This transcript is automatically generated
What with the holiday shopping season in full swing our next guest says twice about getting -- new credit card it can actually dean your credit score.
-- Alzheimer is the president consumer education for Smart credit dot com.
John -- -- being with us and so people understand we're talking about like every time I go into the gap they say.
If you would charge card today we'll give you 20% off your purchase those of the card you're talking about right.
That is exactly right Tracy and thanks for having me and and the issue is is that it's Christmas time they know -- spending a lot of money even discounts are getting really aggressive fifteen to 20% is the standard discount.
If you open a credit card the problem as it looks that unsophisticated way of applying for credit.
And apply for credit cards is one of the fastest ways to lower your credit score and that's something you don't wanna enter 2012 laugh because just the notion of applying.
Brings your credit down right.
Yeah actually -- it's the -- it's the act -- applying for the card that can hurt your credit score and then if the account is improved.
The new -- going on the credit reports can also lower the score so really you're you're really -- herself twice -- a lot a lot of people have the strategy while just open it take a discount and off closing never use it again the problem is is the damage has already been done you cannot -- and do it.
Simply by closing the card.
Because then you have all that.
Extended credit available to you and that's what hurts you rate but you say don't open a retail store card if you plan on taking out any kind of loan next year how come.
That that's exactly right what if you're gonna do something like finance a home or finance the purchase of a car cosigned -- -- -- -- You want interest rates to be as well as possibly need every basis point to keep the payment as -- as you possibly can't when you apply -- store credit card -- holiday season.
The and so if you think you're gonna apply for anything at all during 2012.
It's -- your best interest to forego any sort of discount you're gonna get -- -- but because you've opened the card.
And just leave it alone music generally use credit card to forty your wallet don't worry about the discount which are also protecting your credit -- -- not dragging it into the conversation.
Is that would you recommend people use just general credit cards and not as negative cash is the best dancer but if you don't have it.
That's the way to go as opposed to these individual store cards.
It's actually a little bit it's actually pretty strategic if you -- she used to charge something over the holiday season -- you're going to -- all that debt.
They clearly got -- -- the car that how the lowest interest -- however if you're just gonna charge it and then pay it off by the due date and not roll roll balance over.
It's your best interest to use the card that has the highest credit climate.
Because the impact on your score your credit score.
The temporary impact of carrying Baghdad for even the grace period is going to be minimized by placing it on a part of the highest one -- because -- -- not.
Credit scoring systems love to see.
Awful lot of separation between the balance is on your -- reports at the limits on the credit cards.
It's so much more complicated and it used to be isn't it and now a days I know that.
This year's score the actual ideals more has come down so much over the years -- -- what -- -- what is considered an ideals.
-- these days.
The -- sort -- -- this is funny if we have been having this conversation in 2007.
-- the ideal score would have been probably around 620 -- Bob which is really really allow today ideals or the new black.
It's 715 about it if you think you're gonna get all -- 0% offers on auto loans at three point nine on mortgages.
You'd better half ficus scores in 715 -- Bob or your not gonna be qualifying for those.
Don't it's instinct is some Black Friday we saw that there was an increase in credit card shoppers 27% of Black Friday shoppers use their credit card this year.
Clearly that's not what you suggest what have you been doing -- cash or credit.
I believe it or not I use a credit card but I use a credit card it because I'm already I'd I'd like to earn rewards are not responsible not that I write shack.
Before the due date on a roll why don't -- the balance -- -- -- like interest rates are meeting last.
But I got to tell yet the 27% of the people who use credit cards over say for example debit cards.
If they're responsible enough to pay it off before the due date Dallas actually eighty better -- and here's why.
Because you have so many more protections under the fair credit billing act.
Act for easing -- credit card -- do under the electronic funds transfer act.
By using a debit card look at -- there's something else that's also -- this holiday season -- identity theft and -- much more shield it against that he's a credit card didn't use a debit cards why -- -- got a way to present confound both of them before you make -- -- right.
John you re exactly right banks should be let us.
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