Credit Card News

Friday, June 19, 2009

5 Hot Credit Card Offers for the Summer

By Curtis Arnold, CardRatings.com Founder

Even though it seems like major banks have been rolling up the red carpet instead of rolling it out for new customers, I found a handful of money-saving deals for savvy credit card users. Even in the midst of the credit crunch, there are still some real jewels out there and these are among my personal top picks. If you don’t think your card measures up, be sure to view our ratings of credit cards on CardRatings.com. Free Credit Score from American Express

Normally, you'll want to check your credit score before you apply for a new credit card. In this case, American Express wants to treat you to a complimentary credit score when you get approved for their new Clear Card. Because your free annual credit reports from the three major credit bureaus don't include a free score, this benefit can save you a few bucks and the hassle of requesting your score.

The big benefit to you is that you can see your credit snapshot from a lender's point of view. The offer also includes a tutorial on what your credit score means and how you can improve it. This no fee credit card also includes a host of travel perks and other benefits. Please note that the free credit score is not a FICO credit score, but rather a score that is offered by the credit bureau Experian (that competes with FICO).

No Interest, No Fees on Credit Card Balance Transfers from Iberia Bank

I can't find another offer like this on the market right now (and believe me, I have spent hours and hours looking). The Visa Classic from Iberia Bank allows cardholders to transfer balances at no interest for six months with no balance transfer fees! This no fee offer is truly amazing considering how some transfer fees have gone up 300-400% in the last several months.

If you think you're going to get slammed with a heavy interest rate after your teaser rate expires, prepare for a pleasant surprise. Iberia Bank Visa Classic cardholders enjoy ongoing interest rates as low as 6.25% (based on your credit profile)! This Louisiana-based bank clearly wants to grow their customer base with an offer like this and they have a proven track record. CardRatings.com has listed Iberia as having one of the best low rate credit card offers in the country for the past decade.

Schwab Credit Card Offers 2% Ongoing Rebate

In an era when card issuers seem to find any excuse to scale back perks and benefits, it's refreshing to see a simple credit card rebate program with a very aggressive rebate. Connect a Schwab Bank Invest First Visa Credit Card to your Schwab One brokerage account, and you earn a full 2% on all your purchases with no limits, no minimums and no spending thresholds! Your cash back rebates get deposited directly into your brokerage account every month for you to invest. Or, if you prefer, you can actually withdraw your rebates in the form of a check to yourself- in this capacity, the card can function as a quasi cash rebate credit card.

Bonus Rebates from Fidelity Investments

Fidelity now offers a trio of American Express branded cards that can help you save for college or retirement. One card even gives you a chance to invest in a regular brokerage account or a mySmart Cash Account. Like the Schwab card, this rebate is unbelievable. But, the real beauty of the Fidelity cards in my humble opinion is the preferential tax treatment that can take advantage of. Your rebate can grow in a tax-deferred account. The end result is a very cool way for you to supplement your retirement savings or help fund your child’s college education! The Fidelity website shows you how your rebate can grow into an even bigger credit card reward when reinvested over time.

5% Gas and Airfare Rebates for Military Families and Red Cross Volunteers

Qualifying for membership in a credit union carries special perks, like those offered through the Pentagon Federal Visa Platinum Rewards Card program. Members enjoy a whopping 5% rebate on gasoline purchases, 2% cash back at supermarkets, and 1.25% on all other purchases. Cardholders also get a 5% rebate on up to $4,000 of qualifying airfare purchases. Most PenFed members or their family members have served in the military. However, anyone can qualify for membership at PenFed by simply volunteering for the American Red Cross or by paying one year's dues in an affiliated non-profit organization. A 5% credit card rebate on gas and an equally generous credit card rebate on air miles could really help ease the pain of summer travel expenses!

Remember to check the fine print on any credit card offers, especially when rebates and rewards are involved. Program details are often subject to change with little or no notice and to certain restrictions, so act fast if you want to learn more about these prime deals. As the name of my book entitled “How You Can Profit from Credit Cards” implies, I love making cards pay me back and hope you are getting your fair share of the bounty as well.

What do you think about these offers and do you know of any other "hot offers"? We welcome you to share your ideas on our active credit card forum.

This article was written by Curtis Arnold, a nationally recognized consumer educator and advocate. Curtis has been educating consumers about credit cards since 1998. He is regularly interviewed and quoted by respected members of the national press regarding consumer credit issues. His new book, How YOU Can Profit from Credit Cards: Using Credit to Improve Your Financial Life and Bottom Line is available now! Order online and receive up to a 32% discount.

CardRatings.com is the most comprehensive source for comparing credit card offers. CardRatings.com is pleased to offer consumers free credit card ratings.

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Labels: best credit cards, best student credit cards, credit card, credit card offers

Tuesday, December 18, 2007

Would You Buy a New TV for $29,811?

By Marc Eisenson & Nancy Castleman, CardRatings.com Senior Reporter

Commercial America's version of "Ho, Ho, Ho!" is "No, No, No!" NO waiting—buy now—with NO interest and NO payments until...next year...or maybe the year after...or maybe even four years from now.

Many of the largest electronics retailers, as well as furniture stores, car dealers and other merchants who sell pricey items, have teamed up with credit card issuers to provide "buy now, pay later, no interest" loans to cash-poor shoppers.

They're a great lure, but unless you read and follow the fine print carefully, you could be setting yourself up for quite a wallop when that "until..." date arrives.

That's when the merchant's "Ho, Ho, Ho!" will sound suspiciously like "Ha, Ha, Ha...Gotcha!"

Sure as day follows night, the Super Bowl follows Christmas, and this could be the year you watch the action on a fabulous 58-inch plasma high definition TV of your very own! They're on sale, heavily discounted, with painlessly easy financing. No interest and no payments until...well, far enough into the future that many people will say, "So, why worry now?"

Here's why. Most "buy now, pay later" purchases end up costing far more than advertised—because if you're buying something you can't afford today, it'll likely remain something you can't afford when the Piper shows up to be paid.

And said Piper won't just want the advertised price. He'll have a boatload of finance charges and default penalties to tack on. Years before your final payment has been made, that deeply discounted TV will have long been retired, along with the players on both Super Bowl teams.

Super Bowl Fever, Anyone?
You're relaxing in the living room, when you spot the pile of weekly ads from Sears, Best Buy, Circuit City, and Radio Shack.

There, right before your craving eyes, Sears beckons with a Panasonic 58-inch high def plasma TV, which lists for $4,999.99—but is on sale for $3,699.99.

"Turn your living room into your own personal movie theater with the TH-58PZ700U 58 inch 1080p plasma HDTV from Panasonic," the ad says.

Then you read that you can save $1,300 if you buy now, and you won't have to make any payments for a year. Plus, there'll be no interest due. Not bad! How could you possibly resist?

To protect your investment, you can buy a "3 Year In-Home Master Protection Agreement" for an additional $749.99. The sales clerk will certainly tell you how valuable this is. You'll still be saving $500 over the retail price of the television, so it's like getting the service contract for free. New total: $4,449.98.
Since this isn't an old-fashioned, put it on a table television, you also need a wall-mount. The premier swing-out arm mount adds another $299.99, but will let you watch the TV whether you're relaxing in your living room or searching for a snack in the kitchen. New total: $4,749.97.

Then there's the HD Essentials Kit, which you might as well get. It includes the cables you'll need, and it's on sale for $39.99...a $10 saving. New Total: $4,789.

And don't forget about sales tax, which, where we live, is 7.25%. That adds another $347.27, bringing the grand total to: $5,137.23.

Ouch! You can't afford to lay out that much at one time, so you apply for the special, "No interest, no payments for a year financing!"

If your credit isn't in tip-top shape, don't get your hopes up about being approved for the interest-free deals. You may be offered different terms that are more costly than the come-on rate. But let's assume your credit is good and you're quickly approved. You can almost taste those Super Bowl treats as you and your friends gather in front of your new home theater!

Bringing you back to reality, the sales clerk says, "Just sign here. Don't worry about the fine print. It's a great deal, and we don't have many left in stock. You better buy it now." So you sign the contract and make arrangements to bring your new "baby" home.

Before It's Too Late: Know What the Fine Print Says
The contract for this giant TV is typical of "buy now, pay later" financing:

"Deferred interest promotional offer details: Finance charges accrue from the date of purchase and all accrued finance charges for the entire promotional period will be added to your account if the purchase is not paid in full by the end of the promotional period or if you default under your card agreement. Making the minimum monthly payment will not pay off your promotional purchase in time to avoid finance charges. Sears cards: APRs up to 26.49%, but if your account has a variable APR, the APR is up to 32.24% and may vary..."

In other words, if you don't pay careful attention to the fine print or make the final payment on time, you'll surely wish you had, because you'll have to pay big bucks in interest if you fail to do any of the following:

* Make the monthly minimum payment, if one is required. (Generally, no monthly payments are due if the interest-free period is a year or less.)

* Make all payments when due. (Better not be late!)

* Pay off the full amount before the deadline arrives.

How Much Will the TV Really Cost?
To keep the math simple, let's make these four assumptions:

1. You have a year to pay off the television.

2. There are no monthly payments required during that year.

3. If your purchase hasn't been paid off by the end of the year, the interest rate is 25%.

4. The year goes by very quickly, and before you know it, the $5,137 balance is due. But your checkbook is bare.

Uh oh! In this all too typical scenario, time goes backwards. Because you failed to pay off the entire balance by the end of the year, interest is calculated from the day you made the purchase—so you immediately have a new balance of $6,421 to pay off on a credit card that charges a whopping 25%—or maybe more, if a penalty rate is applied for any number of reasons.

If you make only the minimum payments from here on in, you'll end up paying a total of $29,811 for the television. Believe it or not, your last payment will be made exactly 55 years and 7 months from the day you brought that TV home. It will be a museum piece by the time you've paid it off!

Tips for Different Types
If you do go for a buy-now-pay-later plan, above all else, make sure you pay for the item by the due date.

Here's an easy way: If you have a year to pay, for example, divide your final purchase price by 12, and make sure you pay at least that amount each month.

Read all the fine print. If there's something you don't understand, get a clear explanation before you sign up.

Unfortunately, these deals often tempt people to throw common sense out the window. They buy heavily advertised items they don't need and can't afford—frequently at prices that are higher than they might have paid elsewhere.

No TV is worth $29,811 and 55 years of payments, right? Don't buy something you can't afford, no matter how good a "deal" it is. If in doubt, pause and ask yourself these questions:

* Do I "need" this item or simply want it?

* Can I afford it?

* Can I trust myself to pay it off during the zero-interest period?

If you answered "No" to any of these questions, leave the store! If you answered "Yes" to them all, invest a little time and energy in comparison shopping to make sure you're getting the best of the bargain, rather than being bested by the bargain!

We welcome your comments about credit and money issues in our popular credit forum!

Nancy Castleman has spent 20+ years helping people get out of debt, save money, and live better on less. Along with her partner, consumer advocate Marc Eisenson, Nancy is known for her work on mortgage pre-payment, and for first explaining "credit card math" in her often acclaimed free e-letter, The Pocket Change Investor. Find it, along with many articles from back issues, special reports, link picks, and book reviews, on her Good Advice Press Web site. You can also see pictures of her 10,000 square foot organic garden and her nine grandchildren.

But what she'd most like you to do is read about Invest in Yourself:Six Secrets to a Rich Life (Wiley, 1998, 2001), which she wrote with Marc Eisenson and Gerri Detweiler. Nancy considers this book, which discusses how to invest your time, energy, and money to create the life you want, to be her life's work. Nancy's books have received rave reviews in leading national publications, including USA Today and Money Magazine.

This article first appeared in the December, 2007 edition of Sound Mind Investing. Published since 1990, Sound Mind Investing is America's best-selling financial newsletter written from a biblical perspective. © Sound Mind Investing | December 2007

CardRatings.com is the most comprehensive source for comparing credit card offers. CardRatings.com is pleased to offer consumers free credit card ratings.

Labels: 0% financing, credit card offers, retail credit card

Monday, August 27, 2007

Credit Card Direct Mail Response Rates Take a Nose Dive

By Curtis Arnold, Founder of CardRatings.com

In 1998, credit card issuers could count on a response rate of 1.2% to the offers for new cards that they sent out. For every 1,000 pieces mailed, 12 people would sign up.

The projected response rate this year is only 0.28%, or four times less than what the credit card industry received less than a decade ago. Now, for every 1,000 pieces of mail, not quite three of us bite at the offers being sent to us.

Yet, from the industry’s point of view, direct mail is still very effective. Why? Because 42% of us got our newest card via a piece of mail. That’s the finding of a recent study of 400 cardholders, by the Auriemma Consulting Group, publisher of Cardbeat, a market research report for the credit card industry.

Still, as Cardbeat's Managing Editor, Megan Bramlette reported:

“Our data shows that most consumers do not enjoy receiving card solicitations in the mail. In fact, about 14% say that they are overwhelmed by the number of mail solicitations that they receive.”

On average, we actually open only 26% of the offers that arrive in our mailboxes – "with nearly half of respondents reporting that they do not open any of the credit card solicitations that they receive in the mail," according to the study’s findings.

It can’t make the industry happy that almost half of us toss these offers into the trash, unopened. (Remember to shred them, people!) But if issuers want to attract new customers, it still seems to be their best option. We’re more likely to respond to a piece of junk mail than we are to any other sort of offer, whether it’s a card we read about on the Internet (I still think our Card Reports section is best place to comparison shop for a card!), see advertised on television, or find out about at the bank.

IMPORTANT: If you would like to stop receiving unsolicited credit card offers in the mail, all you have to do is call 888-5-OPTOUT (888-567-8688) or click here.

According to Cardbeat’s study, we typically get 11 credit card offers a month. If my mailbox is any indication, that number seems low to me. On average, how many do you receive? Tell us and the whole world by posting in our popular credit forum!

This article was originally published on CreditBloggers.com by Curtis Arnold, a nationally recognized consumer educator and advocate. Curtis has been educating consumers about credit cards since 1998. He is regularly interviewed and quoted by respected members of the national press regarding consumer credit issues. Curtis is currently working on publishing a book about credit card usage with Pearson/Prentice Hall- more details forthcoming!