Todd Baldwin (Todd Baldwin) has enough credit card miles to travel from Seattle to Europe for free. The 28-year-old millennial millionaire likes to open new credit cards, especially those with sign-up bonuses, air miles and cash back.
But Baldwin estimated today that he would open two new cards every year, but Baldwin did not start as a credit card optimizer. When he grew up, Baldwin was raised by a single mother who worked in multiple jobs to support three children. Seeing this, he is motivated to make sure that he does not have to worry about money.
Baldwin told CNBC Select: “This is why I was knocked down by fire, because I know I don̵
In Baldwin’s youth, he linked credit cards with debt. But after getting his first credit card (guaranteed card) in his sophomore year at Western Washington University, he quickly realized their use.
His first advice to young people is to start building credit records as early as possible. It will be very convenient when you want to apply for a loan or mortgage in the future.
Baldwin said: “Before I start more research, I don’t know what benefits a credit card will do.” When you charge a credit card, please pay it in full before the due date. In this way, you can avoid any interest charges while also improving your credit score.
Baldwin assured himself that he would not charge fees beyond his ability to pay, so he created a set of guidelines for using credit cards for daily purchases, travel, and other activities. This is how he manages 15 credit cards.
He only deposits 1 credit card in his wallet at a time
Baldwin’s name may have 15 credit cards, but he only keeps one credit card in his wallet and the rest in the safe at home.
He pointed out that the card in the wallet is usually a fixed-fee cash-back card, with a fee of 1.5% to 2% for each purchase. He recommends using such reward credit cards or credit cards with no interest period, such as 0% APR credit cards.
For customers who have both, the Citi® Double Cash card provides zero interest in the first 18 months of balance transfer (13.99% to 23.99% after purchase; N/A for purchase), and 2% cash back: 1% of all eligible purchases, and 1% after you pay the credit card bill.
Citi® Dual Cash Card
On Citi’s secure website
2% cash back: 1% cash for all purchases, 1% after paying off credit card payment
Introduction to APR
Balance transfer for the first 18 months is 0%; purchase not applicable
Regular annual interest rate
13.99%-23.99% variable of purchase and balance transfer
Balance transfer fee
Foreign transaction fees
He doesn’t close the credit card
Even though Baldwin kept most of his credit cards in a safe, he never closed any credit cards, especially his oldest credit card.
Turning off your credit card may cause your credit score to drop temporarily because you lose the available credit limit for the account and your overall credit utilization rate increases. Since good or low utilization means low credit card balances and high credit limits, closed credit cards will increase your utilization and your score will be affected.
Instead, keep your credit card open and active. Putting them in a dormant state may signal to the issuer that you are no longer using the card, and they may close your account. To ensure that you use your credit cards on a regular basis, even if they are stored in a safe, you must charge them a small amount of recurring fees, such as monthly subscriptions or streaming services, so that you pay automatically every month.
He automated the payment of credit card bills
Baldwin knows that paying on time is the most important factor in getting a good credit score, so he makes sure to always pay credit card bills before the due date.
To ensure this, Baldwin automates his monthly payments so that the money is withdrawn from his bank account at the same time each month, without he having to think twice and remember to do it himself.
In fact, when paying bills (such as utility bills for six rental properties he owns), Baldwin puts as many bills as possible on a credit card, and then automatically makes monthly payments with that credit card to help his credit score. For those interested in the aforementioned Citi®Double Cash Card, following Baldwin’s guidelines also means that you put your money in your pocket because you can earn cash back when you pay your credit card bill.
He never had a credit card balance
A common saying is to make a balance on a credit card to improve your credit score. When you have a recyclable credit card balance every month, you will increase the daily interest charges and swallow the available credit limit.
In order to avoid paying interest, Baldwin pays off all credit card balances every month.
He avoids using annual fee credit cards
Although some of the best credit cards charge annual fees, Baldwin only has one credit card that requires annual fees.
His suggestion is to avoid the use of annual fee cards unless the card’s revenue exceeds the fees that must be paid to own the card. For example, Baldwin uses his only annual fee card (airline credit card) to book travel because it comes with an accompanying fare that can offset the cost of the annual fee.
To help determine whether the new card is worth the money, calculate the breakeven amount you spend on the card each year.
Learn more: Best no annual fee credit cards in September 2020
He won’t do his best to win the welcome bonus
Baldwin said: “The important thing is to never spend $1,000 to make $300, because then you will lose $700.”
Although Baldwin likes to take advantage of the generous account opening rewards provided by credit cards, he does not spend money, otherwise he will not only get points, miles or cash. Instead, he waited until there was a large transaction to do before signing a credit card to receive the welcome bonus. Knowing that he is going to spend money, whether it is to renovate one of his rental properties to list on Airbnb or to perform repairs on the car, he is more likely to receive new credit card rewards in a way that matches his budget.
He checks his credit score every two months
Since Baldwin paid his bills on time and never spent more than he could repay his credit card, he didn’t have to worry about his credit score. However, he does check his scores for free every two months, especially before applying for a mortgage for a new real estate investment.
In fact, when Baldwin is in the process of obtaining approval to purchase real estate, he will completely avoid applying for a new credit card. He knows that the hard inquiries generated when the card issuer withdraws his credit report will immediately reduce his score, and he wants the best possible score to be displayed for the lender to use when checking his credit.
Baldwin uses the Credit Karma app to check his credit score, but there are many resources for consumers to access his credit score.
You don’t need to be a Capital One card holder to use Capital One’s CreditWise®, which provides VantageScore for free from TransUnion, one of the three main credit bureaus.
CreditWise® by Capital One
Information about CreditWise has been collected separately by CNBC and has not been reviewed or provided by the company prior to publication.
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Editorial note: The views, analyses, comments or suggestions expressed in this article are solely those of CNBC Select editors and have not been reviewed, approved or endorsed by any third party.