Online Credit Card Statements Can Lead To A Bad Credit Score

by Hank Coleman

Most credit card companies and even most banks today praise their online statements as an environmentally friendly and convenient choice for their customers. You can save the environment and trees by switching from a paper statement to only receiving an electronic one. While this seems like a great idea on the surface, it can also lead to some headaches as well.

Pros…

Save A Tree. Claudia Thompson wrote in her book “Recycled Papers: The Essential Guide” based on academic research that, a mixture of softwoods and hardwood trees 40 feet tall and 6-8 inches in diameter, it takes approximately 24 trees to produce a ton of printing paper using the standard kraft chemical pulping process. So, according to Conservatree and those calculations, one tree makes approximately 16.67 reams of copy paper or 8,333.3 sheets. Discover Card reported that they were able to save the printing and mailing of over 70 million pages of paper each year thanks to its customers who switched electronic statements. Using the math above, Discover Card alone is able to save 8,400 trees per year with paperless statements. That’s a lot of trees and only one credit card companies. When you multiply the numbers across the entire financial and investing industry, you can end up saving a ton of forests.

Convenient. If you move a lot like I do, then you know then how much of a pain it is to change all of your mailing addresses with the plethora of the companies you do business with. According to the Survey of Consumer Payment Choice by the Federal Reserve, the average American has 3.5 credit cards in his or her wallet by the end of 2008 for example. I cannot even begin to count all of the other companies I do business, invest, bank with, etc. I have a lot of accounts and a lot of financial products that produce statements such as mutual funds, online savings accounts, etc. Subsequently, I have a lot of addresses to change when I move. So, for that reason, paperless statements are a big help as well. I can take my time updating my records with companies and not miss a statement in the mail.

Cons…

Forget About It. One of the recent financial mistakes that I have made is not closing credit cards with zero balances. My wife and I worked very hard to pay off our credit card debt, and we have several unused cards to show for it. Now that many credit card companies are feeling the financial pinch and have raised their fees faster than an airline, many credit card holders are finding old cards causing more trouble than they are worth. Several of my credit cards that I have had for years have recently implemented an annual fee. Cards that people no longer use but still have are the worst offenders. So, there have been a few times that I have not been aware of new annual fees popping up on my statements because I have switched to online statements only.

Damage Your Credit. There is the potential to damage your credit score thanks to forgetting about annual fees that you do not watch closely thanks to online statements. I was lucky enough to receive an e-mail from the old credit card. I almost deleted it as spam though. The e-mail said that I had a low balance on my card. I was thinking to myself, “Darn right! It’s zero!” But, I decided to go to the credit card company’s website anyway and found the fee. Not paying the annual fee or any fee that you are charged, whether you know about it or not, can bang up your credit score a little.

What To Do…

You should definitely sign up for your companies’ paperless statement options and help save the environment. But, you should also cancel any old cards that you are not using. While it will hurt your credit score temporarily while your available credit decreases and utilization ratio increases, your score will return to its former level over a short period of time. An added benefit of canceling the card is also to protect you from identity theft.

Tree & Recycling Statistics: Conservatree & Discover

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{ 1 comment… read it below or add one }

Brandon July 26, 2010 at 8:07 pm

My wife can’t understand why I don’t turn off paper bills. I want a paper record of every single change my bank or credit card company makes to my account, I don’t just want to hope the email doesn’t go to my junk file.

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