Listener/Caller (6:33)

All right, I got a few car questions for you here, Clark, to go with that. Renee in Florida says after hearing Clark speak about new and used car prices, I wanted to hear what he thinks about the current new car incentives, specifically in leasing.

Clark Howard (6:47)

So Renee, anytime we talk about leasing, it's a question first of what's your intent? Do you tend to own a car a long time? Do you tend to buy that vehicle and have it? I would consider a long time, five or more years. In the mentality of how long people keep new cars, if you do, as a general rule, you're better off buying rather than going through a lease, because then what happens is at the end of the lease, you have to then either turn that vehicle back in or go through the purchase process as already negotiated in that lease. Now, there are times with certain luxury brands or near luxury brands where they use a lease as the backdoor method of discounting. In those circumstances, as long as the residual value looks like it's going to be a deal, that's the price that you can buy it at. Three or four years, usually three years. As long as you prepare yourself to buy it at that point, then it's a backdoor way into you ultimately having a lower cost of ownership. But you're asking for a lot of complexity going into a lease and a lot of fees that you really may not have been prepared for. And so leasing is something that, eh. But if you like to cycle through vehicles in three, four years time and there's special incentives on the leases, go for it.

Listener/Caller (8:26)

Saw a lot of Black Friday lease specials advertised when that was coming.

Clark Howard (8:30)

Oh, yeah. I mean, well, you know, why all these leases? Because the manufacturers have been able to get a little bit lower cost of funds that they can use for these leases. And they've got too much product and a lot of models on the lot.

Listener/Caller (8:45)

Right. And the years about the 24s are going to be cheaper because that year is about to turn over.

Clark Howard (8:51)

Yeah, the 25s. A lot of dealer lots have 24s when the 25s should already be what they've got on their lots. And they got the 24s that the manufacturers need to push out the door, as do the dealers.

Listener/Caller (9:05)

All right. Susie in Oregon wrote in with this. I have a 1995 Honda Accord with 230,000 miles on it.

Clark Howard (9:12)

All right, Susie, you're just about my hero here. 30 year old, 30 model year old vehicle because of what we were just talking about, that the 25s are out. I love that. 30 years, 230,000 miles a year, driving less than 10,000 miles a year. Wow.

Listener/Caller (9:31)

I am the original owner. It has been a great car, but recently has required some costly repairs. The fuel pump went out and it cost $1,300 to replace. I'm starting to regret having the fuel pump repaired since I don't think the car is worth very much. My question is, should I try to sell the car to recoup the repair money or donate it to PBS for example, as a tax write off? The car is in good working order now, but it's probably only a matter of time before it breaks down again. What should I do?

Clark Howard (10:01)

Right? Susie, I love this. You are really, really thrifty. So you've been driving this as the original owner for roughly 30 years. Unbelievable. And if you are tired of this Honda, you want to get something newer or a brand new vehicle and you can afford to do so, go ahead.

Listener/Caller (10:24)

You're going to feel like you're driving a spaceship if you get.

Clark Howard (10:27)

Because the tech, the technology changes in 30 years. Unreal. Okay, so if you want to get rid of it, go ahead. But from a straight financial standpoint, if other than having to replace the fuel pump, the vehicle's still working fine, you will make up that cost. The average new vehicle costs nearly $1,000 a month, all in payments, everything like that. So you make up that $1,300 repair in about six weeks, five weeks, I mean, no time flat. So don't feel bad that you spent that money. And as far as selling that vehicle, it's worth more than it would have been if you hadn't replaced the fuel pump. So it's not like net you paid a full 1300. So if you are done with the vehicle, sell it. If you want to donate money in the semiannual fundraising drive for whatever PBS station or whatever you want to give money to, you'll give them more money if you sell that Honda and take the proceeds and give it as a charitable donation than you would donating the vehicle because it still works. Because you've already done the repair. And believe it or not, that vehicle has more value than you realize even as a 30 year old vehicle. Because Honda Accords, Toyota Camrys and Corollas maintain such crazy value year after year after year.

Listener/Caller (11:59)

Anita in Georgia says, I have a one year old Nissan. I've read that Nissan may go out of business in the next year. Would it be in my best interest financially and car wise to trade to another brand and avoid the issues that a dealership that is no longer around may occur? My Nissan is in pristine condition with 10,000 miles on it. It hasn't been in any accidents and maintenance has been kept up with. I don't want to lose too much value should Nissan go out of business.

Clark Howard (12:24)

So Anita, the way the Japanese automakers work is when one of them gets into serious financial trouble or insolvency, the Japanese government engineers a takeover by another Japanese auto brand or another Japanese auto brand will do some level of investment for partial ownership of the brand. It would be extremely unlikely, even with Nissan's been a long suffering brand and for a long time was controlled by the French. And that was only undone in recent years. But Nissan has had a long, long time of trying to find its way financially in a very competitive automotive market. So I would be beyond shocked if Nissan's financial difficulties led to a shutdown of the company and a dissolving of the brand. Owning something for a year. You've already taken a big depreciation hit in that first year of ownership. The vehicle's working fine for you. I would not make a change like that, dumping the vehicle because I don't think that your scenario you're worried about is likely at all. It would be very, very extremely remote that a possibility like that would occur. And coming up ahead, I want to talk about something that I have consistently just hated and that is store branded credit cards. And they've actually managed to get worse than they already were. And I'm going to tell you why. When they say, wouldn't you like to save 15% today? The answer is no. I'd rather pay 15% more. And maybe the cashier who says it like a robot, well, look up. Really, you want to pay more? I'll tell you why this episode is.

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Clark Howard (14:41)

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Clark Howard (15:01)

Jobs that Krista had, when she was growing up, was folding khakis at the Gap. What was it used to say when people would come in, we'd tell them.

Listener/Caller (15:11)

The different types of khakis we had. We've flat, front, pleated. We had all different styles of khakis. And I folded T shirts. It was a lot of folding because people would come along and they just mess up your table.

Clark Howard (15:25)

It's funny at Costco, where they have two people whose only job is to refold clothes that shoppers like me pull something up, we look at it, then we try to put it back into shape, and it looks terrible.

Listener/Caller (15:38)

I refold very well because of my past experience in retail, for sure.

Clark Howard (15:43)

Well, there's something about the Gap.

Listener/Caller (15:46)

Would you say I worked at more than the Gap? I worked at a lot of stores.

Clark Howard (15:49)

Yeah, but you'd say, well, welcome to the Gap. Welcome to the Gap. Welcome to this. New York Post reports that the Gap is one of the retailers that for their crummy store credit, they're all crummy, by the way. Any store. What's called a monoline credit card that. I'll explain what monoline is in a second. They're all garbage.

Listener/Caller (16:08)

Except Target gives you 5%.

Clark Howard (16:11)

We'll get to that.

Listener/Caller (16:12)

Okay. I just want to make sure.

Clark Howard (16:13)

Okay. So the interest rate on the gap card is 35%. And there are a number of clothing retailers that are 35% of their store cards. Some credit card issuers now for store cards, monolines, 36%. In fact, 35, 36% has become common. The New York Post reports that 50 different retailers this fall, as interest rates were going down, hiked the interest rate on their store cards by a bunch of points. So what's the difference between a store card that's a monoline and a store card that would be, in my book, not junk credit. A store card that is tied in with a major issuer where you can use the card anywhere. That may not be a good card to carry, but is not junk credit. But if you have a card that is only for that retailer, you got junk in your hands. It's looked at as junk by credit issuers, by the credit scoring models. I mean, they're just terrible. Macy's is one of the companies that raised their store cards well into the 30s. So you say, oh, well, they're giving me 10% off on everything if I use my blah, blah, blah, store card. But if you're then paying 35% interest, are you actually saving money? The answer is no, you're not the only people who benefit are the people who like to shop at that retailer, want the discount and then pay the balance in full on the card. While they're in the grace period and there's no interest, everybody else is being played as a sucker. These store cards are a poison in your pocketbook, and I don't want you to carry them because now not only do they reflect as poor types of credit that you carry, but now the interest you're paying is obscene. Think about the average credit union in the United states charges about 11% on their credit cards. Average bank about double that. And then the store cards are triple what the credit unions charge on average. Triple. Do you want to do that to yourself? My answer is no. What's up, Christa?

Listener/Caller (18:50)

All right, we'll go to questions. This one came in from Chaz in Georgia. Hi, Clark. I have a few credit questions. I've been rebuilding my credit over the last 14 months. I started with a chime debit and secured credit card and quicksilver card from Capital One, following the guidance on your website. Also, I had to take out a personal loan right at the time I started to build my credit. And it went from. My credit. Went from a 345 to 755 credit score in my.

Clark Howard (19:15)

Wait, wait, wait, wait. In a year. Okay. I gotta tell you, that is the most extreme improvement in credit score in a year I think I've ever heard from a listener or viewer. That is exceptional, and that is very, very impressive on your part. If I were to speculate, and I'm only speculating here, there may have been some older items, some charge offs or whatever on the credit report that aged out and are no longer on there. In addition to you building a current good credit record. But that is extraordinary, and you should be really proud of your credit score. I didn't. No one could go as low as 345. And now 755. Excellent.

Listener/Caller (20:05)

Yep. Okay. And so Chow said went from 345 to 755 credit score. And my lines of credit have doubled twice since. A longtime goal of mine was to get a Southwest card so I could rack up points for flights. Finally, I was approved last week for it with a $2,000 credit limit.

Clark Howard (20:22)

Congratulations to you.

Listener/Caller (20:23)

Having the one unsecured card, I did my best not to use more than 30% of the credit limit of that card. And just for bills. Now that I have two cards, do I have to stay below 30% of my credit lines collectively or do I need to stay under the 30% for each card. And under the credit limit, I plan on closing the CHIME accounts and keeping the Quicksilver card. My goal is to make my Southwest card the main spender. What should be my next move once my credit doubles on the Southwest card? Should I keep the Quicksilver open for emergencies, or should I move on to another line of credit that has better benefits and close the Quicksilver card?

Clark Howard (20:58)

Okay, gosh, that's a lot of questions all at once. So, Chaz, I'm going to do the best I can to run through them. The Southwest card that you had been seeking and now you have is only a good decision if you pay the balance in full every month on the Southwest card. When you're talking about credit utilization, keeping it below 30%, I can't tell from your question if you mean you're leaving a balance of 30% or your high limit in the month is roughly 30% of your credit. But with the airline cards, the airline cards don't charge the crazy high interest of the store cards I was just talking about, but they do charge higher than normal credit card interest rates. And so it's really important with that Southwest card that you use it as a payment system, and that is a borrowing card. In other words, that you pay the balance in full every month. Don't know what the interest rate is on the Quicksilver card. As to having the Capital One card, as your credit continues to rehabilitate, at some point Capital One is going to offer you another card, and they'll offer you one of the ones that they push very heavily, that pays one and a half percent cash back. And when you get to that point, you want to convert your Quicksilver, if it's not earning any cash back, to a card that's earning at least 1.5% back. You don't want to just reduce the number of lines you have. You want to at least have two from two different issuers. Right now you have the Southwest card from Chase, then you have the Capital One card. You want to maintain having at least two different cards from two different companies. Now, on your question, utilization, 30% is the absolute max of available credit you want to charge up in a month. Depending on the scoring models, they're either looking at individual cards, but usually they're looking at overall utilization. So as long as you Never go above 30% in your overall amount of credit, you should be okay. But what I prefer for you to do is follow the methods we Talk about on clark.com where you send in payments Regularly through a month before your statement closing date. And that will allow you to report a lower utilization rate. Because you get steadily below 30% utilization, your credit score goes even higher.

Listener/Caller (23:35)

Mike in Minnesota says a group of parents want to give our children's daycare teachers something extra for the holidays. The default suggestion is a Visa gift card. I tried to search your website to see why cash is best, but I could not find a great article. Please advise.

Clark Howard (23:52)

I'm shallow breathing. I'm shallow breathing. The Visa gift cards have been a nightmare for people. As I've detailed in my TV work. As we've talked about here on the podcast and our YouTube show, the Visa gift card product has been a very vulnerable product where you buy the card, you give it to somebody, they're smiling until they're embarrassed or angry when they go to a store and try to use it and there's no money on it. This has been an Achilles heel of gift cards generally, but specifically the Visa gift cards have had a terrible problem with criminals being able to empty those cards the second they're activated. And the recipient who thinks they're getting, you know, 50, 100, whatever number of dollars daycare teacher goes to use it and they're all excited and thankful for what you gave them. And then there's no money on the card because of the lack of security Visa has on their gift cards. And getting Visa to restore the money after their system has been compromised and that card has no money on it, well, you might as well go out and try to move a mountain by yourself. They're very difficult to work with. So cash is king. Nobody's going to be able to compromise that $20 bill or $40 you give or whatever amount of money it is you give. The money is rock solid. Will be in that teacher's hand. He or she will be able to use that. The Visa card, though, way too often is fool's gold. Ends up being worth nothing.

Listener/Caller (25:41)

Tony in Massachusetts says my new company shuts down between Christmas and New Year's. So we're moving our annual trip to Naples, Florida from late January to December 25th to January 4th.

Clark Howard (25:52)

Smart to fly on the 25th.

Listener/Caller (25:55)

Flying, I assume.

Clark Howard (25:57)

Okay.

Listener/Caller (25:57)

Yep. While I was able to find a decent not great airfare. Oh yeah, flying for sure. The rental car rates are outrageous for this week. I'm currently booked at just over $500 for the 10 days. Do I have any chance of getting a lower rate?

Clark Howard (26:11)

Minor. You know, the rental car market is so intensely strong in Florida during those key Christmas weeks. Christmas New Year's weeks that it is. I know this is going to be weird to say, but paying $50 a day during the Christmas New Year's period is actually a lot lower than most people are paying now. Is there a chance of you getting a lower rate? First thing I'd say is check Turo Turo. It's where individuals, it's kind of like an Airbnb for cars, rent their own vehicles out and you may find a better deal on Turo Turo has its own issues, but that could be a way for you to save a fair amount of money and reshop your car rental rate a week out before your trip. So just about 18. Well, no, one more week from now.

Listener/Caller (27:10)

Yeah. Okay.

Clark Howard (27:11)

Yeah, one more week.

Listener/Caller (27:12)

Sent in. His question I wanted to mention I should have told you this came in like a few weeks ago. So I'm just getting through all the questions.

Clark Howard (27:17)

Oh, great. All right. So Tony, since we were not an on time airline and you're hearing the answer later than you submitted, I want you to reshop it on the 18th and I want you to reshop on the 23rd and see if there's a better deal. And if you're a Costco member set up through Costco Travel. Well, actually your regular Costco membership sign in works on Costco Travel. Now sign into that, see if Costco Travel has a cheaper rate for you on that rental a week out or just a couple of days out and hope you have a great, great time in southwest Florida. I love going to Collier County, Florida. I just hope that you have great warm weather through that time. You're there over the Christmas New Year's holiday period. And we look forward to being with you tomorrow on the podcast to YouTube show and know what we're all about you learning ways to save more, spend less and avoid getting ripped off.