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New Visa and credit

I just opened a Charles Schwab checking account tied to my brokerage account and recieved a Platinum VISA card to be used as a debit card. I have great credit and am wondering rather or not to activiate it. I remember reading or hearing that every new card you have affects your credit because it ups your available borrowing amount. Is that right? I really don't need the debit card. I still write checks or transfer funds but it would be convenient to use it. Thoughts?
Reply to
Jack Deuce
i have a concern with these brokerage debit cards due to them potentially having access to so much money, in case of misuse. there are ways that pins can be stolen. i wonder if even the noncash parts of your accounts could be grabbed... i know a bank account holder who could draw more cash than their balance, because the bank was happy to charge overdraft fees.
i wonder if you can just hold the card for future activation if the need came up... something tells me they will kill it without activation soon. what i like to do is arrange a monthly automatic xfer from brokerage to bank checking account... does schwab brokerage web page let you set that up?
Reply to
dumbstruck
What i meant was then to use a debit card from your checking account when convenience is desired. This appears to put a firewall between debit cards and your brokerage account, yet keeping auto access to its $.
Reply to
dumbstruck
Why do you care about your credit rating? unless you plan on negotiating a large loan shortly why care if it moves a little
One extra credit card isn't gonna do much but it's true that having too much unused credit affects your score. i doubt a unused credit card will change
One piece of advice: Some credit cards charge yearly fees if unused... Read the fine print on yours.
Reply to
Dusenberg
One should always be careful with one's credit rating, though not obsessed with it.
Nowadays, it's checked not just to get a loan, but to rent an apartment, and sometimes even to get a job.
In Jack's case, it probably won't register at all. While brokerages such as Schwab and Fidelity do offer associated credit cards, (ie. Fidelity's is via FIA card services and actually has one of the best cash-back deals I know of. Schwab used to have a similar cash back deal but ended that a few years ago), it looks like Jack's looking at a *debit* card, not a credit card. Debit card should have no impact at all on your credit rating - it's not an extension of credit but rather an instantaneous way of directly accessing your brokerage's cash balance.
--
David S. Meyers, CFP®
http://www.MeyersMoney.com
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Reply to
David S Meyers CFP
If opening a brokerage account and having a debit card tied to that, perhaps it'll affect credit rating if
A:) the applicant tells Fidelity or whomever they are interested in margins or borrowing to invest
B:) There is overdraft tied into the account. Some bank accounts have automatic overdraft of say $200 or $500 etc.
Those are two examples of maybe how a debit card can have a credit extention but those are guesses to me...
Reply to
Dusenberg
having
access to so much money, in case of misuse. there are ways that pins can be stolen.
i wonder if even the noncash parts of your accounts could be grabbed... i know a bank account holder who could draw more cash than their balance, because the bank was happy to charge overdraft fees.
up...
something tells me they will kill it without activation soon. what i like to do is arrange a
monthly automatic xfer from brokerage to bank checking account... does schwab brokerage web page let you set that up?
My wife and I have investment accounts tied into our debit cards, although they are mutual fund accounts and not stocks so transactions are not done until the end of day. The safety we set-up was that cash payouts are to another bank card from another bank and not an account on the same debit card as the investment accounts are.
I see no security issues as long as your PIN is protected and stop picking birthdays, phone numbers and 1234 as a pin.
And don't tell your co-workers your birthday. All it takes is one unsavory thief/coworker to write down your announced birthday and steal your social insurance number and it's potentially away to the races.
Reply to
Dusenberg
David S Meyers CFP writes:
I doubt it's so limited. It's probably rather "an instantaneous way of directly accessing your brokerage account's 'available for withdrawal' balance" (i.e. it can tap your margin). This is why the one card of this type I have is kept in my safe deposit box. (I keep the card because it's a gold AmEx and can be useful for special ticket pre-sales).
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Rich Carreiro                            rlc-news@rlcarr.com
Reply to
Rich Carreiro
i think a brokerage debit card is potentially the most dangerous thing to take out of your safe. pins can be stolen by skimmers cameras, hacking, whatever. here is an old article
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its not the likelyhood of stolen pins, its the dire consequences of potential access to your entire nest egg or even lines of margin credit. thus i dribble the brokerage money into another little account with debit access.
Reply to
dumbstruck
That to me is the risk to consider. You get a slip at the ATM after using one of these debit cards and it says available balance, (your entire brokerage account) or (your entire margin limit).
Someone used the word firewall, I think that's a good analogy. You might link brokerage to a bank account but by not having a hook right into it from a debit card, you have a firewall between your debit card and brokerage. In the worst-case, only your bank account gets flushed. Now, a brokerage debit card may already work like this - linking only to a side bank account, with no automatic overdraft from brokerage - but it's something to check.
What doesn't get talked about enough also is the mess that an ID theft kind of crime creates, specifically with flushed bank accounts. You might eventually be able to get your money back but it can take a lot of time, especially if the transaction looks valid or you arguably are at fault for whatever reason. When a credit card is misused, you just protest the charge and don't pay your bill.
-Tad
Reply to
Tad Borek

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