The most effective way of using a "recovery" card?

[SageMother]

It's one thing to have a card just after a financial misstep but quite another to keep that card for any longer than you absolutely have to. It might be best to use the high interest card by doing a cash advance, placing that money in savings, then paying off the balance in one or two payments several times to push your rating up, but never actually purchase goods using the card.

Has anyone tried this?

[berlinlife06]

I never thought of that strategy to get better score and get rid of the bad credit remarks! I think that is an excellent idea!

[aquariancore]

What I have done is make a purchase where I already have the money and pay it off in three installments to establish credit. I believe when you take out money against the card your fees jump and it's actually held against you.

[louisgodwin]

I think Aquarian is right. I'm pretty sure taking out cash advances is something that is held against you, though I can't say I'm 100 percent certain of that.

[trickrtreat]

It does seem like they love you when you use their card. Especially the high interest ones. But I still like the logic of paying it off quickly.

[harmony_mom]

My friend actually used the method of taking out a cash advance and repaying it, and it did raise her credit score quite quickly, so it doesn't count against you. She did say however that she found it tempting to use the cash for something else when it was in her account and it ended up backfiring a couple of times, so it does take some self control.

[parise]

I would use this type of card for a little each month, and pay the amount charged each month without fail.

[berlinlife06]

The thing is, if you are using the card to improve your credit score, then there's a use. But why is it so important to improve the credit score? I have no idea what's mine, and I don't trust any of those offers that say they'll give it to you for free on the net... and you have to enter your Social security, Address and all you info... I just can't trust it!

[Jenna]

Quote:

Originally Posted by SageMother It's one thing to have a card just after a financial misstep but quite another to keep that card for any longer than you absolutely have to. It might be best to use the high interest card by doing a cash advance, placing that money in savings, then paying off the balance in one or two payments several times to push your rating up, but never actually purchase goods using the card. Has anyone tried this?

I don't really think it makes much sense to take out cash advance on a high interest credit card. The money that you earn by putting themoney in savings will never recoup the interest you are charged.

Especially since cash advances are usually charged a higher interest rate than you expect. If you had a 10% interest rate on the card, and took out a cash advance, then there is every possibility that you would be charged 24% interest just on the cash advance. Different interest rates apply to cash advances for pretty much every single credit card.

Be sure to read your terms and conditions carefully - you'll see the difference there.

Also, your credit score can actually be lowered if you charge over 20% of the available credit on the card - another reason not to do this type of thing.

Your credit score will get the same benefit if you just order a pizza on the card once a month and pay it off.

This seems like a whole lot of work just to be on the losing end of a deal IMO.