Lyle Daly

Lyle Daly is a personal finance writer who specializes in credit cards, travel rewards programs, and banking. He writes for The Ascent and The Motley Fool, and his work has appeared in USA Today and Yahoo! Finance. He was born in California but currently lives as a digital nomad with a home base in Colombia.

Recent Posts

MOVED Can You Pay Off 1 Credit Card With Another? It's Complicated

Posted by Lyle Daly on Jan 1, 2020 6:00:00 AM

There's no direct method, but there are a couple of indirect options.

If you have multiple credit cards, you've probably wondered at some point whether you could just use one to pay off the other.

Plenty of consumers ask this question because there would be obvious benefits if the answer was yes. It would be easier to manage when money's tight, and better yet you could earn rewards on one credit card by using it to pay another card's bill.

Woman choosing and removing one credit card from a set of three.

Unfortunately, you can't earn rewards that way. And when you're paying a credit card bill, there's no way to add another credit card as a payment source. There are two potential workarounds -- but only one of them is a good idea.

Balance transfers

If you want to pay one credit card with another, the smart method is a balance transfer. To do this, you'll either need to log in to the online account or call the card issuer of the card you want to use for payment. You'll then provide the card number for the credit card with the balance you wish to transfer over, as well as the amount to transfer.

There are a few things to keep in mind with balance transfers. Not all credit cards offer this option, and among those that do, many charge a small balance transfer fee. Some cards have limits on the amount you can transfer to them. Even if a card doesn't have a balance transfer limit, your transfer amount and any transfer fee can't total more than your credit limit.

Consumers typically use this method to get a lower interest rate on their credit card debt, often opening balance transfer cards that offer 0% introductory APRs for a set period of time. 

If you can't pay your credit card bill in full and you have a good credit score, one of these cards can help you save money on interest. You'll need to make minimum payments, but you won't have interest charges piling up, at least during the card's introductory period.

Cash advances

The alternative route is to get a cash advance on one credit card, and then use the money to pay your other card's bill. Most credit cards offer cash advances, although cash advance limits are usually much lower than the card's total credit limit. You will also need to pay a cash advance fee on any amount borrowed using this method.

The reason why getting a cash advance from your credit card is such a poor decision is the interest. Credit cards have separate cash advance APRs, and these APRs tend to be much higher than the standard purchase APR.

To make it even worse, there's no interest-free grace period with cash advances. For purchases, credit card companies must give you a grace period of 21 days before charging any interest. This is because of the CARD Act of 2009. That law doesn't apply to cash advances, so credit card companies can start charging you interest on those immediately.

It's never a good idea to get a cash advance, and it also doesn't make any sense to use a cash advance to pay another credit card bill. You'd be better off making a minimum payment and carrying the balance on the original card for the time being. You'll pay interest, but at least it will be at the purchase APR and not a higher cash advance APR.

What to do if you can't pay your credit card bill

If you can't pay your entire credit card bill, the right move will depend on the amount you owe.

For credit card debt that you won't be able to repay within about three to six months, a balance transfer is the way to go, assuming you can qualify for a balance transfer card. But if you're confident you can pay off all your credit card debt relatively quickly then it could be best to simply focus on paying it down as fast as you can without transferring the balance.

And while a cash advance may initially seem convenient, the fee and the interest you'll pay mean you should avoid this option at all costs.

Topics: Credit Cards, Balance Transfer

MOVED The 5 Biggest Drawbacks of Having a Lot of Credit Cards

Posted by Lyle Daly on Dec 31, 2019 2:00:00 PM


Having a lot of credit cards has its perks -- but it's not all plane sailing.

With the array of benefits that the best credit cards offer, it's tempting to sign up for every card that you like. More cards mean you can get more sign-up bonuses, earn extra rewards in additional spending categories, and take advantage of even more perks.

That's been my strategy, and at this point, I have over a dozen credit cards. Although you can get substantial value this way, there are also drawbacks to be aware of before you start opening multiple cards per year.

Man having a mental breakdown while clutching two big fistfuls of credit cards to his head.

1. You have more accounts to manage

Every time you add a credit card to your wallet, you make your finances more complicated. You have another bill to pay, which makes a missed payment more likely (although you can mitigate this risk by setting up auto-pay). It's also another account that you need to monitor for fraud.

When you have one or two credit cards, you probably won't have much trouble. But with more, it becomes much more of a challenge to manage all those accounts. Any missed payments or other mistakes can cost you money, too, so you should only take on this kind of responsibility if you know you can handle it.

2. It's harder to get approved for new credit cards

My biggest annoyance with having so many credit cards is that it has become significantly harder to get approved for new ones. Quite a few credit card companies now deny applications because the applicant either has too many credit accounts open already or because they've applied for too many cards recently.

If you're used to getting your applications easily approved because you have a good or excellent credit score, be prepared for that to change as your number of cards increases.

3. You could pay more annual fees

Many of the credit cards with the most perks, and especially the most popular travel cards, carry annual fees. It's easy to justify paying an annual fee for a card if you use it frequently and get a lot of value from it. When you have multiple cards with annual fees, then you need to carefully weigh whether you're using them all enough to make those fees worth it. And even if the answer is yes, it can still get expensive.

4. You need to remember which card to use for each purchase

One advantage of having multiple credit cards is that you can earn more rewards on your purchases. For example, you could combine one card that earns a solid flat rate on all your spending with cards that earn higher bonus rates on specific categories, such as grocery stores, travel, dining, and gas. It's a great way to increase the amount of cash back or travel points you earn.

The downside is that to earn those extra rewards, you'll also need to know which card to use for which bonus category. That can lead to situations where you're standing at the register trying to remember which of your many cards will get you the most rewards.

5. It can affect your credit score

The number of credit cards you have doesn't affect your credit score, but there are still a couple of ways that having lots of credit cards can hurt your credit.

The average length of your credit history is a factor used to calculate your score. If you open several new credit cards, it will decrease that average account history length.

Another factor that impacts your credit score is new credit inquiries, which includes the hard credit inquiries that occur whenever you apply for a credit card. If you apply for several credit cards, you'll have multiple hard inquiries on your credit file, thus bringing down your score.

Tread carefully with credit cards

There's nothing wrong with carrying multiple credit cards, and in fact, it can be a smart strategy for some consumers. But it also means you'll have more risks and complications to deal with, so you should err on the side of caution. Start slow, and if you feel like you can handle more, do it one card at a time.

Topics: Credit Cards, Travel

MOVED 7 Unnecessary Expenses to Cut in 2020

Posted by Lyle Daly on Dec 31, 2019 6:00:00 AM

Here's how you can tighten up your budget this year.

If one of your New Year's resolutions is to save more money, then seeing where you can reduce your spending is a great place to start. Most consumers, including those who aren't big spenders, have at least a couple expenses that they could do without.

Every dollar counts when it comes to your expenses, as even trimming a small amount per month can save you hundreds of dollars per year. To give you ideas on where you can save, here are some common expenses that you could and should eliminate.

A couple of young women crossing the street and carrying a massive number of shopping bags.

1. Cell phone payment plans

As exciting as it is to get the newest smartphone every year, it's not a good decision to finance a phone on a payment plan. You're taking on an extra monthly bill for a device that you don't need.

The smarter approach is to pay for your phone upfront and keep it for as long as it's working well. If having the latest model is that important to you, then you should make that one of your savings goals and put away enough each month that you can pay for it in full.

2. Bank account fees

Bank fees may not be super expensive, but if you're paying them on a regular basis, they can add up. And with all the great bank account options available, there's no reason to pay any of them.

There are plenty of banks that won't charge you a monthly maintenance fee, regardless of how much you have in your account. You can find a bank that either reimburses ATM fees or has a large network of ATMs for you to use. The other common bank fee is an overdraft fee, but you can avoid that by keeping track of your balance or setting up overdraft protection.

3. Home phone service

Odds are you have a cell phone that does everything your home phone does and much more. If you're still paying for home phone service, it's time to pull the plug.

4. Storage

A storage unit can be useful in situations where you're short on space and need somewhere to leave some of your belongings, but you should only view it as a temporary solution.

If you have property sitting in storage for months or years, you should start working on a plan to get it out of there. That could mean selling your stuff, finding a place in your home to put it, or a combination of the two. But it doesn't make sense to pay hundreds or thousands per year to store things you're not using.

5. Cable

Gone are the days when you needed cable to watch the best shows. These days, there's plenty of quality content available through the growing number of streaming services.

And while it used to be challenging to watch live TV or sports without cable, that has changed as well. Several online services offer channel packages with live TV, and if you're a big sports fan, most of the major sports leagues also offer online subscription packages to watch their games.

6. Unused subscriptions

Subscription services can be valuable if you're using them -- I did just mention the benefits of entertainment subscriptions, after all. The issue is that it's easy to forget to cancel a service you're not using, or to hang on to one that you only use every so often.

With these types of services, the smart approach is to be ruthless. If it's not something you use often, cut it. Save yourself the money for the time being, and if you decide you need it later, you can reactivate your subscription.

7. Credit card annual fees

There's nothing wrong with paying an annual fee for a credit card, but if you have multiple cards with fees, you should probably choose only the one that provides you with the most value. Unless you're a travel rewards enthusiast and you spend a lot of money on your credit cards, it's difficult to carry several cards with fees and get your money's worth from all of them.

Making life more affordable

You don't need to make big, sweeping changes to your life to save more money every month. All of the expenses on this list are things that you can cut without reducing your quality of life.

Topics: Banks

MOVED 5 Financial Habits You Should Start in 2020

Posted by Lyle Daly on Dec 27, 2019 10:00:00 AM

These habits can make a big difference to your financial situation.

The start of the year is when many consumers decide that they're going to get better with money, but that's a lot easier said than done. Without a solid game plan for how you'll improve your finances, you could fall back into the same old patterns.

That's why it's important to focus on building positive new habits. And there are several effective financial habits that can help you save more and spend less.

Bird's eye view of an older couple examining a spreadsheet and using a calculator.

1. Set up automatic transfers to your savings after every paycheck

If you keep getting to the end of the month and discovering that you don't have any extra money to save, it could be because you're not making your savings a priority. When saving is the last item on the agenda, it's also the most likely to be pushed to one side.

The solution is to move saving money to the top of the list by making it the first thing you do after you get paid. And by setting up automatic transfers between your bank accounts, there's no risk of forgetting.

You don't need to save a lot if money's tight. Even a small amount is better than nothing, and once you start saving, you'll be more motivated to increase how much you save when you're able.

2. Use a rewards credit card for all your spending

When you have the option to pay by credit card, there's little reason to go with a debit card or cash. Rewards credit cards allow you to earn cash back or travel points on your spending. You won't get anything back by paying cash, and most debit cards don't earn purchase rewards, either.

That's a huge advantage, so it makes sense to use a rewards card on any purchases where credit card payments are accepted without a fee.

3. Set up savings targets for future expenses

You probably plan ahead and make sure you have enough money to pay all your monthly bills, such as rent, gas, and internet service. But what about those expenses that don't arrive on a monthly schedule? If you have a car, it's going to have maintenance and repair costs. If you want to go on a vacation, that's going to cost you some money.

It's important that you have money ready for these future expenses. The best way to do this is to estimate how much you'll need and when you'll need it. That's your savings target, and you can then break down how much you need to save per month to cover that expense.

4. Review your spending monthly

When you don't keep an eye on your expenses, it's easy to lose track of how much you're spending. You could end up spending much more than you realize on shopping, meals at restaurants, and other discretionary expenses. Another common occurrence is paying for all kinds of subscription services that you rarely use.

A monthly review of your credit card bills and banking statements is a good way to keep your spending in check. Here's what you should look for:

  • Have you been doing too much unnecessary spending? Focus on reining that in next month.
  • Are you paying for any services you don't need? Cancel them. Don't wait, because then it's more likely that you'll forget.
  • Have the prices gone up on any monthly services you pay for? Call to see if you can negotiate a better deal or shop around for other providers.

5. Put at least 10% of your income towards your retirement

A large retirement nest egg is a must, and many Americans aren't saving nearly enough. Unless you want to work your entire life, you should set aside at least 10% of your income specifically for retirement. Note that 10% is just a minimum, and it's even better to save more, especially if you don't yet have much of a retirement fund.

Here's a smart way to look at it -- if you save too much for retirement, the worst-case scenario is that you can retire even earlier than expected. If you save too little, you'll need to work past the typical retirement age, go back to work after retiring, or struggle to get by on a limited amount.

Getting on the right track financially

You don't need to do anything complicated or time-consuming to attain financial security. All it takes is making these smart money habits a part of your everyday life.

Topics: Banks

MOVED How 1 Phone Call Can Get You More Value From Your Credit Card

Posted by Lyle Daly on Dec 26, 2019 4:00:00 PM

It's the credit card trick most consumers aren't using.

If the annual fee on your credit card is coming up for payment, you may be weighing whether the card is worth keeping. The benefits of the best rewards cards can certainly justify their fees, but that's only true if you make the most of them. And if you have multiple credit cards with annual fees, it's more likely that you won't want to pay for all of them.

The typical consumer goes with one of three options: downgrading to a no-annual-fee alternative, canceling the card, or deciding to pay the fee for another year. None of those are necessarily bad ideas, but there is a way you can get a better deal.

Older woman writing something down in notebook while on the phone.

How credit card retention offers work

Credit card companies don't want good cardholders who pay their bills on time to cancel. That's why they have what are known as retention offers. These are offers that representatives in the retention department can make to get you to reconsider.

Common examples of retention offers include:

  • An annual fee waiver
  • Bonus rewards
  • A statement credit after you make a set amount of purchases

To provide a firsthand example, I recently called to cancel a card with a $95 annual fee. Although the representative said she couldn't waive it, she could offer me a $95 statement credit that would apply after I made $95 in purchases, which would effectively cancel out the fee. She also offered me 500 bonus points during each of the next 16 billing cycles when I made at least $500 in purchases, for a potential maximum of 8,000 bonus points.

It doesn't take anything special to get these kinds of offers. You just need to make a cancellation call to your card issuer.

And although conventional wisdom is that you have a better chance at a retention offer if you use the card frequently, this isn't a requirement. I also called to cancel a card with a $149 annual fee. With this card, I immediately stopped using it after I got the sign-up bonus, so there was almost 11 months of inactivity. Despite that, the representative still offered to waive the $149 annual fee for me.

Using retention offers to your advantage

A retention offer can get you some extra value from a credit card you weren't sure about keeping, but that's not the only way to take advantage. You can also see what offers are available for credit cards that you don't want to cancel.

Here's what you do -- call the number on the back of your credit card and say that you're thinking about canceling. Make sure you have a cancellation reason ready. One simple reason is that you're not sure the card's benefits are worth its annual fee.

You'll be transferred to the retention department, where you can tell the representative why you want to cancel the card. Then, it's just a matter of seeing what they offer you. This may be negotiable, so don't be afraid to try asking for more. For example, if they offer you 5,000 bonus points for spending $1,000 in three months, ask if they'll bump it up for 10,000 points for $2,000 in spending.

If you receive a retention offer, you can accept it immediately on the call. The worst-case scenario is that they don't offer you anything. In that case, you can tell them that you've changed your mind and decided to keep the card. You don't need to worry about accidentally canceling a card you wanted to keep, because the representative would need to officially confirm the cancellation with you before processing it.

Maximizing your credit card's value

Considering you can check whether you're eligible for a retention offer in one cancellation call, it's smart to do this with all the credit cards you carry. There's a good chance the card issuer will offer you something of value, and there's no work or risk required on your part.

Topics: Credit Cards, Cash Back & Rewards

MOVED 6 Reasons to Make All Your 2020 Travel Plans Now

Posted by Lyle Daly on Dec 26, 2019 10:00:00 AM

Now is the time to plan your trips for 2020.

Where will you go in 2020? While it may seem like you have all the time in the world to figure that out and book your trips, there are several big benefits to making your travel plans sooner rather than later. You don't necessarily need to get every ticket, hotel, and vacation rental booked this second, but a broad-brush plan will make everything easier and more affordable.

Man in puffer jacket and parka crossing narrow bridge over forest and pointing intrepidly at mountain in distance.

1. You're more likely to follow through

We've probably all met someone who talks about all the places they'll go without ever making it happen. It's easy to tell yourself that this is the year you're going to Europe, or South America, or any other destination that interests you. But then life gets in the way. It seems as if you're constantly too busy, so you keep postponing your trip. Before you know it, another year has passed, and you're back to square one.

Planning is the key to making sure you go on the trips you want. Once you pick out a timeframe and start making the necessary arrangements, that trip moves from being a nice idea to a concrete plan you're putting into action.

2. You can watch for the lowest prices

It's not always true that you can get the lowest prices by booking early because prices often fluctuate. The advantage of making plans early is that you can monitor prices and book when you see a good deal. If you're shopping at the last minute, you're under more pressure to book something right away.

To have a better chance of snagging a low price, enter your desired travel dates on a booking site and set up price alerts. Another option is to book refundable airfare and accommodations. That way, if the price of either goes down later, you can cancel your original reservation and rebook it at the lower price.

3. There are more opportunities to book with travel rewards

If you use travel credit cards and you want to book using your points, you're much more likely to find award availability by shopping early. There's usually a limited number of flight seats or hotel rooms you can book with travel rewards. If you wait too long, other travelers may snatch them up first.

Keep in mind that many loyalty programs also have two types of airfare/hotel stays you can book with points: a standard option and a saver option that costs significantly fewer points. Saver airfare/hotel stays go much more quickly, for obvious reasons

4. You can request time off from your employer in advance

Although every employer is different, many of them handle time off on a first-come, first-served basis. When employees in the same role need time off, whoever asked first gets priority.

By figuring out your travel dates now, you can also request your vacation time at work. And in the event that your employer can't accommodate the dates you want, you'll have plenty of time to find alternative dates that work.

5. You have more time to budget and save for your trip

Vacations can be expensive, even when you're careful about your spending and you look for ways to save money on your trip. Unfortunately, this expense often pushes people to do one of the following:

  • Go into debt with loans or credit cards to pay for their trips
  • Skip travel because they don't have the money for it

Neither option is ideal. It's not a good financial decision to go into debt for an unnecessary expense, but you also don't want to miss out on traveling entirely.

The better solution is to save a set amount per month until the date of your trip. And if you get started on this early, you'll have a much easier time saving enough.

6. Popular activities can sell out quickly

It's never fun when you book a trip and learn about an activity that you'd love to do, only to discover that it's sold out. Many popular activities and events, such as tours and concerts, sell out several months in advance. If you miss out, you either won't be able to go or you'll need to pay a much higher price.

Don't wait

Although last-minute travel can be exciting, you're better off making your plans well ahead of time for the places you really want to go to. If you plan properly, 2020 could be the year when you take that trip (or trips) you've always wanted.

Topics: Credit Cards, Travel

MOVED 9 Travel Lessons I Learned After 1 Year of Living Abroad

Posted by Lyle Daly on Dec 26, 2019 6:00:00 AM

Here are my best pieces of travel wisdom.

In the past year, I've gotten more firsthand travel experience than ever before. It was my first year living as a digital nomad, and with no lease agreement tying me to one place, I've had the opportunity to move around and take a lot more trips.

Being a frequent traveler is a kind of crash course in what to do and what not to do. After spending time in three countries and counting, taking a dozen flights, and suffering through the occasional delay, these are the travel lessons I've learned to live by.

Middle-aged man looking at an iPad while sitting on rocks overlooking a sunset over mountains.

1. The most direct route is worth the cost

It's tempting to save some cash by booking airfare with more stops, but it's also important to consider how that extra stop will affect your travels. Flying to your destination will take you longer, and you may be more tired when you get there. You probably have limited vacation time to begin with. Do you want to spend more of it sitting around in an airport?

That doesn't even touch on the potential problems that could arise, such as delays or flight cancellations. Each stop you add to a trip makes it more likely something could go wrong.

2. Travel points you can redeem as cash are extremely valuable

I know that everyone raves about transferring points in hopes of those high-value redemptions, but I've found that I actually redeem points as cash more often.

If you're unfamiliar with how this works, some travel rewards cards let you redeem your points at a fixed rate to purchase travel in cash. For example, a card issuer may let you redeem rewards at $0.015 per point. In that case, you could use 10,000 points to purchase a $150 airline ticket.

This option comes in handy when you won't get a lot of value out of award tickets, which is often the case for shorter domestic flights. It's also helpful when there aren't any convenient award tickets available for the route you want.

3. You won't need to pack as much as you think

This is popular travel advice, but it's popular for a reason. Many travelers overestimate what they need to take and come to regret it when they're lugging around multiple heavy, awkward pieces of luggage.

A good way to approach packing is to treat it like writing a paper for school. Your first attempt is just the first draft. After that, it's time to review your work and cut unnecessary items. Odds are you won't use every piece of clothing and gadget that you initially thought you needed.

4. Always have a form of entertainment at the airport

If you're the type of person who dreads going to the airport, that could be down to a lack of planning. It's no fun to sit around an airport. But it can be nice to relax and spend the wait watching shows you downloaded or catching up on the reading you've always wanted to do.

Of course, this is especially important if your flight gets delayed. As frustrating as that can be, it's much worse when you're waiting for hours with nothing to do.

5. Vacation rentals are better than hotels for the budget-minded traveler

Trying to take a vacation without breaking the bank? One of the best ways to spend less is by choosing a vacation rental instead of a hotel.

Hotels typically cost more per night, with prices that are often twice as much or more than comparable vacation rentals. The price disparity becomes even greater when you consider the extra charges you can incur at a hotel. There may be resort fees or additional taxes charged upon checkout. And since most hotel rooms don't have kitchens, you'll likely go out to eat more.

6. Bring at least one backup credit card

Hopefully, you won't ever lose your credit card while you're traveling. But you should bring along an extra one in case it does happen. If you'll be outside the United States, you should also make sure that the credit cards you take with you don't charge foreign transaction fees. 

7. Be prepared, not paranoid

When discussing the safety of an area, the loudest voices often split into two groups. There are those who assume 95% of the world is dangerous and you'd be crazy to go there. And then there are those who would tell you an active war zone "really isn't as bad as people say."

As it often goes, this is a situation where the most sensible option is the middle ground. Any time you're traveling somewhere new, you should read up on common crimes in that area and watch out for potential dangers when you're there. However, you shouldn't let paranoia keep you from enjoying yourself.

8. Use an ATM instead of exchanging currency

Although currency exchanges are the traditional way to get cash while abroad, the exchange rates are rarely a good deal. It's better to withdraw money from an ATM using your debit card. You should check what kind of fees your bank will charge before you go, and if it will be expensive, look into checking accounts with no foreign transaction fees.

9. Unlock your phone and buy local SIM cards

Wireless carriers may charge an arm and a leg if you want to use your cell phone internationally. Fortunately, there's a much more affordable solution -- unlock your phone and when you arrive at your destination, buy a SIM card with a prepaid plan. You can often buy a local SIM card at the airport upon arrival. In many countries, weeks of prepaid data costs just $10 or less.

Making the most of every travel experience

It's always exciting when you have the opportunity to travel. By following the right strategies, you can save money and ensure you have an amazing trip.

Topics: Credit Cards, Travel

MOVED Here's 1 More Reason to Never Cosign on a Loan

Posted by Lyle Daly on Dec 25, 2019 10:00:00 AM


Any loan you cosign on could become a thorn in your side.

While the consensus from financial experts is that you shouldn't cosign on a loan, people still wrestle with this decision. They consider cosigning other people's personal loans, auto loans, or, in extreme cases, even mortgages.

If you're in this situation, you may already know the obvious risks. You're responsible for the loan you cosign, and any missed payments or other repayment issues can affect your credit score. But perhaps you're confident that the borrower will pay, so you figure there's nothing to worry about. Although this is dangerous logic to use, let's assume you're correct.

Middle-aged woman showing document to an older woman, possibly her mother.

The problem is that even if the borrower makes all the payments on time and does everything right, being a cosigner on a loan could still come back to bite you. That's because that loan will be considered your debt, so it could prevent you from borrowing money in the future. Here's why.

Cosigning increases your debt-to-income ratio

When you cosign on a loan, it's tied to you. For all intents and purposes, it's as if you applied for the loan and borrowed that money. One reason that's important is because it increases your debt-to-income (DTI) ratio.

Your DTI ratio is your monthly debt payments divided by your gross income. For example, let's say you earn $5,000 per month. The payments on your credit cards, student loans, and other debt add up to $1,000 per month. You would have a DTI ratio of 0.20, which would more commonly be expressed as 20%.

Then, a friend of yours asks you to cosign on a personal loan with payments of $900 per month. Even if your friend is making every payment, it will still add $900 per month to your total monthly debt payments. That will push your DTI ratio up to 38%.

How a higher DTI ratio affects you financially

A higher DTI ratio may not initially seem like a big deal. If the borrower is paying, does it matter that your DTI ratio has increased?

To lenders, it does. Any time you apply for a loan, line of credit, mortgage or a credit card, the lender is going to review your DTI ratio to evaluate the risk of lending you money. If your DTI ratio is too high, the lender could deny your application.

Although there's no set cutoff point when it comes to DTI ratios, there are common guidelines used by mortgage lenders. You have a better chance of approval when applying for a mortgage if your DTI ratio, including your projected mortgage payment, is no greater than 36%.

Let's go back to the example above, where you cosign on a friend's loan and raise your DTI ratio from 20% to 38%. If you want to buy a house in the future, cosigning on that loan could be the difference between whether the mortgage lender approves or denies your application.

The same is true with any type of new credit account you want to open. It becomes more difficult to get approved as your DTI ratio increases.

Does cosigning on a loan ever make sense?

Cosigning on a loan is a high-risk, no-reward situation for you. The worst-case scenario is that the borrower doesn't pay. As you're responsible for the debt, you will suffer a credit score drop that could take years to fix. Even in the best-case scenario, you'll have a higher DTI ratio, and that could limit your own financial opportunities. The only person who stands to benefit is the person asking you to cosign.

The smart approach is to politely decline these requests. You can give advice on how to raise their credit or boost their loan approval odds, but you shouldn't put your financial stability in someone else's hands.

Topics: Personal Loans

MOVED 7 Strategies to Earn More Credit Card Rewards in 2020

Posted by Lyle Daly on Dec 25, 2019 8:00:00 AM


Let's make 2020 your most rewarding year yet.

When you've been using a rewards credit card for a while, you eventually reach the point where you want to take your earnings to the next level. Maybe you earned $700 in cash back last year, but you want to raise that to $1,200 or even $1,500. Or you want to go from 50,000 travel points per year to 100,000.

With the right strategies, it's possible to increase the total rewards you earn by 50%, 100%, or even more. Whether you prefer cash back or travel rewards, here are the changes you can make to get these kinds of results in 2020.

Young woman holding a calculator and a credit card and grinning with satisfaction at the credit card.

1. Apply for at least one new card to earn a sign-up bonus

The consumers who earn the most rewards are always on the lookout for the biggest credit card sign-up bonuses. With bonuses, you can earn a big chunk of cash back or travel points, and it usually takes just a few months.

Considering how quickly you can earn rewards this way, it's smart to apply for at least one card with a sign-up bonus each year. If you think you can manage more cards, then you may want to start looking for a new one each time you complete the requirements for a bonus.

2. Combine a flat-rate rewards card and a card with bonus categories

There are two types of rewards credit cards:

  • Flat-rate cards -- These earn one rate, such as 1.5% back on all your spending.
  • Bonus category cards -- These earn higher bonus rates in certain spending categories, such as 3% back at grocery stores. On regular spending, they typically earn 1% back.

To get the best of both worlds, you should carry each type of card. You'd use your bonus category card in any of the categories where it will earn you extra points and your flat-rate card for everything else. 

3. Review your spending to choose the right bonus category card

It's important to choose a bonus category card that you'll be able to use often. For that reason, you should review your spending to find the categories where you spend the most money.

There are a few ways you can do this. You could review all your expenses for the past month. If you want to go back further, you could use an entire year. Another option is to look at your monthly budget.

This will give you a good idea of whether you'll benefit most from a card that earns more back at grocery stores, restaurants, or another spending category.

4. Check the special offers your credit card company sends you

Credit card companies occasionally send out special offers that give you the opportunity to earn extra points. For example, I've seen offers of 500 to 1,000 points for either making at least three contactless card payments or for using a card at least three times through a payment app.

Offers like these aren't difficult to complete, so make sure you check any emails from your card issuer.

5. Use the shopping portals for your rewards cards

Most credit card companies have shopping portals. A shopping portal is a site you visit through your online credit card account, and it contains an assortment of merchant sites where you can shop to earn extra points. Under each merchant, the portal will list the number of additional points you earn per $1 spent.

Click the link from your card issuer's shopping portal to visit the store you'd like to shop in. You'll then earn extra points on any purchase you make.

6. See if you can get retention offers for the cards you already have

The last thing a credit card company wants is to lose a cardholder. To avoid that, it may offer you something extra if you want to cancel your card. This is known as a retention offer, and it could be an annual fee waiver, bonus rewards, or anything else the card issuer can provide to retain clients.

You can take advantage of this by calling your card issuer and telling them that you're thinking about canceling your card. The worst-case scenario is that they don't offer you anything, in which case you can always say that you've changed your mind and you want to keep the card. But there's also a good chance that you'll get a retention offer.

7. Consider carrying more than one bonus category card

Although a flat-rate card and a bonus category card are a great combination, you can earn even more by carrying multiple cards with different bonus categories.

It's obviously better from a rewards perspective to have more bonus categories where you can earn extra. The downside is that you'll have more credit cards to manage. That means more bills you need to pay on time, and you'll also need to remember which card to use for each purchase. If you can handle that, then it's worth expanding the number of bonus category cards you use.

Maxing out your rewards

It's never a good idea to spend more money in the pursuit of credit card rewards. That's why you need to find ways to earn as much back as possible on your normal expenses. By adopting some or all of the strategies above, you'll be able to wring a lot more rewards out of your typical spending.

Topics: Credit Cards, Cash Back & Rewards

MOVED Want to Boost Your Travel Rewards? You May Want a Cash Back Card

Posted by Lyle Daly on Dec 22, 2019 4:00:00 PM

Cash back and travel rewards aren't mutually exclusive anymore.

You might think that it's impossible to earn travel points with a cash back credit card. After all, you earn travel rewards with travel cards and cash back with cash back cards. Simple, right?

Although that seems logical, it isn't always the case. Some credit card companies are now blurring the line between their cash back and travel cards, effectively allowing you to convert cash back to travel points. And that's great news for travel enthusiasts, because once you understand how this works, it can help you earn hundreds and even thousands more points every month.

Young couple on a bus smiling and looking at something through the window.

How it works

Chase and Citi are the two biggest credit card companies that currently allow you to convert cash back rewards into travel points. To do this, you must have at least one of each type of card with that card issuer.

When you have both travel and cash back cards, you can transfer any cash back you accumulate over to your travel card. The standard rate is one point per $0.01 of cash back you transfer.

Let's say you have two Chase credit cards, a travel card and a cash back card. You have $500 in cash back available. Instead of redeeming that cash, you could transfer it to your Chase travel card, where it will become 50,000 points. It will then have all the same redemption options as any rewards you earned with your travel card, such as transfers to any of Chase's travel partners.

By the way, Chase and Citi only let you transfer cash back to travel cards in their own respective travel rewards programs, which are Chase Ultimate Rewards and Citi ThankYou® Rewards. You can't transfer cash back to one of their co-branded airline or hotel credit cards. If you have a Chase cash back card, you wouldn't be able to turn your cash back into miles on a Chase credit card with United Airlines.

Maximizing your travel points with cash back cards

When you're able to convert cash back to travel points, you can take advantage of spending categories where cash back cards earn better rewards. This gives you the opportunity to earn significantly more points on your everyday spending.

For example, imagine you have a travel credit card that earns three points per $1 spent on travel and dining, and one point per $1 on everything else. If you also have a cash back card that earns 5% on internet, cable, and phone spending with the same company, you can transfer that cash back to your travel card.

If you had used your travel card to pay those bills, you'd be earning one point per $1. Instead, you can pay with the cash back card, earn 5%, and send the cash back to your travel card -- effectively earning five points per $1.

Here's what makes this even better -- many of the best cash back credit cards don't have annual fees, so you'll be boosting your travel rewards without needing to pay anything extra.

A simple, effective travel rewards strategy

If you already have a travel credit card with Chase or Citi, there aren't any drawbacks to adding one or more of their cash back cards to your wallet. It's a smart way to earn more travel points on your typical expenses, and it won't cost you a thing. You will have more credit card bills to pay each month, but that's easy enough to manage with automatic payments or by setting yourself reminders.


Topics: Credit Cards