Will Having a Mortgage Improve My Credit Score?

Worried woman looking at bills
Until the Fair and Accurate Credit Transactions Act was signed into law in 2003, Americans weren’t entitled to a free copy of their credit reports. And 24 years ago, when I began my career in consumer news, you couldn’t see your credit score at all, at any price.

Consumer access to credit reports and scores is a good thing. After all, if someone’s going to make important decisions about your future based on this stuff, we have both the right and obligation to make sure it’s accurate, as well as understand how to improve things.

While it’s good to be vigilant, however, let’s not become obsessed. Here’s this week’s question:

On my latest credit check, there was a remark about a lower ranking because “I had no mortgage.” I paid my mortgage off by 1996 and don’t understand how that could be counted against me. How can I fix this? -Helen

Here’s your answer, Helen!

Can a lack of debt hurt your credit score?

When it comes to credit scores, by far the most important factor is how good you’ve been at paying your bills on time, every time, for a long time. Do that flawlessly, and you can rest easy.

While a long, on-time history is the main thing, however, it’s not the only thing. Something else lenders like to see is a mix of different types of credit. The two major kinds are revolving credit, like credit cards, and installment credit, like car and mortgage loans.

So what Helen may have seen when she checked her score is a notation that it may be negatively affected by a lack of installment loans.

I can’t blame Helen for being concerned. After all, scores are important and when a notation indicates you may have done something wrong, it’s easy to think it’s a big deal and needs fixing. But in this case, it isn’t and it doesn’t.

What should Helen do?

For starters, take note that only 10 percent of your score is related to your credit mix, according to Fair Isaac, originator of the most widely used score. So having a variety of credit types isn’t hugely significant.

Of course, there’s a quick, albeit ridiculous, solution if Helen wants to try to raise her score by diversifying her credit portfolio. She could take out a mortgage, car loan, signature loan or other type of installment loan.

But unless Helen’s life depends on earning the highest possible credit score, she’d be nuts to take out a loan for the sole purpose of making Fair Isaac happy. If she has a great history of paying her bills on time, the impact on her score of not having an installment loan will be negligible. If her history isn’t so great, she’s much better off simply continuing to make on-time payments rather than taking on new debt.

I found an article on Kiplinger that addressed a similar issue: How paying off a mortgage affects credit scores. From that article:

Craig Watts, a spokesman for Fair Isaac, the firm that created the widely used [FICO] score, says that your credit score will likely be unaffected (by paying off a mortgage.) If your mortgage is your only installment loan, however, your score could suffer a slight ding, although not enough to make you want to change your plans.

Bottom line? While Fair Isaac or potential lenders may want you to have lots of different kinds of credit to earn the highest possible credit score, let’s not get carried away. Paying interest is almost always a waste of money and often a source of stress. Please: Pay off your mortgage, credit cards, car loans and anything else you owe. And when you do, don’t worry about any notations you see and don’t obsess about any potential negative impact it will have, particularly if you aren’t going to be borrowing soon. If you pay your bills on time, both you and your score will be just fine.

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Fed Officials Again Flag December; See Smooth Rates Liftoff

Janet Yellen Speaks At Monetary Policy Implementation Conference
Andrew Harrer/Bloomberg via Getty ImagesFederal Reserve Chair Janet Yellen

NEW YORK — Federal Reserve officials Wednesday continued to flag December as a likely time for interest rates to rise after seven years near zero, with two expressing confidence they will be able to pull off a rate hike smoothly despite fears of an abrupt market reaction.

Investors reacted by increasing the odds for a rate increase next month to 72 percent, from 64 percent Tuesday, based on interest rate futures prices.

Cleveland Fed President Loretta Mester repeated her position that the U.S. economy is now strong enough to absorb a modest policy tightening. Atlanta Fed President Dennis Lockhart, sitting alongside her on a panel in New York, said global financial markets have settled since the August turmoil that caused the U.S. central bank to delay raising rates.

I am now reasonably satisfied the situation has settled down … So I am comfortable with moving off zero soon.

“I am now reasonably satisfied the situation has settled down … So I am comfortable with moving off zero soon, conditioned on no marked deterioration in economic conditions,” Lockhart told a conference of bankers, traders and regulators.

“I believe it will soon be appropriate to begin a new policy phase,” he said, adding he will monitor economic data between now and a meeting on Dec. 15-16, for which he has a vote on policy. Mester regains a vote next year under a rotation.

Sentiment for a December hike took firm hold at the Fed’s October 27-28 policy meeting, according to meeting minutes released Wednesday that showed a solid core of U.S. central bankers poised for liftoff.

The Fed’s October statement helped convince skeptical markets that a rate hike may finally be imminent after several years of near zero rates. But the October session also saw central bankers begin grappling with longer-term issues that may be relevant to the pace of subsequent rate hikes, including whether the U.S. economy’s lower long-term potential means low interest rates will become a permanent norm.

For now, however, Fed officials seem confident that the central bank will meet its twin goals of full employment and stable two percent inflation.

Rob Kaplan, the Fed’s newest policymaker, declined to use his first public appearance as president of the Dallas Fed to comment directly on the timing of a rate hike, but expressed confidence that inflation will rise back to the Fed’s goal over the medium term. The Fed has said it needs exactly that confidence before raising rates.

Once rate hikes start, he said, the Fed will reassess conditions at each meeting and will pause further rate hikes if needed.

The comments were the latest in a string of communications from Fed officials meant to prepare global markets for the first U.S. rate hike in nearly a decade. The policy change is expected to continue pushing the U.S. dollar higher, pulling capital from emerging markets and elsewhere towards rising U.S. rates.

‘Huge Surprise’

New York Fed President William Dudley, whose branch of the central bank will use a handful of new levers to wrench rates up from near zero, told the New York conference he does not expect a “huge surprise” or major market reaction to a hike in part because it has been so loudly telegraphed.

Trillions of dollars of reserves parked at banks and worries that bond markets are less liquid and stable than in the past have added to concerns that deep volatility could greet the Fed rate hike.

Lockhart said he was “very confident” in the new tools and noted that the big focus now was deciding whether to make the policy change next month.

He said that any lingering concerns about U.S. labor market strength have been satisfied for a rate hike. Inflation he said was less clear, but he expects prices to rise as the downward pressure from a strengthening dollar and falling oil prices fades.

“A key point regarding inflation is that conditions have not been deteriorating, just hanging below target,” said Lockhart, seen as a centrist among the Fed’s 17 policymakers. “On balance for me the data have been encouraging and affirm that the economy has been growing at a moderate pace.”

New Chip Credit Cards Putting Squeeze on Small Businesses

Credit Card Changes Q and A
NEW YORK — New credit and debit cards with computer chips are putting the squeeze on small businesses.

The cards being rolled out by banks and credit card companies are aimed at reducing fraud from counterfeit cards. As chip cards are phased in, magnetic stripe cards, which are easier for thieves to copy, will be phased out. Businesses of all sizes face an Oct. 1 deadline to get new card readers and software that can handle chips. Most estimates of transition costs for small companies vary from the low hundreds to tens of thousands of dollars due to the wide range of equipment used.

This is one of the biggest nightmares merchants are going to face.

If businesses don’t meet the deadline set by companies including MasterCard, Visa and American Express, they can be held liable for transactions made with phony chip cards.

The switch to new chips in credit and debit cards poses a threat for small companies because they can’t get the volume discounts on the new equipment that big retailers get. And they don’t have in-house tech experts to install the new systems.

“This is one of the biggest nightmares merchants are going to face,” says Michael Kleinman, owner of Mason Eyewear, a store in Brickell, Florida, and Centurion Payment Services, a company that processes credit and debit card payments.

Tip of the Iceberg

The card readers shoppers see are just one part of a payment processing system. They’re connected to software in a merchant’s computer system that receives the transaction information and sends it to a payment processor. The processor then posts a charge or debit to the cardholder’s account and a credit to the merchant’s account.

The simplest card readers used in stores and other small businesses are likely to cost at least $100. The machines will also read magnetic stripes and some also handle what are known as contactless payments made with services like Apple Pay or Google Wallet. Most software prices start at several hundred dollars, but can run into the thousands for more complex systems. Many companies have computer systems that do more than handle payments — they also manage inventory and customer and vendor information. Businesses like restaurants and those with multiple locations are likely to have the most complex systems and the highest expenses.

Dickie Brennan & Co., which operates four New Orleans restaurants, expects to pay more than $25,000 to replace card readers and software, says Derek Nettles, the company’s information technology director. The company won’t raise its prices to pay for the switch; instead, it’s delaying an upgrade of its security camera system.

“We’re not happy about the additional expense,” Nettles says.

It’s Not Plug and Play

Changing card readers and software isn’t something many small business owners, even tech-savvy ones, will be able to do on their own. They’ll need to hire technology consultants who can charge as much as $100 an hour or more to install the system and ensure it works.

Even with Kleinman’s expertise in payment processing as owner of Centurion Payment Services, it took him five hours to install two card readers and software. And he was on the phone getting technical support from his vendor while he did it. Although the new system works, there are glitches that keep him tinkering. For example, sometimes the system has trouble accepting certain cards.

“Most people are definitely going to need to hire somebody to do it,” Kleinman says.

It may make sense for companies with combined payment, inventory and other systems to separate the payment part to make them less vulnerable to hackers, says Scott Shedd, a technology consultant with WGM Associates in Scottsdale, Arizona.

But that will add more costs, says Avivah Litan, an analyst with Gartner Research.

“If you want to use this opportunity to secure your systems, it could cost you thousands,” she says.

Why It Might Be Time to Switch Banks

Worried couple paying bills online.
Switching banks is easier than we think, according to a recent survey.

Conducted by Harris Poll for BancVue, the study of more than 1,000 U.S. adults found that 61 percent of those who have never switched banks believe that switching would be at least somewhat difficult. That figure goes as high as 69 percent for millennials, the generation defined as people ages 18 to 34.

But 81 percent of people who have switched banks say it wasn’t difficult at all. BancVue is a Texas-based financial services company whose products include Kasasa, a national brand of free checking accounts offered at nearly 300 community banks.

BankVue Chief Executive Officer Gabe Krajicek says in the release:

“There’s no reason for Americans to stick with a bank that isn’t serving their needs. … And the long-term benefits of finding the right institution far outweigh the short-term hassles of moving.”

Americans seem to be enticed by higher interest rates and better banking products, according to the survey.

Forty-five percent of people would switch banks for a higher interest rate, and 25 percent of people who have switched banks did so because they were dissatisfied with the products their prior bank offered.

For a step-by-step guide to finding a new bank or credit union, check out “Loathe It? Leave It! 5 Simple Steps for Switching Banks.”

Nasdaq Hits Record as Stocks Run on Strong Data

Financial Markets Wall Street Fitbit IPO
NEW YORK — The Nasdaq composite erased its last standing milestone from the dot-com era Thursday, as it set a record intraday high, with stocks on Wall Street in rally mode boosted by strong economic data.

A report in German newspaper Die Zeit about possible concessions made to Greece by its international creditors, which briefly extended the market’s rally, was later denied by EU diplomats.

The Nasdaq composite (^IXIC) hit a high of 5,143.32, topping the previous 5,132.52 record which stood since March 10, 2000. It also set a record closing high, as did the Russell 2000 (^RUT), while the Standard & Poor’s 500 index (^GSPC) closed within 0.5 percent of its record.

Economic growth is beginning to make itself more evident.

U.S. consumer prices last month posted their largest increase in more than two years, jobless claims applications fell last week to a near 15-year low and factory activity in the mid-Atlantic region accelerated to a six-month high in June.

“Economic growth is beginning to make itself more evident,” said John Manley, chief equity strategist at Wells Fargo Funds Management in New York.

Manley said the perceived dovishness of the Federal Reserve’s statement and estimates after its meeting Wednesday continued to support equities.

“The Fed is going to be very slow to raise interest rates,” he said.

Markets have closely watched for signals from the U.S. central bank as it prepares to raise rates for the first time in almost a decade.

The Dow Jones industrial average (^DJI) rose 180.10 points, or 1 percent, to 18,115.84, the S&P 500 gained 20.80 points, or 1 percent, to 2,121.24 and the Nasdaq composite added 68.07 points, or 1.3 percent, to 5,132.95.

Eurozone leaders will hold an emergency summit Monday to try to avert a Greek default, after bank withdrawals accelerated and government revenue slumped as Athens and its international creditors remained deadlocked over a debt deal.

The ECB told a meeting of eurozone finance ministers it wasn’t sure if Greek banks would be able to open Monday, said officials with knowledge of the talks.

The Greek situation is an emotional one for investors and it is hard to know how exactly markets will react, said Wells Fargo’s Manley.

“In 2010 [a Greek default] would have been a real problem. I don’t see a lot of ramifications among financial institutions if it happened now, and if there were, the ECB and IMF will know how to deal with it,” he said.

All the 10 major S&P 500 sectors were higher with the health index leading with a 1.5 percent rise.

Fitbit (FIT) shares ran up as much as 59.5 percent to $31.90 in their market debut before closing at $29.68, 48.4 percent above the $20 IPO pricing.

Advancing issues outnumbered declining ones on the NYSE by 2,062 to 1,015, for a 2.03-to-1 ratio on the upside; on the Nasdaq, 1,949 issues rose and 833 fell for a 2.34-to-1 ratio favoring advancers.

The benchmark S&P 500 index posted 41 new 52-week highs and 2 new lows; the Nasdaq composite set 161 new highs and 30 new lows.

About 6.2 billion shares changed hands on U.S. exchanges, above the 5.96 billion daily average so far this month, according to BATS Global Markets data.

Why Some Travelers Are Making a Big Credit Card Mistake

Dollars and Euros

The dollar is so strong these days, especially against the euro, that it is spurring many Americans to chase their dreams of visiting the Eiffel Tower in Paris, riding a gondola through the canals of Venice or hiking the majestic Bavarian Alps.

It makes a lot of sense. By traveling when the dollar is strong, you can save yourself a small fortune. That helps bring down the cost of foreign travel to a level that seems manageable to many Americans who might have previously felt those sorts of trips were beyond their reach.

Some unscrupulous merchants abroad might try to take advantage of the dollar’s strength — and your enthusiasm — to fill their own pockets a bit more with a sneaky tactic called “dynamic currency conversion.” However, if you keep alert and know what to look and listen for, you can head these bad guys off at the pass before they’re able to rip you off.

The Dynamic Currency Conversion Trap

Here’s the situation: Say you’re at a shop near the Eiffel Tower in Paris. You’ve just spent a day taking in all the sights in one of the world’s most spectacular cities, and now you’re buying a bottle of wine and some bread and some cheese so you can have a picnic in the park and relax as the world passes by. You even splurge a little bit on the bottle because the dollar is strong and because, well, it’s Paris.

You walk up to the counter and pull out the chip-and-PIN credit card you got specifically for your trip because you’re a savvy traveler. (And since you’re a savvy traveler, you also don’t have to worry about your bank refusing the transaction because you took the time to call the bank before you left to tell them where you were going and when you’d be there.)

“Bonjour, madame,” the man behind the counter says. Then, in broken English as he holds your credit card, he says, “Would you like for your transaction to be done with dollars or with euros?”

You pause. “Oh, I didn’t realize I had a choice. But I guess since the dollar is so strong, I’ll go ahead and pay in dollars.”

And you’ve just fallen into the trap.

It’s called dynamic currency conversion, and paying in dollars instead of the foreign currency is pretty much never a good idea, even though it sounds like one.

Reasons to Avoid Dynamic Currency Conversion

Here’s why paying in dollars is a bad idea:

Your credit card issuer offers a better exchange rate than a merchant ever could. In this situation, the merchant — not the credit card company — is doing the currency conversion. That’s a problem. Credit card exchange rates are pretty hard to beat. That small Parisian merchant wouldn’t be able to match that. The currency exchange booth at the airport won’t be able to either.

The merchant will likely tack on a bunch of fees. If you just let your credit card issuer do the currency conversion, there’s a good chance you won’t pay any extra fees for the service. That’s because most credit cards haveeliminated foreign transaction fees. Those fees used to add 1 to 3 percent on top of your bill when you purchased something overseas, but not anymore. In recent years, those foreign transaction fees have become far less common.

Let the merchant do the conversion, and it’s a different story. The fee a merchant will charge you for this service can reportedly run as high as 7 percent of the transaction. So make sure the card you travel abroad with doesn’t charge extrafor foreign purchases.

The merchant might not give you all the details. Don’t expect full disclosure of fees if you agree to dynamic currency conversion. Stores in tourist areas of major European cities are busy and crowded, and sometimes a cashier just won’t think to give you all the information you need. And then, of course, there’s the more sinister possibility: They know that it is a bad deal and don’t want you to know what fees will be added on to the charge.

What You Should Do Instead

If someone asks you if you want your credit card transaction to be done in dollars instead of the local currency, the solution is simple: Just say no.

There will be times when a store owner won’t take no for an answer, however.

Thankfully, this doesn’t happen often, but if it does, you have a couple options. You could either offer to pay cash for the items, or you could simply walk away. There’s a good chance that the merchant will give in if he thinks that pushing currency conversion will cost him a sale. If he doesn’t give in, however, just keep walking. Chances are that you’ll be able to find that bottle of wine and cheese at some other store that will be a bit more welcoming.

Finally, when your trip is over, be sure to go over your credit card statements with a fine-toothed comb. Keep your eyes open for any charges that seem unusual for any reason, and don’t hesitate to call and ask the bank about anything that looks amiss. After all, the last thing you want is for some unscrupulous storekeeper to take advantage of you and tarnish your treasured memories of a magical, once-in-a-lifetime trip.

How to Find the Best Travel Rewards Credit Card for You

Young female passenger at the airport, using her tablet computer

Choosing a travel rewards credit card can be overwhelming. Every week, American consumers receive millions of pieces of direct mail from credit card issuers offering large sign-on bonuses and fast ways to travel for free. If you search for the best travel card on Google, you will be presented with millions of results. It can be very difficult to find the best card.

Most credit card comparison tools are either blog posts or static lists of credit cards. One of the oldest in the market is CreditCards.com, which has a page dedicated to travel and airline credit cards. The top result is the Capital One Venture Rewards Credit Card.

Is Capital One Venture the best card for everyone? As my research reveals, it depends upon your situation. I used the customizable tool at MileCards.com to review three different scenarios, and I received three different recommendations. Now more than ever personalized recommendations are important to earn the best rewards.

Scenario 1: The Frequent Flier

Bob flies United Airlines all the time for business. He is earning 50,000 miles every year from business travel and wants to top up those miles with a credit card. He spends about $3,000 each month on his personal credit card and about $800 of that is in restaurants.

Based upon Bob’s information, the recommendation was the Chase Sapphire Preferred Card. The card allows you to earn 2 points for every $1 you earn on dining, and you can transfer the Sapphire points directly to United Airlines. Including the first year bonus, Bob would earn 91,600 points in the first 12 months. Capital One Venture doesn’t allow you to transfer points to existing frequent flier programs, and would not have been the best option for Bob.

Scenario 2: The Infrequent Flier With Hawaii Dreams

Sarah never flies. A recent graduate, she wants to visit Hawaii soon, but only if she can get a free flight. And she doesn’t want a card with an Annual Fee. She spends about $1,000 a month, and most of it is spent on groceries and gas.

After inputting Sarah’s information, the Amex Everyday Credit Card was the top result. There is no annual fee on the credit card. You earn 2 points for every $1 spent in grocery stores, up to $6,000 each year. And Sarah can transfer those points directly to Delta Airlines. In the first 12 months, Sarah will earn 31,600 points. So long as Sarah pays her bill on time and in full every month, those points won’t have cost her a dime. That would be enough for a flight anywhere in the continental United States and she would be on her way towards that Hawaii trip.

Scenario 3: The Big Spender

Emily has a big job and likes to spend what she earns. She spends $4,000 a month on her credit card and pays the balance in full every month. Her spending is evenly split between travel, clothing and restaurants. Emily is always looking for ways to get more free travel. And Emily isn’t afraid to pay an annual fee if she is able to get value.

After inputting Emily’s information, the top recommendation is the Citi Prestige Card. There is a steep $450 annual fee. However, the rewards are significant, especially in the first year. Although Emily has to pay the $450 fee, she will get $250 of air travel credit. So, on the next flight that she books using the Citi Prestige Card, she would immediately get $250 of her $450 fee back.

She would earn 3 points for every $1 spent on travel and 2 points for every $1 spent on travel. Even better, after Emily spends $3,000 she would receive a 50,000 point welcome bonus offer.

So, during the first 12 months, Emily would earn 135,200 points with a true cost of $200 (after the refund of the air travel). MileCards values those points at $1,993. Emily is more than happy to spend $200 to receive $1,993 of value.

The Best Travel Credit Card of 2015: It Depends

The right travel rewards credit card really depends upon your unique situation. It pays to do your homework and find the card that meets your specific needs. The Capital One Venture Rewards Card recommended by CreditCards.com isn’t a bad card. But it may not be the best card for your situation. That is why is you should look for tools, like MileCards, that provide personalized results.

Just remember, these cards are only worthwhile if you have a lot of self discipline. If you don’t pay your balance in full and on time every month, you will be hit with steep interest charges. The interest you would pay on your credit card debt would likely end up costing much more than the free travel that you receive. But if you have the discipline to make your payments on time every month, free travel awaits.

The Postal Service Wants You to Bank at Your Post Office

Congress Keystone
J. Scott Applewhite/APSen. Elizabeth Warren, D-Mass.

Elizabeth Warren would like to change the way you bank.

The Massachusetts Senator and consumer advocate firebrand may not be running for president. But her backing of the U.S. Postal Service’s plan to begin offering budget-priced banking services to U.S. savers could remake the American landscape regardless.

An Idea Whose Time Has Come?

In May, USPS admitted to losing $1.5 billion in its most recent fiscal quarter. If the losses keep up at this rate, the Post Office’s budget deficit could surpass last year’s $5.5 billion loss, and swell into a $6 billion annual deficit. Last month, though, the USPS Office of Inspector General refloated an idea to close the Post Office’s budget gap. Simply put, the Post Office should turn itself into a bank.

Not entirely, of course. Under the Inspector General’s plan, backed by Sen. Warren, USPS would still deliver mail and such. But it would also begin expanding the kinds of financial services it offers, permitting “unbanked” and “underbanked” customers to take out small loans, cash checks, pay bills, and open savings accounts — all at their local post office. According to the Inspector General, entering this market could help USPS reap as much as $10 billion in annual revenue — and close its budget gap with a resounding snap.

Even just expanding the financial services the Post Office already offers, by adding electronic wire transfers and ATMs to existing offerings of selling paper money orders and prepaid cards, and executing international money transfers, could raise as much as $1.1 billion in additional revenues for USPS.

An Idea Whose Time Came a Year Ago …

USPS actually first voiced this suggestion early last year (when it was promptly and publicly taken up by Sen. Warren). Back then, Warren explained that 68 million Americans currently have no active checking accounts, yet still need the kinds of banking services associated with such accounts. To get these services, they pay through the nose.

According to Warren, banks and — in particular — payday loan and check cashing stores, charge unbanked customers “an average of $2,412 per household” annually for ordinary financial services. The Senator notes that “the average underserved household spends roughly 10 percent of its annual income on interest and fees — about the same amount they spend on food.”

What It Means to Them

This means that in one fell swoop, expanding financial services offerings at post offices could both solve USPS’s chronic budget deficit and prevent millions of Americans from being overcharged for basic banking services.

No longer would the “unbanked” be stuck paying high monthly service fees to maintain a bank checking account with a too-low balance, or even higher costsfor small loans from a payday lender. These low-margin activities, too unprofitable for many banks to bother with them, could be offered at the post office instead. As a side benefit, these folks would then have thousands of extra dollars a year to spend on things they actually want to spend their money on, helping to grow the economy.

What It Means to You
Of course, if you already have a bank account, you may think USPS’s plan is interesting, but not really relevant to you. It could become relevant, however.

In recent months, we’ve seen multiple stories of traditional banks closing down their physical branches to cut costs and take advantage of the cheapness of online banking. SNL Financial reports 332 bank closures across the U.S. in the first quarter of 2015. One single bank, JPMorgan Chase (JPM), says it’s planning to close 300 branches over the next two years.

Assuming this trend continues, finding a physical branch of your bank at which you can cash a check or get a money order when you need it could become increasingly difficult. Knowing that the local post office can help you out, on the other hand, could turn increasingly attractive.

Motley Fool contributor Rich Smith doesn’t own shares of any of the stocks mentioned above. (Nor does The Motley Fool.) Rich admits, he does most of his own banking online. But he’s willing to give post office banking a try if it will help poor folks out, save the Post Office and thereby secure our Strategic National Junk Mail Reserve.

Is American Faith in Banks Finally on the Mend?

Getting the cash
Wounds of the Great Recession are slow to heal when it comes to confidence in the banking industry. Gallup recently released results of a phone survey that found that only 26 percent of Americans have “a great deal” or “quite a lot” of confidence in banks. The number is the same as last year, but higher than the historical low of 21 percent in 2012.

This doesn’t mean that three-quarters of Americans are keeping their money under their mattress. Gallup also found that an additional 43 percent had “some” confidence in banks, while 28 percent had “very little” and 2 percent had “no” confidence.

Banks, like other large institutions, have taken a big hit in confidence in recent years, but still rank in the middle of the 17 institutions about which Gallup collects opinions. Banks did best in 1979, the first year Gallup started asking the question, when 60 percent of Americans had confidence in banks. It dropped to 30 percent in 1991 during the height of the savings and loan crisis. From there it drifted up to 53 percent in 2004, but fell off a cliff during the Great Recession, bottoming out in 2012.

A person’s politics seem to be a factor. Gallup found the Republicans are most likely to have confidence in banks, at 35 percent, followed by Democrats at 27 percent and independents at 25 percent.

Similarly, 39 percent of people who are generally satisfied with the way things are going are confident in banks. But only 24 percent of those generally unsatisfied are confident.

The phone survey of 1,527 adults was taken June 2-7 and has a margin of error of plus or minus 4 percentage points.

How a Quick Call Can Change 4 Things About Your Credit Card

Girl with computer and credit card
A simple phone call can potentially save you hundreds of dollars, improve your credit score, score you extra frequent flier miles and more — and your chances of success are higher than you’d imagine.

Most people never make that call, though. Maybe they’re too busy. Maybe they don’t know what to say. Maybe they don’t think it will matter.

It does matter — and consumers’ reluctance to make that call can cost them.

Of course, not everything can be fixed with a phone call. For example, if your payment is late for the fourth time in six months, don’t expect the bank to cut you any slack. But many things can be tweaked or improved if you take the time to call your card issuer.

Here are a few examples:

Late Payment Fee

A CreditCards.com survey last year showed that 86 percent of cardholders who asked to have a credit card late payment fee waived got their wish.

The problem is only 28 percent of cardholders have asked. While not everyone has been late with a payment, chances are lots of cardholders are paying those fines without knowing that a simple call could get them out of it.

Some card issuers — Discover being perhaps the most prominent among them — advertise that they won’t charge a late fee on your first late payment. Many other card issuers will waive the fee for some of their cardholders, but only if the cardholder asks.

A good record of on-time payment can help seal the deal. When you call, make sure the bank knows you’re rarely late and that it won’t happen again.

Interest Rates

That same survey also revealed about 2 in 3 cardholders who requested a lower interest rate got one, but just 23 percent had ever asked. Again, that means a large number of cardholders are missing out on a large amount of savings.

How big? Consider this:

  • If you have a $5,000 balance on a credit card with a 20 percent interest rate and pay $150 a month, you’ll pay $2,359 in interest before paying the card off over 50 months.
  • Lower that interest rate to 15 percent and keep everything else equal, you’ll pay $1,508 in interest in just 44 months. That’s a savings of $851!

Could you get your card issuer to lower your APR as much as 5 percent? Maybe or maybe not. But even lowering that APR to 18 percent — just a 2 percentage point drop — would save you about $375 in interest.

Credit Limit

An increased credit limit can do wonders for your credit score. That’s because it can quickly shrink your credit utilization ratio — how much debt you have compared to your available credit. For example, say you have $5,000 in available credit and $2,000 in debt. That means your credit utilization is 40 percent, well above the recommended goal of 30 percent or less. However, if you can increase your credit limit to $7,000, your utilization rate suddenly drops to an acceptable level of 29 percent. Your credit score is likely to improve as a result.

Be cautious, though. Don’t expect the bank to double your credit limit. You can likely improve your odds of success if the increase is a baby step rather than a giant leap.

One temporary downside: Your credit card issuer might do a hard pull of your credit when deciding whether to increase your limit. With any hard pull, you will likely see a small, temporary decrease in your credit score. However, the long-term benefit of the higher credit limit will likely outweigh any brief hit your credit might take.

Sign-up Bonuses

This is a move you’d need to make before you actually get the card, and you’ll need to do some homework to make this work.

Say you’ve received an offer in the mail from your bank for a card that you really like. The card comes with a low APR, no annual fee for the first year, no foreign transaction fees and a 20,000 point sign-up bonus. Sounds great, right? Yes, except for the fact that you’ve gone online and seen other offers of 40,000 or 50,000 points.

Well, if your credit is excellent, there’s a good chance that you can have those points. Just give your bank a call, tell them about the other great offers that you’ve seen and ask the bank to match the offer. Again, if you’ve got strong credit, you’ve got a good chance of success.

No Guarantee of Success

As mentioned, data has shown that cardholders are more likely to have their requests granted than they’d expect. But that doesn’t mean any of these are a slam dunk. The reality is that people with the best credit get the best treatment, the best rewards, the lowest APRs and the most fees waived.
Before you pick up the phone to talk to your bank, be sure you know where you stand with your credit. Get a free copy of your credit report fromAnnualCreditReport.com, and dispute any errors or omissions you find. Get your FICO credit score. And of course, pay your bills on time, every time, in the weeks and months leading up to your request. These moves can help increase the chance that the next request you make will be a success.