CREDIT CARD CRITICAL MASS
WHAT IS CREDIT CARD CRITICAL MASS?
Credit card critical mass refers to the appropriate number and kinds of credit cards to have. How does one know what kinds to have? How many to have? When enough is enough? Then, when is how many too much, therefore, when is it time to stop collecting more or even cut back? What is the best way to cut back? This blog post will attempt to answer these questions. But keep in mind that the numbers and types of cards will vary depending upon the person, their lifestyle and needs.
COLLECTING CREDIT CARDS
When I started collected credit cards, I went through some very active phases. The reason for these was manifold:
a. building up my credit
b. getting promotional welcome bonuses
c. collecting cash rewards
d. establishing the best cash rewards rates
e. traveling bonuses
THE CASH REWARDS SWEET SPOT
At one point in my credit card collecting, I realized that I had achieved a cash rewards credit card sweet spot. I compare this to a straight flush in the card game of poker. The blog post, A Two-Pronged Credit Card Rating System (Part 2 – June 2019) goes into detail about this. The straight cash rewards flush looks like this collection of credit cards:
6% for US supermarkets
5% for purchases at many cobranded store cards
4% for dining out
3% for gas
2% for health care services and items
1.5% for all purchases
REACHING CRITICAL MASS
In the collecting cards phase, I saw only the small picture. At the time I applied for a card, I found it a necessity. After a few years, I accomplished all of my above goals and then some. Not only did I reach my credit card critical mass but in retrospect, I surpassed it. How did I know that I had done this? That was easy to answer. I knew because the number of cards I had to deal with had become unmanageable.
SURPASSING CRITICAL MASS
As the owner of many credit cards, I was forced to see the big picture and began to ask myself these questions:
a. how many cards did I really need?
b. what categories did I spend the most in?
c. with that in mind, which cards did I use most often?
d. which cards was I leaving dormant?
e. why was I having trouble keeping track of my card purchases when it came time to do my monthly accounting?
f. how could I make things more manageable?
g. when was enough, enough?
h. how could I safely cut back on the number of cards I had?
THE CREDIT CARD CRITICAL MASS FORMULA
Fortunately I found a formula I could use to determine about how many cards to own, which ones to keep and those to phase out since I had surpassed critical mass. These are the factors I now consider in which cards to use:
a. the oldest aged accounts
b. those with the best credit line and lowest credit utilization ratio
c. the ones with optimal returns in my top spending categories
d. those that give me the maximum value for use with my favorite merchants, stores, airlines. or hotels
PHASE OUT RATHER THAN CLOSE CARDS
It is best not to close cards. Instead, let them phase out by letting them be dormant. Make sure that any card that has fees stays open only if it is useful by the above standards. Otherwise, close it to avoid any future fees if it is going to be dormant.
IN CONCLUSION
It is beneficial to have both network and co-branded cards when they have value. But it is wisest not to gather more cards than are really necessary. It can become a real nuisance to have too many cards to care for. On the other hand, it is great to have just enough to be helpful and profitable.
SOURCES & RESOURCES
1. Is 20 Cards Too Many To Own: How to Streamline Your Wallet
2. How Many Cards Is Too Many?
3. How to Cancel A Credit Card
4. How Many Credit Cards Should I Have?
5. How Many Credit Cards Does the Average American Have?
6. Network and Co-Branded Cards
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Credit Card Cash Rewards Explained
Credit card cash rewards can offer added benefits to credit card owners. But sometimes it can be confusing to claim them. In addition, not all cash rewards are the same.
Types and Distribution of Credit Card Cash Rewards
There are several types of credit card cash rewards as well as different ways they can be distributed. It is important to know when and how they can be made available to make the most of these rewards.
Types of Cash Rewards
There are between three and four types of cash rewards. The most direct is the statement credit applied directly to your credit card statement, illustrated above. But which statement is the question. Is it your current statement or your next statement? I often find that a call into the credit card company is needed to clarify this question.
The other types of cash rewards are illustrated here. They are gift cards, merchandise and friend referral rewards.
Distribution of Credit Card Cash Rewards
This is where things can get confusing. Distribution has several options:
• anytime by request online or by phone
• with a minimum of $25 in rewards by the same methods
• in increments of $25 in rewards by the same methods
Option One is the simplest and most direct. Capital One and now Bank of America credit cards both offer this service. See the illustration above,
Option Two is where things can get complicated and there are drawbacks. This is because you can’t withdraw cash rewards at any time. There has to be an accumulation of at least $25 to do so. American Express distributes cash rewards this way. Read the fine print inside the red outline.
Then there is Option Three, the least desirable way to cash in cash rewards. They can only be made in increments of $25. As illustrated below, cash rewards can be distributed only in increments of $25.
Reading the fine print is important to understand what types of credit card cash reward exist and how they can be distributed. You can also learn more about credit cards on this blog by going to the search bar and typing in credit cards.
SOURCES AND RESOURCES
Capital One Cash Back VISA Credit Cards
Bank of America Cash Back VISA Credit Cards
Wells Fargo Credit Cards
American Express Credit Cards
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Extreme Credit Card Benefits for The Former Middle Class
What Are Extreme Credit Card Benefits?
Before extreme credit card benefits can become a consideration for someone in The Former Middle Class, two things need to be explained. The first is that one must be thoroughly versed in The Principles of Good Credit Card Hygiene. Even if someone has a history of medicore credit, the credit score must become very good to excellent. ‘One Must Learn to Walk Before One Can Run’.
In contrast, there are people who can achieve even more extraordinary benefits than those of us who are part of The Former Middle Class can. That is because they have the funds to spend from the start. For example, one of the super benefits credit cards requires an expense of thousands of dollars to receive a heftier signup bonus. But in my case, I had started using credit cards with monthly bonuses to add a small amounts of cash to my retired, minimal fixed income.
How Someone from The Former Middle Class Can Obtain Extreme Benefits
During the time I was getting this kind of ordinary cash bonus of between 1% and 3%, I developed the need to acquire a travel point credit card offering both a cash rewards bonus and travel miles. That was when I became aware of the extreme benefits I could receive separate and apart from using credit cards the way I had been. The fact that both my husband and I had credit scores hovering around 800 helped tremendously to move into this new level credit card benefits, the sign up promotion.
Your Credit Score
As explained in the last blog post, a very good to excellent credit score is one of the most important aspects of qualifying for extreme credit card benefits. But let’s go back a step to when credit cards had cash rewards that paid out in increments of a minimum of $25. It was not difficult to earn about $40 over a two month period. But that is not extreme credit card benefits and I needed extreme benefits.
What Extreme Credit Card Benefits Involve
Extreme credit card benefits involve more than just getting monthly cash rewards or travel points. They require additional incentives from the credit card company to get someone to apply for a particular credit card. So that is exactly what the credit card companies started doing. They began to offer either large sign up cash or travel points promotions or both when a certain amount of money was charged by the customer in a given amount of time. The cash usually ranges between $100 and $200. Payment occurs after $500 or $1000 in charges. The period of time to make the charges is usually 3 months.
People who are solidly middle class can make a lot more cash back. But if one compares the percent of return rather than the cash itself, someone in The Former Middle Class can match and even outrank the returns that the Middle Class and above can. In one situation, I got a 40% sign up promotion cash bonus! I only had to spend $500 over a three month period. So $200 cash back from $500 spent is a 40% return. This is definitely Mastering The System of Extreme Credit Card Benefits.
Qualifying For Extreme Credit Card Benefits Cards
We know that the first and most important thing is to achieve and maintain very good to excellent credit. The next thing is to apply for such a card after you have paid your balance in full and have zero debt. Lastly, it is important not to apply for too many credit cards in a short amount of time. Straight forward? So it would seem. But it can get complicated and time consuming requiring a actual bookkeeping system to stay on top of things. This will be discussed in a future post. This is the system of tools that I use to keep track of my extreme credit cards benefits card accounts.
In Conclusion
It can become very enticing to continue to apply for and collect extreme credit card benefits cards. They offer a one time promotion that is a lot more than regular cash rewards or travel points. But one must proceed with caution by keeping diligent track of all of one’s accounts as the number of the hot credit cards in one’s possession increases. If a person accumulates a large number of these cards, it can become a job just keeping track of everything. Obtaining these cards can be a way to earn some extra non taxable income for The Former Middle Class person. But at the same time, unless it is a real necessity, it is easier to have a few top notch cards that offer cash back and are “tied to a travel program like an airline or a hotel”. According to Jim Wang of WalletHacks, they offer the best bonuses.
Sources and Resources
The Former Middle Class
Wallet Hacks, Best Credit Card Promotions
Using Credit Cards for Survival and Profit
The Principles of Good Credit Card Hygiene
Mastering The System of Extreme Credit Card Benefits
The Credit Card Maven
Savvy Saving Survivalism
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Using Credit Cards for Survival and Profit
My second eBook, USING CREDIT CARDS for Survival & Profit is now available on Amazon along with my first, The Poor Middle Class Crisis. The second eBook temporarily is available in the older version entitled, Mastering Credit Cards for Survival & Profit.
Introduction
I am The Credit Card Maven. I have learned ways to use credit cards for survival and profit. This post is designed to share these techniques with my friends and followers.
I started using charge cards many years ago. I never abused them. The bills were always paid on time. But they were not credit cards. They were charge cards for department stores. At one point, I decided to eliminate most of them.
The Credit Score Scale from Shutter Stock®
Credit Cards Replace Charge Cards
My FICO score has always been in the excellent range. In spite of that, I had no idea how FICO scores worked. It was just one of those mysteries of life. I continued to carry a limited number of cards as well as having a credit score of over 800. When our financial situation changed in 2008, credit cards took on a totally new meaning for us.
Credit Cards Become Currency
Due to circumstances which I detail in my first eBook, The Poor Middle Class Crisis Introduction, our financial profile changed drastically. Our equity was gone as well as our income. We no longer had savings. Suddenly credit cards became a way to earn money and derive other benefits from them, as well.
The biggest incentive to use credit cards as currency was our need to take a trip to Colorado to visit our families. Because of that, I signed up for a total of four travel rewards cards. One of them was the airline travel rewards card. I signed up during a promotion. If I spent $1,000 in three months using this card, I would get 30,000 bonus points and $100. off the airfare. I have earned enough points for a free trip to Colorado and back, again. Hopefully it won’t take six years to see our families again.
Mastering Credit Card Use
As you can imagine, using so many cards can become very confusing. I am still perfecting my system. But I can tell you what I have learned so far. We are fortunate enough to have excellent credit. So we were easily able to secure all the cards we wanted. If you don’t have great credit, do everything you can to improve it. There is a link to an article from NextAdvisor.com in the Sources and Resources section about paying down if not getting out of debt. Do read it.
Treasure An Excellent FICO Score
For the person with excellent credit, you want to keep it. Great credit is precious. Here are some golden rules on how to train yourself to use your credit cards wisely.
• Sign up for cards that best meet you needs and spending habits. There are websites that show you which to use.
• Always pay bills in full and on time.
• Make a chart of closing and payment due dates for all your cards.
• Keep an accounting of how much you spend each month so that you do not exceed your budget.
• Use no more than 30% of the credit limit you have on each card.
• It is better to charge larger amounts on a few cards than to charge small amounts on many cards.
• For cash rewards cards, write on the card itself the cash back % you get on each category of purchases.
• Do not close old credit card accounts. It is best to have as long a credit history as possible.
• Avoid fee based cards unless the benefits greatly outweigh the out-of-pocket expense.
Credit Card Myths and Tips
Myths about credit cards abound. So here are some tips to dispel them.
• A credit score will not necessarily be lowered by having numerous cards. But don’t sign up for too many too close together. That can appear to the credit card score companies like you are in crisis.
• Almost every credit card company has a ‘Check Your FICO score’ feature. You can use it without negatively impacting your score. This is a ‘soft’ check.
• A ‘hard’ check can negatively impact your score. That could be checking by a loan company, a future employer,etc.
Conclusion
There is so much more that can and will be said about credit cards, their use and mastery in future posts. Credit cards can be like a loaded gun. They can be dangerous, even deadly if you do not know how to use it. On the other hand, they can be a lifesaver when properly trained.
Sources and Resources
0% Interest Card Offerings Now, from NextAdvisor
Getting the Right Card for Your Balance Transfer
Credit Cards Dos and Don’ts
The Ten Best Cash Rewards Cards from CreditKarma.com
How To Pick The Best Credit Card for You from NerdWallet.com
Find The Best Credit Card Offers for You
5 Money Problems You Can Solve With A Good Attitude
There are so many invaluable posts on the WalletHacks.com site, I am linking to their archive
Using Credit Cards from The Alison D. Gilbert Blog
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Living A Consciously Frugal Life
Savvy Shopper Savings with Credit Cards: Introduction
Savvy Shopper Savings is essential to living a consciously frugal life as a member of The Former Middle Class, the Facebook page. For me, one of the most valuable tools in my financial survival toolkit, introduced in the Financial Survival Toolkit blog post, has been the responsible use of credit cards and as a result, the invaluable benefits that I have derived from them.
Credit cards can be both a blessing and a curse. The suggestions given here about them apply only to people who use the responsibly and have excellent credit scores. I have used credit cards for as far back as I can remember. I have always paid them on time. My credit score is excellent, as a result. I have written previous blog posts about credit cards. But very recently, I realized recently that there was much more to be gained from having credit cards than just having an excellent credit score. They can be an essential tool of savvy shopper savings.
When I realized their invaluable potential, I began an in-depth research project into their use. There are two types of credit cards that fit into this category, cash rewards cards and travel rewards cards. My study has included both. Many websites and blogs specialize in savvy shopper savings with the use of credit cards. Here are two PDF booklets I compiled for the abundance of information available from research on the Internet.
The Best Cash Back Credit Cards
The Best Travel Rewards Credit Cards
Savvy Shopper Savings with Credit Cards: Conclusion
The responsible use of credit cards for cash and travel rewards is just one of countless ways to live a consciously frugal life. Future blog posts will reveal more about the use of credit cards as one-time high yield instruments as part of our savvy shopper savings strategies.
Sources, Resources and Internal Links
Savvy Shopper Savings, the Facebook group
The Former Middle Class, the Facebook page
The Viper Tool Storage Company, the website
Wise Bread, the website
WalletHacks, the website
NerdWallet, the blog
previous blog posts about credit cards
the Financial Survival Toolkit blog post
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Money, A Government Commodity
Introduction
In addition to the inequity of money is the fact that many of us no longer have enough income or savings to live the traditional life we grew up with or used to have. In other words, we are no longer Middle Class Americans. We are part of the Poor Middle Class Crisis. Many of us are in debt. Many of us baby boomers are now seniors and beyond significant employability.
The most devastating causes of the loss of one’s money can be a serious illness, a death, the termination of a good job, as well as storms and earthquakes. A significant economic downturn can scoop up more of the Middle Class and deposit us, like yesterday’s trash, into the heap of The Poor Middle Class. Some people ended up in the depths of poverty and homelessness from the horrific hurricanes of 2005 and 2012 and the stock market crash of 2008.
Learn more about The Poor Middle Class Crisis and our story in the Poor Middle Class Crisis eBook available on Amazon.com, the introductory facebook page of the same name and the companion facebook resource, support group, Financial Survival Resources for The Poor Middle Class.
Time For A Change
Here is an introductory video to the homesteading life, Off Grid with Doug and Stacy.It is time for a change, a paradigm shift to a new kind of economy. We need an economy that offers alternatives to money as its foundation. We no longer have a large Middle Class or the ease to be part of it. Our government’s focus has shifted. We have a growing Poor Middle Class and increasingly fewer people in possession of the government produced money.
If the economic paradigm does not shift, this is the direction we are headed in. Many people will have to live like slaves. They will continue to have to work two and even three minimum wage jobs. Even then, they may barely make enough money to survive. Also, they may still need government assistance, like food stamps to make ends meet and health insurance to survive.
Disastrous Results From Uneven Distribution of Government Money
If people are not fortunate enough to find work, are not able to work, can’t support themselves or their families and cannot get enough government assistance, they may also become homeless. The number of homeless people in this country is also increasing. One of the changes that needs to take place does not involve going backwards.
The problem will not be solved by increasing jobs in outmoded technologies that will be short lived and not provide health insurance. It will also not be solved by the government’s shifting money around where even less goes to the needy and more goes to national defense. As we know, the haves will rarely give enough to help the have-nots unless they are forced to. It does not look like the current administration is of the mind to force the very wealth to do so. This would require a substantial tax restructuring. This is not going to happen, either. Therefore, what is required is a completely new kind of economy.
Exempt From Disaster
The ultra-wealthy 1% and other very wealthy people might be exempt from needing to be part of this paradigm shift. They could keep their money. In fact, they would continue to monopolize this government commodity. But for those of us who suffer from the lack of money and the results of the unwillingness of the wealthy to share theirs with us, we need a system for The Middle Class, The Poor Middle Class and The Poor to rely as little as possible on government controlled money. As the saying goes, ‘the solution is not in the problem’.
Alternatives To A National Government Money Based Economy
I believe that we are in the beginning of this paradigm shift. Money is becoming harder to come by for too many of us. Therefore, we need to be less dependent on it. As a matter of fact, cash produced by our government is much less involved in our daily goods and services transactions. Here are some of the ways this has already changed:
• Community currency or local currency is defined by Wikipedia as “In economics, a local currency is a currency that can be spent in a particular geographical locality at participating organisations”.
• Bartering all kinds of food and products (on an individual or community cooperative basis) The Barter Network
• Acquisition without money such as foraging for food, using natural sources of energy, street find, reuse of existing found materials, scavenging for food and other usable items
• Homesteading and off grid living as close to what nature can provide with a bare minimum of cash to live such as Off Grid with Doug and Stacy
• Bitcoin is a digital, international coin system not produced by the US government
Conclusion
This is just the beginning of opening the doors and windows of the proverbial ‘thinking outside the box’. Paradigm shifts do not take place overnight. They only appear to in an historical perspective. We do not have that perspective, yet. This movement is much too new. But the good news for many of us is that is it a is happening and it is in its beginning.
Sources & Resources
The Viper Tool Storage Company
The Poor Middle Class Crisis eBook
Financial Survival Resources for The Poor Middle Class
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USING CREDIT CARDS
Credit Cards
WARNING, using credit cards can be like carrying a loaded gun. At the same time, they can be financially beneficial if you know how to shoot. On the other hand, they can be deadly if you don’t. In fact, many people do end up in debt using them. The interest that accumulates can make it impossible to ever pay them off. Groups that help people get out of debt prohibit their use altogether.
But in my case, using credit cards is part of my financial survival toolkit. With this caveat, I also strongly suggest the following. If you are not able to be vigilant using them by never missing a payment, do not include them in your financial survival toolkit.
How I Make Money Using Credit Cards
Yes, I have actually learned how to accumulate cash or credit towards purchases using my credit cards*. So far, I have discovered two ways to create income. If you know of others, please let me know. I have the following cards:• a cash rewards card
• a travel points card
* The ‘income’ from them, the cash rewards are not taxable because the money is a discount or purchase rebate, not income itself.
Cash Rewards Credit Cards
Some banks offer credit cards that accumulate cash points for purchases. The points are a percentage of the expense. They range between 1% and 3%. I have been able to earn about $20/month with this system.
* Mention of this card is in no way an endorsement of it.
Travel Rewards and Sky Miles Credit Cards
I signed up for a travel rewards credit card when the bank had a special promotion. If I charged a certain amount of purchases within three months, I would receive 20,000 in travel points. I did this. The travel points will go towards a trip out of state to see family and friends.
* Mention of this card is in no way an endorsement of it.
Sources & Resources
Here is a list of the best credit cards for a variety of categories. You can explore these websites for even more suggested card categories.Excellent Credit Scores:
Excellent Credit Score Cards
Cash Back:
Best Credit Cards for Cash Back | Compare Cards
Travel:
Best Travel Credit Card-BankAmericacard Travel Rewards
Credit Karma | Best Travel Credit Cards
General use:
Best Credit Cards for 2017 | Compare Cards
Credit Karma | Best Credit Cards
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THE POOR MIDDLE CLASS CRISIS: Introduction
INTRODUCTION
The Poor Middle Class Crisis is the story of The Poor Middle Class. It is designed to be a resources guide for the Financial Survival of the Poor Middle Class. This guide is an instruction manual for building resources known as a ‘financial survival toolkit’. It also encourages readers to start or find and participate in a ‘financial survival support group or community’.The Poor Middle Class, itself, is a relatively new phenomenon. Our personal membership was precipitated by the 2008 stock market crash the same week as a primary income earners job layoff. For others families, becoming affected by the poor middle class crisis may have been due to the subprime mortgage scandal. It cost many families their homes. The Poor Middle Class are composed of people who were once middle class, who likely have college degrees or advanced degrees, had careers and good jobs, had homes with equity in them, had pensions, had good health insurance and savings.
The Challenge for The Poor Middle Class
Financial survival has become a critical issue for the Poor Middle Class. This is a crisis that has led to the growing need for new, resourceful financial survival tools. These tools are not exclusive to one demographic, one age group, a particular sex, or one location. But because I am a ‘senior’ living in New York State, some of the tools and resources may apply specifically to people in this demographic.As a result, I especially welcome your comments and additional suggestions to expand the resources for anyone’s financial survival toolkit. Therefore, I invite you to visit and participate in my companion Facebook page, The Poor Middle Class Crisis & Resources.
Financial Survival
Now, we have almost nothing left of that life. But we are not technically poor. Therefore we do not qualify for the level of government benefits reserved for those living in poverty. But we are no longer middle class, either. We are in a place where we cannot meet the obligations of a middle class lifestyle. But we are not poor enough to get enough assistance to survive, either. We also are unable to find or maintain jobs like we had before the financial crisis began. The result is that we need to become very resourceful to survive. Therefore, I needed to gather new financial survival resources. I have created a ‘Financial Survival ToolKit’ in my mind to transform this crisis into an adventure rather than a place of fear.
My Financial Survival Toolkit
It has taken me years to compile the resources, tips and suggestions I have in my financial survival toolkit. In addition, I continue to add to it. I am a visual person so I find it helpful to choose visual tools to help me implement concepts and ideas. I love the cabinets and tool boxes created by the The Viper Tool Storage Company. Therefore I chose one of their set ups to be my virtual financial survival toolkit. Many of my real tools are based on my own experience. Some are based on ideas and tips I have gathered on my financial survival journey. There may be resources that you already use. Other tips and tools may be new, hopefully useful suggestions. I also welcome any input and suggestions you may have. Please enter them in the comments section.Financial Overview
I keep an overview of my monthly finances at all times. This means that I monitor my income and expenses with the benefit of online banking, automatic bill paying and computerized bookkeeping. It includes payment of most of my bills by autopay after my monthly income becomes available. There is a flow to all of this. It has taken me some time to create a system to coordinate the ins and outs of it. Sometimes I feel like a juggler. At other times, I still feel like a beginner.The Poor Middle Class Crisis And Solutions
There are plenty of financial survival tools following this post in the series, The Poor Middle Class. The next post is A BUDGET: THE MOST ESSENTIAL FINANCIAL SURVIVAL TOOL FOR THE POOR MIDDLE CLASS. Read it and others on The Alison D. Gilbert Blog.
Sources & Resources
I’m Middle Class and Poor: It wasn’t supposed to be that way5 Charts That Show How the Middle Class Are Disappearing
Lest We Forget: Why We Had A Financial Crisis
The Secret Shame of Middle Class Americans
My Secret Shame from The Atlantic by Neal Gabler
Your Stories of Financial Struggle
Americans are trapped in a ‘cycle’ of financial insecurity
Young Invincibles, Financial Health
Report on Financial Health of Young Americans
How To Combat The Senior Poverty Epidemic
Parents Taking on Child’s College Debt and Putting Themselves at Financial Risk
Viper Tool Storage Box aka My Financial Survival Toolkit
