value in points. So, staying in a Marriott property with a typical bill of $150 not counting food and beverages, would get a total of $900 Bonvoy points, and for an established member, there is always a 500-point bonus just for making and checking into the hotel. It doesn't take very long, before a free room is there or more. In addition, Chase charges $99 for the card per year, but in turn offers a free night certificate for use in a connected hotel, which essentially makes the night free as well as the card costing less. Over the years, while I traveled in business before getting into real estate, I accrued millions of hotel points, and as I have a card associated with the hotel, those points are never lost.
He spoke highly of having a Costco credit card., which offers no annual fee. This allows him to carry a no-fee card and accrue points which translates to dollars for using the card. There are other cards that also offer cash back cards but will charge an annual fee. The Costco funds will accrue and can be redeemed for merchandise at a Costco store, or if one goes to a store, they can get the cash.
From George Souto, who was on the call, we were told that available credit counts for up to 30% of a credit score, and the balance does not need to be paid in full to keep the benefit. Also, making payments on time with no lates on the report accounts for up to 35% of the credit score. In addition, length of credit accounts for up to 12% of the score. Essentially 77% of a credit score can be impacted just with credit cards. Going over the credit limit on credit cards can impact a score by just as much as a $1,00 can cause a score to fall up to 80 points.
What cards are selected are dependent on the user and as to how they can get best benefits. There are all manner of offers from hotels and airlines and the type of card may carry additional benefits.
For example, a hotel may offer a Visa or Mastercard for regular use and each card will carry benefits as noted in the Marriott example above. That same bank may offer an additional card, such as an Americab Express card, which will carry a higher annual fee, but also, the multiplier for points would be higher, and may not be restricted to just hotel points and the same for all purchases.
When a card is selected can also offer benefits in additional points. For example, one can be offered anything from 40,000 to up to 100,000 signing points. This is usually a matter of special promotions or even signing up for the card while flying on a particular day. As an example, from my personal experiences, on a flight I just took to Aruba, the bank, Barclays for American airlines, was offering 70,000 bonus points for signing up for the card within a week of the flight. A special code was given to apply. In addition, the mileage for that flight was also applied to the card benefit. Future flights would carry the benefit of free baggage for the user as well as anyone else that was flying with the user.
The discussion was further carried on to the benefits offered for discounted prices if using a particular credit card associated with a hotel brand or airline. There are many benefits to using a card correctly and getting much in the way of discounts or freebies because of the cards.
Jim Paulson Maximizing Credit Card Bonuses
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