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Income, Not Credit Score, Counts for X1 Credit Card

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x1 credit card

About once a year, I do a review of all of my credit cards. I check to make sure that I’m utilizing them in the best possible ways. Moreover, I look into new credit cards, just in case there is something else out there that might be a good fit. In doing that, I’ve come across the X1 credit card. Unlike with other credit card applications, your rejection or acceptance isn’t based on your credit score. Instead, it’s based on your income. It intrigues me.

Doing a Credit Card Review

I review all of my credit cards monthly for the basics:

  • What are the balances on each of my credit cards?
  • Does anything look off that would make me suspect credit card fraud or identity theft?
  • What is the current interest rate?
  • How much can I pay off on each credit card?

But once a year, I do a much more in-depth credit card review. In addition to double-checking all of the above things for each credit card, I check for the following things:

  • What are the rewards that I’ve accumulated in the past year? I prefer cash back rewards and typically cash them in once per year. If I have used a card that only offers points rewards, I use this time to buy gift cards or gifts for others.
  • How have I used the card? I drill down to figure out the types of things I’m spending on each card, the way I’m maximizing rewards, and where I might be spending too much? This is the time to review all recurring subscriptions with an eye towards canceling, renewing at a lower cost, or switching to a card with better rewards.
  • What perks does the card have? Have I taken advantage of those perks? I update my spreadsheet of information to remind myself which cards to use for travel, because they offer travel insurance, etc.
  • Does the card have any fees, such as an annual fee? If so, should I keep this card or cancel it?
  • Have I added an authorized user to this card? Should I?
  • Do I have a balance transfer offer that is worth taking advantage of?
  • Can I request a credit limit increase? Should I? Most often, if I think I’ll qualify, I make the request. That way, I have more available credit, of course. More importantly, I have a better ratio of debt owed to credit available, which is good for improving credit scores.

What I Look For in a New Credit Card

At this time of year, I also review new credit card offers. I look for good sign-up and first-year bonuses, especially on cards that don’t have an annual fee or that waive the first year’s annual fee. Moreover, I check for balance transfer and low interest opportunities. Additionally, I check to see if my current credit score qualifies me to apply for better credit cards that I might not have qualified for in the past.

The X1 Card Doesn’t Look at Credit Scores

In doing this review, I have come across a new credit card that doesn’t rely on credit scores at all. When you apply for the X1 credit card, the company reviews your income, not your credit score. This is entirely different from how all other credit companies approach the process. Therefore, if you have a low credit score but steady income, you might find this credit card appealing.

Of course, this isn’t very good for people who don’t have a strong income. In these times of pandemic layoffs and unprecedented unemployment claims, the X1 credit card might not work for a lot of people. But it can be good for those who are still working but whose credit score has diminished recently due to costs associated with COVID restrictions and changes. Moreover, it’s a good option for people who are just getting out of college and who have gotten new jobs but don’t yet have strong established credit history.

This is, perhaps, not surprising consider that the card was created by Thrive, the same company that created ThriveCash. The latter is a loan platform for students. They’re able to produce offer letters showing that they’ve gotten a summer internships or just-out-of-college job, and, based on those letters, they receive a line of credit. It’s another way of getting access to funds when you haven’t yet established a good credit score.

The Perks and Details of the X1 Card

The based-on-income feature is the main thing that makes the X1 card different from other credit cards. But, of course, you need all of the details when you consider applying for a new credit card. Here are some important things to know about the X1 card:

  • There is no annual fee.
  • There are also no late fees or foreign transaction fees with the X1 card.
  • The balance transfer fee is 2%, which is lower than many other credit cards.
  • The APR is a variable and ranges from 12.9% – 19.9%.

Earn Points on X1 Card

You earn points on all purchases which can be redeemed at various retailers including Anthropologie, Etsy, Peloton, and Warby Parker. You can increase your points per purchase by spending more money; points go up when you spend $15,000 pr more annually on the card. Furthermore, you can double your points on every purchase for a month for each time your unique referral link is used.

Easily Control Recurring Subscriptions

Also, I mentioned previously that one of my annual review things is to check on my recurring subscriptions. The X1 card simplifies that. It tracks those subscriptions for you. Moreover, you can cancel subscriptions from within the X1 app. But what’s even better is that anytime you want to sign up for a new service, but not commit to renewing it after the free trial, your X1 card will generate a virtual credit card that automatically expires at the end of the free trial. That’s a perk I can get behind!

Get a Higher Credit Limit

Your credit limit on the X1 credit card is “based on current and future income.” The company periodically reviews your income and offers credit limit increases. According to their website, people find that they get up to 5X as much credit on the X1 card as compared with their other credit card limits.

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Immediate Steps to Take if You Suspect Fraudulent Charges on Your Credit Card

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These days there are so many different ways to monitor for fraudulent charges on a credit card. You should be in a position to notice such charges almost immediately. As soon as you do, you should take action. The faster you address the issue, the better chance you’ll have of not owing any money or becoming a worse victim of identity theft.

Contact the Credit Card Company

The very first thing that you should do is contact the credit card company. Ask to speak to a representative in the fraud department. Let them know that you see fraudulent charges on the credit card. They’ll ask you for some basic information to confirm that you’re the account holder. Then they will take action to help you.


You Are Protected

There are two key ways that you’re typically protected from having to pay a lot of money for fraudulent charges on a credit card:

  1. Most credit cards offer zero liability. In other words, they will reverse those charges for you. Sometimes they do so immediately. Other times they have to investigate.
  2. You also have federal protection. If you report a missing or stolen credit card before someone has used it then you don’t ever owe anything. If it has been used, you can only be charged up to $50 for fraudulent charges on a credit card.

Note that the rules are slightly different for debit cards. If unauthorized charges are made on your debit card, then you may be held liable for all, some, or none of those charges.

Ask the Credit Company What Steps They’ll Take

The credit card company may do any and/or all of the following things:

  • Immediately reverse the charges so that you don’t owe the money.
  • Contact the vendor and do an investigation then reverse the charges.
  • Ask you to contact the merchant and work it out with them first. Then to call them back if that isn’t effective.
  • Put a freeze on your credit card account at your request. This pauses the account while you take time to investigate the issue.
  • Cancel the credit card number. Then they issue you a new card. This prevents you from further fraudulent charges on a credit card.

You might also want to follow up with the credit card company in writing. The FTC has a template for a sample letter that you can use to dispute all types of billing errors. They note the following important tips:

  • Send the letter within sixty days of the phone conversation reporting the fraud, the sooner the better.
  • Make sure to send it to the right address, which is usually not the same as the payment address for the credit card.
  • Include copies of all pertinent information and supporting documents.
  • Send it with a return receipt request so that you can be certain that it was received.

The FTC also offers additional information about disputing credit card charges.

Review Your Credit Cards and Credit Report

Once you have straightened out fraudulent charges with the credit card company, you need to make sure that you don’t have any other problems with your accounts.

First, check all of your credit cards for unauthorized transactions. If you see any, go through the same process to contact those companies.

Next, order your free credit report. Make sure that everything looks as it should. In particular, check to make sure that no new accounts have been opened in your name without your authorization.

The other key action to take at this time is to change all of your account passwords for online banking accounts.

Credit scores and more. It’s all on Credit Karma.

Report the Fraud to the Credit Bureau

Once you know the extent of the fraud, it’s time to contact one of the three major credit bureaus: Experian, Equifax, or TransUnion. Let them know that you have been a victim of credit card fraud. Ask for them to put a fraud alert on your account. Alternatively, they can also freeze your credit, which might be the better option if you have been the victim of extensive fraud as opposed to fraudulent charges on one credit card only.

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How Much Does Credit Karma Spend Giving You Free Credit Scores and Reports?

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Credit Karma truly changed the game a few years ago when they began to offer free credit reports. They also give you your credit score for free. Prior to this, you had very few options for accessing this important information. Now, thanks to their innovation, you can easily access your credit report and scores for free in several locations. But if they do this for free, then how is it that Credit Karma makes their money?

Credit Karma Changed the Game

Not too many years ago it was relatively challenging to access your own credit information. The credit companies seemed to obfuscate this information. It all felt like a big mystery to many consumers.

Of course, you could get your free annual credit report from each of the three major reporting agencies. However, you could only do that once per year. While accessing your free credit score felt a little bit easier, it was still a challenge.

It’s all different today. When you log in to your credit card accounts online, you often immediately see your FICO credit score. You can also easily access it, as well as your free credit report, from a number of sources. Credit Karma played a key factor in changing the world in this way. It’s been to the benefit of consumers who are now increasingly empowered to take control of their own finances thanks to the access they now have to this information.

Is It Really Free?

One of the big questions that people immediately ask is whether or not it’s truly free to get your credit report and credit score through the company. It is.

The reason people are wary is because historically “free” hasn’t actually meant entirely free. Other companies before Credit Karma offered “free credit reports.” However, you had to sign up for credit monitoring services with them. Technically, you could join a free trial, get your credit score and then cancel before you paid anything. However, canceling was often challenging, if you remembered to do it at all. Therefore, you ended up paying for the credit score after all. (Well, you paid for credit monitoring, but since you didn’t want it in the first place, you paid for what you did want, which was the “free” credit score.)

Credit Karma simply does not operate this way. You don’t have to give them any money. You don’t even have to give them a credit card that they could potentially charge money to. You enter your information and they give you your credit report and credit score for free.

If It’s All Free, How Does Credit Karma Make Money?

This company is a terrific example of the difference between a finance company and a finance company. Finance companies make their money primarily in dealing with money. Fintech companies, on the other hand, emphasize the “tech.” They offer innovative Internet-based solutions to problems. They provide tools that help with your finances. This is how they make their money (through a variety of channels.)

Credit Karma Got Capital Investment

First of all, when it was a young company, it operated like a tech company. In other words, it got venture capital. For example, in 2014, Google Capital gave the company $85 million in order to roll out new products. One of the key new products at that time was the ability to offer free credit reports. (They had already been offering free credit scores for six years.)

According to the VentureBeat article announcing that deal, Credit Karma pays out tens of millions of dollars annually to access those credit reports/scores. And yet, they (and their investors) believed that it would be financially worth it to make that investment.

Speaking of their investors, Google Capital wasn’t the only company to fund Credit Karma. Investopedia reports that they received nearly $900 million from eight rounds of funding over the years, although the most recent round was in 2018.

Credit Karma Makes Money Off of Advertising Products

Like many websites, this one has ads on the site. Moreover, they offer a variety of products and services to their customers. You don’t simply go on the website, get your credit score, and leave. Instead, you have the opportunity to access a wide variety of different services and tools that can improve your credit. If you use them correctly, it’s a win-win. You improve your credit score and the company gets a small fee any time that you utilize the services advertised on their site.

Like with so many other websites, if you click through to something that interests you on the site, you have the opportunity to purchase it. If you do, Credit Karma makes a little bit of money. The company has more than 100 million registered users, over 35 million of which are active monthly users. Those little bits add up for the company. So, for example, if you see a credit card offer on Credit Karma that you like, and you click over to it and decide to apply, then Credit Karma benefits. But you didn’t pay anything.

Intuit Purchased Credit Karma

Credit Karma has continued to do well over the years indicating that users appreciate what they have to offer. One of the things that they started to offer more recently was tax preparation services. So, it’s no wonder that Intuit – known in particular for owning TurboTax – took notice. In 2020, they announced that they will be purchasing Credit Karma for more than $7 billion. It’s their largest acquisition ever, meaning that they certainly think that there’s financial profitability here.

Interesting, Intuit also owns Mint. Mint and Credit Karma offer many of the same services. Both are personal finance companies that offer free credit scores through an app-based / web-based service. That said, Mint tends to focus heavily on assisting you with understanding and improving your credit. Credit Karma does something similar but emphasizes the free credit report and other services such as tax prep. It will be interesting to see over time how the time are similar and different now that they’re both under the Intuit umbrella. That said, currently Intuit plans to continue to have Credit Karma operate as a standalone service.

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Is the Credit Karma Free Credit Report a Scam?

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Credit Karma recently made the announcement they would offer their users free credit reports on top of the free credit scores they already give. The question many people have when they hear about something like the free credit report is, “What’s the catch?” and, “Is it a scam?” The good news is the offer isn’t a scam, and for the most part, there aren’t any catches involved with getting it.

Is the free credit report really free?

Many companies that offer “free” credit reports technically come with no cost, but there’s a catch. In order to see the report, you have to give your credit card and sign up for a free month of credit monitoring with the company. If you cancel the credit monitoring before the month free trial is up, then you don’t get charged for anything. If you accidentally forget, your credit card ends up being charged. The FCC also reports that canceling can difficult, and it is not always done the first time you request it to be removed. So while the report is technically free, there’s a catch that can cost you money down the line.

Credit Karma set up their no-cost credit report offer the way they did with their no-cost credit score. There is no need to give your credit card to be able to see the report. They are able to do this because of the way they make money. Other sites make their money by selling the credit monitoring services, but Credit Karma makes its money through offering services where they get a commission if you sign up. These credit scores and credit reports don’t come cheap, as the company spends tens of millions of dollars to get them, but they make enough on the advertising to their users to more than make up for these costs.

Is it a real credit report?

There are some who take issue with the free credit scores from sites like Credit Karma, Credit Sesame and Quizzle. They question the efficacy because they aren’t FICO scores. There’s a debate as to whether this really matters or not, but it’s a concern to some people. They want to know if the credit report is from the credit reporting agencies, or if it’s some type of other credit score. Good news: The reports are legitimate.

In this instance, the credit reports given are from TransUnion and Equifax, and it’s the credit report you would get if you bought it directly from them. While it is a real report, it’s only one of the three main credit reports available. You do not have access to your Experian credit report from the site, although you can get your Experian report directly from them free of charge. You can also get your credit report for all three agencies at no cost once a year (plus in some other specific circumstances) from AnnualCreditReport.com (you can see how the Credit Karma and AnnualCreditReport offers compare here).

How Does This Help?

When you are looking for financing (or anything else regarding your credit), it is nice to have a leg up. Now, not all lenders disclose which reporting agency they check. Additionally, if you need a mortgage, they often take all three and average them. So, having the info helps you stay on track, but you will never know exactly what the bank sees until they show you personally.

How often can I see my credit report?

Many people wonder if the credit report is a one-shot deal. That is, once you’ve seen it one time, then you can no longer see it again to see if it has changed in the future. The answer it no. In fact, you can access your updated report as frequently as once every week if you desire. Although, many creditors only update the reporting agencies about once every month.

Conclusions

The Credit Karma free credit report is not a scam, or a bait and switch program. The only catch is that in order to get it, you will be given a lot of advertising offers which you can choose to accept or decline. You won’t have to give your credit card to access the report, but you do have to give them sensitive financial information. It comes with some risks, but nothing out of the ordinary for a credit reporting site.

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How to Avoid Growing Your Credit Card Debt

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Primarily, credit cards are financial products that can be a useful resource for making huge purchases. Whether it’s groceries, jewelry, travel packages, and other goods and services, these cards can be an alternative mode of payment when you have no immediate cash at your disposal.

However, cards that are maxed out can be harmful to your financial condition. When you have high balances, your debt becomes unmanageable to the point where you’ll find it difficult to pay them down.

If you believe that your credit card is getting out of control, keep reading this article to know how to prevent it from growing.

Minimize Spending On Your Credit Card

One of the best ways to avoid growing your credit card debt is to reduce spending using it. Although credit cards can be an alternative way of buying essential goods and other items, maxing out their set limit is no good at all.

Thus, if you want to save yourself from incurring debts, try spending without your credit card. If you can, use cash until you settle all your debts and normalize your finances. Remember, by challenging yourself not to spend on any of your cards, you can stop your debt from ruining your financial health in the long run.

Pay Off Your Credit Card Balances With A Loan

Sometimes taking back control over a growing credit card debt can be harder than you think, specifically if there’s a high interest rate being charged on your balances. To protect yourself from this financial turmoil, paying off your debt with a loan can be an excellent idea.

If you have a good credit, you can apply for an unsecured loan with a low interest rate. Once approved, you can utilize the loan proceeds to pay off your debt. Although you still have a debt to pay, this option can be a great way to avoid the growth of your credit card balances.

However, finding relief with a loan can also make a bad situation worse when used irresponsibly. As such, working with a loan coach can be an excellent idea. They can help you through the process of choosing the best financial solutions, like Lendvia loans, for your credit card balances.

Negotiate A Lower Interest Rate

You can prevent your credit card balances from growing by improving your interest rate. This means calling up all your card providers and asking politely for a low interest rate. To increase your chances of getting your request granted, explain to the company your credit card situation and show them that you’re serious about clearing your debt as soon as you can.

Although some credit card companies might have their own approach in handling your request, it’ll never hurt to give it a try. If you’re successful, then, you can avoid your debt from getting out of hand, thereby improving your overall financial health.

Create A Budget And Track Your Costs

If you’re looking for the simplest way to cut down your credit card balances and keep them from growing, creating a budget could be the way to go. Typically, your budget will serve as your guide to your monthly spending. By knowing the amount of money you’re willing to spend each month, it’s easy to make some sacrifices and little adjustments on your expenses, and these include the use of your credit cards.

This means that whether it’s cutting out a pizza party each week or downgrading your cable plan, your budget will be there to regulate your card use every month.

On the other hand, tracking your costs is an important part of creating a budget. When you know what your committed expenses are, calculating your budget in order to control your card spending will be more convenient and straightforward. Moreover, by keeping track of your finances, you become aware of your increasing credit card balances, and, in turn, you can look for ways to safeguard yourself from a potential financial problem.

Therefore, if you don’t want your growing credit card debts to be a source of your financial issues, using a reliable asset protection solution, like the one in Cook Islands, can be of great help. With this kind of protection in place, you can keep your assets out of the reach of creditors, like credit card companies, and potential lawsuits.

Finally

In reality, paying off debts is never easy, especially if they’re due to high-interest credit cards. And, if you don’t handle it properly, you might end up paying them off in your lifetime. So, if you don’t want to be pulled away from your financial independence, protect yourself from your increasing credit card debts by following the tips mentioned above.

For more great savingadvice articles, read these:

Should You Use Credit Cards to Pay off Student Loan Debt?

What Does The Average Millennial Debt Look Like?

How Do You Develop A Financial Strategy To Stay Out of Debt And Save Money?

Who Has The Most Debt In The US?

 

Should You Use Student Loans to Pay Off Credit Card Debt?

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student loan to pay off credit card debt

In some cases, when a person takes out a student loan, they get more cash than they need to cover their tuition, housing, and other college costs. When this happens, figuring out what to do with the excess can be challenging. At times, the simplest choice is to send it back to the student loan company. But, if you have credit card debt, is that the best move? If you are wondering whether you should use student loans to pay off credit card debt, here’s what you need to know.

Student Loan Interest Rates Are Lower

Typically, the rate you’ll get on a student loan is far lower than what you’ll have on a typical credit card. For the period between July 1, 2019, and July 1, 2020, the interest rate on direct subsidized loans and direct unsubsidized loans from the federal government is 4.53 percent. Compare that to an average credit card interest rate of 15.09 percent, and it is easy to see why using a student loan to pay off a credit card would be an attractive idea.

With the lower interest rate, you’d pay less over time by paying off your credit card with your student loan. That’s an important consideration.

Streamline Your Monthly Payments

By rolling your credit card into your student loan, you’d streamline your monthly payments. You’d have one set amount to pay each month, making your budget easier to manage thanks to the increased predictability.

If stability is a goal, then using your student loan to pay off a higher interest credit card could give you that. The two debts become a single line item, making it easier to track.

Empty Credit Card Temptation

When you pay off a credit card, you have the ability to charge that amount all over again. If you don’t intend to close your credit card account, then that temptation may be hard to resist. As a result, you may begin ringing up a new credit card balance quickly, creating even more debt.

If you aren’t sure you could refrain from using the credit card after its paid off and don’t intend to close the account, you might not want to pay it off with your student loan. If you do, you could be getting yourself into deeper financial trouble, which isn’t ideal.

Issues During Bankruptcy

While few people plan to file for bankruptcy in the future, it certainly happens. If you get in a bad financial situation and have to file, credit card debts are often dischargeable. You could rid yourself of that burden during the bankruptcy process.

In contrast, federal student loans can’t be discharged during bankruptcy. They stick with you regardless of the financial hardship. If you pay off your credit cards with your student loan, you are effectively moving a dischargeable debt into one that isn’t. That’s a risk that exists, so it’s important to take it into consideration.

It Might Be Against the Rules

When you have money from a student loan, there can be rules about how you use it. Federal student loans are limited to educational expenses at your school. Usually, this includes tuition, room and board, certain transportation costs, and specific tools, supplies, and equipment.

Technically, if you use your federal student loan to pay off a credit card, you could be misusing those funds. You’d be violating your lending agreement, and that could come with ramifications.

Now, it could be hard for your lender to prove that’s what occurred, which is why some people decide to use the money inappropriately. But that doesn’t mean it’s impossible.

Additionally, it’s crucial to note that private student loans may have different rules. With those, each lender can decide what is and isn’t permitted, so you might legally be in the clear to take the funds to pay off other debts. If you’re considering it, review your agreement to find out whether it’s allowed.

Have you considered using student loans to pay off credit card debt? If so, did you go through with it? Why or why not? Share your thoughts in the comments below.

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