Editor's Choice Awards: Best Credit Cards of 2009, Part 2
January 12, 2010
By: Curtis Arnold
As our "year-end" highlights list moves into the new year, we spotlight credit cards that caught our attention in 2009 that also look to make a major impact in your spending habits during 2010.
Best Reward Points Cards
2009 may have felt like the swan song for reward credit cards, with many banks pulling back on perks to preserve profits. Two of our favorite reward cards earned our team's attention, and it looks like they'll still be going strong in 2010.
Fidelity Investment Rewards American Express Card
A longtime favorite of our editorial team, this charge card combines the flexibility of cash back with the special cardholder privileges that American Express knows how to do best. Cardmembers earn two points for every dollar spent on the card. A simple, online redemption system lets participants convert 5,000 points into a $50 deposit to qualifying Fidelity brokerage accounts. Cardmembers who feel like splurging can also redeem points for specially selected travel and luxury retail rewards. You can earn as many points as you like, and take up to five years before redeeming them.
Bank of America WorldPoints MasterCard
Bank of America helped invent the credit card as we know it, and company officials took a stand against industry peers who chose to hike interest rates and raise service fees on customers in good standing. The WorldPoints program includes a few of BoA's credit cards, but their MasterCard remains one of the last remaining reward cards with a zero percent balance transfer option. Participants can trade points for gift cards, airline tickets, and high quality merchandise, while earning bonus points for shopping at featured retailers. WorldPoints members also enjoy access to a dedicated concierge for personal shopping and entertainment booking, offering an attractive alternative for consumers who sometimes prefer to maintain a monthly balance.
Best "Poor Credit" or "Bad Credit" Cards
Subprime credit cards took the spotlight in 2009. Regulators targeted lenders that used "poor credit" offers to generate fees from desperate consumers. Meanwhile, a new wave of subprime customers entered the market after waves of layoffs and market crashes. Two products stood out for us as being both fiscally and ethically sound:
Citi Secured Credit Card
Citigroup may have taken some heat from federal regulators in 2009, but their secured MasterCard earned the top spot on our list of "no credit" credit cards. Most secured credit cards require consumers to leave deposits in statement savings accounts, earning little to no interest. Instead, Citi pairs its secured card with an eighteen-month certificate of deposit that earns competitive market rates. Even after paying a low annual fee, a cardholder that uses this secured account to rebuild credit correctly can actually earn money on the deal. Best of all, completion of the eighteen-month CD contract with no major account issues can earn customers an upgrade to a traditional, unsecured credit card.
Bryant State Bank MasterCard
A small bank with barely any online presence ended up on our list because of its ethical and innovative approach to the subprime credit card market. Responding to the Federal Reserve Board's 2008 proposal to more tightly regulate subprime credit cards, company spokesperson Michael Williams penned a letter that outlined ways that banks could profitably serve customers with bad credit--without gouging them. Many of Williams' proposals, including a limit on "fee harvester" cards and an extended right of rescission for new or changed accounts, found their way into the Credit CARD Act. Bryant State Bank's MasterCard offers an affordable second chance option for consumers who want to rebuild credit without leaving a deposit.
Most Innovative Credit Cards: Citi Forward & Discover Motiva Card
Although new banking regulations may change the kinds of penalties lenders can assess when you miss a payment or exceed your credit limit, we like seeing banks take the proactive approach of rewarding responsible credit card use. Citibank and Discover Card offer two new cards that provide different incentives for paying balances on time and managing credit limits wisely. Citi's Forward Card offers an interest rate reduction of up to 2% for making on-time payments, along with frequent bonus points in Citi's Thank You Rewards program. Discover supercharges the Motiva's cash back reward by refunding up to two months of finance charges after a year of on-time payments.
Most Innovative New Program: Chase Blueprint
Chase Blueprint cardholders can select some items, such as reimbursed work expenses, as charge items to be paid off quickly. Other charges can be allocated to short and long-term status, with varying interest rates and minimum payments. The service even offers a "Finish It" option that reminds our editorial team of playing Mortal Kombat. Just tell Chase the date when you want to finish paying off your balance, and their system will put you on a special payment plan to help you reach your goal.
Programs such as Motiva, Blueprint, and Forward give us hope that banks' reaction to stricter regulations will include broader money management options, instead of just new fee structures. We hope to see other lenders reward customers for using their credit cards responsibly in 2010 and beyond.
Related articles: Editor's Choice Awards: Best Credit Cards of 2009, Part 1
About the Author
Curtis Arnold, a nationally recognized consumer educator and advocate, has been educating consumers about credit cards since 1998. New! Curtis is the author of "How You Can Profit from Credit Cards: Using Credit to Improve Your Financial Life and Bottom Line" (FT Press, 2008). He is also the co-author of the upcoming Complete Idiot's Guide to Person-to-Person Lending (Alpha Books/Pengiun Group USA, April 2009), a contribitor to The Ultimate Allowance (InnerWealth Publishing, 2008) and is extensively featured in 42 RulesTM for Driving Success With Books (Super Star Press, January 2009).