Much of our global society uses credit cards, especially those who live in consumer-orientated countries like the U.S., U.K., the E.U., and many parts of the Asian continent. Credit cards are not just for buying things at a supermarket.
One of the classic uses of a credit card is buying gas and diesel for our vehicles. Over the road, truckers find fuel company credit cards useful. One of the most popular fuel credit cards is the Chevron credit card. One long-time user praised the fact she could pay a fuel bill once a month instead of for every purchase at the pump.
The Chevron credit card customer mentioned above was concerned about Chevron moving out of her state. This move meant the customer could close her Chevron account and cut the credit card into little pieces. Not so fast!
How Does Credit Work?
On the surface, many apply for the credit cards they think will help them make purchases of convenience. We want to be part of the masses that use credit cards instead of money. In its simplest terms, credit cards are contractual agreements between buyers and sellers that buyers will pay for the item at a later date.
Ultimately, if you have a credit card that you pay off every month, you’re ahead of the credit game. The ugly truth is credit card issuers want you to carry a monthly balance so you keep paying them interest. Paying them the most possible interest comes from consumers paying their lowest monthly payments.
This is by design, one that arguably goes back to America’s Founding Fathers. The truth is credit cards such as the Chevron credit card act as both a surveillance tool and a way to put people who can pay their bills into one consolidated group. Credit card companies want, and indeed need, both types of debtors.
The Credit Score
Most people by now have heard of the credit score. The concept and minor use of credit scores have been around for decades. However, it wasn’t until consumers started gaining widespread access to credit reports that credit scores entered the American consciousness.
Today, credit scores are selling points for companies. Some specialize in debt relief. Other companies look for higher credit scores as a means of ensuring regular debt payments.
High credit scores correlate with making regular payments and keeping accounts in good standing. Given the number of consumers using credit, the credit score developed into a type of voucher system that tells new creditors you’ll likely pay your bills.
Closing a Credit Card Can Shorten Your History
People choose specific credit cards for specific reasons. One reason is to pay for something today because you won’t have the money until tomorrow. Another reason is building credit for the future. Conversely, while closing an account may help your finances in the short term, it can hurt your credit score.
On of the defining characteristics of a good credit score is the age of a credit history. Closing an old account with a strong record of good payment can make your history appear shorter and reduce your score.
Fuel credit cards such as the Chevron credit card literally helped build America’s credit card apparatus. If you have one of those fuel-supported credit cards, don’t close it. More than a third of the information used to establish a credit score comes from having older credit card accounts in good standing. It demonstrates you have a long history of living up to your financial obligations.
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