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!

Credit Cards Come to Vending Machines- Students and All Consumers Beware

2006-08-07T11:13:00.000-07:00

By Nancy Castleman, CardRatings.com Consumer Reporter

According to industry experts, cashless vending machines are coming our way, quickly. In fact, folks in Philadelphia will soon be able to use a credit card at 1,000 Coke machines. And it’s expected that by 2009, over half the vending machines in the U.S. will take credit cards.

That’s good news ... if you are a careful budgeter, spender, and bill payer. It can only make life more convenient for you -- whether you’re indulging in a quick sweet treat or making do, while you’re pacing around a hospital emergency room. Just think ... quotations like this may soon be a thing of the past:
"Change is inevitable, except from vending machines." ~ Source Unknown
But if you already spend more than you should supporting this industry, which pulled in over $21 billion in 2004, beware! We’re expected to spend a whopping 50% more when we can use a piece of plastic to buy snacks, soft drinks, and what-have-you from vending machines.

As Elliot Maras, who is the Editor of Automatic Merchandiser Magazine, explains,
"The 50 percent increase in average ticket is similar to the increase seen at quick serve restaurants when card transactions were introduced two years ago, driving an almost overnight acceptance of cashless transactions by the fast food industry."
New Ways to Encourage Impulse Purchases

Also coming our way soon, thanks to cashless vending, will be the sale of more valuable items ... in snazzy new machines ... in new places. For example, starting this fall, Macy’s will be selling iPods and other electronics that way. We’ll be able to use our credit and store cards to quickly get the latest "must-have" gadgets from nifty-looking, "cool" machines. Oh joy!

From Elliot Maras’s point of view:
"The fact that a prestigious department store such as Macy's is willing to have a vending machine on its premises reflects the progress that the vending industry has made on the public relations front. Just a few years ago, no department store would have considered having a vending machine on its premises. The old perception that vending machines make for poor customer relations and are associated with cheap merchandise is falling by the wayside."
Particularly Worrisome

Parents whose children have easy access to a "Snack Center" at school might want to be most concerned about cashless vending machines. According to Elliot Maras,
"Our most recent survey, based on fiscal 2004, indicated 11 percent of all vending machines were at schools."
I ‘fess up to frequently frequenting the vending machines when I was in college. Yes, they had them, even then! (In fact, the fist vending machine is thought to date back to 215 B.C.)

But they weren’t in the public schools, where they no doubt already lead many a child into temptation. Still, there is some good news for parents concerned about vending machines: "better-for-you" products aimed at kids have grown by 31% since 2002, compared to only 7% for more mainstream food and drinks, according to a recent article in Automatic Merchandiser Magazine.

Three Tips for Parents

1. If you find yourself in front of a vending machine this summer with your kids, you might want to tell them a bit about "the olde days," when vending machines weren’t quite so ubiquitous. It’d be a good time to talk about convenience versus cost -- and how high that cost might end up being, if they use credit cards to buy soft drinks and then don’t pay off the bill when it arrives.

2. You can just say NO! to the use of credit cards in vending machines.

3. For young people going off to college with their first credit cards, it’s a good idea to limit their use to emergencies, only. David Hunt, the former president of AT&T Universal Card, put it this way, when he gave his daughter her first credit card:
"If you can eat it, drink it, or wear it, it’s not an emergency."
We welcome your comments about credit card 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!

Avoiding Student Credit Card Debt

2006-07-27T15:27:00.000-07:00
By Curtis Arnold, CardRatings.com Founder

Summer 2006 is winding down and the new school year is rapidly approaching! The endless days of basking in the summer sun are fading and, at the same time, credit card issuers are starting to ramp up their marketing efforts for the new school year. To help college students deal with the barrage of card offers, we are pleased to offer the following tips. While this list is not exhaustive, it is hoped that following these tips will help students manage their credit wisely.

Be cognizant of the fact that credit card issuers are very anxious to get your business. So anxious, in fact, that issuers spend millions and millions of dollars each year aggressively marketing their cards on college campuses across the country. This marketing takes many forms...giving away T-shirts, full page ads in college papers, pre-approved credit card applications, etc., etc. Credit card issuers are seeking to develop long term relationships with college students and, according to critics, are willing to do almost anything to accomplish this goal.

Credit cards geared toward students often come with high interest rates and other unfavorable terms. This is largely because students usually have limited credit histories and also due to the fact that students have a higher default rate than other age groups. In spite of these facts, however, students should not settle for the "first offer that comes their way". Remember, there is keen competition among student card issuers and use this to your advantage. Compare offers by reading terms and conditions carefully and choose the best offer!

Don't use your credit card as a source of income. While many college students have full intentions of "paying off" their cards in a timely manner after they enter the workforce, such good intentions are often never realized. I know firsthand the potentially devastating effect of relying on credit cards as a source of income while attending college. I amassed in excess of $40,000 in credit card debt during my undergraduate and graduate studies! As you might expect, this debt created an extreme amount of anxiety and stress for me after school (and, incidentally, was the primary reason I founded this site). If you do find yourself "buried in credit card debt", consider utilizing the debt resources found on our site.

Utilize the resources on the Internet to help educate yourself about credit cards and credit in general. Credit is a complex subject and, in order to master the subject, you have to be willing to educate yourself. There are many superb web sites that are geared toward educating students about credit. Consider taking a personal finance class as well!

Finally, remember that credit cards are not evil! In fact, credit cards are an excellent way for students to establish credit. Establishing credit is exciting and is a sign of true independence. Just remember that credit cards require financial discipline and prudence. We hope these tips help will help you become a credit savvy consumer during the '06-'07 school year!

You can find a comprehensive list of student credit cards, including reviews, by visiting the Card Reports section of our website.

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

Curtis Arnold, a nationally recognized consumer educator and advocate, 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- more details forthcoming!

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 Debt Likely to Escalate as the Fed Raises Rates Again

2006-06-29T06:30:00.000-07:00
By Mike Killian, CardRatings.com Debt/Credit Management Reporter

On May 25th, the Wall Street Journal (WSJ) published an article entitled "Loss of Balance: Credit-Card Issuers' Problem: People Are Paying Their Bills". The article began, "Although Americans are deeper in debt than ever, they are paying off bigger portions of their monthly credit-card bills." The article offers reasons why and the overall affect on the card industry.

The assertion that Americans were making a bigger dent in their card debt was quite surprising, especially considering all of the negative news to the contrary that we are normally inundated with. I asked noted consumer advocate Dr. Robert Manning to comment on the article. Dr. Manning, a professor at Rochester Institute of Technology, has appeared numerous times before the U.S. Congress and every major news broadcast advising on issues related to consumer debt and credit. He is also author of the widely acclaimed book Credit Card Nation: The Consequences of America's Addiction to Credit.

Dr. Manning expressed grave concerns about our nation's growing addiction to credit. According to Dr. Manning,
"Immediately after the article appeared, debt jumped 4.5%. Gasoline prices and increasing interest rates [the Fed raised rates yet again today] have squeezed the consumer far more than ever before. My standard refrain is that the last 5 years have seen a stationary consumer income versus expense. The next 5 years will experience more consumers pushed into bankruptcy especially if involved with variable interest rates [almost all cards have variable rates]."
The WSJ article also offered the comment, "J.P. Morgan [Chase] has estimated they will reduce credit card profits by $500 million in the second half of 2006." Dr. Manning suggested otherwise.
"Besides gasoline prices and increased prime lending rates reducing additional consumer payments, the credit industry is offsetting potential loss through increased interest rates and fees."
The WSJ and Dr. Manning basically agreed on the factors contributing to the increased consumer payment rate. However, I suspect Dr. Manning might question the use of the term "shrewdly" below. As stated in the WSJ:
"Although consumers are using plastic for more of their daily purchases, they are giving card issuers fits by juggling their debts more shrewdly. When card holders are hit with high interest rates on one card, they routinely transfer balances to new cards at lower rates. And in recent years, as real-estate values soared and mortgage rates fell sharply, more consumers wiped out credit-card debts altogether by borrowing against their homes."
Unfortunately, as Dr. Manning adamantly proposes, any increased payment rate that results in debt reduction may be a very temporary phenomenon. Perhaps the real question to explore is will credit card usage escalate while consumer debt continues to grow. If so, I think Dr. Manning's prediction of increased bankruptcies is as realistic as the long-term historical trend of rising credit card profits.

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!

Consumer Tips on Redeeming Credit Card Frequent Flyer Miles

2006-06-15T06:15:00.000-07:00
By Mike Killian, CardRatings.com Debt/Credit Management Reporter

In a Knight Ridder newspaper article entitled Strapped Airlines Making It Tougher To Redeem Miles, the assertion is made that frequent flyer miles have become a form of currency that can be used to purchase many types of everyday products and services, including cameras, hotel stays, and meals. On the flip side, the article also suggests that redeeming frequent flyer miles for airline tickets is getting tougher and tougher.

I found the article topic intriguing
and decided to solicit comments from an expert. I interviewed Ladonna Epler who is the senior award planner at AwardPlanner.com. Ladonna is associated with travel expert Randy Peterson, who was quoted in the referenced article. Ladonna clarified a few points regarding the article's implication that airlines were making it tougher to redeem miles. According to Ladonna,
"The same number of miles still exist today with airlines. The difference is that [frequent flyer mile] programs are getting so popular that more and more consumers are taking advantage of frequent flyers miles. This then gives the appearance that airlines are making it tougher [to redeem miles], which is not actually the case."
Since these remarks were quite different than the thrust of the Knight Ridder article, I asked Ladonna about the services offered by Awards Planner and for advice for our frequent flyer readers.
"Award Planner is a membership service. We are experts when it comes to planning award travel and are very successful in achieving most itineraries. If seats are not available when we initially call, we can take the time to continually call back to check for openings-but we can never guarantee anything. We have extensive experience and can access a wealth of resources that provide us with the most up-to-date program information."
Ladonna stressed flexibility is the key to successful redemption. Flexibility of date, time, and location are all important.
"The more notice the client provides us, the better the chances are of getting the awards desired. But we can arrange award travel even hours before departure. We can work with the consumer 6-9 months out, but we usually like to have around 2 weeks [notice]."
In a typical year, about 500 billion frequent flyer miles are earned by members. Over time, an average of 82% of all awards earned will actually be redeemed.

For members of selected programs, the value of a mile depends on how the award is used. Generally accepted to be valued at 2 cents, a mile can vary from 1 cent to 8 or 9 cents. With advanced planning, an upgrade has a higher value than a coach award in the U.S.

I hope these tips help you as you plan your next vacation. Bon voyage!

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!

Survey Shows College-Bound Freshman Lack Basic Credit Card and Money Skills

2006-06-08T15:39:00.000-07:00
By Nancy Castleman, CardRatings.com Consumer Reporter

Over 2.7 million students will graduate high school this year, but the sad truth is that six out of ten of them would flunk "Personal Finance 101" if it had been offered in their school. That's the key finding of a recent survey done by the Jump$tart Coalition for Personal Financial Literacy, a non-profit organization dedicated to improving the personal financial literacy of young adults based in Washington, D.C.

Whether it's about savings accounts, retirement, insurance, or credit cards, the students taking the Jump$tart survey knew slightly more about money management than the class of 2004 did. While the trend is in the right direction, the survey results make it clear that the class of 2006 is heading off to college with very little knowledge and experience.

Credit Cards and the Class of 2006

When it comes to credit cards, high school students report very little experience. For example, here are the responses to the question, "Whose credit card do you use?"

12.9% a) My own
14.5% b) My parents
4.80% c) Both my own and my parents
67.7% d) None, I don't use a credit card

Surprised that over 67% have no credit card experience? (I was too!) Laura Levine, Jump$tart's Executive Director, explains that it's because you have to be 18 years old to get a credit card. Still, given all the spending teens do (or persuade their parents into doing) -- plus all the commercials and ads they see on television and the Internet -- it's terrible that the majority of high school graduates are going off to college with no experience at all with credit cards! Yet their inboxes at college are going to be stuffed with tempting credit card offers.

While you might think Jump$tart would be in favor of legislation to prohibit card issuers from being on college campuses, Laura Levine says,
"We believe that education is the right answer. ... They [credit card issuers] will always find a way to reach their customers and potential customers. Imagine trying to travel or buy things on the Internet without a credit card. What's important is to educate every teen about what credit cards are good for and to steer them away from the downsides."
Fortunately, the majority of high school seniors do seem to understand some of the basics about credit cards. Consider how they answered, "Which of the following credit card users is likely to pay the GREATEST dollar amount in finance charges per year, if they all charge the same amount per year on their cards?"

8.8% a) Vera, who always pays off her credit card bill in full shortly after she receives it.
70.6% b) Jessica, who only pays the minimum amount each month.
14.4% c) Megan, who pays at least the minimum amount each month and more, when she has the money.
6.3% d) Erin, who generally pays off her credit card in full but, occasionally, will pay the minimum when she is short of cash.

Like most of the class of 2006, you got the correct answer, didn't you? Paying the minimum amount means you'll pay the maximum amount of interest!

The majority also know that they can check their credit reports once a year for free and that they are likely to get a small line of credit on their first credit card ... to see how they handle it. Perhaps a sign of the times, over 67% understand that a responsible credit counseling service will work with creditors to set up a payment schedule you can meet. However, only 15% know that if your credit card is stolen and you notify the card issuer promptly, the maximum amount you'll be forced to pay is $50. Visit Jump$tart.org to see the entire survey ... with the correct answers.

While I was tooling around on Jump$tart's site, I was reminded that CardRatings.com is one of this coalition's national partners. Curtis Arnold, CardRatings.com's Founder explains why:
"We firmly believe that preventative medicine is the best type of medicine. If we can reach a student or young adult before they begin mismanaging credit and run up 1000s of dollars in credit card debt, then we firmly believe that national credit card debt levels will sharply decline over time. "
What You Can Do

If you want to do your bit to get personal finance taught in the schools, here is what Laura Levine advises:

"Understand the situation in your children's schools. Talk to the teachers. 'Wouldn't it be great if we incorporated some of this material?' But schools don't hold the full responsibility for educating kids."

Levine notes that after-school programs can address life topics like personal finance as well. For example, she points our that the Girl Scouts have developed a money management program.
"If I had a child who was a member of an organization that didn't have a program, I would suggest to them that they consider doing a project where they learn about money."
Her advice for parents who want to teach their children about personal finance is,

"Don't worry about teaching. Have a conversation, maybe you look up the answer together. If you introduce the topic, what you know and don't know about money issues will help."
Curtis Arnold adds:
"I think parents should take advantage of the free credit education resources found on JumpStart.org and CardRatings.com to equip their kids for the deluge of credit card offers they are going to get when they turn 18. Open dialogue is very helpful and a great first step. If you have mishandled credit as an adult, share your mistakes and how it adversely affected your finances."
Summer is an excellent time of year to teach children a bit about money, when they -- and you -- don't have to deal with the school pressures. While it's an especially good idea if you have a child about to head off to college, no matter what your kids' ages, if you want to improve their financial literacy, please take action and utilize the resources mentioned in this article.

The money you save may be your own!

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!

Will Federal Rulings Affect Non-Profit Status of Credit and Debt Counseling Agencies?

2006-06-02T09:40:00.000-07:00
By Mike Killian, CardRatings.com Debt/Credit Management Reporter

During October of last year I wrote an article regarding non-profit credit counseling agencies entitled Is Non-Profit Status Merely Marketing Hype. Scott Pryzwansky, Senior Account Executive at Trone Public Relations, saw the article and wrote to me:
"A little known provision of the Senate tax bill is currently in front of Congress. This provision fully addresses the premise that many non-profits should actually not be tax-exempt. This provision would have a profound effect on the way the consumer credit counseling industry operates, ensuring that people trying to control mounting credit card debts get the counseling and education they need from legitimate credit counseling agencies."
Scott suggested interviewing a company he represented concerning this bill but unfortunately numerous attempts for an interview failed. But I was fascinated with the subject and did a bit of follow-up on the issue elsewhere.

I approached Scott Bilker, a consumer advocate who is very familiar to our readers. Scott is the creator of DebtSmart.com and author of Talk Your Way Out of Credit Card Debt. He directed me to some great resources that I would encourage readers interested in the subject to review:
Credit Counseling In Crisis
National Consumer Law's Investigation of Debt Settlement Companies
Profiteering In a Non Profit Industry
Mr. Bilker additionally offered some interesting insights when I asked what affect stripping credit counseling agencies of non-profit status could have on consumers:
"I don't see this legislation affecting the consumer and if it does, like all other things that affect consumers, it would simply raise the price of service."
Since I silently disagreed with Scott's point of potentially raising the price of for-profit counseling services, I was very glad to see Scott also add a non-prompting afterthought:
"Non-profit--yeah, right! Some of these outfits have multiple offices and charge big bucks. Please--I'd rather go to for-profit agencies so I can be sure they're working for an honest purpose!"
In my original article Is Non-Profit Status Merely Marketing Hype, Jim Young, CEO of Accelerated Debt Consolidation, echoes Scott's remarks. Jim's comments seem to sum up this whole controversy so well:
"It is not so much a matter of for-profit versus non-profit as it is a matter of WHO is handling the accounts. Since you will get terms exactly the same whether you use a for-profit or a non-profit, there are more important issues involved. For example, what is the firm’s retention rate? How many clients have they brought in and how many are still with them? Do they disburse payments daily? Will they allow you to keep credit cards out of the program? Another question is follow-through...."
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!

Insider Tips on Maintaining a Good Credit Score During Credit Counseling

2006-05-25T02:54:00.000-07:00
By Mike Killian, CardRatings.com Debt/Credit Management Reporter

If I was considering which credit card was best for me, a future need of credit counseling would certainly not be a concern of mine. But if the purpose of getting the credit card was to take advantage of a balance transfer offer or debt consolidation, perhaps it should be.

In a conversation with Jim Young, CEO of Accelerated Debt Consolidation, Inc., I learned some fascinating information on this subject. Jim's viewpoint on the subject is quite contrarian and enlightening. According to Jim,

"Debt consolidation is usually the last step before counseling for a debt desperate consumer. Interest rates in a Debt Management Program (DMP) vary widely from one credit card company to another. Therefore why not select a card issuer which would be more favorable in the event a DMP becomes necessary?"
This certainly seemed plausible. Jim directed me to the DMP Interest Rate Reduction Web page on his organization's website, where you can view exactly what interest you would pay in a DMP regardless of which counseling agency that you utilize.

An example on this page illustrates a $10,000 Citibank debt at 24% with minimum payments of $250 per month. If the cardholder only made minimum payments each month, this debt would take 137 months to pay off and cost $18,934.72 in interest. If this same card debt was enrolled in a DMP, the interest rate on this same Citibank card debt would be lowered to 9.9% and would be paid off in 60 months resulting in a savings of $16,267.59 in interest!

Jim pointed out that,
"Not all card issuers offer the same opportunity. As you can see from the Web page, issuers like Chase offer a 6% rate in a DMP. On the other hand, the rate on Key Bank cards is set at 12.9% and Capitol One even higher.

Therefore if I were considering doing a balance transfer [or opening up a new card account], I would consider card issuers offering lower interest in a DMP in the event a Debt Management Program becomes necessary."
I should add, I have not seen a page anywhere else that offers this type of valuable information. Every debt counselor by law must abide by the same interest rate regardless of tax status or accreditation. There is no negotiation of the interest rate that is allowed. It is etched in stone unless changed by the financial institution itself... not the counselor. I am very grateful that Accelerated provides this information openly and honestly for any consumer to view.

Jim concluded with one more powerful suggestion,
"If a consumer has an low introductory interest rate [on a particular card], don't include this [card] in a DMP until after the introductory period. Similarly, if a card has a permanent [ongoing] low interest rate, don't include that either. And if a debt counselor says you can not do that, find another agency willing to work with your particular situation!"
Great tips here that could save you thousands of bucks in interest. You can comparison shop for low interest rate cards in the Card Reports section of CardRatings.com. An informed consumer is mighty powerful folks!

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!

A Condensed Consumer Guide to Surviving Credit Card Company Mergers

2006-05-19T05:46:00.000-07:00
By Mike Killian, CardRatings.com Debt/Credit Management Reporter

Recently David Lazarus of the San Franciso Chronicle wrote an article entitled Beware MBNA Changes. As the title indicates, the thrust of the feature concerned the recent changes caused by the merger of Bank of America (BofA) and MBNA. The expose focused on the negative impact to existing MBNA credit card holders.

I interviewed a familiar advocate to our readers, Linda Sherry of Consumer Action, a national non-profit education and advocacy organization celebrating its 35th anniversary in 2006. Linda had also been interviewed for the referenced article and I was very anxious to get her input on a few concerns.

I initially asked Linda how she happened to be interviewed for this particular
article.
"I am often contacted by this reporter, who knows I work on credit card issues. He is aware of Consumer Action's annual credit card survey and the fact that we testified last year about credit card anti-consumer practices in front of the Senate Banking Committee."
I followed up by saying that I had always been opposed to so many issues discussed in this article and am just as angry about its content as any other consumer. But I added that I was unclear why MBNA and BofA were singled out since so many other card issuers are doing the exact same thing.

Linda elaborated,
"Consumers need to be very watchful following mergers that affect their credit card companies. It is our experience that following mergers, companies usually change the terms on the card and the terms rarely change for the better. Many consumers do not follow the advice of consumer advocates to closely monitor their bills for change of terms notices, so they end up missing these notices and not realizing that the landscape has changed. This usually ends up costing them money, either through a late payment fee or a rate hike following missed payments or a change in their credit scores.

I am not a fan of the "machinations" being used to whittle away the grace period and to take away its benefits. Some companies are calling this "residual interest." When you have had a balance in a previous month and in the subsequent month make a full payment of every cent that is owing, I do not believe you should be charged
interest.

Also, one late payment as a trigger for a rate hike is inherently unfair."
Realizing one of the changes includes an increase in interest for being late 1 time by only 1 day, I asked Linda if her group was anticipating an impact and if so in what form? I also asked if she had any advice for consumers.
"I think many consumers will be hit with higher finance charges under the new policies.

Again, people should expect changes in terms following mergers. Cardholders need to read the fine print. What you don't read can cost you!"
A final suggestion is that if you don't like the terms and condition of your credit card, you can always comparison shop for a more consumer friendly card on CardRatings.com. And, while shopping, please take a moment to write a negative consumer review about your card in our consumer reviews section. Consumers unite! :)

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!

Got Mail? A Record Six Billion Credit Card Offers Were Mailed Last Year!

2006-05-15T13:26:00.000-07:00
By Rebecca Lindsey, CardRatings.com Senior Reporter

If Americans have noticed an increased volume of credit card offers in their mailboxes recently, they’re not imagining things. Mail Monitor, the direct mail offer tracking service from global market research firm Synovate, announced that over six billion credit card offers were mailed to U.S. citizens in the year 2005.

That’s an increase of 16% from 2004, when ONLY 5.23 billion were mailed! Ten years ago in 1995, a scant 2.7 billion credit card offers were mailed (yes this statement is laced with sarcasm).

“Over the past few years we keep saying 'this is record mail volume' but it continues to grow at a high rate,” says Brent Stratford, Vice President of Competitive Tracking Services in the Financial Services Practice at Synovate. He continues,
“This type of mail volume gives consumers more options. The mailbox is where consumers will most likely find ‘test’ offers (new marketing strategies and programs). Credit card users may get an extra perk or pricing structure by examining those offers that come in the mail.”
At the same time of record mailings, the average response rate to direct mail credit card solicitations fell to 0.3%.

Considering that the current population of the United States is just under 300 million, according to the U.S. Census Bureau, a lot of mail is going straight to the shredder.

According to Mail Monitor, the major factor in the increase is American Express. In 2005, the company increased its direct mail credit card solicitation volume by 56% over 2004. This is significant because American Express consistently has the lowest response rate of any major mailer—substantially lower than the 0.3% response rate that the industry averaged in 2005.

Many other card issuers also significantly increased their mailings. For example, regional issuer Columbus Bank and Trust showed a 205% increase in mail volume from 2004 to 2005.

Mail Monitor reports that 58 percent of credit card offers in 2005 included some type of rebate or rewards program. While this gives credit card users greater selection to choose the card that works best for them, many consumers are tired of the surplus credit offers in their mailbox.

Those who are not interested in shopping around for credit cards, or who choose to find credit cards using other methods (such as online comparison shopping at CardRatings.com), can choose to “opt out,” or stop the major credit bureaus—Experian, TransUnion, Equifax and Innovis—from selling their name to mailing lists.

While opting out won’t stop financial institutions you do business with from sharing or selling information about you with third parties, it will cut down on the number of pre-approved credit offers that you receive. Consumers can visit OptOutPrescreen.com, or call 888-5OPTOUT (888-567-8688). And, who knows, you may save a tree in the process! :)

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!

Popular Cash Back Credit Card Announces Enhanced Cash Rebate Structure

2005-04-29T13:30:00.000-07:00

Blue Cash from American Express, a popular cash back credit card, will be offering an enhanced cash rebate program effective May 8th, 2005.

The current cash back reward structure is as follows:

Total Annual Spend: Up to $2000
Cash Back on Everyday Purchases: 0.5%
Cash Back on Other Purchases: 0.25%

Total Annual Spend: $2,001-$6,000
Cash Back on Everyday Purchases: 1.00%
Cash Back on Other Purchases: 0.50%

Total Annual Spend: $6,001 - $50,000
Cash Back on Everyday Purchases: 3.00%
Cash Back on Other Purchases: 1.50%
Bonus % if you carry a balance: 2.00% for Everyday Purchases and 0.50% for Other Purchases.

Everyday purchases are defined as purchases made at stand-alone U.S. supermarkets, drugstores, gas stations and home improvement stores.

Starting on May 8, 2005, the rebate tiers will change to the following new structure:

Total Annual Spend: $0 - $6,500
Cash Back on Everyday Purchases: 1%
Cash Back on Other Purchases: 0.50%

Total Annual Spend: $6,500.01 - $50,000
Cash Back on Everyday Purchases: 5%
Cash Back on Other Purchases: 1.5%

Please Note! The new categories of Everyday Purchases will be U.S. supermarkets, gas stations and drug stores that are not departments of superstores or warehouse clubs. Also, rebates will only be awarded on the first $50,000 of elgible purchases for each rebate year based upon the applicable rebate percentages above.

These changes will be welcome news to Blue Cash cardholders. The only drawback will be that home improvement purchases will no longer be labeled as "Everyday Purchases". Fierce competition among issuers of reward credit cards is prompting enhancements to reward card programs, which is great news for consumers!

Click here for more details about Blue Cash, including online appplication information.

Falling Credit Card Delinquencies May Be Short-Lived

2006-05-09T08:10:00.000-07:00
By Mike Killian, CardRatings.com Debt/Credit Management Reporter

The The American Bankers Association (ABA) recently reported that the percentage of credit card accounts 30 or more days past due slipped to 4.27 percent in the 4th quarter of 2005 (October-December). However, another recent article published on CardRatings.com, Trends in the Federal Report, suggests an increase of credit card balances from 2001-2004. These two statistics regarding credit card debt seem contradictory.

I hoped to connect or separate the two reports conclusively and I went to two different sources to do so. I was able to contact Kieth Leggett, Senior Economist at the ABA and Linda Sherry, Director of National Priorities at Consumer Action, a non-profit, membership-based organization that was founded in San Francisco in 1971.

I asked each if it was possible that the federal trend report was about to be altered by the ABA report. Both Keith and Linda indicated a minimum connection between the two reports. Both also offered some interesting perspectives regarding the issues.

Keith expanded on possible reasons for the fall in delinquencies:
"2005 offered a stronger economy and a more factorable climate to reduce delinquencies. Additionally many consumers converted credit card debt to equity debt which also lowered delinquencies. But also, the new bankruptcy law went into effect October 17, 2005 and many consumers declared bankruptcy early to avoid the more stringent law. Thus much of the debt which may have been delinquent was captured in an early bankruptcy thereby reducing the overall number of 4th quarter delinquencies."
I also asked Keith and Linda whether recent federal guidelines by the Office of Currency Comptroller (OCC) to increase minimum credit card payments might have had any affect on this situation. Neither thought there was a direct correlation.

Keith offered a unique viewpoint:
"Most banking institutions had already incorporated OCC guidelines. In fact, all but two had done so prior to the end of year. Therefore, the increased minimum payment was already in affect in most cases and would have had minimum impact. However, because of the American Bankers rationale previously offered, ABA is anticipating delinquencies to again increase in 2006."
Linda Sherry's comments focused on future trends and were less than optimistic:
"Increasing minimum payment should yield less delinquency, not more. But I think we might see an increase in delinquency in the first half of 2006.

Delinquencies continue to hover around 5%. Our greatest concern is not so much delinquency, which is relatively constant. Our greatest concern is the increase in consumer debt."
Linda, I could not have said that better myself! Rising debt should be a major concern of every consumer going forward. Statistics can be manipulated, but one thing we do know is that there is a direct correlation between rising debt and rising delinquencies.

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!