Credit Card News

New Discover Card Offer Rewards On-Time Payments

2007-04-10T09:32:00.000-07:00

By Nancy Castleman, CardRatings.com Senior Reporter

Motiva, a unique new credit card from Discover, is designed for people who carry a balance and can use some extra motivation to pay their bills on time. Here's how it works: When cardholders make six on-time payments in a row, they receive the seventh month's interest as a "Pay-On-Time Bonus." Send in that seventh payment promptly, and it counts toward the next set of six timely payments, so there can be two bonuses a year.

You can use the Pay-On-Time Bonuses, along with other Discover cash-back bonuses, to pay down your credit card bill, which could be helpful in getting that balance paid off. If you prefer, Discover will send you a check or direct deposit the amount into your bank account. All you have to do is call or go online to let Discover know how you want to redeem them.

Motiva is a no annual fee card with a teaser rate of 3.9%, good for 10 months on purchases, which then goes up to anywhere between 10.99% and 17.99%, depending on the cardholder's credit picture. That 3.9% rate is also offered on balance transfers made by July 1, 2007 - and it's good through April, 2010.

When you sign up for Motiva, you can choose the due date, and pay by phone or online, even on the due date. (Discover will also take checks and money orders, as well as automatic direct payments from your checking account.) If you want, Discover will even send you email reminders to help you avoid fees and pay on-time.

Does Motiva Motivate People to Stay in Debt or Get Out of It?

Personal finance writers and consumer advocates recommend that folks with balances pay them off as fast as they can, using a "no frills" card with the lowest interest rate they can get. That rate could be less than Motiva's teaser or long-term rates.

One viewpoint is that Motiva encourages people to spend more money, to carry bigger balances, and to remain in debt longer. After all, there's no "Pay-On-Time Bonus" if you don't owe anything, and the more you owe, the bigger your bonus will be.

I asked Margo Georgiadis, Executive Vice President and Chief Marketing Officer at Discover, for her response to these points of view. Here's what she said:

"Some people are always going to carry a balance. We feel that our cardmembers should be rewarded for using our card, no matter how they use it. Motiva is part of our commitment to make sure we offer a range of smart products designed for the different ways people choose to use credit. We're giving people more options to make the most of their money."

My own view? If you usually carry a balance, have higher rate cards, and think the bonus might motivate you to get out from under, Motiva is well worth considering.

Here are my tips for using Motiva to get out of debt:

1. Transfer balances from higher rate cards.

2. Limit your card use to emergencies, only. Resist the temptation to spend!

3. Pay off as much of your credit card bill as you can ... every month ... especially while you have the teaser rate.

4. Apply every single bonus against your outstanding balance.

5. Don't be late! If you're late making a payment on your Motiva card, your rate will go up - to as high as 28.99%.

Click here for more information on Motiva including application details.

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 her book, Invest in Yourself (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.

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

Please Note! You are welcome to republish this article as long as you state that CardRatings.com is the source for the article. You must also include a link to our website if you republish the article online. Click here for more details about using our articles and thanks for your interest!

New Discover Card Offer Rewards On-Time Payments

2006-12-31T12:55:00.000-08:00

"Some people are always going to carry a balance. We feel that our cardmembers should be rewarded for using our card, no matter how they use it. Motiva is part of our commitment to make sure we offer a range of smart products designed for the different ways people choose to use credit. We're giving people more options to make the most of their money."

My own view? If you usually carry a balance, have higher rate cards, and think the bonus might motivate you to get out from under, Motiva is well worth considering.

Here are my tips for using Motiva to get out of debt:

1. Transfer balances from higher rate cards.

2. Limit your card use to emergencies, only. Resist the temptation to spend!

3. Pay off as much of your credit card bill as you can ... every month ... especially while you have the teaser rate.

4. Apply every single bonus against your outstanding balance.

5. Don't be late! If you're late making a payment on your Motiva card, your rate will go up - to as high as 28.99%.

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

Beware of Credit Card Foreign Transaction Fees!

2007-03-29T07:57:00.000-07:00
By Heshan Demel, CardRatings.com, Consumer Credit Researcher

Foreign exchange fees on credit cards should be of keen interest to those traveling beyond the borders of the United States. Exchange rates offered by credit cards are usually hard to beat. Of equal and perhaps greater importance, however, is the foreign transaction fee that your credit card bill might show once you have returned home from your trip. This fee, which is often a shock to cardholders, has been increasing as of late. So cardholders that travel overseas extensively need to be aware of foreign transaction fees.

Many travelers now rely on credit cards to pay for overseas travel and purchases. For many consumers, credit cards are easier to keep up with than traveler's checks and they're almost universally accepted now.

Foreign transaction fees charged by credit card issuers will mean you may pay a little extra for that umbrella drink in the Caribbean or that Parisian pastry.

Virtually every credit card assesses an international transaction fee for purchases done outside the 50 states, and that could even include U.S. territories like Puerto Rico and the U. S. Virgin Islands. Visa and MasterCard charge a 1% processing fee and most card-issuing banks add additional fees as well (on top of the 1% fee levied by MasterCard/Visa).

This fee is generally a percentage of the U.S. Dollar value of the transaction. So, even if you paid 100 Euros for a meal that was actually $125.00 (U.S. Dollars), the foreign transaction fees will be assessed on the $125.00 amount.

A March 2007 survey of credit card issuers by CardRatings.com revealed the following foreign transaction fees:

American Express - 2%
Bank of America - 3%
Chase - 3%
Citi Bank - 3%
Washington Mutual - 1%
Wells Fargo - 3%
Capital One - No Foreign Transaction Fee
Discover - Rarely accepted overseas so not part of this list

Despite fee hikes in the past year or so, credit cards are often still the most cost effective payment method for overseas travel, but you should consider fees when planning your trip and budget accordingly.

Update: You maybe entitled to a refund of any Foreign Transaction Fees imposed between Feb 1, 2006 and November 08, 2006. Please refer to www.ccfsettlement.com.

Bon voyage!

Heshan Demel- Heshan joined the CardRatings.com family in January 07 but has supported them for many years due to his close friendship with its founder. He has a bachelor's degree in finance from Ouachita Baptist University in Arkadelphia, Arkansas and a Master's Degree in Business Administration (MBA) from the University of Arkansas at Little Rock, Arkansas. He has over 9 years of banking experience with Regions Bank where he was a loan analyst. He is a member of the Arkansas Young Professionals Network and enjoys ballroom dancing, travel, and entertaining.

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

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

Please Note! You are welcome to republish this article as long as you state that CardRatings.com is the source for the article. You must also include a link to our website if you republish the article online. Click here for more details about using our articles and thanks for your interest!

Citibank and Chase Adopt More Consumer Friendly Credit Card Policies

2007-03-21T11:53:00.000-07:00
By Heshan Demel, CardRatings.com Consumer Credit Researcher

Citibank recently announced that they would be eliminating the controversial universal default clause from all of their accounts. At the same time, Citi announced that is also eliminating “any time for any reason” increases to the rates and fees of its customers’ accounts.

Traditionally, credit card issuers have taken the position that they can increase rates and fees at any time for any reason. As a result of the new policy, Citi will not voluntarily increase the rates and fees of any cardholder accounts until the card expires and a new card is issued (typically 2 years).

Chase also announced recently that they would eliminate the equally controversial double or two cycle billing method of calculating finance charges. This method of computing finance charges results in significantly higher finance or interest charges for cardholders who carry a balance on occasion. Chase also said it will ease up on some fees it charges customers who go over their credit limit (aka credit line). The company will stop over-limit fees at 90 days.

If you are unhappy with your current card for any reason (fees, rates, etc.), then you should definitely call your card company to complain. The card issuers are more receptive to cardholder requests now than they have been in many years due to the intense political and media pressure they are feeling. Use this pressure to your advantage! Many times a simple 5 minute phone call will lower your rate by several percentage points resulting in hundreds of dollars in savings. At the same time, most issuers are willing to reverse a $39 late fee at least once a year or so.

If you don’t get the results that you want from your current issuer, then start comparison shopping! The average credit card interest rate is currently around 15%. If your credit score is 700 or better, you should qualify for a rate around 10%. Shop CardRatings.com for the best low rate and low introductory rate card offers, as well as info. on how to obtain your credit score for free.

Heshan Demel- Heshan joined the CardRatings.com family in January 07 but has supported them for many years due to his close friendship with its founder. He has a bachelor's degree in finance from Ouachita Baptist University in Arkadelphia, Arkansas and a Master's Degree in Business Administration (MBA) from the University of Arkansas at Little Rock, Arkansas. He has over 9 years of banking experience with Regions Bank where he was a loan analyst. He is a member of the Arkansas Young Professionals Network and enjoys ballroom dancing, travel, and entertaining.

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

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

Please Note! You are welcome to republish this article as long as you state that CardRatings.com is the source for the article. You must also include a link to our website if you republish the article online. Click here for more details about using our articles and thanks for your interest!

Credit Card Foreign Transaction Fees on the Rise

2007-02-22T10:28:00.000-08:00
By Heshan Demel, Consumer Credit Researcher - CardRatings.com

Foreign exchange fees on credit cards should be of keen interest to those traveling beyond the borders of the United States. Exchange rates offered by credit cards are usually hard to beat. Of equal and perhaps greater importance, however, is the foreign transaction fee that your credit card bill might show once you have returned home from your trip. This fee, which is often a shock to cardholders, has been increasing as of late.

Many travelers now rely on credit cards to pay for overseas travel and purchases. For many consumers, credit cards are easier to keep up with than traveler's checks and they're almost universally accepted now.

Despite the convenience associated with using cards out of the country, there are normally costs associated with the convenience. Foreign transaction fees charged by credit card issuers will mean you may pay a little extra for that umbrella drink in the Caribbean or that Parisian pastry.

Virtually every credit card assesses an international transaction fee for purchases done outside the 50 states, and that could even include U.S. territories like Puerto Rico and the U. S. Virgin Islands. Visa and MasterCard charge a 1% processing fee and most card-issuing banks add additional fees as well (on top of the 1% fee levied by MasterCard/Visa).

This fee is generally a percentage of the U.S. Dollar value of the transaction. So, even if you paid 100 Euros for a meal that was actually $125.00 (U.S. Dollars), the foreign transaction fees will be assessed on the $125.00 amount.

A recent CardRatings.com survey of credit card issuers revealed the following foreign transaction fees:

American Express - 2%
Bank of America - 3%
Chase - 3%
Citi Bank - 3%
Washington Mutual - 1%
Wells Fargo - 3%
Capital One - No Foreign Transaction Fee
Discover - Rarely accepted overseas so not part of this list

Despite fee hikes in the past year or so, credit cards are often still the most cost effective payment method for overseas travel, but you should consider fees when planning your trip and budget accordingly. Bon voyage!

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

Heshan Demel- Heshan is new to the CardRatings.com family but has supported them for many years due to his close friendship with its founder. He has a bachelor's degree in finance from Ouachita Baptist University in Arkadelphia, Arkansas and a Master's Degree in Business Administration (MBA) from the University of Arkansas at Little Rock, Arkansas. He has over 9 years of banking experience with Regions Bank where he was a loan analyst. He is a member of the Arkansas Young Professionals Network and enjoys ballroom dancing, travel, and entertaining.

CardRatings.com is the most comprehensive source for comparing credit card offers. CardRatings.com is pleased to offer consumers free credit card ratings.
Please Note! You are welcome to republish this article as long as you state that CardRatings.com is the source for the article. You must also include a link to our website if you republish the article online.
Click here for more details about using our articles and thanks for your interest!

Gas Rebate Credit Cards – What Do Consumers Think? (Part 2 of a 2-part series)

2006-12-13T12:31:00.000-08:00
By Rebecca Lindsey, CardRatings.com Senior Reporter

This is Part 2 of an article series revealing results from the CardRatings.com Gas Rebate Credit Card Survey. Part 1 of this series covered the growing popularity of gas rebate credit cards, and how they can sometimes be a better deal for cardholders than a typical rebate credit card. In this follow-up, we discuss frequency of use, terms that cardholders value the most, and other trends in gas rebate programs.

Of over 1300 respondents to the CardRatings.com Gas Rebate Credit Card Survey, only 34 percent said that they currently have a credit card with a gas rebate program. When asked how often they used their gas rebate credit cards, 78 percent of those respondents said “Frequently.” In a follow-up question, 79.2 percent of respondents said they planned on using their gas rebate credit card more frequently during this past summer to help offset the cost of gas prices. So clearly those who use gas cards feel that they’re an effective way to save a little money at the pump.

Of those holding gas rebate cards, over half (52%) replied that CitiBank was the issuer of their card. Chase/Bank One/First USA, and Discover Bank were in the next two top spots.

So why do people choose the cards that they do? CitiBank was one of the first to offer the aggressive 5% rebate program and has obviously earned fans and loyalty because of it (please note that Citibank recently scaled back their gas rebate percentage on many of their cards). Among the other factors that influence cardholders are the typical suspects: annual fee, interest rate, amount of rebate/reward, and card acceptance.

While the interest rate of a card is usually a large factor, the survey revealed that the presence of an annual fee and the actual amount of the rebate ranked highest of importance to respondents when shopping for a gas rebate credit card, at 81 percent and 75 percent respectively. How widely the card is accepted came in third at 65 percent. Less important were the interest rate (46%) and other rebates and benefits (other than gas rebates) offered (42%).

High concern regarding annual fees and less concern for interest rates might imply prudent use of gas rebate cards: cardholders are more concerned about getting the most reward for their money and effort and we could guess that they use these cards for common, everyday purchases to earn rewards and then pay off the balance each month. (Which by the way, is the best way to use any credit card!)

Curtis Arnold, founder of CardRatings.com, recognizes the timeliness of the gas rebate credit card survey and surmises that it could be a way for some to be introduced to the usefulness of this type of credit card.
“Once a consumer analyzes their spending, they may find that they can realize significant savings by using a gas rebate credit card or other type of rebate card.”
You can comparison shop for the best rated reward credit cards, including gas rebate cards, by visiting the Card Reports section of our site. Here's to saving us all a few bucks during this holiday season!

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

Rebecca Lindsey is a Senior Reporter for CardRatings.com. She began writing articles about consumer credit issues for CardRatings.com in September 2000. Her articles have been republished and/or referenced by leading publications throughout the country, including "Live Well on Less Than You Think: The New York Times Guide to Achieving Your Financial Freedom" by Fred Brock.

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

Please Note! You are welcome to republish this article as long as you state that CardRatings.com is the source for the article. You must also include a link to our website if you republish the article online. Click here for more details about using our articles and thanks for your interest!

Gas Pump Woes: Can Credit Cards Help Ease the Pain? (Part 1 of a 2-part series)

2006-11-20T12:48:00.000-08:00
By Rebecca Lindsey, CardRatings.com Reporter

The recent small drop in gas prices has been nice, but not overly exciting since it’s still a high price to pay for a tank of gas and considering that gas prices are rising again according to a recent MarketWatch article. People are searching for any way possible to cut their gasoline bills and if condensing errands, telecommuting and carpooling aren’t enough, one can always cut to the chase and try to save money at the point of purchase. Looking for gas stations with the lowest prices is a given, but another technique is growing in popularity: the gas rebate credit card.

In an online survey conducted a few months ago by CardRatings.com, over 1,300 respondents illustrated consumer interest and action in saving money at the gas pump through credit cards. Although a press release was issued immediately after the end date of survey, the purpose of this article is to attempt to dissect and better understand the survey results.

Respondents were asked questions ranging from how much they typically spend on gas per month to how much of a rebate they receive on their gas rebate credit card (if they used one). The results emphasized the fact that those who utilize gas rebate credit cards do find them effective at helping them to save money.

Knowing About Them vs. Using Them

One of the most interesting findings of the survey was that while almost 70% of those responding to the survey were aware of credit cards that offer rebates on gas, only 34% have such a card. Why such a discrepancy?

Curtis Arnold, founder of CardRatings.com and a nationally known consumer advocate, says this wide gap could be caused by several different types of consumer thought.

Arnold speculates that some cardholders may think that having a credit card specifically for gas purchases is too much of a hassle while others may be trying to maximize earnings on an existing credit card reward program by placing all purchases on that one card.
“The wide gap between those numbers suggests that people may be a little hesitant about gas rebate cards and may feel skeptical about whether they can actually help ease the pain at the pump” he adds.
But a key finding of the survey suggests that gas rebate cardholders do feel like they are indeed realizing savings at the pump. In response to the question “How effective do you think your gas rebate cards are when it comes to saving money on gas?”, over 95% of those responding feel that their rebate cards are effective, with the breakdown as follows:

“Somewhat Effective” – 30.8%
“Effective” - 30.1%
“Very Effective” - 34.4%

Under five percent of respondents say that their gas cards are ineffective at saving them money.

Perhaps the major factor behind these numbers is that 81% of respondents hold a gas rebate credit card with a 5% rebate (it is worth noting that a few 5% gas rebate cards have scaled back their rebate percentage since the completion of this survey).

Do Gas Rebate Cards Really Work?

With many gas rebate cards currently offering a 2-5% rebate, a little number crunching shows that gas rebate credit cards are probably worth looking into. After all, one would be hard-pressed to find such an aggressive offer in another type of credit card rebate/reward program.

For example, say you were in need of a fill up and saw a gas station offering gas at $2.00 per gallon. But you also know that another station a block or two down the street was offering gas at $1.90 per gallon. So you keep driving, right?

Ok, then consider this: If you are the holder of a gas rebate credit card that offers a five percent rebate on gas purchases, and the best deal you can find is $2.00 per gallon, that five percent equates to you spending $1.90 per gallon rather than two dollars.

If you buy 15 gallons of gas, the five percent rebate is credited to your card in the amount of $1.50.

If you are already the holder of a rebate card, and you utilize that card for all of your purchases to maximize the amount of your reward, consider the same scenario. Perhaps your current rebate card gives you a 1 percent rebate on all purchases; basically, this equates to you spending $1.98 per gallon. At 15 gallons, that’s only 30 cents deposited to your card. Quite a jump down from the above $1.50! Furthermore, it is worth noting, that your savings would even be greater if gas is above $2.00 per gallon in your local area.

Arnold relates that the most popular gas rebate credit cards include other products in their rebate programs as well, allowing a consumer to maximize their earnings power. For instance, he mentions that one card from American Express gives a 5 percent rebate on gas purchases in addition to a 5 percent rebate on grocery and drug store purchases once you have accumulated $6,500 in annual spending. Most also allow at least a 1 percent rebate on all other purchases made with the card. He cautions, though, that it is important to note that any 5 percent rebate may be an introductory offer.

Says Arnold,
“I would challenge consumers to take a look at their current card rebate program and the rewards they have recently collected. Then compare it to the potential rebate earnings of a gas card rebate program. Not many other types of cards offer such an aggressive rebate, which can be up to 5 percent. Moreover, many gas rebate cards these days don't limit your rebates to one particular brand of gas. Once a consumer analyzes their spending, they may find that they can realize significant savings by using a gas rebate credit card or other type of rebate card."
Part Two of this series will take a look at other findings from the CardRatings.com gas rebate credit card survey. In the mean time, you are welcome to review the complete survey questions and survey results.

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

Rebecca Lindsey is a Senior Reporter for CardRatings.com. She began writing articles about consumer credit issues for CardRatings.com in September 2000. Her articles have been republished and/or referenced by leading publications throughout the country, including "Live Well on Less Than You Think: The New York Times Guide to Achieving Your Financial Freedom" by Fred Brock.

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

Please Note! You are welcome to republish this article as long as you state that CardRatings.com is the source for the article. You must also include a link to our website if you republish the article online. Click here for more details about using our articles and thanks for your interest!

Happy Holidays from Discover Card – 5% Cash Back Credit Card Bonus Offer

2006-10-27T11:00:00.000-07:00
By Nancy Castleman, CardRatings.com Senior Reporter

Halloween hasn’t happened yet, but the television commercials are already pushing holiday spending. Another sign of the impending spending season: Discover Card is launching its "Make the Holidays More Entertaining" Get More program, which runs from October through December.

If you have a Discover Card, and sign up for its Get More program, you can get a total of five percent back on: purchases at certain stores and Web sites, movie tickets and rentals, as well as meals at specific restaurants. Some of the merchants who are participating are Amazon.com, Barnes & Noble, Borders, Circuit City, Crutchfield, Napster and Waldenbooks. (Cardmembers continue to earn up to a 1% Cashback Bonus on purchases in other locations.)

Some might say that the Get More program encourages over-spending. But according to Julie Loeger, Vice President of Rewards Marketing at Discover, it’s:
"a free and easy way to build rewards even faster at locations where they [Discover cardholders] are already spending the most time and money. So ultimately, we're rewarding them on the purchases they're making during that particular time of year anyway."
Once you sign up for Get More, which is free to Discover cardholders, you’ll see that the businesses participating in the program change, four times a year, depending on the season. For example, in the fall, the merchants tended to sell back-to-school items, including clothes, shoes, and things you might need in a dorm room. In the spring, home improvement might be highlighted.

Why cardholders have to specifically sign up for Get More – since all Discover cardholders are eligible – puzzled me. So I asked Julie to explain why cardholders have to sign up for the program – as opposed to having it be an automatic feature of Discover cards. Here’s her response:
"We view the Get More program as a great way for us to use Cardmember feedback on an ongoing basis. After each program we measure what Cardmembers like the most and design our next campaign with that in mind. We try to make these programs as relevant to our Cardmembers as possible, so by tracking various measures like enrollment figures, we're able to see what's working and what needs tweaking. So far this approach has been very successful – we've enrolled almost 20 million since our launch in January of 2005 and we continue to see positive trends."
Despite the lack of automatic enrollment, as far as I can tell, there are absolutely no hitches to signing up for this program and we have gotten very positive consumer feedback about the program on the CardRatings.com message board. If you have a Discover card, you have nothing to lose. Go to DiscoverCard.com and sign up for the Get More program. It’s a piece of cake … or should I say gingerbread?!?

If you don't have a Discover Card, you can apply for one online here. 5% savings is sure to make the holiday season even merrier.

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, 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 sq ft organic garden and her nine grandchildren!

But what she'd most like you to do is read about her book, Invest in Yourself (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.

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

Please Note! You are welcome to republish this article as long as you state that CardRatings.com is the source for the article. You must also include a link to our website if you republish the article online. Click here for more details about using our articles and thanks for your interest!

High School Student Credit Cards: The Good, The Bad, and The Ugly (Part 1 of a 2-part series)

2006-09-22T06:00:00.000-07:00
By Mike Killian, CardRatings.com Debt/Credit Management Reporter

Age of Majority is considered "the year a person acquires all the rights and responsibilities of being an adult". In most states this is 18. For example, a teen cannot be drafted before age 18. Yet contrary to popular belief, an adolescent can have a credit card... BEFORE the Age of Majority!

The stats regarding high school card usage may surprise some. According to the JumpStart Coalition for Personal Financial Literacy, a nonprofit educational organization, nearly a third of high school seniors reported having a credit card of their own or one co-signed by a parent. Also, according to surveys conducted by nationally recognized credit expert Dr. Robert Manning, the number of incoming college freshmen with credit cards tripled between 1999 and 2002.

Dr. Manning is the Director of the Center for Consumer Financial Services at Rochester Institute of Technology. He is also author of Credit Card Nation and has testified before congressional hearings as a consumer advocate on issues related to credit and credit cards.

In a phone conversation, Dr. Manning offered some very revealing and even startling points.
"A credit card can be issued before the age of 18. A creditor simply cannot force a minor to pay the debt.

Approximately 1/3 and possibly as much of 40% of all High School Seniors AND Juniors have a credit card today. Possession of a credit card has been a simple migration from older brothers and sisters in college to younger siblings in high school and the advertiser naturally follows this migration.

But in addition to normal consumer purchases, availability of the high school credit card can easily lead to issues of secrecy. An emergency room treatment to pump a stomach after a night of drinking can now be kept from a parent. A traffic ticket is paid by credit card and the parent never knows. All of these issues and more are easily handled with a credit card. So targeting the high school age consumer is not this societies only concern with younger credit card holders."
I also made contact with Laura Levine, who is the Executive Director JumpStart Coalition for Personal Financial Literacy. According to Laura,
"In our 2006 Survey of Financial Literacy Among High School Students, 12.9 percent of the survey participants already had credit cards of their own. (We survey 12th graders, only, so a lot of them are already 18.) Fourteen-and-a-half percent said they used their parents' credit cards and 4.8 percent of them said they used both their own card and their parents' cards. Of the 5,775 students we surveyed, 67.7 said they did not yet use a credit card.

Although I personally believe that some companies are marketing a little too assertively to teenagers and I would prefer they didn't, I think it's more important and more effective to educate our young people about using credit cards wisely rather than to try to stop the marketers. Especially if we're talking about teens, they're just a few years from being able to get a credit card on their own anyway, so I'd rather see them be better prepared to handle it."
I think Laura and Dr. Manning both make some very good points. Part 2 of this article series addresses how to best educate the future leaders of our country about credit cards. A lot is at stake here folks, not the least of which is the future success or failure of our nation.

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

Mike Killian has been writing about credit and debt management issues that are of importance to consumers for over 8 years. His articles have been referenced by various members of the media, including MSNBC and The Motley Fool. Mike has also offered debt elimination seminars to businesses and community colleges for many years.

Mike offers free consumer advice on the CardRatings.com Credit Forum as well as on his own site, FreeMoneyTraining.com. While at his site, you can view additional articles as well as his schedule of upcoming seminars.
CardRatings.com is the most comprehensive source for comparing credit card offers. CardRatings.com is pleased to offer consumers free credit card ratings.

Please Note! You are welcome to republish this article as long as you state that CardRatings.com is the source for the article. You must also include a link to our website if you republish the article online. Click here for more details about using our articles and thanks for your interest!

High School Student Credit Cards: The Good, The Bad, and The Ugly (Part 2 of a 2-part series)

2006-10-24T06:04:00.000-07:00
By Mike Killian, CardRatings.com Debt/Credit Management Reporter

In part one of this article series, the extent of high school credit cards was discussed by Laura Levine, Executive Director of the JumpStart Coalition for Personal Financial Literacy. Similarly, Dr. Robert Manning, author of Credit Card Nation, shared some very startling and revealing facts about younger teen credit card usage.

The facts were scary but is it right to keep a card from a teen until age 18 when he/she can get one on their own anyway? A credit card for many adults is an adventure in disaster at best. How can we as responsible parents allow our unsuspecting youth to enter the "world of plastic" completely unaware and without a shred of experience?

In 1997, I wrote an article called Credit Cards... Just Like Drugs. In it I said there was no better analogy. We use it (credit) and use it and use it until we can't live without it. Yet we live in an "age of plastic" and our youth must be taught to use plastic responsibly, even if we as parents have not. Sounds reasonable, right? But how exactly do you we go about doing that?!?

I don't have all the answers but I have tried to put together some ideas which might help.
Fellow writer Rebecca Lindsay offers some inspiring ideas in an article published on CardRatings.com entitled High School Students and Credit Cards - A Recipe for Disaster?. In it are some great resources for learning money management skills.

A great tool I have offered to many in my classes is the Debt Calculator offered through this site. There is no better hands-on teaching tool to illustrate how quickly compound interest can escalate.

Perhaps a debit card could be a useful “training wheels” approach. Purchases are deducted immediately from a banking account balance and may be refused if there are not adequate funds in the account to cover the purchase. The hope is that your child will learn to use plastic in a responsible manner, while limiting the potential pitfalls that are often associated with credit cards.

A prepaid credit card is another approach. Prepaid cards allow parents to set spending limits and monitor where their children are spending money, both through monthly statements and through Internet accounts that show daily transactions. Parents typically transfer money from their own checking accounts to the card for a small transaction fee, and the card can be used like any other credit card to make purchases.

Similarly a low-limit credit card may be a possibility. The drawback is that parents must co-sign for the account, but having a low limit will reduce parental exposure. Limits can be increased as responsible behavior is demonstrated.
Laura shared a few clarifications on these tips that I think are very important:

"Parents who get pre-paid cards or debit cards for their kids, as well as parents who co-sign a credit card for them, need to remember a few things: If your son or daughter is under 18, then you, the parent, are responsible for that card, not your teenager. A debit or pre-paid card is not perfect "training" for a credit card; they are good money management tools, but don't teach your child about interest rates, making payments, accruing debt, etc.--and these are the things that new credit card users seem to struggle with. A teenager isn't going to learn--or isn't necessarily going to learn the right things--simply by getting and using a credit card. I often use the analogy of a musical instrument. We don't buy our kids violins and hope they'll just plunk around until they learn how to play it. Why would we think kids will learn how to manage money simply by being given a credit card?"
Consider the alternative. If your teenager had a credit card at this moment, would you be willing to drop them off at the mall with their card? If not, perhaps parental training before they reach 18 is in order.

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

Mike Killian has been writing about credit and debt management issues that are of importance to consumers for over 8 years. His articles have been referenced by various members of the media, including MSNBC and The Motley Fool. Mike has also offered debt elimination seminars to businesses and community colleges for many years.

Mike offers free consumer advice on the CardRatings.com Credit Forum as well as on his own site, FreeMoneyTraining.com. While at his site, you can view additional articles as well as his schedule of upcoming seminars.
CardRatings.com is the most comprehensive source for comparing credit card offers. CardRatings.com is pleased to offer consumers free credit card ratings.

Please Note! You are welcome to republish this article as long as you state that CardRatings.com is the source for the article. You must also include a link to our website if you republish the article online. Click here for more details about using our articles and thanks for your interest!

Celebrate Freedom by Donating Credit Card Frequent Flyer Miles to our Service Men and Women

2006-09-13T10:34:00.000-07:00
By Mike Killian, CardRatings.com Debt/Credit Management Reporter
Operation Hero Miles was created by Congressman Ruppersberger(D-MD) in October, 2003. The program allows troops stationed in Iraq or Afghanistan to fly home on leave for free. It also gives family members of wounded servicemen and women free plane tickets to visit their loved ones recovering at military hospitals across the country. If you ever wanted to support our troops, this is a marvelous opportunity to do so and what better time to do so as we remember the 5-year anniversary of 9-11.

Now operating through a partnership with the Fisher House Foundation, the program seeks and issues badly needed free tickets to our service men and woman and their families.

I spoke with the Fisher House Vice President of Communications, James D. Weiskopf, about the innovative program. According to James,
"With your support, we have provided nearly 6,500 tickets to Iraqi Freedom and Enduring Freedom hospitalized service members and their families, worth more than $8 million (average savings per ticket is currently about $1,300).

Fisher House™ is proud to partner with Hero Miles in support of our wounded and injured service men and women and their families. We do not yet have access to all frequent flyer miles donated through Hero Miles, but do have partnerships with the following airlines: AirTran Airways, Alaska Airlines, American Airlines, Continental Airlines, Delta Air Lines, Midwest Airlines, Northwest Airlines, United Airlines, US Airways."
Fisher House takes care of all associated airline ticket taxes, security fees and administrative fees. Furthermore, they handle the first trip for a non-accompanied minor. It is worth noting, though, that Fisher House agreements with individual airlines only permit airline tickets for military (or DoD civilian employees) hospitalized as a result of their service in Iraq, Afghanistan, or surrounding areas, and their families. These tickets can not be used for R&R travel, ordinary leave, emergency leave, or other travel not related to a medical condition.

Fisher House is involved with numerous programs but offers a specific page for donating frequent flyer miles. It is appropriately named Hero Miles. Be sure to scroll down to view the PDF file entitled Quick Reference Guide To Donate Miles. This file offers a concise procedure for each participating airline.

Cardholders who have travel rewards credit cards can participate in the program by following a two-step process. First of all, you must transfer the miles that you've earned on your rewards card into an airline frequent flyer account. Then once the miles are in the airline account, simply ask the airline to transfer the miles following the procedure listed above. Please note that some reward cards, particularly those that are not directly affiliated with an airline, will not allow you to transfer miles into an airline frequent flyer account.

If you ever wanted to support our service men and woman and have frequent flyer miles available, then please seriously consider this deserving program. Regardless of your personal feelings about the war that we're waging, you will be helping some very deserving individuals and their families who are doing a very difficult task on behalf of their country.

The Hero Miles creator, Congressman C.A. Dutch Ruppersberger, sums up the beauty of the program best by noting that,
"Whether you are for or against the War in Iraq, we must support our troops. When I visited BWI-Thurgood Marshall Airport greeting the servicemen and women coming back from Iraq and Afghanistan, I was shocked to learn they were forced to pay their own way home from there. I got together with the airlines and set up a website, HeroMiles.org, creating a way for Americans to donate their unused frequent flyer miles to military personnel, and Operation Hero Miles was born.

More than 540 million miles have been donated - enough for more than 22,000 free flights for the troops. Operation Hero Miles was expanded to give family members of wounded servicemen and women free plane tickets to visit their loved ones recovering at military hospitals across the country. Sometimes the love and support of family is the best medicine to help a troop recover. It is an honor to give something as small as a plane ticket to our servicemen and women and their families who give so much and risk their lives for their country."
We welcome your comments about credit card and other money issues in our popular credit forum!

Mike Killian has been writing about credit and debt management issues that are of importance to consumers for over 8 years. His articles have been referenced by various members of the media, including MSNBC and The Motley Fool. Mike has also offered debt elimination seminars to businesses and community colleges for many years.

Mike offers free consumer advice on the CardRatings.com Credit Forum as well as on his own site, FreeMoneyTraining.com. While at his site, you can view additional articles as well as his schedule of upcoming seminars.
CardRatings.com is the most comprehensive source for comparing credit card offers. CardRatings.com is pleased to offer consumers free credit card ratings.

Please Note! You are welcome to republish this article as long as you state that CardRatings.com is the source for the article. You must also include a link to our website if you republish the article online. Click here for more details about using our articles and thanks for your interest!

"In Debt We Trust" Documentary Exposes America's Growing Addiction to Credit Card Overspending

2006-08-25T07:14:00.000-07:00
By Mike Killian, CardRatings.com Debt/Credit Management Reporter

Every now and then a film comes along which should be viewed by every single American. Such a film is the recently released In Debt We Trust- America Before the Bubble Bursts. This is a video by highly acclaimed documentary director, Danny Schechter. Among his more than 20 other recognized films is the award-winning expose Weapons of Mass Destruction.

His newest release, In Debt We Trust is inspired by the works of an individual who is no stranger to this site - Dr. Robert Manning, a Research Professor of Consumer Financial Services at Rochester Institute of Technology and the author of Credit Card Nation (Basic Books, 2000). The film gives great insight into the impact debt is having on young people and our society, and offers ways to empower the public with information on avoiding the traps of debt and dependency.

A frequently invited expert at U.S. Congressional hearings, Dr. Manning's consumer credit research has influenced public policy debate on consumer debt issues. He has become one of the most outspoken critics of the nation's consumer spending habits and lending practices.

According to Dr. Manning, the documentary helps expose several disturbing patterns, such as banking deregulation:
"...deregulation of the banking industry in the 1980s has unleashed powerful forces that encourage banks to over lend and seduce consumers to overspend....People could be managing their lives better, but the odds are stacked against them."
I caught with director Danny Schechter. Danny's comments were as hard-hitting as his film:
"In Debt We Trust... is about a growing inequality that some experts fear will lead to a new 21st century serfdom. It’s about the transfer of wealth from working people into the vaults and accounts of a relatively small number of financial institutions and real estate interests. The lenders are profiting by charging usurious rates and doing so legally, in part, because they have mastered the art and science of marketing products and then manipulating media, politicians, and political institutions.

Most often, credit card abuses are examined in terms of individuals and consumer scams like identity theft. My film started with that approach but evolved into a much deeper look at what’s been called “financialization.” This is an institutional problem involving a growing debt-and-credit complex that threatens the very fabric of our nation, not just in terms of a possible financial crash in the future but how it is impinging upon our lives and livelihoods right now."
As a fellow consumer action reporter and counselor, I strongly encourage every reader to look for this film in one of its 4 versions: 30 minute television production, DVD version, full length theater version, or international version. Regardless of which version you watch, be prepared for a strong call to action.

In the words of the director:
"Many at the TV news networks whom I have worked with over the years say you can’t cover complex issues, especially on economic questions, because “the dismal science” is boring and a turn-off.

My film is out to prove them wrong. The American public needs to know why debt has become “the enemy,” in the words of one of the people we interviewed. All Americans need to know what we can do about it.”
I can only hope that the documentary garners mainstream media attention as it is a much-needed wake-up call. We simply can't continue on the same course for very long.

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

Mike Killian has been writing about credit and debt management issues that are of importance to consumers for over 8 years. His articles have been referenced by various members of the media, including MSNBC and The Motley Fool. Mike has also offered debt elimination seminars to businesses and community colleges for many years.

Mike offers free consumer advice on the CardRatings.com Credit Forum as well as on his own site, FreeMoneyTraining.com. While at his site, you can view additional articles as well as his schedule of upcoming seminars.
CardRatings.com is the most comprehensive source for comparing credit card offers. CardRatings.com is pleased to offer consumers free credit card ratings.

Please Note! You are welcome to republish this article as long as you state that CardRatings.com is the source for the article. You must also include a link to our website if you republish the article online. Click here for more details about using our articles and thanks for your interest!

Discover's New Business Credit Card May Transform Card Industry

2006-08-18T05:53:00.000-07:00
By Mike Killian, CardRatings.com Debt/Credit Management Reporter

Discover has launched a very unique and innovative business product simply called the Discover Business Card. While having some similarities to Discover's standard Platinum Card that has been offered to consumers since 1985, the business card is customized to meet the needs of the small business market.

I spoke with Sastry Rachakonda, Director of Discover's Business Card division, about some of the special features of this card. I was particularly interested in learning more about "PurchaseChecks", a benefit which Discover has been touting in marketing efforts. According to Sastry,
"Fee-free PurchaseChecks are a unique feature of the Discover Business Card. Unlike convenience checks which many other institutions offer with their card, these checks are completely free with no hidden charges. They get similar benefits as the Discover Card, such as earning rewards, and the same APR and payment grace period as card purchases. This is especially useful if the business-to-business source does not accept credit cards as often is the case. PurchaseChecks provide a flat .25%, and the Discover Business Card provides 5% Cashback Bonus on office supplies, 2% on gas and up to 1% on all other purchases. There is still no limit on cash reward, it never expires and Cardmembers have the ability to increase -- even double -- their rewards (turn $20 into $40) by purchasing from any of the 70 brand-name partners."
I must admit that I was impressed by this concept and could see that it could possibly create major ripples in the card industry. After all, many business transactions are still done without the use of credit cards. Sastry was quick to point out another unique feature of the card,
"Employees can be offered credit cards for any specified limit which can be changed in real time. For example, an employee may have a $25 credit limit but is required to make a $500 purchase at Home Depot. The business owner can telephone or go online and change the credit limit to $500 and then change it back upon completion of the transaction."
Sastry concluded the interview with a comment that I think is worth noting.
"The key to this program is that it addresses an underserved small-business market. We believe it has the potential to fundamentally transform how small business makes payments."
That evening I caught a competitor's ad boasting about their cash back rewards program and was reminded that Discover is often credited with having created America's growing addiction to cash back credit cards. My next thought was that in the not-so-distant future others will probably start mimicking the innovative Discover Business Card as well. :)

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

Mike Killian has been writing about credit and debt management issues that are of importance to consumers for over 8 years. His articles have been referenced by various members of the media, including MSNBC and The Motley Fool. Mike has also offered debt elimination seminars to businesses and community colleges for many years.

Mike offers free consumer advice on the CardRatings.com Credit Forum as well as on his own site, FreeMoneyTraining.com. While at his site, you can view additional articles as well as his schedule of upcoming seminars.
CardRatings.com is the most comprehensive source for comparing credit card offers. CardRatings.com is pleased to offer consumers free credit card ratings.

Please Note! You are welcome to republish this article as long as you state that CardRatings.com is the source for the article. You must also include a link to our website if you republish the article online. Click here for more details about using our articles and thanks for your interest!

Simmons Bank Introduces New Low Fixed Rate Visa Card @ 7.25% APR

2006-08-11T05:43:00.000-07:00
By Mike Killian, CardRatings.com Debt/Credit Management Reporter

Why would anyone apply for a credit card from a bank located in Arkansas? The answer is simple. Cards issued by Arkansas banks have historically offered some of the lowest rates in the country.

The latest offering by an Arkansas based bank is no exception. I am referring to the new Simmons First Visa Platinum Card, which boasts a 7.25% fixed purchase rate (APR). It is refreshing to see a low fixed rate card offer in a rising tide of interest rates (the average rate on variable rate platinum cards is now about 14%). Considering the fact that cardholders have had to digest 17 interest rate hikes by the Feds in the past two years, this card is definitely "bucking the high interest rate trend".

But having one of the consistently lowest fixed rates in the country is only one of the benefits of using the Simmons First Visa Platinum Card. Why? Because the card also provides benefits such as travel insurance, emergency cash and a customer service center that is always open. There is also no annual membership fee and no transaction charges for balance transfers (the balance transfer APR is also 7.25% fixed).

Simmons' card offers have received much national recognition. Money Magazine has cited Simmons for having "one of the best [card] bargains in America". Consumer Reports noted that Simmons has one of the ten most consumer-friendly cards in the nation. And the Wall Street Journal pointed out Simmons reputation for good customer service. According to the Journal,
"Once you've entered the low-rate club, you're generally treated more like a neighbor and less like a number."

So, what's the catch? Well, Simmons does require that applicants have good credit. In other words, they don't give their card out to just anyone that asks for it! If your credit is good, though, you definitely should consider Simmons. You'll be hard pressed to find another card with a lower rate that is as consumer friendly.

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

Mike Killian has been writing about credit and debt management issues that are of importance to consumers for over 8 years. His articles have been referenced by various members of the media, including MSNBC and The Motley Fool. Mike has also offered debt elimination seminars to businesses and community colleges for many years.

Mike offers free consumer advice on the CardRatings.com Credit Forum as well as on his own site, FreeMoneyTraining.com. While at his site, you can view additional articles as well as his schedule of upcoming seminars.
CardRatings.com is the most comprehensive source for comparing credit card offers. CardRatings.com is pleased to offer consumers free credit card ratings.

Please Note! You are welcome to republish this article as long as you state that CardRatings.com is the source for the article. You must also include a link to our website if you republish the article online. Click here for more details about using our articles and thanks for your interest!