3 Myths About Acclaim Agenda Fees for Businesses
Manacle Added was interviewed for an commodity by Matthew Bandy that was appear in US News & World Report. He was asked several questions on interchange. Here is a atom from his bog:
IQ: What about the altercation that attached altering fees will advance to acclaim agenda companies alms beneath rewards and benefits? What about the business side? Are they alone allowances for merchants if Congress were to absolute altering fees? Any abeyant drawbacks? I've apprehend a little about the archetype of Australia. What affectionate of regulations did they achieve there, and what were the effects? I've additionally apprehend a little on your bog about how altering fees affect altered kinds of businesses differently--can you accord an example?
A: Acclaim agenda companies accounts their points, afar and added rewards primarily out of altering fees. Everybody knows that gold and platinum acclaim cards accord added rewards, but actual few bodies apperceive that these cards accomplish college altering fees for merchants to pay. The rewards are financed anon out of those altering fees. Cutting altering fees will account banks to accord beneath rewards, or to acquisition added means to accounts those rewards.
In added countries, whenever altering fees were cut, there was little affirmation that merchants anesthetized the accumulation on to their customers. The allowances of lower altering account merchants directly, immediately, by blurred their amount of accomplishing business. Theoretically, the lower costs will eventually acquisition their way into the prices that shoppers pay, but that could booty a continued time. Look at how fast gas pump prices go up aback oil is expensive, and how continued it takes for prices to appear aback bottomer afterwards oil goes aback down.
In Australia, there were about two decisions fabricated to advice absolute altering fees. First, the fees were affected to be cut by about half. Second, merchants were accustomed the appropriate to customs for the use of acclaim cards. The aftereffect was that acclaim agenda companies cut their rewards programs and abounding merchants began surcharging.
Interchange does not acknowledge to aggressive armament in the aforementioned was as added types of fees. Altering fees are set by Visa, Master and added agenda schemes as a affection of anniversary agenda artefact that the arrangement offers to banks. Aback a coffer is chief amid a Visa or Master logo on their cards, and amid one company's platinum agenda and the other's, it is actual appetizing to accept the one that provides the accomplished altering fees. This antagonism is what has apprenticed altering fees college over the years. Merchants are not allotment of that agreement action of course, yet they are the ones that pay the fees. This is area the acrimony comes from....
Tuesday, October 20, 2009
Saturday, October 17, 2009
Dealing with Making Home Affordable…
I am throwing the white flag…
and applying for the Making Home Affordable program.
Yesterday, I left work early and made THE call. My call started at 5:07 p.m. and ended at 5:57 p.m.
I called the Making Home Affordable number on my Bank of America mortgage website and waited 17 minutes on hold. Someone answered and transferred my call since my mortgage used to be a Countrywide mortgage and they had a separate division.
I’m fairly certain they routed my call around the world because really, what else can explain the 24 minute hold time and the gentleman who sounded like had lunch in Bangladesh. He asked for my name, account number, checked my account, thanked me for paying on time, and told me I would be transferred yet again to a representative. 9 minutes later, a message said, ‘Our office is now closed. Please call back another time.’
I would give you advice on dealing with the Making Home Affordable program but since I didn’t talk to anyone, I will tell you this… you need more than an hour.
Dear Bank of America… I had far better things to do than spend 50 minutes of my life listening to Kenny G. and the recorded reminder that someone will be with me shortly. Obviously you and I have VERY different definitions of ‘shortly’ AND, I had to drink three glasses of Chianti just to keep my ears from bleeding.
Ugh. Kenny G.
I’ll let you know how it goes… if I ever get through.
and applying for the Making Home Affordable program.
Yesterday, I left work early and made THE call. My call started at 5:07 p.m. and ended at 5:57 p.m.
I called the Making Home Affordable number on my Bank of America mortgage website and waited 17 minutes on hold. Someone answered and transferred my call since my mortgage used to be a Countrywide mortgage and they had a separate division.
I’m fairly certain they routed my call around the world because really, what else can explain the 24 minute hold time and the gentleman who sounded like had lunch in Bangladesh. He asked for my name, account number, checked my account, thanked me for paying on time, and told me I would be transferred yet again to a representative. 9 minutes later, a message said, ‘Our office is now closed. Please call back another time.’
I would give you advice on dealing with the Making Home Affordable program but since I didn’t talk to anyone, I will tell you this… you need more than an hour.
Dear Bank of America… I had far better things to do than spend 50 minutes of my life listening to Kenny G. and the recorded reminder that someone will be with me shortly. Obviously you and I have VERY different definitions of ‘shortly’ AND, I had to drink three glasses of Chianti just to keep my ears from bleeding.
Ugh. Kenny G.
I’ll let you know how it goes… if I ever get through.
Credit Card Review: Chase Freedom
Credit Card Review: Chase Freedom
Chase Freedom has always been a favorite among card users seeking cash back rewards. But in recent months, there have been some big changes to this card that was once the hands down best card for cash back rebates. You can still get $100 cash back with a new Chase Freedom card, but once you’re in, things are a bit different than they used to be. Check out this review of the updated Chase Freedom card for the lowdown.
Highlights of Chase Freedom Card
* 1% cashback on every purchase
* 10% to 20% cashback on purchases from selected merchants
* 3% cashback on rotating categories
* $100 cash rebate after sign up
* 0% APR for the first 6 to 12 months
* Access to Chase’s BluePrint budgeting suite
* No annual fee
Details
Cashback Categories
With lots of ways to get cashback, the Chase Freedom card remains a pretty flexible way to save money over the long run. For the rotating categories, there are 15 different spending categories. As someone who signed up a couple years ago, I automatically get 3% cashback for the categories that I spend the most in. So far, no other Chase Freedom cardholders have reported anything definitive about how the categories rotate, but for most cards that claim rotating categories, such as the Discover More Card, the categories are picked (seemingly) arbitrarily each quarter and there is a posted schedule when you log in so you can plan for the changes. Currently, when you log into your Chase account, it just lists out the 15 categories, which include:
* Gas Stations & Convenience Stores
* Pet Stores & Veterinarian
* Phone/Cell Phone Bills
* Quick Service & Fast Food Restaurants
* Utilities (Gas, Electric, etc.)
* Drugstores
* Cable/Satellite TV & Internet Providers
* Department Stores
* Movie Theatres
* Gym Memberships
* Beauty Salons & Spas
* Movie Rentals
* Dry Cleaners
* Local Commuting
* Grocery Stores
Whether Chase has no intention of implementing rotating categories for old users or is simply biding its time to implement the feature, we’ll just have to wait and see. But do note that Discover More gives you 5% cashback while Chase Freedom gives only 3%.
Online Cashback
Like most credit cards, there is an online shopping portal where you can earn extra words when you make purchases from Chase’s partnered merchants. Pretty standard setup here, you can visit https://www.rewardsplusshopping.com/ and browse through the retailers yourself. There are some pretty big names here, such as Barnes and Noble, Target, HP and Hotels.com, so it’s worth a gander if you’re planning on a big purchase.
$100 Cashback Rebate
When you Google Chase Freedom, there are two signup links, one of which gives you $50 cashback and another which gives you $100 cashback. The bigger bonus is just one result down, oddly rewarding those who dig just a wee bit deeper.
The rebate is only available for new sign ups. The $50 cashback reward is a little bit easier to get – all you have to do is make a qualifying purchase (excludes cash advance) and they’ll cut you a check in 6 to 8 weeks. For the $100 cashback reward, you have to make $500 worth of qualifying purchases in your first three months, which includes balance transfers.
0% APR
The introductory period for the 0% APR spans either 12 months or 6 billing cycles, depending on your credit history. And, of course, if you are late even once, you forfeit the low rate and immediately get socked with the default rate. After the introductory period, you get a 23.24% variable rate, unless your credit score is awesome. For “elite” credit scores, you get 13.24% variable and for “premium” you get 18.24% variable.
Also, there’s this disclosure:
Also, we apply payments to introductory balances before balances with higher APRs. This means that the length of your introductory period may vary based on your payment amounts and the APRs for other balances on your account.
That’s really nothing new – your lower APR balance always gets paid down first so your higher APR can rack up more interest. Come February 2010, that will all change, however.
Other Stuff
Balance transfers and cash advances come with a 3% fee with no apparent cap, so be careful. If you’re moving around $5,000, you’ll pay a $150 fee.
Chase cardholders also get access to BluePrint, which is basically a suite of budgeting tools. They advertise it as a way to pay no interest on certain purchases, but really, the reason you don’t pay interest on those purchases is because you pay them off before the grace period is up. It’s more of a self awareness thing than an interest break, but it’s kind of neat nonetheless. Check out our inside look at Chase BluePrint for more information.
All in all, Chase Freedom remains a pretty decent card. Lots of people are up in arms because it’s not quite as decent as it used to be, but for those looking to earn rewards without doing a lot of legwork, this card works.
Sign up for the Chase Freedom card with $100 bonus cashback.
Chase Freedom has always been a favorite among card users seeking cash back rewards. But in recent months, there have been some big changes to this card that was once the hands down best card for cash back rebates. You can still get $100 cash back with a new Chase Freedom card, but once you’re in, things are a bit different than they used to be. Check out this review of the updated Chase Freedom card for the lowdown.
Highlights of Chase Freedom Card
* 1% cashback on every purchase
* 10% to 20% cashback on purchases from selected merchants
* 3% cashback on rotating categories
* $100 cash rebate after sign up
* 0% APR for the first 6 to 12 months
* Access to Chase’s BluePrint budgeting suite
* No annual fee
Details
Cashback Categories
With lots of ways to get cashback, the Chase Freedom card remains a pretty flexible way to save money over the long run. For the rotating categories, there are 15 different spending categories. As someone who signed up a couple years ago, I automatically get 3% cashback for the categories that I spend the most in. So far, no other Chase Freedom cardholders have reported anything definitive about how the categories rotate, but for most cards that claim rotating categories, such as the Discover More Card, the categories are picked (seemingly) arbitrarily each quarter and there is a posted schedule when you log in so you can plan for the changes. Currently, when you log into your Chase account, it just lists out the 15 categories, which include:
* Gas Stations & Convenience Stores
* Pet Stores & Veterinarian
* Phone/Cell Phone Bills
* Quick Service & Fast Food Restaurants
* Utilities (Gas, Electric, etc.)
* Drugstores
* Cable/Satellite TV & Internet Providers
* Department Stores
* Movie Theatres
* Gym Memberships
* Beauty Salons & Spas
* Movie Rentals
* Dry Cleaners
* Local Commuting
* Grocery Stores
Whether Chase has no intention of implementing rotating categories for old users or is simply biding its time to implement the feature, we’ll just have to wait and see. But do note that Discover More gives you 5% cashback while Chase Freedom gives only 3%.
Online Cashback
Like most credit cards, there is an online shopping portal where you can earn extra words when you make purchases from Chase’s partnered merchants. Pretty standard setup here, you can visit https://www.rewardsplusshopping.com/ and browse through the retailers yourself. There are some pretty big names here, such as Barnes and Noble, Target, HP and Hotels.com, so it’s worth a gander if you’re planning on a big purchase.
$100 Cashback Rebate
When you Google Chase Freedom, there are two signup links, one of which gives you $50 cashback and another which gives you $100 cashback. The bigger bonus is just one result down, oddly rewarding those who dig just a wee bit deeper.
The rebate is only available for new sign ups. The $50 cashback reward is a little bit easier to get – all you have to do is make a qualifying purchase (excludes cash advance) and they’ll cut you a check in 6 to 8 weeks. For the $100 cashback reward, you have to make $500 worth of qualifying purchases in your first three months, which includes balance transfers.
0% APR
The introductory period for the 0% APR spans either 12 months or 6 billing cycles, depending on your credit history. And, of course, if you are late even once, you forfeit the low rate and immediately get socked with the default rate. After the introductory period, you get a 23.24% variable rate, unless your credit score is awesome. For “elite” credit scores, you get 13.24% variable and for “premium” you get 18.24% variable.
Also, there’s this disclosure:
Also, we apply payments to introductory balances before balances with higher APRs. This means that the length of your introductory period may vary based on your payment amounts and the APRs for other balances on your account.
That’s really nothing new – your lower APR balance always gets paid down first so your higher APR can rack up more interest. Come February 2010, that will all change, however.
Other Stuff
Balance transfers and cash advances come with a 3% fee with no apparent cap, so be careful. If you’re moving around $5,000, you’ll pay a $150 fee.
Chase cardholders also get access to BluePrint, which is basically a suite of budgeting tools. They advertise it as a way to pay no interest on certain purchases, but really, the reason you don’t pay interest on those purchases is because you pay them off before the grace period is up. It’s more of a self awareness thing than an interest break, but it’s kind of neat nonetheless. Check out our inside look at Chase BluePrint for more information.
All in all, Chase Freedom remains a pretty decent card. Lots of people are up in arms because it’s not quite as decent as it used to be, but for those looking to earn rewards without doing a lot of legwork, this card works.
Sign up for the Chase Freedom card with $100 bonus cashback.
Bank of America: The Nice Guys?
Bank of America: The Nice Guys?
The results are in, and according to numerous studies, we’re pissed about our credit cards. We’ve had our credit limits slashed, our rewards cut back, our interest rates hiked and our coffers raided by fees, fees and more fees. Some vindication came in the form of the Credit CARD Act, but for the most part, we’ve just seen old dogs learning new tricks and still making a buck off consumers. And we’ve all been plenty vocal about our disgruntlement. According to a recent Consumer Reports poll:
* 21% of cardholders claim they were treated unfairly by lenders
* 45% reported that they were using their credit cards less
* 33% of those polled have closed an account since January 2008
In addition, 54% of customers reported that they now pay their balances off in full, likely to avoid being charged ever increasing fees. So, what’s the result of all this ire? Surprisingly, and perhaps smartly, Bank of America has been equally as forthcoming about the issues surrounding customer satisfaction. In fact, on Monday, Bank of America wrote a letter to Barney Frank, chairman of the U.S. House Financial Services, promising that they’ll play fair with customers in the years to come. Here’s what the letter says:
In light of the concerns expressed to us by our customers, Bank of America will not implement any change in terms (risk or economic based) re-pricing of consumer credit card accounts between now and the effective date of the CARD Act. We believe that this is the responsive to the concerns we have heard and is consistent with other consumer oriented policy changes we have made recently, like giving customers much more control over the risk of incurring overdraft fees and substantially limiting the application of those fees.
Those “changes in terms” and “re-pricing of consumer credit accounts” that Bank of America claims they won’t be partaking in refer to the backlash from the first wave of CARD Act. To compensate for the upcoming restrictions, many card companies began switching cardholders to variable rates, adding new fees (foreign transaction fees, inactivity fees, etc.) and otherwise altering credit card terms. We also saw debit cards step up their game by ruthlessly levying overdraft fees and allegedly rearranging transactions so consumers would incur more penalties. All of this put a sheen of mistrust on relations between consumers and their banks.
Give it to Me Straight
In addition to the letter of good faith sent to U.S. lawmakers, Bank of America also earlier made an effort to show their dedication towards transparency. This October, Bank of America plans to roll out the Basic Visa, a card that is marketed as a no-nonsense, straightforward card with no tricks or traps. Again citing the will of the people, Bank of America said this in their press release:
In response to consumer demand for a card that offers the convenience of credit with simplified rates and terms, Bank of America is introducing the BankAmericard® Basic™ Visa® card. The new card features one basic rate for all types of transactions, including balance transfers and cash advances. That rate, which is tied to the U.S. Prime Rate, will not change over the life of the account.
Of course, a variable rate tied to the prime rate will actually end up being mighty lofty when (or if) the economy gets back on its feet. But at least they are being up front about how your interest rate gets figured.
The odd thing, though, is that the Fairness in Lending Act already requires credit card companies to disclose interest rates, though this is also done in asterisk form, in tiny print a page and a half below the prominently displayed introductory rate.
Overdraft Overhaul
As mentioned in the more recent letter, BofA also took measures to redress its overdraft policies, again, citing the bad PR that all banks have gotten lately. Starting October 19, Bank of America:
* Will not charge for overdrafts less than $10 per day (as opposed to charging for overdrafts above $5)
* Will not charge more than 4 overdrafts per day (formerly 10)
* Will allow customers to opt out of overdraft protection
All of these measures are very nice of Bank of America. But it seems a bit dubious to remove a dastardly practice and spin it as a brand new benefit for customers (”Blankets – now without small pox!”). It almost feels like too little too late.
The results are in, and according to numerous studies, we’re pissed about our credit cards. We’ve had our credit limits slashed, our rewards cut back, our interest rates hiked and our coffers raided by fees, fees and more fees. Some vindication came in the form of the Credit CARD Act, but for the most part, we’ve just seen old dogs learning new tricks and still making a buck off consumers. And we’ve all been plenty vocal about our disgruntlement. According to a recent Consumer Reports poll:
* 21% of cardholders claim they were treated unfairly by lenders
* 45% reported that they were using their credit cards less
* 33% of those polled have closed an account since January 2008
In addition, 54% of customers reported that they now pay their balances off in full, likely to avoid being charged ever increasing fees. So, what’s the result of all this ire? Surprisingly, and perhaps smartly, Bank of America has been equally as forthcoming about the issues surrounding customer satisfaction. In fact, on Monday, Bank of America wrote a letter to Barney Frank, chairman of the U.S. House Financial Services, promising that they’ll play fair with customers in the years to come. Here’s what the letter says:
In light of the concerns expressed to us by our customers, Bank of America will not implement any change in terms (risk or economic based) re-pricing of consumer credit card accounts between now and the effective date of the CARD Act. We believe that this is the responsive to the concerns we have heard and is consistent with other consumer oriented policy changes we have made recently, like giving customers much more control over the risk of incurring overdraft fees and substantially limiting the application of those fees.
Those “changes in terms” and “re-pricing of consumer credit accounts” that Bank of America claims they won’t be partaking in refer to the backlash from the first wave of CARD Act. To compensate for the upcoming restrictions, many card companies began switching cardholders to variable rates, adding new fees (foreign transaction fees, inactivity fees, etc.) and otherwise altering credit card terms. We also saw debit cards step up their game by ruthlessly levying overdraft fees and allegedly rearranging transactions so consumers would incur more penalties. All of this put a sheen of mistrust on relations between consumers and their banks.
Give it to Me Straight
In addition to the letter of good faith sent to U.S. lawmakers, Bank of America also earlier made an effort to show their dedication towards transparency. This October, Bank of America plans to roll out the Basic Visa, a card that is marketed as a no-nonsense, straightforward card with no tricks or traps. Again citing the will of the people, Bank of America said this in their press release:
In response to consumer demand for a card that offers the convenience of credit with simplified rates and terms, Bank of America is introducing the BankAmericard® Basic™ Visa® card. The new card features one basic rate for all types of transactions, including balance transfers and cash advances. That rate, which is tied to the U.S. Prime Rate, will not change over the life of the account.
Of course, a variable rate tied to the prime rate will actually end up being mighty lofty when (or if) the economy gets back on its feet. But at least they are being up front about how your interest rate gets figured.
The odd thing, though, is that the Fairness in Lending Act already requires credit card companies to disclose interest rates, though this is also done in asterisk form, in tiny print a page and a half below the prominently displayed introductory rate.
Overdraft Overhaul
As mentioned in the more recent letter, BofA also took measures to redress its overdraft policies, again, citing the bad PR that all banks have gotten lately. Starting October 19, Bank of America:
* Will not charge for overdrafts less than $10 per day (as opposed to charging for overdrafts above $5)
* Will not charge more than 4 overdrafts per day (formerly 10)
* Will allow customers to opt out of overdraft protection
All of these measures are very nice of Bank of America. But it seems a bit dubious to remove a dastardly practice and spin it as a brand new benefit for customers (”Blankets – now without small pox!”). It almost feels like too little too late.
Consumer Reports’ Credit Cards Worth Holding
Consumer Reports’ Credit Cards Worth Holding
In the November 2009 issue of Consumer Reports magazine, they had a rundown of “credit cards worth keeping.” This is an especially useful list now that terms are changing and many of us are considering moving on. Here are Consumer Reports’ picks:
Balance-Transfer Cards
Consumer Reports likes American Express Clear, PenFEd Visa Platinum and People’s United Bank Platinum MasterCard. These cards have APRs hovering between 12.24% and 17.24% with the People’s United Bank card having a 13.99 variable rate. What makes these cards attractive for balance transfers is that they have low APRs and fees for balance transfers. The Amex carda nd the Peoples United Bank card both have 0% introductory periods, and the Amex card has no balance transfer fee. The PenFed card, one of the most popular credit union credit cards – there’s no introductory rate for balance transfers, but you get a low 5.99% rate for life. Of course, you’ll have to pay $20 to join the credit union – but that’s small potatoes (especially considering many credit card companies are now levying annual fees anyway, such as Bank of America).
As far as rewards go, the People’s United Bank card has none. The Amex card gets you a $25 gift card for every $2,500 in purchases and a free annual credit report with score (neat!). The PenFed card gives you 5% cash back on gas, 2% on groceries and 1.25% on all other purchases, which rivals one of our favorite rewards cards, the Discover More Card.
Low Rate Cards
If the interest rates are killing you, Consumer Reports recommends holding on to Iberiabank’s Visa Classic and Simmons Frist Visa Platinum. Of course, getting your hands on these cards isn’t as easy as your typical card. The Iberiabank card requires you to show proof of income and to disclose your employment history for the last 6 months.
The Simmons card is nice because it has a low default rate of 16.25% which only kicks in after 2 late payments within 6 months. None of these cards get rewards, but the money you’ll save on finance charges is a reward in itself.
Cash Back Cards
For responsible (or perhaps just wealthy) card holders who pay off their cards in full each month, cash-back cards are the way to go. Consumer Reports recommends the Amex Blue Cash, Capital One No Hassle Cash Rewards, Fidelity Rewards American Express and Schwab Invest First Visa. The last two are interesting choices – they are linked to your account with Fidelity or Schwab and are clearly more geared towards folks with some money to plunk down on mutual funds or stocks. All these cards get 2% cash back except for the Amex card which gives you cash rewards up to 5% after you spend over $6,500 for the year. Another perk: the Capital One and Schwab cards have no foreign transaction fee, a rare feature these days.
Other Tips
Aside from their recommendations, Consumer Reports suggests getting “association cards” through employers, unions and other affiliations. For example, the USAA offers favorable cards for veterans. Teachers can get good deals from the National Education Association.
And as we have mentioned earlier, credit unions are an excellent way to go. Because they are member owned, their interests are more skewed towards card holders (rather than investors) and they typically tend to have less fees.
You’ll also want to make sure your credit score is in good shape if you decide to jump ship. Remember: closing an account can adversely affect your credit by skewing your debt to credit ratio. If your rates were raised based on your credit rating, the chances of you finding another, more favorable card may not be very good – especially after closing your account.
If you’re shopping for a new credit card, you should also check out some of these other resources:
* MYC’s Discover Escape Card Review
* CreditCards.com: Weekly Credit Card Rate Report
* MYC’s Discover Miles Card Review
* BankRate’s National Credit Card Rate Averages
* MYC’s Chase Freedom Card Review
Photo by .larry page
Related posts:
1. Debit Cards Vs. Credit Cards: Plastic Showdown
2. The Best and Worst of the Credit Card Industry
3. How much is your loyalty worth?
4. Revolving consumer debt to hit $1,000,000,000,000
5. A Primer: Secured Credit Cards
In the November 2009 issue of Consumer Reports magazine, they had a rundown of “credit cards worth keeping.” This is an especially useful list now that terms are changing and many of us are considering moving on. Here are Consumer Reports’ picks:
Balance-Transfer Cards
Consumer Reports likes American Express Clear, PenFEd Visa Platinum and People’s United Bank Platinum MasterCard. These cards have APRs hovering between 12.24% and 17.24% with the People’s United Bank card having a 13.99 variable rate. What makes these cards attractive for balance transfers is that they have low APRs and fees for balance transfers. The Amex carda nd the Peoples United Bank card both have 0% introductory periods, and the Amex card has no balance transfer fee. The PenFed card, one of the most popular credit union credit cards – there’s no introductory rate for balance transfers, but you get a low 5.99% rate for life. Of course, you’ll have to pay $20 to join the credit union – but that’s small potatoes (especially considering many credit card companies are now levying annual fees anyway, such as Bank of America).
As far as rewards go, the People’s United Bank card has none. The Amex card gets you a $25 gift card for every $2,500 in purchases and a free annual credit report with score (neat!). The PenFed card gives you 5% cash back on gas, 2% on groceries and 1.25% on all other purchases, which rivals one of our favorite rewards cards, the Discover More Card.
Low Rate Cards
If the interest rates are killing you, Consumer Reports recommends holding on to Iberiabank’s Visa Classic and Simmons Frist Visa Platinum. Of course, getting your hands on these cards isn’t as easy as your typical card. The Iberiabank card requires you to show proof of income and to disclose your employment history for the last 6 months.
The Simmons card is nice because it has a low default rate of 16.25% which only kicks in after 2 late payments within 6 months. None of these cards get rewards, but the money you’ll save on finance charges is a reward in itself.
Cash Back Cards
For responsible (or perhaps just wealthy) card holders who pay off their cards in full each month, cash-back cards are the way to go. Consumer Reports recommends the Amex Blue Cash, Capital One No Hassle Cash Rewards, Fidelity Rewards American Express and Schwab Invest First Visa. The last two are interesting choices – they are linked to your account with Fidelity or Schwab and are clearly more geared towards folks with some money to plunk down on mutual funds or stocks. All these cards get 2% cash back except for the Amex card which gives you cash rewards up to 5% after you spend over $6,500 for the year. Another perk: the Capital One and Schwab cards have no foreign transaction fee, a rare feature these days.
Other Tips
Aside from their recommendations, Consumer Reports suggests getting “association cards” through employers, unions and other affiliations. For example, the USAA offers favorable cards for veterans. Teachers can get good deals from the National Education Association.
And as we have mentioned earlier, credit unions are an excellent way to go. Because they are member owned, their interests are more skewed towards card holders (rather than investors) and they typically tend to have less fees.
You’ll also want to make sure your credit score is in good shape if you decide to jump ship. Remember: closing an account can adversely affect your credit by skewing your debt to credit ratio. If your rates were raised based on your credit rating, the chances of you finding another, more favorable card may not be very good – especially after closing your account.
If you’re shopping for a new credit card, you should also check out some of these other resources:
* MYC’s Discover Escape Card Review
* CreditCards.com: Weekly Credit Card Rate Report
* MYC’s Discover Miles Card Review
* BankRate’s National Credit Card Rate Averages
* MYC’s Chase Freedom Card Review
Photo by .larry page
Related posts:
1. Debit Cards Vs. Credit Cards: Plastic Showdown
2. The Best and Worst of the Credit Card Industry
3. How much is your loyalty worth?
4. Revolving consumer debt to hit $1,000,000,000,000
5. A Primer: Secured Credit Cards
How I Reduced My Credit Card Interest Rates
One of the most asked questions I have received involved getting the interest rates lowered on credit cards. It is disheartening to hear stories of those with interest rates over 20%. That makes it so hard to pay them off!
I have read and heard over and over again to call them to simply ask for a lower rate. For me, up until recently, over and over they told me no. A study I read about (and I can’t remember where I read it at the moment) claimed that calling your cards and asking to reduce the rate helped a little over 50% of people who tried it. Before I started paying off my debt, I was clearly in the group it didn’t work for.
I really wasn’t a good customer in their mind. While I paid my card on time, I only paid the minimum payment. I also had a huge debt-to-income ratio and my cards were almost maxed out. That made me a high risk to them and a high risk means that a higher interest rate is needed. That hurt my chances of negotiating a lower rate and I believe that is why calling wasn’t working for me.
Since I couldn’t get a lower rate, the only thing left to do was to pay off as much as I could on my cards. I needed to lower my credit utilization (how much of my credit limit I was using) as well as make sure all payments are made on time. Both of those factors, when reduced, actually work to increase one’s credit score. If you don’t have much spare money with your income to send more money, perhaps selling things would be a way to make some money or even obtaining a temporary part-time job. Make a dent in your debt and be very agressive with doing it.
Once I had paid off some of the balance on my credit cards (that’s where all of my 2005 tax return went), I was able to finally call them and get a lower rate. My credit score was improving and our debt-to-income ratio was lowering. They even told me on the phone that I was a “good customer” and qualified for a lower rate (by 3%)
The improvement in my credit score also made it possible for me to obtain a new credit card to use to transfer a higher rate balance onto. I only have the low rate for 12 months, but that is 12 months that I have to keep paying off debt and having more of my payment going towards the balance and not interest. (Just a word of caution: with balance transfers, make sure you pay every payment on time or you may be faced with an interest rate over 30%.)
Even with the balance transfers, I still ended up with a balance of $3,500 that I couldn’t transfer. I had heard about people to people lending through Prosper.com and decided to try to borrow $3,500 through there to reduce my interest rate. Thankfully, I was able to receive a loan and it reduced my interest rate by 4%. A word of note here, not everyone is able to get a loan from Prosper at a great rate. Even though regular people are lenders there, they still are looking for a return on their money. They will determine the amount of risk with your loan and decide the interest rate that they feel is comfortable for the risk.
It’s not easy. We have been sacrificing some things for a while and pinching pennies wherever we can to find extra money to send to our credit cards. We also are working more for a while (I currently work a full-time and two part-time jobs and my husband works full-time). But it is worth it to finally get our debt paid down and to get our rates lowered.
In the end, always rememer to do what is right for you and your situation because every situation is unique. What worked for me may not work for everyone and I am far from a financial advisor. What I described above has worked for us.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
I have read and heard over and over again to call them to simply ask for a lower rate. For me, up until recently, over and over they told me no. A study I read about (and I can’t remember where I read it at the moment) claimed that calling your cards and asking to reduce the rate helped a little over 50% of people who tried it. Before I started paying off my debt, I was clearly in the group it didn’t work for.
I really wasn’t a good customer in their mind. While I paid my card on time, I only paid the minimum payment. I also had a huge debt-to-income ratio and my cards were almost maxed out. That made me a high risk to them and a high risk means that a higher interest rate is needed. That hurt my chances of negotiating a lower rate and I believe that is why calling wasn’t working for me.
Since I couldn’t get a lower rate, the only thing left to do was to pay off as much as I could on my cards. I needed to lower my credit utilization (how much of my credit limit I was using) as well as make sure all payments are made on time. Both of those factors, when reduced, actually work to increase one’s credit score. If you don’t have much spare money with your income to send more money, perhaps selling things would be a way to make some money or even obtaining a temporary part-time job. Make a dent in your debt and be very agressive with doing it.
Once I had paid off some of the balance on my credit cards (that’s where all of my 2005 tax return went), I was able to finally call them and get a lower rate. My credit score was improving and our debt-to-income ratio was lowering. They even told me on the phone that I was a “good customer” and qualified for a lower rate (by 3%)
The improvement in my credit score also made it possible for me to obtain a new credit card to use to transfer a higher rate balance onto. I only have the low rate for 12 months, but that is 12 months that I have to keep paying off debt and having more of my payment going towards the balance and not interest. (Just a word of caution: with balance transfers, make sure you pay every payment on time or you may be faced with an interest rate over 30%.)
Even with the balance transfers, I still ended up with a balance of $3,500 that I couldn’t transfer. I had heard about people to people lending through Prosper.com and decided to try to borrow $3,500 through there to reduce my interest rate. Thankfully, I was able to receive a loan and it reduced my interest rate by 4%. A word of note here, not everyone is able to get a loan from Prosper at a great rate. Even though regular people are lenders there, they still are looking for a return on their money. They will determine the amount of risk with your loan and decide the interest rate that they feel is comfortable for the risk.
It’s not easy. We have been sacrificing some things for a while and pinching pennies wherever we can to find extra money to send to our credit cards. We also are working more for a while (I currently work a full-time and two part-time jobs and my husband works full-time). But it is worth it to finally get our debt paid down and to get our rates lowered.
In the end, always rememer to do what is right for you and your situation because every situation is unique. What worked for me may not work for everyone and I am far from a financial advisor. What I described above has worked for us.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
It’s Official! We Are Credit Card Debt Free!
I initiated the big debt payoff click yesterday for an online payment to our credit card. I anxiously logged in this morning and saw the glorious $0.00 balance due. It didn’t hit me yesterday, but it has definitely hit me today after seeing that balance. I’ve been known to sometimes forget to hit the last confirm payment button, so I had to make sure before announcing on here.
WE ARE CREDIT CARD DEBT FREE!!!
After 38 months of pinching pennies, increasing our income and riding on the roller coaster of debt reduction – we have finally come to the end of the credit card ride. We are no longer a slave to them. We are free now…and it feels…wonderful.
I feel like I can stand up straight since our credit card debt isn’t pushing us down. A huge weight has been lifted. At the same time, there is a feeling of “What’s next?” We’ve been at this for over three years. You really do get used to a routine and now things will be shaken up. It will definitely be a period of adjustment. With change comes some fear but a lot of excitement!
You may be wondering what we did with regards to our savings. Due to a payment that is taking longer than expected to get to us, we ended up pulling $1,499 from our savings account to make our debt payoff a reality. We should have the money by the end of the month but I didn’t want to cut things too close – I wanted to be debt free by our goal date of May of 2009. As soon as that payment comes in we are going to put it straight towards our savings.
We first thought we would do something grand when we paid off our credit card debt, like splurge on a family vacation (we have yet to go on a vacation with the three of us). After thinking about it, we are going to hold off on that and simply have a pizza party to celebrate. We need to get more money in our savings before we do anything big. Perhaps next year will be the year for our vacation. We’ll see how things go.
I’d like to thank everyone for reading. You have helped to keep us accountable for our financial decisions and without your support I’m not sure if we would have kept going at reducing our debt like we did. You have been here for the rough and sometimes very sad times and helped to keep my head above water during those times. I’ve said it many times before, but words cannot begin to express my gratitude. If I was writing this on paper…you would see little tear drop outlines all over it. I was okay with writing this post up until I thought about all of you and then the waterfall started. Thank you all so very much. You have helped us to make it to this special day.
As things sink in a little bit more, I’ll share with everyone our plans for the future and also take a look back at our journey. I am excited to be starting the next (credit card debt free) chapter of our lives
WE ARE CREDIT CARD DEBT FREE!!!
After 38 months of pinching pennies, increasing our income and riding on the roller coaster of debt reduction – we have finally come to the end of the credit card ride. We are no longer a slave to them. We are free now…and it feels…wonderful.
I feel like I can stand up straight since our credit card debt isn’t pushing us down. A huge weight has been lifted. At the same time, there is a feeling of “What’s next?” We’ve been at this for over three years. You really do get used to a routine and now things will be shaken up. It will definitely be a period of adjustment. With change comes some fear but a lot of excitement!
You may be wondering what we did with regards to our savings. Due to a payment that is taking longer than expected to get to us, we ended up pulling $1,499 from our savings account to make our debt payoff a reality. We should have the money by the end of the month but I didn’t want to cut things too close – I wanted to be debt free by our goal date of May of 2009. As soon as that payment comes in we are going to put it straight towards our savings.
We first thought we would do something grand when we paid off our credit card debt, like splurge on a family vacation (we have yet to go on a vacation with the three of us). After thinking about it, we are going to hold off on that and simply have a pizza party to celebrate. We need to get more money in our savings before we do anything big. Perhaps next year will be the year for our vacation. We’ll see how things go.
I’d like to thank everyone for reading. You have helped to keep us accountable for our financial decisions and without your support I’m not sure if we would have kept going at reducing our debt like we did. You have been here for the rough and sometimes very sad times and helped to keep my head above water during those times. I’ve said it many times before, but words cannot begin to express my gratitude. If I was writing this on paper…you would see little tear drop outlines all over it. I was okay with writing this post up until I thought about all of you and then the waterfall started. Thank you all so very much. You have helped us to make it to this special day.
As things sink in a little bit more, I’ll share with everyone our plans for the future and also take a look back at our journey. I am excited to be starting the next (credit card debt free) chapter of our lives
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