During a recent interview, I was asked if the credit crisis has had any affect on our credit card arbitrage. I hadn’t even thought about it because so far, it hasn’t.
Of course that could always change with one trip to the mailbox! I thought about many of the different angles that I have dealt with credit card companies in the last few months. Here are some of my observations.
Applying for new cards. I just turned over all my cards this summer to new offers without any problems. I’m getting ready to turn over all of Scott’s cards next month, so I’ll keep you posted.
Reallocation. When I got my new TrueEarnings Costco Business Card from American Express, I asked if I could reallocate some of the balance from my SimplyCash® Business Card from American Express which has a credit limit over $75,000. Their response was that I would need to wait 60 days before doing so. I thought that was interesting and something I haven’t heard before.
Cutting lines. There’s a very interesting thread that I’ve been following at Fatwallet where American Express is reducing credit lines. We haven’t gotten a letter yet, but I wouldn’t be worried if we did. I don’t carry any balances there, so it wouldn’t affect me. Now, if Chase or Bank of America cut a credit line where I’ve carefully placed a 49% balance I would not be too pleased.
Balance transfer fees. I’ve been monitoring the credit cards with 0% balance transfer offers, and they are still out there. I did get an email that Discover will be removing the maximum balance transfer fee on November 1 for their cards (so you could probably still lock in a maximum fee if you applied this week). I’ll be watching to see if other cards follow suit.
Freezing HELOCs. Back in May, a reader that had his HELOC frozen asked if I was worried about the same. There’s a reason that I have our home equity line of credit at a credit union; I believe that they have tighter lending guidelines and don’t feel as much pressure during a “credit crunch”… although I could be wrong! Either way, I’ve decided to max out our line, just in case. It’s below 3.5% on a tax adjusted basis, so I don’t have a problem paying a few dollars in “insurance” to keep it open right now. Once we turn over all our cards, I’ll drop it back down.
Credit Reports. Last time I checked our credit reports with the free FICO scores & credit reports offer, I didn’t see anything out of the ordinary. I usually scan the section where current lenders check to see if anything has changed on your report. They didn’t appear to be checking on a more regular basis. I’ll be interested to see if it looks different now (Note to self: time to find another free offer for credit reports!)
Interest Rates. I ignore them. Completely. All the time. We don’t carry a balance on any of our routine spending, so I couldn’t really care less what they would charge if we did. For all I know all of my cards could have had the interest rate raised, but I wouldn’t even know.
What About You?
Have you seen any effects of the so-called “credit crisis” on your stash of credit cards?
The only effect I, and I’m sure you, had from this credit crunch is lowering rates in the savings accounts used to make money off of this. ING and FNBO dropped rates a bit, which brought the total expected income down a bit. For now it’s negligible, but if the financial crisis continues and banks keep lowering their savings interest rates, it could start to really cut into the profits, and plans I had for them.
I am interested in knowing how you maintain/organize so many cards. Do you have a special kind of wallet?
Bharani
How does your credit scor look like.
Do you mind sharing that information.
Just for fun,you can tell us how big is your credit report – 10 pages or 100 Pages. ( Please do not take it offensively)
I am have an alternative strategy: I get cards that get me points toward things. For example, I have an L.L. Bean card and an REI card and buy all my clothes and outdoor gear from these two sources.
Since I pay my balance off every month, as do many others, why not take this approach of a card with perks that you like?
@ Bharani: This might help: How Do I Organize 181 Accounts?
Although, I only carry 2 or 3 cards with me. The rest stay at home!
@ Frequent Visitor: My credit score is fine because I always keep the utilization to less than 49% on any one card. I try to keep the overall utilization to 20%.
I’m going to have to do some digging to figure out how big my credit report is… I usually only check it online, so I’m not really sure! I know its more than ten though!
@ Neil: Don’t worry, we pay of all our balances each month that aren’t used for credit card arbitrage, and I’m a big fan of earning cash back. Here are the cards that I currently use: Reshuffling My Whole Cash Back Credit Card Plan
I haven’t felt anything but rumor has it that if necessary a creditor can demand full payment at any time.
My Boss has had a hard time getting approved for a mortgage loan and his credit is great. He did get one and the interest rate is 5.35 percent.