More Money Podcast - 072 How to Keep It Simple with Your Credit Cards - David Rubenstein, Credit Card Expert

Episode Date: November 9, 2016

Credit card expert David Rubsenstein (from CreditShout.com and CreditForums.com) chats with me about the most important things people need to know about credit reports, credit scores and credit cards. If you're looking for an in-depth podcast episode about credit that really gets down to the knitty-gritty, you found it! Long description: This is by far the most in-depth episode about credit cards I've ever done, so I hope that's is exactly what you're looking for! For this episode, I chat with credit card expert David Rubenstein from CreditShout and CreditForums and we get into all the important stuff you should know about credit. Now, we cover a lot of ground in this episode, but I an important thing I wanted to reiterate is the importance of checking your credit report once per year. In Canada, you can get free reports from Equifax Canada and Transunion Canada. In the U.S., you can get free credit reports from Experian, TransUnion and Equifax. Not only is this a way to help prevent against identity theft, it's just a good way to keep on top of your credit. Helpful Posts on CreditShout Top 11 Hidden Credit Card Perks Best Credit Cards for Building Credit Zero Percent APR Credit Cards: What You Need to Know in 2016 Best Credit Card Signup Bonus Offers of 2016 Card Hackers: New Credit Card Churning Rules to Limit Your Signup Rewards How To: Budget With The 50 / 30 / 20 Rules What Kind of Card Does David Use? I was interested to hear that even though David has such a vast knowledge of all the credit card sign-up offers and benefits around, he doesn't play the credit card churning game at all. Instead, he just keeps it simple and uses a 2% cashback credit card. Follow David on Social Follow CreditForums on Facebook Follow CreditForums on Twitter For more podcast episodes, check out the Podcast page. Shownotes: jessicamoorhouse.com/72 Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello, and welcome to Episode 72 of the Mo Money Podcast. I'm your host, Jessica Morehouse. Thank you so much for joining me for another wonderful episode. And this one is all about credit and credit cards specifically. I have a credit expert with me, David Rubenstein from Creditshout.com and also Creditforums.com. And so we get into the nitty gritty of credit and credit cards, which is very exciting because i don't think i've done an episode about this topic before and i think it's very very important to understand what goes into the world of credit how to use credit cards responsibly so you do not get into debt or you can help yourself get out of debt and of course a big thank you to

today's episode sponsor lowest Lowest Rates. Lowest Rates is where you can find the lowest rates in Canada for your mortgage, auto insurance, life insurance, and more just like that. I've done it to find the best quote for my life insurance, so I highly recommend you check them out too at lowestrates.ca. So without further ado, let's draw credit, shall we? Thanks, David, for joining me on the show today. It's great to be here. I'm really looking forward to it. Yeah, I'm excited to talk about credit cards. It's something I haven't talked with anyone about on the show, so this is going to be a lot of fun. So first, let's get to know you a little bit. So you are the owner of Creditshout.com and

Creditforums.com. But what, you're a credit card expert, especially, you know, specifically with credit cards in the U.S. So how did you become a credit card expert? How did you get into that bizarro world? Maybe because I went to law school and I got used to reading the fine print and just wanting to know what the little benefits and perks the cards touted

were and what they really were. Whenever you sign up for a new card, you get this flyer or booklet in the mail written in usually about eight point font so really discouraging you to know uh everything your card does for you now some people would think that it's because it's trying to hide all the fees which yes uh they don't want you to

realize how high the interest rate is uh but they also i think don't even want you to know about all the protections they offer because it's great to say that they have them and even better to say they have them and not have anybody take advantage of them. Yes, which is so true because I know – like I have a number of credit cards and if you ask me to name what their – lots of their benefits besides like rewards and points and cash back, whatever, I would have to look them up. Like I wouldn't know off the top of my head, which is terrible. Right. And I think, especially here in the US, I think people do recognize those perks. I think that explains a lot of the popularity of American Express cards. But also in recent years, Discover has really become well-known for its customer service. And Visa, with their Visa signature program here in the U.S., like I said, I'm not sure what distinctions are made in Canada. Also trying to provide the same level of service and perks that – so much more than just trying to help you get concert tickets as they advertise, but a lot of consumer protection benefits that will help you out. Absolutely.

So do you still practice law or are you more just the credit card guy now? I do practice law a little bit as my day job, so I say. But I do like keeping in touch with credit cards and financial service products. And even what's really been interesting to me more recently has been some changes in how credit scores are computed, identity theft protection, what you can do to keep your ID safe, which all goes back to maintaining healthy credit, healthy spending habits as well. Absolutely. So I would love for you to kind of explain your two websites, Credit Shout and Credit Forums. What are they both all about? They're pretty interrelated. uh i i think it's just an accident of of happenstance um and inability to get the

forum software to uh work properly on the older credit shout site so uh you know credit chat would be the main site where we have a lot of information about credit cards what uh tips to improve your credit score um you know, resources to answer questions. For people who are younger and new to even having credit and want to know what they can do to get a card even to help pay for stuff in between paychecks. And credit forums would be the forum site, which has been a place that users go to chat with each other. Some people are exchanging tips on the best credit card sign-up offers.

Some people are looking for support as they try to clean up their credit, raise their credit scores. And recently we've added some stuff about personal finance, so people are chatting about investment

strategies or real estate investments or interest in those. And trying to encourage each other to reach financial independence. That's awesome. So the one thing that's, you know, credit cards, they've got kind of a dark side, but they're also a good thing. It's kind of a weird thing credit cards are because they can kind of lead people into kind of a bad path into credit card debt. And a big issue, I think, with lots of people that just get credit cards, don't know how to use them properly or responsibly. And then they find themselves in a situation where they're like several thousand dollars in debt, and then they

have to figure out how to pay it off. On the other side, credit cards are kind of a good thing too if you know how to use them properly. So can we just talk for a minute about what are some of the kind of ways that you've maybe in your kind of expertise have seen people kind of misuse credit cards and some of the kind of ways we can avoid that? Well, I think for a lot of people, especially when they're getting their first credit card, it almost doesn't feel like you're actually spending money. Yeah. And you go out and it's almost like several times a week you're spending another $10 or $20, and you don't even realize it because it's not that same psychological barrier of handing over the cash as it is handing over this piece of plastic. It's almost like you're playing Monopoly. And then that month or sometime a couple months down the line, all of a sudden you found you spent a couple thousand dollars more than you really could afford to.

And you make the mistake of just making the minimum payments and running the balance up more, and the credit card issuer just keeps collecting that interest at 20% and charging those fees, and it could really rack up and cost you a ton of money and kill your credit scores. And some of the dark sides, I was talking to somebody the other night. She graduated college in 1996, but couldn't get her own cell phone until 2003 because of her credit. For several years, even after graduating college, she had to have one of her parents co-sign on a lease when she wanted to rent an apartment because of her credit score. And so even when you're in college, you're already racking up, at least here in the States, you're racking up a ton of debt just to attend college.

Oh, well, no. It's the same in Canada. It's very expensive. Yeah. Just to get that piece of paper that lets you walk in the door to get your first job. Oh, I know. I know. I know. And then – but that's not looked upon negatively.

Yeah. But if you're on top of that, you're utilizing credit cards and you're near your limits. They're looking at your utilization ratio and they're seeing you're tapped your limits. They're looking at your utilization ratio, and they're seeing you're tapped out, basically. And nobody wants to just extend you credit. So then when you get your parents to cosign for the lease and subsidize your cell phone,

you go and get the electricity turned on, and you have to leave a deposit with the electric company. Well, who wants to do that? Because that's just money that you won't get back until you move again. Yeah, exactly. So it's important to me, it's important to develop good spending habits early. Absolutely. No, that just reminds me.

Sorry. Just the other day I was watching this John Oliver. I don't know if you've ever watched any of his videos last week tonight, but he did this segment about do a credit card check and can maybe refuse, if you have a bad score, to rent you that place. And same with apparently employers. They'll maybe ask to do a credit check and may not give you the job if they see that you have a bad credit score, even though they aren't necessarily related to whether you'll pay your rent on time or whether you'll be a good employee.

But it's another way that it could affect your life with a, you know, if you have a bad credit score. Yeah. Well, I do, I do want to let your listeners know that a buddy of mine is an employment lawyer and he just did a guest post for us. Um, so when your, your landlord runs a credit check or your prospective employer does the background check and pulls your credit as well, if they're not going to lease the apartment to you or, well, he focused on give you the job, but the Fair Credit Reporting Act here in the U.S. does provide you rights that they should be providing you that report before they turn you down so that you have a chance to review it and dispute any inaccuracies in the report. That's really good to know. That's good to know.

So, and inaccuracies definitely happen. Here in the U.S., you should be getting, using that free annual credit report site offered by the FTC to get. And yeah, they're free here with, we have TransUnion and Equifax and they're both free, I think once a year. So it's important to kind of make that a habit, a boring habit, but a habit nonetheless that you should be doing, checking your credit reports to make sure there's not some inaccuracies, which reminds me, I should probably, I think it's my one year anniversary since I've done that. So I should probably get on that. I mean, that's all you need to do it.

Every six to 12 months, you rotate between two or three of the credit bureaus, and you just look in on it. Absolutely. You know, they often will pay to get that information monitored every month because of the amount of work and effort it takes to clean things up when somebody steals not just a credit card number but your ID, your social security number, or bank account number and create accounts in your name and just hijack your money, your identity, your credit. Yeah. That brings me, because I remember you mentioned to me offline that there was a blog post on your website about what companies are doing to help prevent some of this credit card hacking. What are they doing? Oh, so I think that was unrelated. I meant credit card hacking in terms of card issuers trying to prevent people who are constantly rotating in and out of cards just to collect a sign-up bonus.

Oh, okay. Okay. Still, good to know that they're putting some measures in place. But some of the credit card issuers, American Express, Discover, Capital One, are giving you your FICO score in your every month updated as part of their services, which is just a great way to flash. If it suddenly, uh, goes down, you know, that, that could be an early warning sign for you to check what's going on in your credit report. Oh, that's good to know. So, uh, that, that is a good service that, that does come along with, uh, your, with a lot of the, uh, uh, better credit cards and credit card issuers.

Yeah, definitely something to take advantage of. So let's kind of talk about maybe some of the lighter, the more positive parts of why using a credit card can be beneficial. I know kind of the ones coming to my mind is obviously building your credit. That's right. I think the main reason why I got my first credit card is because I knew down the road, if I wanted to get a loan or a mortgage, I need to start building credit as soon as possible. And that's also kind of why one of the reasons you're always told, you know, that first credit card you get, don't, you know, if you've had it for a very long time, don't just cancel it, maybe hang on to it. Yeah, well, lenders of all sorts will look at the length of your credit. They're going to look at how much of your available credit you're utilizing. So if you have five cards but only really use one of them, that's good because you utilize less credit.

Now, of course, I say it's best to pay your bills in full every month and not incur that credit card interest. But maybe say you took out a new card to help finance a big purchase and are taking advantage of an extended 0% APR offer. It may, for a little bit, ding your credit because they'll look at how you're utilizing your overall credit, but you'll also each align individually. So the goal is to have no line, I think, above like 40% utilized. And overall, you know, you want to be between 15 and 30% utilization of your available credit. Good to know. And so now utilization will show that you have a, when you look at the report, it'll show, you're like, oh, I pay that bill in full every month, and it shows $2,275. Well, that's just the balance that is due at the end of the month that you haven't paid in full yet.

So even if you pay in full, it will show that you're actually utilizing some credit. Is there any benefit? I don't usually wait until I get that bill to pay it off. I usually check my bank account either once a week or every paycheck, so every two weeks. And then when I see a balance, then I just pay it off. I kind of always like seeing that number zero. It gives me peace of mind. And also, I don't want to mistakenly forget that, oh my gosh, it's the end of the month and I haven't paid it. Is there any benefit to doing that or is it just a good thing to do budget-wise? Yeah, I mean I like to have my credit card set up to just automatically debit my checking account on the due date to pay the statement balance in full.

That's a smart way to do it. So you just kind of link it to your savings account or account a savings account or account that always has money in it. So you never miss a payment. Oh, yeah. Because one time, back in the back in the 90s, when I lived in Washington, DC, a check I wrote to the cable company took about two and a half weeks to get across town. And they, you know, dinged me for a late fee, and the late fee was as much as the monthly cable bill. And when I called, they said, I've been with you for three and a half years.

I've never been late before. If you look probably on the post-dated letter, you'll see that I mailed it weeks and weeks ago, and they were like, oh, nothing we can do about it. Really? C cable companies are just the best um that's true i do want to say that besides helping to build your credit responsible use of credit cards also has some other benefits and not just the the welcome bonuses and all that um i to me credit cards do offer you a lot of consumer protections.

And one of these is near and dear to my heart because it saved the day for me, which is the accident protection program. We had moved into a new house, and we bought a new kitchen table with a glass top. And I was trying to help out after we had some people over for brunch with with the cleanup and um doing some vacuuming and i threw the cord over the table because i'd gotten the vacuum wrapped around the table instead of going you know reverse around i decided to be fancy and throw the court over, managed to, one in a million shot, hit this Lucite ball hanging from the life fixture, which dropped straight down over the glass table and shattered it into hundreds of pieces.

And I just want to give a huge shout out to American Express, because within a week of us sending them, and you do this all online, a copy of the receipt for the table and the photograph of the shattered tabletop, we had in our mailbox a check for the full purchase price of the table. So we were able to replace it and I was able not to have my wife angry at me for very long. So quick question about that. Is there I guess it's probably, you know, something that fine print did the table have to be brand new for them to protect it? Or what were kind of some of the rules in order to get that money? Because that's, that's amazing

that you got a check in the mail. Yes. So there are some limitations. But this protects you against accidents or even theft. And usually, depending on CardoShore, you would have to make your claim within 60 to 90 days after purchase. Okay. And the benefit is capped often, well, depending again on your card, $500 to $10,000 per item. I'm not sure what kind of card you need to be at $10,000, but it's probably one of the fancy American Express cards. And usually with an annual cap as well.

So you can't just go breaking things on purpose hoping to generate cash to pay the rent. One question I have for you, just because it's kind of popping into my head, is with credit cards, something that you do need to be aware of is the difference between interest rate and APR. Do you want to kind of explain that in some layman's terms for me? Well, I would say, I mean, credit cards now, at least in the U.S., they disclose what their APR is. And the difference is you could be charged both interest and fees depending on how it works. charged you $10 every time you didn't pay a bill in full plus 15% interest on the outstanding balance. Well, the APR would be the annualized rate that would include that $10 non-payment in full fee plus your interest calculation.

Yeah, I feel like that's something that most people probably don't know about, including myself. Right. Because I was absolutely aware of interest rate, and I never wanted to pay the crazy 19% or whatever. But, yeah, there's probably lots of little fees that are in the fine print that I may not know about. Yeah, I mean, I think a good result of the Dodd-Frank laws, a lot of those little fees have been done away with. And they just charge the interest.

But the interest is high. So they make money hoping you don't pay your balance in full so they can charge you, you know, oftentimes. You'll end up at around 20% per year on your balance. And then they also get a cut, and this is split among card issuers and the different networks, but between 2.3% to, I think, 4.8% of each transaction. So at least in America, our love of credit cards definitely adds to the cost of every item we buy because, of course, where you shop, they're going to want to build in what it costs them to process credit cards.

So they end up in the same place as if you paid cash. Which is why I think a lot of people just choose to pay by credit card and get miles or cash back because they might as well enjoy some little benefit of the cost of using the card. So what are some of the things that you do? Because you're a credit card expert and you probably know how to use a credit card the best way possible. What are some of the things that you do to make sure that you use your credit card to kind of maximize the benefits out of it and just make it worthwhile? So what's funny is I know all the different sign-up offers. I really don't take advantage of them. I just use a flat 2% cash back card.

And I'm happy with that. Just because I like to keep my personal finances simple. And I would like to spend as little time as possible keeping track of stuff. Which is funny I say that because I also obsessively track in Quicken several times a week what we're spending on our credit cards just to make sure we're not developing any bad habits. Now that's smart. Yeah, it's okay to have – I have a coffee problem. So it's okay if you have a latte or two a week. But if I suddenly find myself trying to meet, twice every afternoon, a different person. So

I could get, grab another latte that'll, you know, end up costing you a lot of money, uh, at Starbucks at the end of the day. Um, you know, but I just like to, to be able to, you know, it's important to me to save money. Um, yeah, absolutely. Um, you know, I just, At the end of the day, I think being smart about your spending will save you more money than spending lots of time trying to get credit card sign-up bonuses. I agree. As awesome as they can be. And they can be, absolutely. Me and my husband just got a new credit card maybe six months ago, and the kind of benefit, it's a yearly benefit, is where you get a companion flight on this one airline for $99. And there's not a lot of – there's like no blackout dates and all these great things.

And we do go from Toronto to Vancouver at least a couple times a year. So we're like, hmm, might as well. The only thing was like this was kind of the first time we got a credit card where you actually had to pay for it. So it was like 100 bucks a year. And you're like, oh, it seems so much crazy spending money on a credit card. Like, it seems like this can't be right. But we just did the calculations and the money we would save on flights would actually, it would pay itself off and we'd save quite a bit of money. But I'm the same way as you.

Before that, I just usually get like the free credit card that's like, you know, maybe 2% cash back or whatever. Just keeping it simple. So I don't have to, you know, I like the idea of sign up offers. But at the end of the day, I just want to kind of save my money and budget strategically and not overspend and and so i i do use my credit cards for you know mainly kind of bigger purchases which you know obviously there's the benefit of the consumer protections which is great and then i usually use my debit card for kind of my day-to-day things because also it kind of keeps me it's a good uh way for me to make sure i don't uh just keep tapping my credit card and buying stuff that I shouldn't.

Because I always am like, no, I only have this much left in my bank account, so I better make it last. Exactly. Because if you see it dwindling down, it feels a little more like you're handing over the cash. You just don't want to give it up. Exactly. Because you might need it later. Exactly. But when you kind of, yeah, see the, on your credit card just keeps going up, you're like, eh, I'll worry about that later.

I don't know. There's not like the same sense of urgency. I don't know why. I think it's totally psychological. Yeah, it's got to be. I haven't studied it at the university level or anything, but there's, it's definitely, there's sort of that room in between you and the money because it's a piece of plastic and it feels like a game from when you're a kid in some ways. Absolutely. Absolutely. So before we wrap up, what's one, you know, key thing that you'd like

to share with people about credit cards? What's one thing that you want them to take away? I think the number one thing I always would love people to take away is to remember to use their cards responsibly. No amount of sign-up bonuses or rewards points would overcome the cost of paying the credit card interest if you're not able to make your payments in full every month. Now, if you do find that you are running balances you want to try to pay down, I have found only two so far, cards. Out there, major cards that are offering 0% APR balance transfer offers with $0 transfer fees.

Oh, okay. So here in the U.S., the Chase Slate will give you a 0% intro APR for 15 months and $0 balance transfer fees during the first 60 days with no annual fee on the card. So that is a great card to try to get yourself back if you have good credit but want to get balance is back under control. And then also the capital one quick silver one rewards card, uh, 0% APR for nine months with no, uh, no, uh, transfer fee. Uh, that card does, uh, come with a $39 annual fee. Uh, but, uh, hopefully, uh, it's more than offset by not paying that 3% to 5% fee to transfer a balance. And that card is actually also a rewards card offering 1.5% cash back on everything you spend. So those would be my top 0% APR tricks because not paying that transfer fee definitely helps. And then use that time to get that balance, if not paid off, down as low as you can because

when the interest hits, it's not pleasant. No, that is for sure. Well, thank you so much, David, for joining me and sharing your expertise with me. I know I learned a lot about credit cards that I didn't know before, and it was a pleasure chatting with you. Yeah, it was very fun. So thank you for having me on. You're welcome. And that was Episode 72 of the Mo Money Podcast with the wonderful David Rubenstein. Make sure to check out his two fabulous websites all about credit. You can them out at creditshow.com and creditforums.com and i will of course include some uh helpful links he sent me some uh links to articles he thinks would be great for my listeners and i'm going to include them in the show notes so make sure to go to jessicamorehouse.com slash 72 for all that good info and again

thank you to my pals over at lowestest Rates for sponsoring this podcast episode. Thank you again for supporting me and the Mo Money Podcast. Make sure to check out them at lowestrates.ca if you're looking for the best rate, a quote on mortgage, auto insurance, life insurance, and whatever you're looking into. Lowestrates.ca is where you can find out all that good stuff. And before I wrap up, I've got some more iTunes reviews that I'm so excited to give some special shout outs to. All right, the first I'm going to get to that I just discovered, and I can't believe I just discovered this. I've got a review from Germany.

Hello, Germany. Senso45 sent me a review June 27th. I'm sorry I'm taking this long to give you a shout out. I didn't know. I'm actually going to say a big thanks to MyPodcastReviews.com because I signed up with them recently. So I can kind of just get a nice email of all of the reviews I get because I get so many. And so just a free shout out for MyPodcastReviews.com. They're awesome and it keeps me organized.

So sorry, Germany, for taking so long to say thank you to you. But I appreciate you. And their review is looking forward to hearing the next season. Well, I'm hoping you're enjoying this current season, which is the season you're referring to. So thank you a lot for that. All right. And now I've got two new reviews from fellow Canadians. The first one is from Jessica Washorn, and she says,

I was so stoked to find a fellow young Canadian woman in the personal finance space. Represent! This show has practical explanations of the how and why of smart personal finance. Jessica addresses university, paying off debt, making smart career moves, getting to home ownership, taxes saving, and investing all of the good stuff. There are great interviews with experts and an awesome new series of listener money stories. And I do believe she actually just emailed me and she will be a guest on my listener series coming up. So I'm very excited to chat with her soon. Another review I've got is from John knows from Canada. And he says stumble across this

podcast in my newly found obsession with personal finances. I love how down to earth and relatable you are while still giving useful relatable information. Finding myself excited for travel just so I can listen to more. Keep it up. Happy face. I didn't even know you can do happy faces on reviews. That's pretty cool. Thank you so much for that lovely review. And again, if you're listening right now, you like my show and you have not yet given me a review, please do. I'm going to give you a shout out on a future episode, which I think is always cool. I like getting shout outs on podcasts where I give you reviews. It's kind of fun and you just feel special.

So please do that. It's super easy, especially if you're just like on your phone right now. I think you just have to go to my podcast, click on reviews, and it's as easy as plugging in your rating and review. And yeah, I just want to hear from you. Let me know what you're thinking. And that's kind of it. And I'll see you back here tomorrow for another wonderful listener series episode. This podcast is distributed by the women in media podcast network find out more at women in media.network