Today we have a special guest interview with John Ganotis, the founder of Credit Card Insider. We’ve asked specific questions related to the company and others that directly impact consumers. Read on to see our questions and John’s answers below.
Tell us about Credit Card Insider and why you started it.
I was frustrated by the widespread lack of basic financial literacy knowledge people have today. The mission of Credit Card Insider is to help people gain a vast understanding of the fundamentals of how one major area of financial literacy, credit, works. Credit seemed like one of the most important areas to educate people. Without basic knowledge it can be easy for someone to make financial mistakes that may seem small, but can continue to impact him or her for 7 years or more. This affects everything from the ability to rent an apartment to getting a cell phone plan.
Do you think everyone should use credit?
No. My attitude toward credit is that everyone should have a basic understanding of how credit works, especially what can negatively impact credit reports and credit scores. Next, I think people should have an understanding of the benefits of having positive credit history established and how to establish that history. This is especially important if that person plans to apply for a mortgage, cell phone contract, or anything that requires good credit. Having a line of credit requires discipline, and some people do not have enough discipline to only spend on a credit card what they can afford to pay off in full at the end of the month. There are still methods those people can use to build credit (for example, credit builder loans) without getting a credit card. But, in the case that someone does want a credit card, part of the mission of Credit Card Insider is to provide visitors with information that helps them make informed decisions about what cards to get in their situations.
If you could give someone only one piece of advice on credit what would it be?
That’s a tough question, because it really would depend on the person and how much the person already knows about using credit responsibly. I think one of the biggest pieces of advice I’d give to anyone is to always read and understand the terms of a credit product. Don’t make the assumption that all the fine print is the same on most credit cards, because even one or two minor sentences could have a big impact on fees you pay with a card, for example.
Holiday shopping is around the corner, what should people pay special attention to?
Retailers like to push their store credit cards, and incentivize employees and managers to get more credit card signups (see this Reddit thread if you don’t believe me). During the holiday season it may be tempting to sign up for one (or some) of these cards to get a one-time discount or defer paying for some big-ticket items until next year. It’s especially important to consider the typical downsides of store cards before signing up for one, and like with any credit card make sure you’ve read and understand the terms before deciding to apply for a store card.
What’s one of the worst stories you’ve ever heard from a visitor?
I get lots of stories from people, and many of them follow similar patterns. Rather than sharing a specific story, I’ll share one of the biggest patterns: falling behind on payments to the point where an account goes to collections. I often hear from people after an account has already gone to collections, and there isn’t a lot that can be done at that point to mitigate the damaging credit history impact that comes from collection accounts. This is where understanding credit fundamentals could have helped people avoid mistakes that lead to an account going to collections. Sometimes people don’t understand how paying a credit card bill works, or other times they think defaulting on loans will make them go away. No matter what the reason, understanding the credit history impact of delinquencies may help inform behavior to avoid having accounts sent to collections. If you want to hear more credit card horror stories, we have a few on our YouTube channel.
What is one of the most frequent myths regarding credit that you hear?
I hear from a lot of people who think that closing a credit card is good for your credit scores, and that credit scoring models like to see fewer accounts. This is a dangerous myth, because it’s incorrect. Not only do most credit scoring models give more points for more accounts, but closing a credit card could unfavorably impact your credit utilization. by decreasing the total available credit you have, and that’s a major factor in credit scores.
Why do you think new technology like chip readers and smartphone payments have been slow to be adopted?
People are already in the habit of carrying and swiping a card. The chip rollout in the United States has been confusing for many people, and the checkout experience is widely perceived as slower. These chip cards are just a stepping stone to other, more secure payment systems, especially with the Chip-and-Signature system we have in the US. That is an opportunity for mobile payment systems, like Android Pay and Apple Pay. I think we’ll see much broader adoption of mobile payments as their integration with wearables becomes more mainstream, and more people learn they can use them. Paying with Apple Pay on an Apple Watch is a much easier and more convenient process than paying on a smartphone, so experiences like that will likely pave the way for people to use mobile payments.
If you had to guess, how far away do you think being plastic-less is? Most people are paperless and carry very little physical money with them now.
It will take a long time, because people are in the habit. There are also many companies involved with a physical credit card transaction that will fight hard to prevent themselves from becoming obsolete. As wearables with payment systems become more mainstream I think we will see a shift to virtual plastic first, like what’s happening with Apple Pay and Android Pay. After that more vertical integration that eliminates as many middlemen as possible and doesn’t need to rely on “card” products will occur. I don’t think physical credit card transaction infrastructure will be phased out completely until at least 2025 unless legislation forces it to happen sooner, but the majority of people will transition to a different solution sooner.
How is Credit Card Insider different from other finance sites online?
We focus on clear information about the fundamentals of building credit. There are many other sites that go much broader and focus on personal finance in general, but I think that leaves a gap for people who want to dive deep into understanding credit without distraction of other areas. There are also a number of sites that focus on maximizing credit card points. Points maximization is certainly an interesting area, but I think there’s a lot of work to be done in credit education to make sure people understand the fundamentals before signing up for credit cards to get bonuses. Without understanding the basics, jumping into the points game could lead to debt or damaged credit history.
Who else do you look up to in the credit or personal finance world?
Looking at the big players in the credit world, I’m a fan of what Credit Karma has done. In my opinion they started the conversation about getting a free credit score and were one of the first websites I remember offering one. I think that helped the masses realize they should monitor their credit regularly and get an understanding of what factors can impact credit health. Now, in 2016, a number of websites are offering free credit scores and many credit card issuers have followed suit to offer free FICO scores on monthly statements. I think a lot of that has to do with Credit Karma spreading awareness over the past five to ten years.
What’s the 5-year plan for Credit Card Insider?
I’d plan to continue going deeper into credit education to double down on the quality of our resources about credit rather than going wider to cover more finance topics. This includes adding more videos to grow our YouTube channel, where many people find Credit Card Insider in the first place. As we grow, I also plan to improve the features for sorting and comparing cards to make it easier for visitors to find the cards that are right for them.