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November 13, 2009 4:34 PM

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One minor error: Most personal lines insurance policies (auto, homeowner, renters) DO charge you for switching - it's called a \"short rate penalty\" and is often around 10% of the remaining premium. Make sure you refer to your policy documents (or call your insurer/agent) to find out if this applies to you. Saving a few bucks on insurance is always great but not when the savings are immediately negated by a penalty.

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catastrophegirl chooses not to fly

November 13, 2009 4:34 PM

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@SGriswold: true, i switched my car insurance when i bought a home to get the line item discount. i was charged a pro rated percentage of the remainder of my insurance term for ending the policy. however, the $300 a year i saved with the line item discount on combining the policies made the $75 charge worth it.

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thetango

November 13, 2009 4:34 PM

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This is true but some states have laws that prohibit this type of behavior.

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Verucalise (Est.February2008)

November 13, 2009 4:34 PM

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I piggybacked after my divorce, my SO and I opened 1 credit card in January '08, and two more in July '08- My credit score jumped from 580's to 625 in less than a year. I bought a brand new van in January '09, him as the primary and myself as the secondary (so the title/insurance were in my name). We got 10.49% interest in January, and I just refinanced my vehicle at 5.89% at my local credit union.

We originally tried to get the loan thru the credit union, since they offered us 6.49%, but they would only approve us for $21,500. Here it is, 9 months later, and I put extra money on the principal, PERFECT payment history for 5 years on car loans, and they refi'ed same day.

It DOES work. But I also paid off anything small remaining on my credit, plus besides my initial loan inquiries in January, I hadn't applied for credit for over a year. Combine piggybacking with credit repair and stop trying to open credit lines, it does WONDERS. I'm waiting for things to fall off next year, and I estimate i'll have a 700 credit score when that happens.

awesome.

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wcnghj

November 13, 2009 4:34 PM

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NO NO NO!

Piggybacking is STUPID, from a relative for free, yes, it's fine.

7 replies

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sammy_b

November 13, 2009 4:34 PM

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@wcnghj: Agreed - ONLY from a trusted relative.

my mom put me on her credit card when I was 16 and on an out-of-country trip, she just wanted me to have a way to buy a plane ticket home if everything went awry. When i got back she took her card back but kept me on the account until i was about 22. She charged up big balances and paid them off in full, on time every month for YEARS. It helped my credit score immensely, but if it weren't my mom it wouldn't be worth it. The risks are simply too great.

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November 13, 2009 4:34 PM

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Agreed. Being an AU on a spouse/other relative's account is fine, but what's being alluded to here is very dodgy indeed. Seriously - I can't believe Consumerist would be advocating this at all. It's such a very, very bad idea, and is the whole reason why authorized user accounts very nearly ended up being discounted from FICO scoring altogether. Plus... I thought that AU accounts would only count now if you share the same last name or address as the main accountholder?

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November 13, 2009 4:34 PM

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@MsAnthropy: Which is bad. I got my cousin to put me on her Discover account as an AU. I do not share an address or last name with her. I do not open my own for practical reasons (I'm not in the US; I'd open one here but they need a work visa; I'm here as a student)

I had thought that it was already discounted from the FICO scoring which is why I then got a bunch of checking accounts while in China (2 from local banks, one from a UK bank, and one from the local Citibank branch) in case I can't open any when I get back to the US due to credit checks (my report is pretty much blank). So is it?

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wcnghj

November 13, 2009 4:34 PM

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@jamar0303: FICO still counts AUs.

Why not check your credit reports? www.annualcreditreport.com . Check with your cousins address.

--

You can get a US checking account with no credit just fine, bad credit is a different story.

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November 13, 2009 4:34 PM

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@wcnghj: The bit about \"not being in the US\" prevents annualcreditreport from working for me. But it's nice to know that hope isn't lost.

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wcnghj

November 13, 2009 4:34 PM

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@wcnghj: And yes, the buyer will know the card number if he/she gets a paper copy of their transunion credit report.

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November 13, 2009 4:34 PM

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@wcnghj: Yeah I saw that one and I'm like \"oh no way would I EVER do that with anyone!\"

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Verucalise (Est.February2008)

November 13, 2009 4:34 PM

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@wcnghj: I don't agree with piggybacking if you are \"acquaintances\" or roommates, even close friends. My SO and I have been together for 6 1/2 years, and it sucks that we can't usually go into a financial venture together (like buying the house).

Doing the piggybacking has immensely helped us. But it only works in CERTAIN situations.

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wcnghj

November 13, 2009 4:34 PM

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@Verucalise(countingcalories): Right, doing this with somebody who is a trusted relative, etc. is just fine IMO.

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wvFrugan

November 13, 2009 4:34 PM

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How about a thread \"How to Cash in on Your BAD Credit\"?

It can actually save you more money than good credit, I know!

1 replies

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November 13, 2009 4:34 PM

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@wvFrugan: I cash in daily. I have the luxury of knowing that my financial condition could only improve If my identity was ever stolen.

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azzie

November 13, 2009 4:34 PM

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Piggybacking greatly helps to people with short credit history.

If you have a credit card since, say, 2001 and you add an authorized person with short credit history today, credit report of that person will reflect that joint account was open 2001 (not in 2009). So you've just made the length of that person's credit history 8 years. Credit score skyrockets at this point.

This trick greatly helps newcomers to the country (if you can trust them).

It's funny - my wife's much credit history is much longer than she's actually been in US.

2 replies

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Dwight K. Schrute

November 13, 2009 4:34 PM

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@azzie: However, it is quite obvious to any credit analyst looking at one's credit repot which trades are their own and which are are just \"authorized user\" accounts.

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November 13, 2009 4:34 PM

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@azzie: similarly, when my brother and I went to college, we were both made AUs and given cards on one of our parents' credit accounts... the account has been open since 1984, which is when I was born. Given that and my own fiscal responsibility (student loans, my own cc), I have an excellent credit score!

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LatherRinseRepeat

November 13, 2009 4:34 PM

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I'm not sure about the insurance tip. For car insurance, at least. I think your credit history weighs less than your driving record and zip code. But I guess it varies, depending on the insurance company.

Also, insurance companies have their own database for tracking you. Let's say you got in an accident 5 years ago. Although, it's been wiped from your public DMV record by now, the CLUE database still has it on record.

So if you were to switch insurance companies, the new insurance company would most likely query the CLUE database rather than the DMV records. So yeah, you're kinda screwed and wind up paying the higher premium anyways.

1 replies

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November 13, 2009 4:34 PM

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@LatherRinseRepeat: Driving record really only starts to count after you're 23-25, based on the shopping I did.

Before that, it's all zip code and credit history.

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Brazell

November 13, 2009 4:34 PM

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Consumerist, you bitch and moan about people handing over their zip code at checkout or giving their receipt to a guy at Best Buy walking out of the store ... but then you advocate offering up your credit line for piggybacking? C'mon now.

Anybody who has spent any amount of energy in their life protecting their credit should NOT piggyback... you're just looking for regret.

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imationlh

November 13, 2009 4:34 PM

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I work for an insurance company located in the northwest U.S. Your credit score can affect your premium by up to 56 percent. All insurances companies, large and small, use your credit score to give you a discount or, as I like to put it, rape you in the pooper because of a low credit score. It's ridiculous.

1 replies

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November 13, 2009 4:34 PM

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@imationlh: And it should be outlawed as I pound that point over and over again on credit and insurance forums. If insurance is required by law to have, using credit to price it should be banned. Housing is a basic human right, and landlords should be banned from using scores too. But whatever, as the stomach turns.

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MaytagRepairman

November 13, 2009 4:34 PM

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Umm. Back in February Consumerist said piggybacking doesn't work any more unless it is for a spouse or child.

[consumerist.com]

2 replies

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wcnghj

November 13, 2009 4:34 PM

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@MaytagRepairman: FICO 08 is still used by a slim few.

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MaytagRepairman

November 13, 2009 4:34 PM

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@wcnghj: Citations? What is a slim few?

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spinfire

November 13, 2009 4:34 PM

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There are still ways to play the arbitrage game. I purchased a computer (well, parts :) from Newegg and they offer 0% (deferred!) interest for one year if you make a purchase of $1000 or more. My purchase was for $1200. As long as you pay it off in full by the end of the 1 year promotion you pay 0% interest. They do a nice job of reminding you the statements, and even show you how much interest has accrued (at 24% or something ridiculous).

I put the $1200 in a 1 year CD earning 2%, so I'll make 2%. If I'd used my CC rewards card I would only have gotten 1%, so this is definitely worth it.

2 replies

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joeny1980

November 13, 2009 4:34 PM

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@spinfire: Thats pretty smart, using the CD. But really, you only get 1% on your CC rewards card? I have Discover and get 3% and a promotional 5% for certain things within each quarter (this quarter, I believe it is restaurants, grocery stores, movies, and some others). I charge everything possible including all of my utility bills. Obviously without carrying a balance and paying each month. Its pretty sweet knowing that every hundred bucks I spend I make back $3. Not alot but it adds up, and its free money. Better yet it allows you to get your rewards as cash or in gift cards. Sometimes the gift cards are double value! So for example - you can spend $1,000 to book a vacation that just happens to fall into the 5% promotional quarter. So you just earned $50. Now you use that $50 to buy a gift card worth $75 or maybe even $100 for say... Gap or Chili's or something like that. As long as its something that you would normally use and you don't treat it as a bonus - you just got back up to 10% free money.

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joeny1980

November 13, 2009 4:34 PM

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@joeny1980: ...[clarification, regarding the gift cards]... as long is the gift card is for something you would normally buy and you just use it as you would use cash.

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whitecat

November 13, 2009 4:34 PM

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DO NOT BUY INSURANCE BASED SOLELY ON PREMIUM COST.

(Sorry for shouting.)

But if you do this, you might end up with Allstate, and Allstate sucks. The reason their rates are so low is that they deny legitimate claims. That's also why they're known as the worst insurance company in America.

Don't just go by low premiums, go by how they will treat you when you have a claim. If you pay your low premium for years only to be denied coverage or low-balled when you have a claim, you're just throwing your money away. Pay a little higher premium and enjoy peace of mind - that's what insurance is for. If you're with Allstate, switch now to a more reputable insurer.

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