This time of year someone is watching you--watching to see if you are naughty or nice.
Your credit card company is taking note if they see you put certain "naughty" purchases on your card. What kinds of items are red flags to them?
Some are kind of obvious, like purchases at a pawn shop. They assume if you are shopping there or any kind of thrift shop or consignment shop that your finances are hurting. They will rate you lower than if you were shopping at a regular store.
Other shops might surprise you. If you buy liquor at a liquor store or even at a regular grocery store they know about it and make note of it. This time of year people buy more liquor for holiday entertaining, but the credit card company will still judge you for it. Their rationale is just a matter of statistics. If their stats show those who buy more liquor have more financial problems, then they will pay attention to it as a warning sign. It's all in the numbers. What else?
Here's the naughty list:
- Traffic tickets
- Retreading tires
- Bargain binges
- Marriage counseling and therapy
- Lottery tickets
- Cash advances
- Personal pampering
- Income taxes
Marriage counseling is hopefully good for the marriage, but a possible divorce is noticed as a risk to both person's finances. I'm wondering how they figure "bargain binges." I buy about 2/3 of my Christmas gifts on sale, though I shop year-round, not on "binges." With so many stores offering sales during the recession it might not be statistically significant any more. And do they consider shopping at outlet malls in that category?
Why should you care what a credit card company thinks of your purchases? It doesn't hurt your credit score/FICO score, thank goodness. Not directly anyway.
It does matter if you ask your credit card company to raise your credit limit. If your purchases have been too "naughty" they will turn down your request. I didn't think about this much, but when I asked our credit card company to raise ours a year ago they said they "couldn't at this time" but said to try again in about 6 months. Sounds like I was buying things on sale. And our credit score was 730 at the time. Why would I care?
If I can get our credit card limit raised & then not use the extra credit it will help raise our FICO score. That's a good thing. You can never have too high of a FICO score.
Also if you call to get a fee removed from your account they will be looking to see if your account has been flagged for risky behavior before deciding.
Bottom line: if you are going to be buying things on the naughty list, try to pay for them with cash or a gift card. You can buy a gift card for some stores using your credit card. For all they know you are giving it as a gift to someone. If you use it yourself they have no record of you doing that. That way your credit card company won't know and can't judge you.
Enjoy your holiday cheer, but learn to hide those naughty purchases from your credit card company! Of course this goes for the rest of the months too.
Click here to link to RealmOfProsperity.
Click here to link to red cocktail recipes at GreatCocktails.
Some there are naughty, but here's one I like for being nice and simple:
- 1 part vodka
- 3 parts cranberry juice
- Dash of lime juice