The Return of Cash Back Credit Cards Posted on 2010/05/27 | 0 Comments

Credit card companies are on the hunt again, looking for new customers using tantalizing cash back reward programs as bait. In this rough economy anything laced with money seems like a good idea. With careful consideration, planning and acknowledgment of the new rules that come with the new cash back, you can use this system to your advantage.

Basically speaking when credit card companies are talking about cash back rewards, they are saying that they will give you back a percentage of what you said on certain things. For instance, Discovery card gives a 5% cash back reward on fashion shopping, and lets say you make a $400 purchase, at 5% you get $20 back for buying things you were going to buy anyway. Typically speaking Discovery card actually rotates what goods are available for rewards, but generally rotate between gas, fashion thing, and amusement park tickets.

Many credit cards are making new rules to tie with these cash rewards, so be aware. If you pay late even once, you risk any and all rewards you accrued up until that point in time, though some will offer reinstatement fees to get you back into the rewards program. Many have annuals charges, or spending caps that make you eligible, for instance they may require a certain amount spent before its eligible for cash back. Some companies are even limiting what stores qualify for rewards. So if your applying for a card with cash back rewards make sure you understand all the terms and conditions, and any penalties that may come up.

There some things you can do to kind of get an edge on these programs. First and foremost, understand your contract, including you penalties for late payments, and spending requirements to remain eligible for rewards. Pay on time every month to stay eligible. Try not to keep a balance you can’t pay off in a month, especially since the interest rates are high in the double digits now. Keep in mind that many cards have a a maximum they will pay out, so spend what you would need to be eligible for rewards, but then not any higher as there is no added incentive to do so. Lastly watch out for expiration dates and changes half way through your program, as changes can happen with out any prior notice, and most companies have a history of doing so.

Capital One No Hassle Miles MasterCard Posted on 2010/05/26 | 0 Comments

Today's credit card offer comes from Capital One. It is my special invitation to their No Hassle Miles Platinum MasterCard. The skinny:

• 1 mile per dollar on purchases
• 0% APR on purchases and balance transfers until February 2010
• 12.99% interest rate

Now, looking at Index Credit Cards Travel Credit Cards page, I see:

Capital One No Hassle Miles Rewards Credit Card:

• 1.25 miles per dollar
• 0% APR on purchases until January 2010
• 8.15% APR

It's hard to say that one is "better" than the other, because the mail offer I got is offering a 12-month 0% balance transfer (although there's that 3% transfer fee to consider). Otherwise, though, a higher interest rate and fewer miles per dollar.

This is why credit card companies structure offers in so many different ways. They put them out there, see what response they get, and then make new offers based on that feedback. You never know what they might offer next.

Chase Jacking Up the Interest Rate on My Amazon Visa Posted on 2010/05/25 | 0 Comments

Got the news today that my Amazon credit card is getting a big interest rate hike --- from the current 10.90% up to 14.24%, a raise of 3.25 percentage points. That's big!

I have the option to turn down this hike BUT if I do I can't use the card anymore. AND I need to use my reward points before rejecting the hike, otherwise I lose them.

I pay off my credit card every month, so I don't really care and I'll keep the card at the new rate. But many other people have been getting these notices recently, and they're not necessarily in the same situation in terms of keeping their balances at zero.

On Friday President Obama signed a new law that is going to stop card issuers from doing a lot of things like raising rates on existing balances or changing rates with like 5 minutes notice. That's good stuff, but I will guarantee you this: every person in American who holds 2 or more credit cards will see the interest rate go up on at least one of them. These card companies know how to take money --- tell 'em what they CAN'T do and they'll start thinking about what they CANdo to get the money flowing again.

PR: wait... I: wait... L: wait... LD: wait... I: wait... wait... Rank: wait... Traffic: wait... Price: wait... C: wait...

Credit Card Tips II Posted on 2010/05/22 | 1 Comments

It is difficult to imagine trying to live without the convenience of credit cards. Yet many get into financial trouble in part due to their misuse of credit cards. By following a few simple rules you can avoid the missteps and use credit cards to improve you personal finances instead of falling into the credit card traps.

First, don't use your credit card for loans. Pay off your balance each month. Pretty obvious advice but way way too many people don't follow it. If you use your credit card for a loans - 98% of the time that is a mistake and big risk to your personal financial future. Don't do it. There is a reason pretty much all the advice from financial advisers on credit cards starts with this - it is the most important advice.

Second, if you don't follow the advice above pay off your loan as soon as possible. Payment the minimum payment is huge mistake. You should not be making any discretionary purchases if you are not paying down your credit card debt substantially each month.

Third, pay your credit card bill in full each month on time. The huge fees credit card companies charge if you are late should be avoided. I will admit I have slipped up occasionally but take great care to avoid paying you hard earned money in exorbitant fees.

Fourth, if following the advice above (which you should be) get a card that pays you for all your purchases. Straight cash is simplest and usually best but if you really want to take the time and effort to try and get more advantage through the use of airline miles or some such other gimmick go ahead.

Fifth, ask for reduced fees and interest rates (which you shouldn't have to worry about since you shouldn't use the credit card for loans but if you do...). The credit card companies make a great deal off the use of credit cards and the cost of acquiring new customers is high so they are most often willing to negotiate. If you miss a payment or make the payment late (by mistake, once or very occasionally) ask for a reduction in the fee. The fees are far too high and just by calling you can likely get a reduction in the fee.

Sixth, setup an automatic withdrawal of your monthly payment (the full payment) from your checking account. Of course you need to be sure you have the funds to cover these payments in full or you may incur fees not only for your credit card but from your bank. Many banks (and credit unions) will allow you to pre-arrange to have checks or deductions covered by the bank in the event you don't have the funds in your account though their may be a fee if they cover a payment for you.

Seventh, if you follow the advice above credit cards are a useful tool. You get to buy items and don't have to pay for them for a month or so (while you can be earning money on you money in a savings account or money market account). And since you are getting paid for a portion of your purchases you not only get a free loan for a month but get paid for the privilege.

If you don't follow the first piece of advice though you need to look at low interest rates over being paid - but don't go down that path.

Related tip: create a emergency cash reserve. Until you have built up a cash reserve of 3 month of living expense you should not be making many discretionary purchases. Once you have 3 months saved away then continue to build that to 6 months (but during that time feel free to spend some of your earnings on discretionary items).

Without the cash reserve it is too easy for anyone to take a financial hit and before you have a chance to get back on your feet be severely punished. Credit card companies take advantage of those that don't plan ahead: Don't Let the Credit Card Companies Play You for a Fool. And as soon as you slip huge fees, penalties and interest charges will start and you may have trouble getting out of the cycle of huge fees and interest. It is best to avoid every getting into that cycle.

Tips for credit card usage Posted on 2010/05/21 | 0 Comments

There are many advantages to having a credit card such as being able to purchase items online and make hotel and car reservations. The way you handle your purchases should be taken seriously. Following are a few tips and suggestions about credit cards.

• Credit cards are just like a loan -- you have to pay what you owe -- so try and not overcharge more than you can afford to pay.
• Keep track of how much you spend on your credit card. Remember that incidental and impulse purchases add up fast.
• Save your credit card receipts. Compare them with your monthly bill. Promptly report problems to the company that issued the card.
• Never lend your credit cards to anyone.
• Owing more than you can repay can damage your credit rating. That can make it hard to finance a car, rent an apartment, get insurance or even get a job.
• Pay your credit card bill on time, and in full when possible. If you don't, you'll have to pay finance charges on the unpaid balance-and it takes forever to get caught up if you just pay the minimum.

Venture To A Better Card With Capital One? Posted on 2010/05/20 | 0 Comments

The No Hassle Miles credit card from Capital One has long been one of our favorite travel reward cards.

Now there’s a more rewarding, albeit more costly, alternative.

The new Venture VISA card is Capital One’s entre into the growing “upscale” market.

It offers pretty much the same rewards as the No Hassle Miles card, allowing users to redeem miles for hotels, rental cars and airline tickets on any carrier, with no blackout dates.

To figure out how many miles you need, just add two zeros to the price. If, for example, your ticket costs $150, you’ll be charged 15,000 miles. If your hotel costs $99, you’d need 9,900 miles.

The big difference is that the Venture card allows users to earn miles more quickly by providing 2 miles for every dollar spent, instead of the 1.25 miles per dollar with the No Hassle Miles card.

New cardholders can earn an extra 10,000 miles if they charge $1,000 worth of purchases during the first three months they have the card.

The drawback is the $59 annual fee — something most No Hassle Miles don’t have.

In dollars and cents, you must charge $2,950 a year to cover the annual fee and then another $1,844 to make up for all the miles that spending would have generated with the No Hassle card.

That means the break-even point is $4,794. If you charge more than that each year, you’re better off with the Venture card. If you charge less than that, stick with the No Hassle Miles card.

In our view, the Venture card should appeal to users with expense accounts and savvy consumers who charge virtually all of their personal expenses, from groceries to medical bills, to generate the most possible miles.

One final reason we like Capital One cards: If you travel abroad, you won’t be charged foreign transaction fees for items bought with foreign currency. Many cards ding you for 3% of the purchase price in U.S. dollars.

Credit Cards Still Seek Affluent Customers Posted on | 0 Comments

Think of your mailbox before the Great Recession. You got bills, grocery store circulars, invitations and magazines, but crowding them all out, we bet, were credit card offers.
Think of your mailbox before the Great Recession. You got bills, grocery store circulars, invitations and magazines, but crowding them all out, we bet, were credit card offers.
Credit card issuers mailed five to seven billion offers a year from 2004 to 2007, according to Mintel Comperemedia, which tracks such things.

But when the economy tanked, default rates soared and billion-dollar losses caused banks to become much stingier with new cards.

After hearing that only 2 billion offers were mailed out last year, we wondered who was still on the mailing list.

We asked Gregory Meyer, community relations manager at Meriwest Credit Union in San Jose, Calif. He says the industry is looking for consumers with:

Above average credit scores. A high score shows you pay on time and haven’t maxed out your credit lines, making it less likely you’ll default.

“Generally, we are looking at the upper echelon in credit scores. These are people with strong credit scores greater than 720.”

A profitable history. “Card companies love the ‘Steady Eddies,’ those who pay down balances while also paying some interest. That’s their bread and butter.”

The ideal customer is “someone who might charge a $2,500 vacation to their card and pay it off at $200 a month,” allowing the issuer to earn about a year’s worth of interest on the debt.

Maturity. “It used to be that 18 year olds were the ones card companies would solicit at class registration days on college campuses, exchanging beach towels and beer coolers for applications.”

Not anymore. Default rates in the 18 to 25 age group scared them off. Plus, marketing cards is now banned on most college campuses, and anyone under 21 must now have a co-signer for their cards.

Lots of assets. Card issuers are focusing on the affluent, pouring through databases to identify potential customers with money to spend.

“They may ask for all customers in a given zip code who are over 55, have $100,000 in their IRA, own a home for at least seven years, their mortgage is current, and they have a checking account with a payroll direct deposit.”