Not just that they all want your money, but the way they treat you as a customer.

Last year, I had a nightmare with American Express over the fraudulent charges on my Costco TrueEarnings card. Though eventually, the issue seems to be resolved, I had to keep calling and calling them every month for more than half a year! Then last week, I went through a similar one with Citibank.

Early this year, I transferred some of the credit line from one credit card to the then newly opened Citi Driver’s Edge card in order to use the card’s 0% APR offer to pay off our car loan. At that time, I only moved credit line from one Citi card, enough to cover the remaining car loan. Since the 12-month promotional offer won’t expire till February 2009, I decided to take the full advantage of the offer. So I called Citibank last Sunday and asked to move some credit line from my UPromise card to the Driver’s Edge card. After some verification, the guy who was helping me told me to hold while he was checking something. When he came back minutes later, he said it was done!

Done???

But I didn’t even have the chance to say how much I wanted to move yet. And I didn’t want to reallocate the entire credit limit because I am still using the UPromise card.

Realizing that he made a mistake, that guy put me on hold again and went to ask his manager on how to reverse the action. When he came back the second, he also brought his manager on the line whose first comment was telling me I shouldn’t use the word “consolidate” or “all credit line” when making my request. But I didn’t use either. This was the first time I did credit line reallocation and I told the manager I knew what I was doing. Then the manager said I had to wait two business days for a different department to unconsolidate my cards then call back to make request again.

It took then just minutes to consolidate, but needs days to unconsolidate!

So I waited two days as told and called again on Tuesday evening. After I asked the CSR to check if the credit limits of my two cards were returned to what they were before, I was told I still have no credit left on the UPromise card. This time I didn’t waste any more time with the CSR and asked to speak with the manager directly. The manager, to my surprise, told me there wasn’t any record regarding the unconsolidation request that I was told two days ago, thus no action was taken since then.

I can’t believe it!

The manager then apologized, but not before telling me that since I couldn’t provide any details on whom I talked to the other day, he had no way to know it was a manager or not or what happened to the request. At the end, he assured me he wrote down the request this time, but asked for 5 business days instead of 2 to get it done.

I wonder I have to ask for the name every time I talk to somebody. From what happened in these two incidents, maybe I should.

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I am a credit card person. Wherever possible, I use credit cards to pay for my purchases. To me, credit cards are my friend, not foe. The reasons for me to favor credit cards over debit cards or cash are twofold:

1. I know exactly where my money went,
2. I can get cash back for the money I have to spend.

Among more than two dozens of cards I own, four are in my wallet. They are the cards that I use the most to cover my everyday purchases, each for a different purpose:

• Chase Freedom Card: At gas stations and grocery stores (3% cash back).
• Costco TrueEarnings Card from American Express: At Costco (1% cash back) and restaurants (3% cash back) where AMEX is accepted. This card also has 3% rebates on gas, but not every gas station accepts AMEX.
• Citi UPromise Card: Shop online through UPromise (rebate rates vary, but could be as high as 10% depending on merchants). The UPromise card allows me to earn 2% cash back at Exxon and Mobil stations.
• Fidelity 529 College Rewards Card: Everywhere else (2% cash back). The new version of this card (from AMEX) only offers 1.5% cash back. Cash rebates will be invested in a Fidelity 529 plan.

I also use Chase Amazon Card for shopping at Amazon.com only to earn 3% cash back.

My experience so far tells me that when it comes credit cards with generous cash rebates, Chase Freedom Card is one of the bests. Though I won’t get a flat 3% rebates on every penny charged on the card, its category-based rewards program does allow me to earn maximum rebates. A few cards from AMEX or Discover have better rewards, the problem for these cards is they are not accepted everywhere.

In addition to the cards mentioned above and those covered before in my best gas rewards card post, there are several other credit cards that offer good cash back rewards. Since 1% rebates are like a standard for cash back credit cards, I only list those that allows you to earn more than 1% back for your money.

Discover More Card

• Program highlight: Discover More Card gives 5% cash back bonus for purchases in selected categories, including travel, department stores, home improvement stores, gas stations, and restaurants. Purchases in other categories earns 1% cash back. There’s no limit on rewards can be earned annually.
• Introductory rate: 0% APR balance transfer for 12 months.
• Balance transfer rate and fee: 3% balance transfer fees, but not less than $10 and not more than $75.

Blue Cash Card from American Express

• Program highlight: Yes, Blue Cash will give you 5% cash back for purchases made at supermarkets, gas stations and drugstores, but not until you charge at least $6,500 on your card. Before you reach the limit, you will live with 1% rewards. Rewards are awarded annually with no limits.
• Introductory rate: 0% APR for 6 months on purchases.
• Balance transfer rate and fee: 3% balance transfer fees, with a minimum of $5 and a maximum of $99.
• Additional promotion: 4.99% APR for balance transfer.

Citi Cash Returns Card

• Program highlight: Citi Cash Returns Card is not as good as before, when 5% cash back on everything, though only for the first 3 months. Currently, it allows you to earn 1% rebates on every purchase, plus a 20% bonus on the rebates you already earned, making the cash back essentially 1.2%. Shopping through Citi Bonus Cash Center still earns 5%. A check will be issued whenever the rebates reach $50 and there’s no limit on cash back you can earn.
• Introductory rate: 0% APR balance transfer for 12 months.
• Balance transfer rate and fee: 3% balance transfer fees, with $5 minimum.

Citi Professional Cash Card

• Program highlight: If you are a small business owner, then Citi Professional Card makes a good choice. With this card, you can earn a full 3% cash back at gas stations, restaurants, office supply merchants, and auto rentals and 1% on other purchases. You can also save 10 to 60% on prescription drug through the card’s Prescription Discount program. This card, however, has a $500 annual limit on the amount of cash backs you can earn.
• Introductory rate: 0% APR balance transfer for 12 months.
• Balance transfer rate and fee: 3% balance transfer fees, with $5 minimum.

Any other good cash back credit cards out there?

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• Costco AMEX TrueEarnings Card to Offer 3% Cash Back for Gas

As crude oil went over $110 a barrel, gasoline prices are also surging. According to GasBuddy.com, (BTW, a good site to find the cheapest gas in your area) the national average price of regular gas is $3.257 per gallon. Though New Jersey has the lowest gas prices in the nation, filling up our cars every week becomes more and more expensive. Both my wife and I have to drive to work everyday and we spent nearly $80 every week on gas. So far we haven’t reached the point that we have to change our plan because of the high gas price, or cut down spending on other items as fuel costs get bigger and bigger, but we do want to reduce our gas bills.

In addition to finding stations in our area that sell gas at a lower price, we also take advantage of the cash rewards offered by our credit cards to get a little bit back on what we have to buy. We are both credit card person and paying gas with credit cards is almost like a no brainer to us. For me, I use a Chase Freedom Card to get 3% cashback on gasoline. My wife uses a Fidelity 529 College Rewards Card for 2% rebate on everything, including fuel. Though every time we can only get something like a buck reduced from our gas purchase by using a credit card, savings add up little by little, especially when the money saved are invested

The following is a list of credit cards that give cardholders solid rewards on gasoline purchase. None of them charges a membership fee, some even offer extra benefits such as 0% APR balance transfer for a year, or cash incentives of using the card. Take a look if you are in the market for a gas reward credit card. Or share with us if you know a card that allows card member to earn better rebates.

Discover Open Road Card

• Program highlight: With Discover Open Road Card, you can earn 5% cashback on gasoline purchases at any stations where Discover is accepted. Plus, it also offers 5% Cashback Bonus on auto maintenance. However, the drawback is only the first $100 are eligible for 5% bonus. Other purchases earn 1% Cashback Bonus.
• Introductory rate: 0% APR until October 2008 (6 months).
• Balance transfer rate and fee: 0% APR until April 2009 (12 months), 3% balance transfer fees, but not less than $10 and not more than $75.

Chase Freedom Credit Card

• Program highlight: Chase Freedom Card is the gas reward card I am using, though not exclusively for gas purchase. The card gives 3% cashback on all purchases at any gas station. But it comes with a catch: Gas purchase must be one of top 3 categories in monthly spending to e receive the 3% reward. Otherwise, the rebate will be just 1%. In addition, the card also has a maximum of $18 you can earn on 3% bonus every month.
• Introductory rate: None.
• Balance transfer rate and fee: 3% balance transfer fees, but not less than $5 and not more than $75.
• Additional promotion: Get $50 after first purchase.

American Express and Costco TrueEarnings Card

• Program highlight: The TureEarnings Card just added gas to its reward program last month. Now it allows cardholders to earn 3% cashback on all gas purchase. The problem is not every station accept AMEX. The TrueEarnings card also gives back 3% bonus for restaurants, 2% for travel, and 1% everywhere else including at Costco. There’s no limit on cash rebates you can earn.
• Introductory rate: 0% APR for the first 3 months.
• Balance transfer rate and fee: 1.99% APR balance transfer for the first 6 months, no fee when the transfer is made in the first 40 days.
• The TureEarnings Business Card gives 5% cashback on all gas purchase.

Capital One No Hassle Miles Rewards for Travel & Gas

• Program highlight: If you travel a lot, then Capital One No Hassle Miles Rewards for Travel & Gas makes a good choice, though I don’t like Capital One itself (it’s not in my wallet). With this card, you can earn 3 miles for every dollar spent on gas, as well as travel, and 1 mile everywhere else. There’s no limit on miles you can earn and the miles don’t expire either.
• Introductory rate: None.
• Balance transfer rate and fee: 13.4% APR, no balance transfer fee.

Citi Dividend Platinum Select Card

• Program highlight: The Dividend Platinum Select Card used to pay a generous 5% cashback on gas, but not any more. Now you can earn 5% on gas purchases for just the first 6 months, as well as purchased made at supermarkets, drug stores, convenience stores, and on utility bills. After 6 months, the reward goes down to 2%. Other purchases earns 1% cashback. A maximum of $300 bonus can be earned in one year.
• Introductory rate: None.
• Balance transfer rate and fee: 0% APR for 12 months, 3% balance transfer fee with a minimum of $5 and maximum of $250.

Chase PerfectCard MasterCard

• Program highlight: If you are looking for a card with high temporary gas rebate, then Chase PerfectCard could be a choice. The card gives a fat 6% cash rebate on all gas purchases, but only for the first 90 days. After that, the rebate drops to 3%, which is still good. In addition, the card also allows you to earn 1% cashback on all other eligible purchases. The maximum monthly rebate on gas, however, is $15, which is equivalent to $500 of net gas purchases every month.
• Introductory rate: 0% APR for 6 month.
• Balance transfer rate and fee: 0% APR for the first 6 month, 3% balance transfer fee but not less than $5 and not more than $75.

Citi Driver’s Edge Options MasterCard

• Program highlight: With Citi Driver’s Edge Card, you can earn 3% rebate on all gas purchases and 1% on purchases at everywhere else. Use your rebate toward the purchase of a new or used vehicle, automotive parts, or merchandise rewards..
• Introductory rate: None.
• Balance transfer rate and fee: 0% APR for 12 months, 3% balance transfer fee with a minimum of $5 and maximum $75.

In addition, there are other credit cards that offer extra bonuses when purchasing a particular brand of gasoline. Though the rewards are usually higher those from the general cards listed above, I am not interested in these “special” cards because of the limitations on where the gas is purchased. All the cards in this category also offer 1% cashback on purchases made elsewhere:

• BP Visa Card: 10% cashback at BP/Amoco gas stations for the first 2 months, 5% afterwards.
• Citgo MasterCard: 4% bonus on Citgo gas.
• ExxonMobil MasterCard: 3% rebates at Exxon/Mobil gas stations.
• Gulf Platinum MasterCard: 3% cashback on gasoline purchases at Gulf stations.
• Hess Visa Card: 5% rebate on gas purchases at Hess, Hess Express and Wilco Hess stations.
• Lukoil MasterCard: 4% on gas purchases made at Lukoil/Getty stations.
• Conoco Phillips MasterCard: 4% rebate on gas purchases at Conoco/Phillips gas stations.
• Shell MasterCard: 5% rebate on Shell gas purchases.
• Sunoco MasterCard: 4% rebate on Sunoco gas.

What’s your preferred gas reward credit card?

photo credit: momo_the_monster

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Before I applied for a Citi Driver’s Edge card back in December, I thought I could take advantage of the no-fee 0% balance transfer offer for 12 months and use the money to payoff our car loan which has an interest rate of 4.90%. Since I have been a Citi customer for almost ten years and have two cards with them with total credit limit more than $30,000, I was quite confident I could get a decent credit line to pay the $17,000 car loan. However, I was disappointed to see a mere $2,500 when the card arrived at the end of 2007. What am I going to do with $2,500?

On the same day when I received the card, I called Citi asking to move credit line from another card to the Driver’s Edge. The phone was cut off before the conversation completed, so the transfer never happened, but it was clear that such move is possible. Then I called over the weekend and experienced some interesting twist and turn during the process.

I first talked to a CSR who insisted, after talking to her supervisor, that I can’t move credit lines from other cards because of the 0% balance offer. That was the first time I heard such an excuse and thought it was ridiculous. I almost did it last time and have done it before with Chase. So I asked to speak with the manager directly. The manager basically told me the same thing and said I can request a credit increase, but they will have to review my credit files. That means another credit check and that’s not going to happen. So I told the manage just transfer me to somebody who can help me close the account. Then something interesting happened.

As I was talking to another account specialist to close the account because the limit is too low and I can’t move the credit line from another account to this card, he surprised me when he said “We can certainly do that.” Within the next few minutes, I moved $15,000 to the Driver’s Edge card and requested a check of $17,000 send to me. Next week, I will have the check in the mail and will deposit it in my bank account to payoff the remaining $16,952.07 car loan

When dealing with credit card companies, I often find talking with different people will get different results. I am glad I didn’t give up easily!

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I usually don’t read too much the Costco Connection magazine I received every month as part of the benefit of being an Executive Member, because more than half of the magazine are ads while the rest are articles about stuff Costco offers . But a piece in the February issue did get my attention last night. It’s an announcement that starting February, TrueEarnings Card holders can earn 3% rebate on gasoline purchases.

And, beginning this month (February), members with the newer cards begin receiving 3 percent cash back on gas purchases! These include gas purchases from Costco gas stations and stand-alone stations (such as Chevron or Shell that are not part of a retail or grocery chain).

Originally, the card offers 3% rebates at restaurants, 2% on travel, and 1% everywhere else. The new rebate program definitely makes the card more usable. Before, I only charge it at Costco (1% cash back) and restaurants, and use Chase Freedom card at gas stations and grocery stores for 3% rebates. However, since the 3% rewards from Chase is part of its top-3-category reward program, it would be better to use the TrueEarnings card to get the 3% back for sure. The only problem is, not everybody accepts AMEX

BTW, in addition to this new rebate program, there are several other cards also offer 3% or more cash back on gas, including:

• Discover More Card: 5% cash back bonus on ravel, apparel, home, gas, restaurants, and movies;
• Discover Open Road Card: 5% cash back on gas and auto maintenance purchases;
• Citi Driver’s Edge Options Platinum Select Card: 6% rebates on the purchases made at supermarkets, drugstores and gas stations for 12 months, 3% thereafter.

With gas price around $3.00 a gallon, 3% cash back is a pretty good deal.

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Don’t have an iPod yet? You can get one for free if you apply and get approved for a Discover More Card and use the card to make a purchase.

MyEasyRewards.com is now offering a free iPod Shuffle upon approval and activation of a Discover Card. From the offer website, the whole process takes three steps:

1. Register at MyEasyRewards.com;
2. Apply for a Discover card;
3. Upon approval, active the new card by making a purchase or balance transfer.

Currently, the Discover Card being offered through MyEasyRewards.com is the Discover More Card which has the following features:

• No annual fee
• 0% APY on purchase for 6 months

From the picture showing on the website, the Shuffle appears to be the new version (the Clip) which has 1GB of disk space, capable of storing up to 240 songs.

To get your free iPod Shuffle, use this link to apply for the Discover card.

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The Federal Reserve just cut interest rate again and banks will soon, if not already, follow suit to lower their savings accounts’ rates. And according to some experts, such as PIMCO’s Bill Gross, the current rate reduction cycle is far from over, which means interest rates from banks are heading no where but south in the near future. With less returns from banks, I am thinking whether to pay off the balance we still owe on our car.

When we bought our Odyssey in 2005, we took a $31,000 5-year car loan at 4.90%. I have never worried about the loan and paying it off early didn’t occur to me since we can get more from our money when the banks were paying us some 5.0+% interests. After more than two and a half years with monthly payment of $650, the debt has been reduced to a more manageable level of a little more than $17,000. As bank deposit returns get less appealing and the cost of carrying the loan exceeds the reward from putting the money in a savings account, maybe it’s time to consider paying it off.

No, I am not going to send them a $17,000 check if I choose to go that route. What I plan to do is getting a credit card that gives me 0% APR for 12 months with no or a cap on balance transfer fee then use the balance transfer money to pay the loan. In this way, I can get another 12 months of interest free period. After doing some homework, I identified a couple of cards for this purpose (FatWallet.com’s Finance forum is a good place to find 0% APR cards):

• Citi Driver’s Edge Platinum Card
• Discover More Card
• Bank of America National Education Association WorldPoints Platinum Plus Card

The one that I am interested in getting is the Driver’s Edge which doesn’t have a balance transfer fee and it could be a card that I may actually use.

I just closed an account early this week. Now it looks like I am about to get another one

*Photo from Homeautoloan.com.

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I just shrank my wallet by one more credit card as part of my effort to simply our finance

Back in July 2006, I applied for a Discover Miles card for the purpose of using its 12-month 0% balance transfer. Ever since I got the card, I haven’t used it for anything else, though Discover once in a while had promotions giving 5% cashback on qualified purchases. I never took advantage of any these promotions. After the 0% promotion ended in July, the card was basically idle in my wallet. Though I have owned several Discovered in the past, somehow I was never a fan of their rewards program.

As a travel card, the Miles card actually has quite good benefits, such as no expiration of miles accumulated and cash redemption, but I have a Citi PremierPass Card that I want to keep as the travel card (I don’t travel a lot though). Therefore, there isn’t much to hold on to a card that I have no plan to use. Plus since it’s only a little bit more than one year old, closing the account won’t significantly shorten my credit history.

So tonight I called Discover to close the account and move the credit line to another Discover card that I had since 1999. In fact, if I want to keep one Discover card, I will definitely choose the Miles card, not the regular card. The only reason to keep the regular card is its long history that I don’t want to lose.

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Chase Freedom card is now offering a $100 after opening a new card and making the first purchase.

I applied for this card in March was the bonus was $200 and my account was credited $200 less than 2 months after I used the card to make a small purchase. I was a little skeptical initially as the ad was very clear about the promotion until I received the bonus. So it is real. In addition, the card itself offers good rewards. After a recent revision of its rewards program, Chase Freedom card currently pays 3% cashback for every purchase in the top 3 categories every month out of a large range of selections instead of just a few fixed ones. Now the card is my day-to-day charge card.

The terms and conditions of getting the $100 bonus are:

You will receive $100 in bonus rebates, which can be redeemed for a $100 check. Please allow 6 to 8 weeks after your first purchase for bonus rebates to post to your account. First purchase includes purchases, balance transfers, cash, or any checks that are used to access your account. To qualify for bonus rebates, account must be open and not in default at the time of fulfillment. The bonus offer is valid only for first-time cardmembers with new accounts. Only one bonus per account. Existing cardmembers/accounts are not eligible for the bonus offer.

To apply for this card, use this link.

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I am a credit card person. If possible, I will use credit cards to pay everything so I earn rewards for the money that I have to spend anyway.

Half a year ago, American Express announced that it will let members make mortgage payments with AMEX cards. The news generated quite some buzz as it marked the first time that a major card issuer allows cardholders to pay mortgage and earn rewards at the same time. Though the first mortgage provider (American Home Mortgage) signed up with AMEX to provide the service has gone out of business in the summer, the idea was an exciting one as mortgage is probably the single largest payment every homeowner has to make every month. It would be great if we can get some back. Too bad my lender, Countrywide, is not part of the deal (Countrywide does offer its own credit card, issued by FirstUSA, and the rewards can be used to pay off mortgage).

Last week when browsing the latest issue of Kiplinger’s Personal Finance, I noticed a small piece in the magazine that mentions a website called CardIt which also allows Visa, MasterCard, and Discover card members to pay their mortgages with the plastics. Of course, like any other convenient services (such as paying taxes with credit cards), there are fees involved. Since the only reason I want to use credit cards to pay mortgage is to get cashbacks, it only makes sense if the benefit (the rewards earned and savings on interests) outweighs the cost (the fees). That, however, is not the case. On CardIt’s website, it lists the cost of using the service:

What’s the catch? Are there fees?
No catch - you make a one-time secure payment and all of your personal information is protected. There is a fee per transaction associated with our service. The fee is 2.49% of the payment amount plus a fixed $19.99 charge per transaction. In other words, a $1,000 payment with Cardit will produce exactly $44.90 in fees. The interest rate of the credit card remains unaffected as do the reward plans. Your credit card company views it the same as any other transaction.

So basically, I have to pay 4.49% fees to get the maximum of 3% cashback (Chase Freedom card can give me 3% back) if my monthly mortgage payment is $1,000. And for most credit cards, the rewards are probably at 1% instead of 3%. Even at 3%, my monthly mortgage payment has to be at least $3,919 to just break even.

Sorry, I only have a small house and a small mortgage.

For whatever its worth, this service is not for me. Probably not for anybody else either.

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It has been more than two months since I last called American Express about the unauthorized charges on my AMEX Costco TrueEarnings card and longer than the 8-week investigation period that I was promised. I was hoping the outcome of the investigation could resolve the problem which has been dragging on for nearly 8 months.

As I was waiting the result patiently, a letter from American Express arrived last Saturday. Enclosed in the letter is a transaction confirmation (the support) from the Netherlands company that handles the transactions on my card. And the letter also says:

As you will see, your name is not reflected on the support. Since many of our customers authorize charges on their Card for goods and services rendered to others, we are providing you with an opportunity to review the support. If you do not recognize the name, please contact us at your convenience. We believe that you are the best authority on the validity of this charge, and therefore, we ask you please review the documentation. If you are not satisfied that it is sufficient, or have additional concerns, please contact us and we will be glad to reopen your inquiry.

Did it say the case is closed and I should to be satisfied with their findings from the two-month investigation?

After finishing the letter, I called AMEX and asked to spoke with a manager once my call was answered. I am sick of having to tell the CSR my story each and very time I call, so I want to go directly to the one in charge. When the manager, who gave me his name as Jerry, came to the line, I told him that if that piece of paper is the result of their two-month investigation, then they are wasting their time because I printed out exactly the same confirmation back in February myself after I used my card number to locate the transaction details from the payment processing company’s website in Netherlands. The only difference was that that guy, who used my card to purchase a monthly pass since last November, just bought two 1-year passes at $154 each! I told Jerry if this is all they have done, then I don’t need them to print out a confirmation for me.

What made me angry was what Jerry said after he asked me if I recognized these charges and I told him that I made it very clear when I first called in February that I didn’t know what those charges were and never authorized them.

“Then we will have to open a fraud investigation.”

Yes, that’s what he said, a fraud investigation! If an unauthorized charge isn’t a fraud, tell me what it is?

Jerry didn’t answer my question. Instead he kept asking me whether I want to proceed with the fraud investigation or not.

YouTube DirektLink

(Or is it?)

Do whatever investigation you want to do, but make the charge stop.

“We can issue you a new card with a different account number and the charge won’t appear on your new card again.”

What a surprise. The first thing I asked in February was to get a new account number and I had been told more than once by both CSR and manager that a new account number won’t stop the recurring charges and I believed in what I heard. Now, all of a sudden, I can indeed get a new card to stop the charge!

Unbelievable!!!

I will have a new card in 10 days and to wait another 30 days for the outcomes of this fraud investigation, if there’s anything meaningful. The problem to me is I probably won’t know whether the issue is resolved or not until next July when the 1-year pass is up for renewal. I didn’t get any charge on my card after the $154 purchase in July.

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If it wasn’t an article on USA Today yesterday, I probably won’t even know there’s a new kind of credit card on the market on September 24, 2007.

RevolutionCard is the name. However, after going through what the new card offers, I found that it’s basically a PIN-based credit card that doesn’t emboss account number and cardholder’s name on the card. Other than the card’s shape that doesn’t resemble any existing cards, I didn’t notice anything really revolutionary.

On the website, the new card lists some benefits including no annual fee and an APR that’s tied to one’s credit score. I won’t consider no annual fee as a benefit worth highlighting as there is no short of credit cards that don’t charge membership fee. As for the interest rate, ranging from 7.99% to 29.50%, the card claims that everybody can get a credit line with an interest rate that’s determined by the credit score. Though traditional cards don’t explicitly offer variable APRs based on credit score, credit history must be taken into account when determining the terms.

Another selling point of the card is that every purchase requires a 4-digit PIN, not the signature, quite unique for a credit card. The purpose is to, as the issuer argues, “protect you from fraudulent purchases.” If you lose the card, no transaction will go through without a PIN if somebody gets the card and tries to use it. And in this case, your personal information won’t be at danger either as no such information will be stored in the card. I can see some value in using PIN in transactions, but I am not sure how much protection it can provide. If a PIN can eliminate “unauthorized transactions, significantly reducing costly disputes,” other banks should probably use it as well. But I don’t think that’s happening.

The USA Today article also mentioned that the issuer is planing to charge merchants who accept the card a fee of 0.5% of the sale price as compared to the average 1.9% charged by traditional credit card issuers. That may be good for merchants, but as a
consumer, the RevolutionCard doesn’t appeal to me at all.

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One of the best deals I ever got from a credit card was the $200 bonus offered by Chase Freedom card back in March. I not only received $250 free money from the card after a purchase was made, but also took advantage of their 0% APR promotion with a huge balance transfer. Despite these short-term activities, this is the card that I actually want to use because its rewards program is quite generous: 3% cashback on purchases made at gas stations and grocery stores, etc., and $200 rewards can be redeemed for $250 cash.

Now the rewards program has been updated.

According to the card’s website, instead of giving 3% cashback for a few fixed categories, Chase now expanded the range of purchases that are eligible for 3% rebates and every month, the top three categories can earn 1% base rebate plus 2% bonus rebate.

The eligible bonus categories include:

grocery stores, gas & convenience stores, quick service payment/fast food restaurants, telecommunications, cable/satellite TV/Internet service providers, video rentals, department stores, dry cleaners, drugstores, movie theaters, local and suburban commuter passenger transportation, pet supply stores and veterinary services, utilities, beauty shops (salons and spas) and gym/recreation memberships.

The expansion could help cardholders to earn 3% rebates more easily. However, that doesn’t mean you can earn as much as you want. There’s a limit on the amount of bonus cashback you can accumulate in each billing cycle:

There is no maximum amount of base rebates or base points that can be earned on net purchases. Maximum bonus rebate accumulation per billing cycle on net purchases is $12 in bonus rebates or 1,200 points monthly, which equates to $600 in net purchases.

That is, you can only earn $12 cashback at most by making $600 purchases in the bonus categories each month. Any spending that’s over the $600 limit will only earn you 1% rebate (the base rebate), though there’s no maximum on base rebates.

And before the change, whenever the accumulated rebate reaches $200, it can be redeemed for $250 cash. This, however, is removed from the revised program. This feature remains in the revised program (Thanks The Financial Buff).

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• Chase Freedom Card $250 Bonus Offer [Expired]

In the October issue of Consumer Reports, the magazine rated some credit card issuers based on user experiences on the company’s customer service, fees, and interest rates.

Of some 21 issuers surveyed in their study, USAA Federal Savings, a credit union for military personnel and their family members, ranked the highest customer satisfaction, followed by Naval Federal Credit Union. For some of the country’s largest Visa and MasterCard issuers, such as Citibank, Bank of America, Chase, MBNA, and Capital One, they found their places at the other end of the specturm. Ranked from 13 to 18, they fell behind independent issuers American Express (6) and Discover (7) in the rating.

What credit card users complained most in the study are the ever increasing fees and sinking customer service. For example, the magazine noted that late fees that credit card companies charged for late payment have more than doubled in the past 12 years, up from $12 in 1995 to $28 in 2006 on average, and the trend is continuing. On the other hand, problems with customer services are on the rise. Nearly 27 percent participants in the study reported that they have experienced lengthy waiting time, confusing navigation menu, or unsatisfactory results. That’s not a surprise to me. Even with American Express, one that’s known for its reputation in customer service, my problem of the unauthorized charges placed on my card has been dragged on for more than half a year without any result.

So how to avoid all these hassles? You definitely don’t want to get a Capital One “No Hassle” card as it is probably one of the worst cards you can have, according to the review. What the report suggested was, if possible, to get a credit card from credit union because they are not as greedy as the Wall Street firms that are driven by profits and stock prices.

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Bank of America is one of my main sources for credit card arbitrage (the other one is Chase). Though I have only two cards with them and they are both more than 5 years old, I constantly got 0% balance transfer offer in the mail with no or very little fee. I don’t really know why they kept offering me the free loans (of course, I have to pay the one time balance transfer fee) as I never used the card to make any purchase. Right now I have $30K borrowed from BoA with $90 fee. At the time when previous favorite such as Citibank lifted caps on balance transfer fees, BoA for a while continued to put a lid on the cost of transferring balance. However, the joy of free money seems to come to an end.

Yesterday, I noticed a discussion on FatWallet forum about BoA removing the balance transfer fee cap. Since I didn’t get any notification myself (maybe it will be coming), I wasn’t quite sure about the news. Then I did a quick check on BoA’s website for their credit card offerings and found that the change may have already happened. For example, the BoA WorldPoints MasterCard’s T&C has this paragraph regarding 0% balance transfer and fees:

0% Introductory APR on balance transfers and cash advance checks for your first 12 billing cycles† (subject to a 3% transaction fee, no less than $10)

Similar wordings of balance transfer fees are also found on the application page of some popular cards such as Visa Signature with WorldPoints card, as well as the Reward AMEX card and the Cash Rewards Platinum Plus MasterCard. Though I didn’t go through all the cards, it appears that the shift in policy has already occurred.

At 3% fee, the balance transfer is not as appealing as the deals with a fixed fee as the more money transferred, the higher the fee paid and the whole idea of making money from balance transfer is to borrow a large amount of money at 0% and save it in a high yield savings account. Though money can still be made if the borrowed money is deposited in an account with a 5.30% yield, I don’t think I will bother to play the arbitrage game anymore.

Will this become a trend for card issuers?

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A couple of days ago, I received an email from Mike regarding my credit card arbitrage:

I was just wondering how you were able to get 100 K onto your credit cards (cash advances??) … I transfer every $ from my credit card bills (i buy everything i can with credit) to a 0% card then put that cash (that i would have used to pay my credit card bills) into a high yield savings, but that limits me to whatever i can purchase for the month, i would like to quickly utilize all of my 25K worth of credit (on credit cards currently owned), rather than only 1-2K per month which is too slow when 0% APR only lasts for 12 months.

First of all, it’s a misperception that you have to have a balance in order to make the transfer. No, you don’t have to. The money can go to any where that accepts check payment as long as the credit card company can issue you a check. However, it’s important you should be able to get the money you transferred once the check payment is made so you can save it in your bank account and earn interests. That’s the whole purpose of the game.

Before I go ahead with how I play the credit card arbitrage game, here’s a word of caution: Credit card arbitrage is not for everybody. If you can’t resist the temptation to spend thousands of dollars *easy money*, it’s not for you. If you have history of late in making payment, it’s not for you either. You don’t want to get into a deeper trouble by trying to make a small profit.

OK, now the complete process of making money from balance transfer:

1. Get a credit card with 12-month 0% APR balance transfer promotion

If the only purpose of getting a new card is to use the interest free period to make money, then length of the promotion period is the key. There are many cards offer a 12-month period with 0% introductory rate. Any period that’s shorter than 12 months is less desirable, unless you can use the card even without the 0% rate. For existing cards, however, a shorter term such as 9 months or 6 months is acceptable, but you need even larger amount to make up the fees. The shortest term I had was 4 months.

2. Request a convenient check to transfer balance

Not all issuers send out convenient checks right after the card is issued. If the promotion period starts from the time a balance is transferred, you can wait till the condition is right (such as the interest rate of your savings account if you expect it to go up in the coming months). I know Discover Card’s promotion starts when the card is issued. If that’s the case, do the transfer immediately after receiving the card.

To expedite the process, call the issuer when the card arrives and request a convenient check. It’s better to get a blank check, but there are credit card company requires your name and the amount you want to transfer be printed on the check before they can send it to you. Once the check is in, just deposit the money into your bank account.

3. Or make the transfer over the phone

If you feel comfortable, you also initiate the transfer on the phone and have the money sent to your bank account directly (you have to provide your bank’s routing number and your account number). I did that a couple of time with Bank of America and Chase which already have my bank information from the online bill pay.

Things will a lot easier if you transfer the money right to your bank account, but that’s not always the case. For instance, last year Discover insisted I can only use the money to pay balance on another credit card. If this is what’s happening, it’s less desirable but still doable if you have cards that can issue refund for over payment. Check out my previous post on how to use Citi card to transfer balance.

4. Consolidate credit limits to get the most out of the deal

It would be impossible for me to have $100K in balance transfer without some consolidations. If you have multiple accounts with the same issuer, you can get the most out of the deal by consolidating your existing credit limits. All you need to is call the credit card company and tell them to move credit lines from this and that card to the card with 0% offer. Just move the credit lines, but don’t close the accounts as they are likely to be older than the card you just got. When the game is over, you can always move the lines back to those cards if you wish. I have done credit consolidations before and it’s quite easy to do.

5. Don’t spend the money and don’t buy stocks with the money as well

Nobody can predict where the market will be one year from now. If you don’t have other funds to cover the balance when the transfer expires, you will have to sell your stocks which could be losing money at that time. Just save the money in a high yield savings account. There are plenty of online savings accounts offer 5+% interest rate. Keep the money in liquid accounts so you can have an easy access. In case something unexpected happens (like late in making payment), you can pay the money back right away.

6. Pay more than the minimum on time every month

If you are late in making minimum payment, even once, you are screwed. So make sure you give enough time to let your payment hit the card ahead of the deadline. And paying the bill online instead of mailing a check can reduce the risk of late payment. In addition, adding $10 more to the minimum payment is always a good practice.

7. Confirm the payoff date

Call the issuer one month early to confirm the last day the balance has to be paid off to avoid any financial charge. Don’t just assume the date on the offer letter is the deadline. Also, since transferring money via ACH usually requires at least three business days before the fund settles, give yourself enough time to arrange the money and pay off the entire balance without any delay.

Finally, there are a couple of items that you should be careful when playing the credit card arbitrage:

• Think twice before getting a new card for balance transfer if the fee depends on the amount transferred (such as the 3% fee that Citi charges). The profit will be eroded even if you can get 5+% return from a savings account.
• Make sure there’s no balance from purchases on the card before making the transfer. Since any payment you make will be automatically used to pay balance with the lowest interest rate, the charge from your regular purchase will started to accumulate interests until you pay off the entire balance, including that from 0% transfer. Edit: And don’t use the credit card until the balance transfer money is paid off either for the same reason (Thanks Tim ).
• Read carefully the deadline on your offer letter. If it says something like “the billing cycle includes August 31, 2008,” then August 31, 2008 is NOT the deadline to pay off the balance and avoid financial charges. Depending on the date of your billing cycle, you may have to give the money back well ahead of August 31, 2008. Call the issuer to confirm the deadline.

Featured information

Interested in cash back credit cards? They are a great option if you want money back when you pay your bill. Look over all the credit card applications before signing.

The bad credit loan is presented by the money lenders and loan brokerage companies for those borrowers who can provide the financial security. The creditcard is the best way to pay immediately. The debt help program is very assistive for the debtors to get relief from high debt charges. The debt solution, presented by the financial debt consultant is very reasonable for the debtors.

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Yesterday, I posted an entry on credit score with a couple of items that I feel are important in getting a good score from my own experience. Last night at home, I went through several credit reports with credit score I obtained in the past few years, trying to find out what I have done in the past actually hurt my score. Generally, from all the discussions we have seen, we can expect the credit score to drop if we, for example, have late payments, or multiple inquires in a short period of time, or owe a large amount of money relative to the credit limit. However, knowing exactly what the credit bureaus consider as negative could be helpful in maintaining and improving credit score. The following are my findings from reports from all three credit agencies:

1. FICO Score 685 with Equifax report on May 1, 2003. Negative factors:

• You have recently been seeking credit or other services, as reflected by the number of inquiries posted on your credit file in the last 12 months. Applied for credit 4 times in the last 12 months.
• The length of time your accounts have been established is relatively short. Your most established credit obligation is 64 months old and your newest credit account was opened 1 month ago.

2. FICO Score 723 with TransUnion report on March 8, 2004. Negative factors:

• You have relatively high number of accounts with balances. You have 6 accounts where your balances last reported are greater than $0.
• The proportion of balance to credit limits (high credit) on your revolving/charge accounts is too high. The proportion of balance to credit limits (high credit) on your revolving/charge account is 11%.

3. FICO Score 699 with Equifax report on June 9, 2006. Negative factors:

• The proportion of balances to credit limits on your revolving accounts is too high. The proportion of balances to credit limits on your revolving accounts is 32%.
• The time since your most recent account opening is very recent. Your most recently opened account was 4 months ago.

4. FICO Score 769 with Equifax report on February 6, 2007. Negative factors:

• The time since your most recent account opening is very recent. Your most recently opened account was 8 months ago.

5. FICO Score 788 with Experian report on August 9, 2007. Negative factors:

• You have too many credit accounts with balance. You have 7 accounts with balance.

Summary

In addition to the negative factors listed above, the credit reports (with credit score) also provide information on what “average US consumers” did regarding their credits. Though we don’t know exactly how credit score is calculated, the averages could serve as indicators on whether or not our behaviors could have a negative impact on our credit score.

• Credit application: On average, US consumers applied for credit between just 1 and 2 times in the previous 12 months.
• Application interval: Most US consumers have an average interval of 20 months between credit applications.
• Balance to credit limit ratio: The average ratio for US consumers is about 30 to 40%.
• Credit history: For the majority of US consumers, the oldest account is about 15 years.
• Cards with balances: On average, US consumers have about 3 or 4 cards with balances.

Since I never had a late payment, I don’t know how damaging it could be in the credit score calculation. If you have experienced other factors that affect your score negatively, but are not listed, maybe you can share with us.

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The last time that I checked my credit score was in February when I almost didn’t have any borrowed money from credit cards. When I saw my FICO score from Experian at 769, it was really a pleasant surprise because it was the highest score I have ever had.

Since then, I have done quite a few things that could damage my credit score, at least temporarily, including:

• Got two more credit cards (Citi PremierPass and Chase Freedom);
• Racked up nearly $100,000 in credit card balance from credit card arbitrage.

From what I have heard, these activities, opening too many cards in a short period of time and carrying very high balance, could have very negative impact on credit scores. But how bad could be it? The last time when I also used more than 30% of my overall credit limit, my credit score was 699. Now, the utilization ratio is nearly at 50%. Could it be even below 699 that I got more than a year ago?

With these questions, as well as the one that I asked regarding credit limit reallocation, I purchased another FICO score from Experian (I always buy Experian FICO score so I can compare the changes) last night and

Not only that the score didn’t drop as I expected, it actually added nearly 20 points in 6 months! Surprise, surprise, surprise.

To make sure that this score reflected the activities I mentioned above, I checked the total balance of my accounts, which showed indeed that I have nearly $100K balance as of now. According to myFICO, the amount owed should account for 30% of the credit score, but it doesn’t seem to have too much negative impact in my case, comparing to what I had half a year ago. Of course, there’s always the possibility that my score could be even higher (maybe over 800) if there were no such a large balance. From what I saw the only negative item on the credit report is that I have too many credit accounts with balance (7 out of 41).

I have heard lots of talks on credit cards and credit score against having too many cards, opening multiple accounts in a short period of time, or carrying a high balance. While the advices are valid in general, it doesn’t appear I am being punished for doing exactly that. Could it be that the negative impacts of these activities are overstated? I don’t know, but it’s possible from my experience. My credit history isn’t very long (less than ten years, but still quite long to get where I am now), and I own 41 credit ac