6 Ways To Make Your Good Credit Work For You

by Guest Blogger on 2008-10-1614

If you’ve got good credit, you’ve got a lot of leeway when it comes to dealing with credit card companies. Why not leverage your good credit? Some of the best credit cards offer “rewards” to consumers with excellent credit standing.

When most people think of their credit cards they tend to groan at their high interest rates, or remember their past late fees. The truth is, credit card companies are completely willing to work with you, and can even renegotiate your contract with them at a moment’s notice.

All you have to do is manage your credit responsibly first. If you do this, then you have almost limitless options that will allow you to pay less on your credit cards, to remove fees, even to get a better APR!

Let’s take a look at some of the doors that open when you have a credit score above 700. If you want to use these tactics, and you aren’t sure what your credit score is, you can check it by visiting myFICO.com or sites that yield free credit scores.

credit card rewards

6 Excellent Ways To Leverage Your Good Credit

1. Renegotiate your APR and get your fees waived.

As long as you faithfully pay your bills on time, it is a simple thing to call your credit card company and ask them to lower your APR, transfer you to a new credit card account with better terms, or remove that last late or over-the-limit fee.

Be aware that you will have to talk to more than one person in order to make this happen, and it will probably be a manager that finally fixes it for you. The general customer service reps are not known for being helpful, and they may actually tell you it cannot be done. This is a lie. All credit card companies have these procedures. Just threaten to transfer your balance to another company and watch the magic happen.

2. Consider balance transfers.

There are tons of people out there who are paying more interest than they need to each month. Are you one of them? If you’ve had a credit card for a long time, and the interest rate isn’t as low as you’d like it to be, consider a balance transfer to a card with a better rate. To successfully do this you will need a credit score that’s over 700. 720 — 750 is an even better range. If you have a credit score over 720 you shouldn’t be paying more than 10% interest on a credit card — unless it is a store credit card like Macy’s of Nordstrom’s.

Balance Transfer Pitfalls – Nearly all balance transfer cards charge a transfer fee. Also, the interest rate you get at first may just be an introductory offer. So read the fine print carefully before agreeing to any offers. After all, the idea is to save yourself some money, not get bogged down in fees and red tape.

3. Refinance your home or vehicle.

Yes, I know the economy is in the crapper, and “banks are not lending” but that’s really not true. Though banks may not be lending to subprime borrowers, folks with good credit will find that right now, the world is their oyster! If you have good credit, then this is an excellent time to refinance your home, or your auto loan.

I can’t stress enough that paying too much in interest every month makes no sense if your credit is good! Just give your credit score a check, and see how you can cut corners by lowering your interest rates on your regular monthly payments.

4. Buy foreclosures

It’s sad that so many have fallen upon hard times during recent events. The number of home foreclosures is higher than it has ever been — up 57% from January 2007. Regardless of what everyone else is doing or going through, now is an excellent time to invest in a foreclosed home because you can rent it out, and earn some extra monthly income. I do realize that a project like this is not for everyone. But for those few intrepid fellows out there, you can use your good credit to generate income for you every single month through your ownership of a rental property.

5. Get the most out of your checking and savings accounts.

Did you know that ING Direct will only let those people with good credit open a checking account? This is because the bank offers killer overdraft protection. Instead of charging you a flat fee like other banks, they simply lend you the money and charge you a set rate of interest until it is paid back. With good credit, you’ll qualify to earn interest in their ING Direct Electric Orange checking account. So again, there are great opportunities for the good-credit-only crowd.

6. Rack up those miles and points, or earn some cash!

If you have a credit score of over 720 and you don’t already have a rewards or cash back credit card, then you are letting one of good credit’s most obvious benefits pass you by. There are lots of cash back credit cards and rewards gas credit cards out there. You can either get money back at the end of the month, or free gasoline.

Other credit cards offer money back through Upromise online so that you can save money for your child’s college expenses. All in all there are so many different flavors of rewards cards out there, that it would be a difficult job to list them all. If something like this appeals to you, then you can definitely find a card that will give you cash back or rewards that will benefit your life right now.

Each of these six benefits are for people with good to excellent credit only. If you work hard to keep your credit score as high as possible, you may want to take some time out today. Spend that time thinking about how you can make your good credit rating work for you. After all, why let the credit card companies have all the fun?

Mr. Credit Card from AskMrCreditCard.com writes credit card reviews and answers reader’s questions about credit cards each day. If you enjoyed this post, why not leave a comment below and tell him about your experiences?

Copyright © 2008 The Digerati Life. All Rights Reserved.

{ 9 comments… read them below or add one }

WealthBoy October 16, 2008 at 9:33 am

I agree it’s definitely a good time to buy foreclosures. However, I think it may be difficult to find lenders willing to accept you. I have a friend that is a very successful real estate investor, and her husband told me that as of late they have had a hard time originating new loans. She’s not even a flipper. She buys, holds, and rents and is cash flow positive.

If seasoned, successful investors are having difficulty getting funded, it may be difficult to finance investment properties. If you have cash, there’s no doubt the time is now. However if you require financing it may be very difficult to find a bank that will approve you. That being said, if you are looking to purchase a home as your primary residence, there is no better time to steal someone’s house. The best way to quickly build equity in your home is to purchase it well below market value.

Donny Gamble October 16, 2008 at 11:19 am

If I was a person who had good credit in this type of market, I would probably wait a little bit until the market recovers from what we are experiencing right now. I think I will receive better offers and better deals if I wait a little bit.

jim October 16, 2008 at 11:28 am

#1 is such a great and simple tip, simply asking can get you percentage drops on your debt (future or present) and is the fastest return on your time.

Alex Wilson October 16, 2008 at 3:17 pm

Australia has similar credit card deals, balance transfers end up getting used in ‘card hopping’ tricks in which you can effectively refinance your credit cards 10-20 times over the course of 5 years and never pay a cent in interest!

Drop me a comment sometime at my blog: savingsguide.com.au.

Cheers mate,

AJ

Curious Cat Investing Blog October 16, 2008 at 8:22 pm

Here is another tip avoid leverage (in the financial sense). That will help you keep your good credit and then when you need a mortgage you will pay less than if you have bad credit.

Taxrascal October 17, 2008 at 5:40 pm

These are some great tips. For the most part, you seem to be avoiding the kind of thinking that got us into the current mess, since a lot of these tips are about using your status as a good borrower to get lower interest, rather than to borrow more money.

Mr. CC October 18, 2008 at 3:57 am

Thank you very much SVB for running my article, and thanks everyone for the excellent comments!

@ Wealthboy: It is definitely easier to buy with cash right now than credit, and I am sorry to hear that your friend is having trouble getting approved. It may be that she has “too much” available credit, even though her score is high.

Things like that did not matter as much before the current credit crunch, but you are right – things are tightening up everywhere.

@ DonnyGamble: That’s a very valid point. If you do use these ideas, and get turned down (because you have too much credit, or simply because the credit card companies do not feel they have as much room to negotiate APR’s and such) then waiting a little while, say until after the new year will probably yeild better results.

@ Alex Wilson: I did not know that Australia’s credit system was similar, but that’s very interesting! I will definitely check out your blog.

@Curious Cat: It is certainly true that the higher your credit score is, the lower your interest rate will be! I’ll check out your article on it.

@ Taxrascal: I am very glad you liked the tips. Personally I love credit and credit cards, but I do no believe in overextending yourself, or being irresponsible with it. You are so right! The overextension of credit by banks is exactly what got us into this mess.

Mr. CC October 18, 2008 at 4:01 am

@ Jim: You are smart to think of the money saved in terms of your time. When it all comes down to it, it’s the time, not the money that matters.

Ryan November 3, 2008 at 1:43 am

I’ve been looking to do some balance transfers because my near 10k in credit debt really hurts me. Unfortunately with a 640 I don’t qualify for the quality balance transfer programs and lenders really don’t want to touch me in the first place.

I literally am still paying an extra 15% on everything for poor choices nearly 8 years ago.. make smart choices with your credit youngins!

-Ryan

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