Membership Rewards

Here’s how it works. With the AMEX Premier Rewards Gold Card, you can earn points up to three times as fast. You can earn triple points on airfare and double points on gas and groceries, while continuing to earn points on all other purchases, such as double points on gas and groceries, and one point on every dollar spent on everything else. Best of all, rewards points have no expiration date, and there is no limit to the number of points you can earn.

For the Membership Rewards Points you earned, you can use them to redeem airline tickets to fly any airline, anytime with no seat restrictions or blackout dates. You can also book hotels, cruises and vacation packages. Use points to pay for your entire trip or a portion of it, and continue to earn points with your favorite frequent flyer and guest programs when you book. Points can also be redeemed for rewards from over 50 of the finest names in shopping and entertainment.

In addition, other membership benefits include:

• Fraud Protection Guarantee
• Return Protection
• Extended Warranty
• Purchase Protection
• Baggage Insurance Plan
• Emergency Check-In
• Assured Reservations
• Car Rental Loss and Damage Insurance
• Travel Accident Insurance

All of these come with an annul membership fee of $175. However, the fee for the first year is waived.

15,000 Bonus Points Promotion

Right now AMEX is running a promotion for the Premier Rewards Card which will give you 15,000 Membership Rewards bonus points when you spend $1,000 in your first 3 months after becoming a cardholder. The rewards points can be redeemed to up for $150 gift card. If you spend $30,000 per calendar year, you can get an additional 15,000 Membership Rewards bonus points.

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From now till December 31, 2009, card members can earn up to 1,500 ThankYou points by simply using the card to make purchases in the next three months. Here’s how you can get the bonus points. For every month when you use PremierPass Card to make 5 purchases or more with at least $10 in each transaction, you earn 500 ThankYou points as bonus on top of the regular rewards you will receive when using the card (basically, you earn 2 points for every $1 spent at supermarkets, gas stations, drugstores, commuter transportation and parking merchants and 1 point for every $1 spent on other purchases).

Don’t have a Citi PremierPass Card? Apply for one now to receive up to 20,000 ThankYou points. More details on the bonus offer and how to earn and redeem ThankYou points can be found in my Citi PremierPass Card review post.

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I got the card in 2006 when I started to make more and more purchases at Amazon.com. I thought getting the card makes sense for the 3% cashback it offers for shopping at Amazon.com (actually, 3 points for every dollar spent and the bonus points can be redeemed for Amazon gift card). Three years later I still have the card, but I only use it at Amazon because rewards for shopping at other places with this card isn’t really that rewarding. With the upcoming upgrade, however, it seems that the card can get a little more usages.

The upgrade will come on October 1, 2009 automatically for existing cardholders. With the new Signature card, card members can enjoy one more newly added benefit: get 2 rewards points for gas, dining and drugstore purchases for every dollar spent, in addition to the usual cashbacks for shopping at Amazon.com (3%) and elsewhere (1%).

These days, I can pretty much get 1% rebate with any credit card that offers a rewards program, but not many will go above the 1% mark and it is becoming increasingly difficult to get good rewards from card issuers because of changes in credit card rules (I think the new law actually punishes people who are using their plastics responsibly). In this environment, I think 2% cashback, though limited to only gas station, restaurant, and drugstore purchases, is a pretty good offer.

With the above being said, I don’t think I will switch to the Amazon card any time soon. Right now, I am still getting 3% cashback from Chase Freedom card at gas stations and grocery stores. When shopping at other places, I use Fidelity 529 card which gives me 2% back on every purchase. As long as I still have these benefits, I will stick with them for my everyday purchases.

BTW, the 2% rebate isn’t the benefit the new card will start to offer. The Amazon.com Signature card will also become a card with no pre-set spending limit, which I am not sure whether it’s a good change or a bad one.

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• OptionsHouse 100 Commission Free Trades
• Lending Club $25 Sign Up Bonus
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Then last week, I received two letters containing price change from American Express for two cards I own: Costco TrueEarnings Card and Optima Platinum Card. Citing changes in the business and economic environment, AMEX says in the letters that it found it’s necessary to increase rates and fess on some of its products. Particularly beginning the bill cycle on October 1, 2009, it will raise APRs on purchases and cash advances and increase the late fee. Even though I don’t think these changes will affect how I use the cards (I never withdrew any cash using a credit card and was never late in making a payment), I decided to go through the letters carefully this time to see what will be changed, given how much talk there is on how credit card issuers are making changes on their policies when they still can.

Starting October 1, 2009, AMEX will change the standard APR for purchases to the Prime Rate plus 11.99%, which is 15.24% as of August 1. The APR for cash advances is increased to the Prime Rate plus 21.99%. Currently the APR for purchases on my cards is at 13.24%. The 2% increase actually isn’t too bad. However since I didn’t have any financial charge against me before, I thought I should be rewarded with a lowered APR for being a good customer, not a higher APR. As for the late fee, AMEX has decided to adopt fee structure that depends on the amount of balance instead of a flat fee. If the balance is below $250, the late fee will be $19; otherwise, the fee will be $39.

It’s no all bad news though. In the letter, AMEX also says it will eliminate the over-the-limit fee at the same time when the above price changes take effect.

At the end, AMEX didn’t forget to remind me that it’s important to keep my balance under my credit limit and pay my bill s on time to avoid late fee.

Well, we all know they are the obvious when handling credit cards.  That’s what I have been doing for years and it’s why I don’t really care these price changes

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In July and August, Citi card members, who hold either their credit cards or debit cards, can get different live concert for as low as $5 each. The tickets are offered through Citi Private Pass, a loyalty program that rewards Citi cardholders with discounts for special events. If you are a card member, you can buy $5 ticket to a bunch of different concerts through the end of August. The concerts are called Lawn Ticket concerts and have different types of music, from Depeche Mode to Nickleback, a great deal for music lovers in this tough economic environment.

Don’t have a Citi card? There are a few cards that Citi offers are quite attractive with good benefits, some already being discussed here, such as the Forward Card, Forward Card for College Students, and PremierPass Card. Once you get the card, just go to Citi Private Pass and purchase tickets to the concerts you like with promo code “CITI” followed by the first two digits of your Citi credit or debit card number.

You have until August 31st to enjoy those cheap concert tickets of the summer

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Features of Current by Discover

Discover claims that the Current card is the only prepaid card that helps parents monitor their teens’ spending (I don’t know whether this is true or not). With the Current card, parents can set up spending limits and restrict what their children can shop and where they can shop. This gives teens freedom of using the card to shop while helping their parents maintain control of the spending.

Other benefits of the Current card include free direct deposit for parents and teens, as well as free deposits from any credit card or bank account. Once money is added, teens can use the card to make purchases online, over the phone and in stores. In addition, the card can even be used an ATM card for cash withdrawals. The card also offer $0 fraud liability guarantee.

The Current card, however, is not free. It has an annual membership fee of $50, or $5 a month. Other fees include $0.50 per ATM withdraw (the first four withdrawals are free though), $3 to replace a lost or stolen card, and $5 to receive a card statement by mail. Free card statements can be viewed online any time and there is no inactivity fee.

Current Promotion

Right now Discover is running a promotion for the Current Card. If you get a Current Card now, Discover will waive the membership fee for first month, a $5 value, when using the promo code BT709. This offer expires on May 30, 2010.

BTW, I had a post on Zecco promotion code for $200 bonus for their Forex trading account a couple of days ago. It  turned out that only those who received the original email will get the bonus when all the conditions are met. I have updated the original post with this information. Apologize for the confusion!

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Special bonus offers

• OptionsHouse 100 Commission Free Trades
• Lending Club $25 Sign Up Bonus
• TradeKing $50 New Account Bonus in November
• CollegeAdvantage $50 Bonus

optionsXpress, one of the brokers that I have an account with and have talked about a few time in the past, is currently offering 12-month 0% APR balance transfer for its optionsXpress Platinum Visa Card. Even though the card also charges 3% balance transfer fee, but the fee is caped at $75 ($5 minimum), which is good if you want to transfer a large amount.

The card has no annual membership fee and it basically rewards cardholders 1% for shopping with the card. Rewards are given as optionsXpress points (1 optionsXpress point for every dollar spent) and once you accumulate 1,500 points, you can redeem them for $15 that will credited to your optionsXpress account. Therefore, you must have an optionsXpress brokerage account in order to receive the rewards points. If you don’t have an optionsXpress investment account, then all your points will be forfeited. In addition, points will expire after 24 months if not redeemed.

While optionsXpress Visa is a good card for balance transfer if you want to move balances from high-rate cards to this card, it seems that it isn’t an attractive choice if you want to invest your rewards. If investing credit card cash back rewards is what you are thinking about, then there are better options out there.

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• CollegeAdvantage $50 Bonus

Actually, what interested me the most isn’t the new rewards program, but what is mentioned in the story about possibly the fate of the Chase Freedom card rewards program that I have been enjoying for quite a well:

For Chase, the move is also a way to replace older versions of its Freedom card, some of which had offered richer cash-back rewards and bonus opportunities. Throughout the year, all Chase Freedom cardholders will be moved to the rewards program, where they will earn 1% cash back (or one point) for every dollar spent and 3% cash back (or three points) for every dollar spent in categories that change each quarter.

……

… However, some Chase Freedom cardholders who want to earn a fixed 3% bonus for spending in grocery, gas and fast-food categories, will soon pay a $30 annual fee. Chase’s Sapphire Preferred card — where users can transfer points to other travel reward programs — has a $95 annual fee.

Just last week, I said that I am lucky because I still haven’t got the letter from Chase about reducing the cashback from 3% to 1%. If what said above is true, then I guess there won’t be much time left for me to keep getting 3% back and I won’t pay $30 annual fee to use the card.

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Of course, Chase won’t be alone in changing the terms (for example, Bank of America also plans to hike card interest rate next month)  and what Chase did didn’t surprise me at all. After the CARD Act of 2009 was signed into law last week, more and more banks will adjust their practices, not to really protect their customers, but make up their losses from other areas. There are predictions that, under the new rule, card issuers will not only tighten the standard on credit card applications, but also cancel card reward programs and impose annual fees on cards that are currently free.

As for the Chase Freedom Card, if the cash back is slashed to just 1%, then I will abandon the card and start to use my Fidelity 529 College Rewards card exclusively because it gives me 2% cash back on every dollar spent, no category restriction and no cash back limit. It’s one of my favorite cash back rewards cards. Actually, if I can choose between cards that give me the rewards as cash and cards that let me invest the cash back, I will go with the latter. The reason is simple: $20 invested today could mean a lot more 5 or 10 years later. If I get the cash, I could just spend it without notice If you agree with my argument, then there are a few choices that let you invest your cash back from credit cards.

Fidelity Rewards American Express Cards

This program currently offers three cards from American Express, all allowing to earn 2% cash back on every dollar spent (when the program was first launched a few years ago, the cash back was only 1.5%) on any purchases and there’s no annual fee. The three cards are:

• Fidelity Investment Rewards American Express Card: Rewards are invested in a Fidelity brokerage account;
• Fidelity Retirement Rewards American Express Card: Rewards are invested in a Fidelity IRA account;
• Fidelity Investments 529 College Rewards American Express Card: Rewards are invested in a Fidelity managed 529 account.

Besides, there’s no limit on how much rewards you can earn with these cards. The only requirement for these cards is that you need a Fidelity account so you can invest your rewards. Every time you earn $50 in rewards, the money will be automatically invested. If you don’t want to invest your cash back, you can also redeem for travel, gift certificate, or other items, but you can’t take out the cash.

Schwab Bank Invest First Visa Credit Card

The Schwab Invest First Visa Card is relatively new, but it generated quite some interests when the card was launched last december. Similar to the Fidelity Rewards cards, the Schwad card also let you earn 2% cash back on everything, but requires a Schwab brokerage account in order to get the cash back. This card has no annual fee and there’s no limit on how much cash back you can earn. However, one drawback of the card is that there’s no pre-set spending limit. When a credit card has no pre-set spending limit, the credit line on credit report will appear as zero, which may not be a good thing as far as your credit score is concerned.

UPromise Credit Card from Bank of America

The UPromise Credit Card is the most flexible card among cards mentioned here in terms of how you can get the rewards you earned. You can link the card to a UPromise 529 College Savings Account and invest the cash back if you choose to do so (I use this card to invest in my daughter’s 529 account), but unlike other cards, this is not required. Probably because a brokerage account is not necessary, the rebate from the UPromise card isn’t as good as cards listed above: You only get 1% rebate for most of your purchases and there are some categories that let you earn a little more.

One more thing. There are a lot of unhappy customers since Bank of America took over the UPromise card from Citibank early this year because their payments were messed up during the transition. Otherwise, I still think this is a good option.

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The CARD Act aims to protect consumers by preventing card issuers from hiking interest rates whenever they feel like to, charging fees that don’t make any sense, and allowing cardholders enough time to pay their bills every month. This video from New York Times explains quite well what the new credit bill means to consumers.

If you ask me whether I think this bill is a good idea or not, then my answer is yes, it is. However, I don’t see I can benefit much from this legislation personally because I have been following the simple rule in using credit cards since the first day I got my first card: Pay my bill in full on time every month. With this rule, I have never got into trouble with credit cards and enjoy a very good credit score. Credit card interest rate, which is the center piece of the new legislation, is never an issue to me, whether it’s 5% or 50%, because I haven’t paid a penny in credit card interests.

When using credit cards, what really bothers is credit card rewards program being downgraded, which unfortunately could be one of the consequences of the new CARD Act. Since now credit card issuers can no longer charge those fees (over the limit fee, pay bill over the phone fee, etc) they used to charge, they will have to find other legal ways to make up the shortfall in revenue, including adding annual fees to cards and canceling card rewards programs. If this indeed turns out to be the case, then I am afraid I don’t get any protection from the new rules. Instead, I become a victim of it

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We became a Costco member in 2004, starting as a Goldstar Member, because we were not sure how much we could spend every year at the warehouse store. A Costco Executive Membership, which requires $50 more to upgrade from Goldstar Membership, would be a waste if we only buy milk and bread every a couple of month. However, we spent a lot more than we originally thought shortly after our first daughter was born: Formulas, diapers, wipes, etc. None of those baby stuff is cheap. The number trips to Costco increased, so did the amount spent each time. In 2006, when I was told how much we had already spent in the past six months at the store, it became quite clear that an upgrade to Executive Membership makes sense. Since Executive Members get 2% cashback on every dollar spent at the store, we only need to spend $2,500 or more in a year to let the membership pays for itself.

So, is the Costco Executive Membership worth it?

For us, yes, it worth the exta $50 a year since the third consecutive year that we get a reward check that’s more than $50. In addition to the 2% cashback, we also enjoy a few other benefits as an Executive Member:

• We use Ameriprise Auto & Home Insurance through Costco to save on auto & home insurance;
• I opened my ShareBuilder account through Costco and got some nice incentives;
• When I was actively using ShareBuilder to buy stocks every month, I got 25% rebate on quarterly commissions;
• Executive members also receive higher bonus to open an savings account at Capital One.

Of course, there are not the only benefits for Executive members. For example, Executive members also pay less monthly fee for Costco’s identity protection program and save 20% using Costco check printing service, etc., even though we don’t use any of these services right now.

Yes, that $50 a year is well spent for us

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• Starwood Preferred Guest Card from American Express 25,000 Starpoints: Open a Starwood Preferred Guest Card and get up to 25,000 bonus Starpoints that can be redeemed for airline tickets, hotel stays, or room upgrade. $45 annual fee is waived for the first year. Find out more about Starwood Preferred Guest Card.
• TrueEarnings Card from Costco and American Express $25 Bonus: Get $25 statement bonus after the first purchase with TrueEarnings Card. Plus earning 3% cash back for gasoline and restaurants, 2%  for travel and 1% everywhere else. No annual fee. Find out more about TrueEarnings Card.
• Platinum Delta Skymiles Card from American Express 20,000 Bonus Miles: Earn 20,000 bonus miles after first purchase with Platinum Delta Skymiles Card and another 2,5000 bonus miles for adding an additional cardmember. Annual fee is $95 and you get one companion Coach Class ticket each year upon renewal. Find out more about Delta Skymiles Card.
• American Express Preferred Rewards Gold Card 10,000 Membership Rewards Points: Receive 10,000 Membership Rewards bonus points after spending $500 in the first 3 months. Plus earn double points on gasoline and groceries for the first year. $125 annual fee is waived for the first year. Find out more about AMEX Preferred Rewards Gold Card.
• Discover More Card $50 Bonus: Get $50 bonus from Discover More Card after spending $500 in the first 3 months of membership. There’s no annual membership fee, plus you can earn 5% cashback on purchases on travel, home improvement stores, department stores, gas stations, groceries, and restaurants, etc. Find out more about Discover More Card.
• Discover Escape Card 25,000 Bonus Miles: Receive 1,000 bonus miles every month in the first 25 months as long as you make a purchase with Discover Escape Card. Earn double miles with every dollar spent and there’s no limit on miles you can earn. Annual membership fee is $60. Find out more about Discover Escape Card.
• Miles Card by Discover 12,000 Bonus Miles: Get up to 12,000 bonus miles in the first 12 months (1,000 miles per month as long as you make a purchase) with Miles from Discover Card. Earn double miles on the first $3,000 on travel or restaurant purchase and 1 mile for each dollar on other purchases. No annual fee. Find out more about Miels Card by Discover.
• Citi PremierPass Card 20,000 ThankYou Points: Receive 20,000 ThankYou Points with Citi PremierPass Elite Level Card after spending $600 in the first 3 months after the account is opened. Earn 1 points for every mile flown and 2 points for every dollar at gas stations, supermarkets and drugstores and 1 point for every dollar spent elsewhere. Annual fee is $75. Find out more about Citi PremierPass Card.
• Citi Forward Visa Card 11,000 ThankYou Points: Get 6,000 Thank Points after making $50 purchase and anther 5,000 point after signing up to receive statements electronically in the first 3 months. Earn 5 points on every dollar spent on books, movies, music, and at restaurants; 1 point for $1 on purchases elsewhere. Plus get up to 2% APR reduction for using the card responsibly. No annual fee. Find out more about Citi Forward Card.
• Bank of America UPromise Card $25 Bonus: Open a UPromise Card account and get $25 bonus after the first purchase. Earn 1% cash back on all purchase and up to 10% on items sold at UPromise participating grocery and drug store items. No annual fee. Find out more about BofA UPromise Card.

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An article on SmartMoney.com yesterday listed four credit cards that are consumer friendly, cards that have “new favorable terms” and “the best perks for different types of spenders”. For the four cards in the article, each seems to have its own purpose, just like those mentioned in a CNBC On The Money article a few days ago. Following are four cards recommended by SmartMoney. Two of them, the Discover Motiva Card and the new Citi Forward Card, have already been covered here before.

• Wells Fargo Platinum Card: The Wells Fargo Platinum Card belongs to the category of low rate card. The card was selected not only because of its 7.65% variable APR, but also because the bank always send statements to cardholders 25 days before the due date, giving them plenty of time to pay the bills. While the rate is low, you can enjoy it unless you have a Wells Fargo bank account.
• Capital One Platinum Prestige: The Capital One Platinum Prestige Card is a card for balance transfer because it offers 12-month 0% APR introductory rate. However, at 3% balance transfer fee, I can hardly agree that the cost to transfer balance with this card is low. But the card doesn’t do double-cycle billing and give cardholders 25 days to pay their bills.
• Discover Motiva: When the Discover Motiva Card was first introduced two years ago, I thought that the card encourages credit card debit because it rewards cardholders who has a balance on the card. It looks like that’s how the card is selected: Motiva is good for a person “who is not able to pay off the card in full when it arrives, and doesn’t want to dig into that natural debt hole that usually follows.”
• Citi Forward: What I like the Citi Forward Card is that, on top of the 11,000 bonus points, it actually rewards card members with good behaviors (such as pay bill on time and stay under limit) by reducing their rates, up to 2%. There’s no other cards do that as far as I know. The card also has a generous rewards program as well, making it good to earn rewards.

Check them out to see if they are worth considering before the credit card industry comes clean with their behaviors.

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Since I do transactions, such as checking account activities, paying bills, and transferring funds, I want to eliminate paper statements all together if I can because there’s nothing on the paper that I can’t find online. So there’s just no reason for me to receive and keep all those papers. Usually, companies encourage its customers to go paperless and offer electronic statement for free. While for many paperless statement is an option, it’s required for most reward checking accounts in order to receive the higher rate; also some companies, like Zecco for example, charge a fee if their customers choose to receive paper statements.

Right now, the only paper statements I am receiving are from mutual fund companies because some of them either don’t have online access for investors or there’s no such an option to switch to electronic files. All bills of my credit cards are electronic, including Discover card which recently launched $30,000 paperless statement sweepstakes to encourage its cardholders to with to the paperless method.

In addition to one grand prize of $15,o00, there are also three first prizes of $5,000 each. To enter the sweepstakes, all you need to do is log into your account and opt to receive electronic statements by providing your email address. Once you enrolled, you will receive one entry into the sweepstakes. Plus, you can

• Get an automatic e-mail reminder 6–7 days before your credit card payment is due.
• Continue to access up to 24 months of password-protected statements with the option to download a printable PDF.

Are you still getting paper statement from Discover? Sign up before 05/31/2009 to go paperless and get a chance to win as mush as $15,000 in cash

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Currently, Citi PremierPass Card Elite Level is running a promotion with 20,000 ThankY0u points to new card members (10,000 points for basic level card). In order to receive the bonus points, you will have to spend at least $600 ($300 for basic level card) in the first 3 months after the account is opened.

Citi PremierPass Card Rewards Program

Citi PremierPass Card Elite Level is one of the best travel rewards credit cards that gives card holders the flexibility to choose how they want to be rewarded. With this card, you can not only earn ThankYou rewards points by spending on everyday purchases, but also earn miles by using the card to buy airline tickets, for yourself and for anybody else. Details of the card’s rewards program include:

• Earn 1 point for every mile flown with any airline on tickets you buy for anyone with this card (For example, the trip to China I took last year is about 7,900 miles and I earned 15,800 TY Points for the round trip that’s 15,800 miles. If my wife and children had went with me together, then I would have earned those points from their trips as well.);
• Earn 2 points for every dollar you spend at gas stations, supermarkets and drugstores, plus earn 1 point for every other dollar you spend on all other purchases;
• Get a complimentary companion ticket when you buy a qualifying ticket;
• Redeem points for flights on any airline with no blackout dates; discounts on hotel stays, retail gift cards and more through ThankYou Network rewards program;
• Points never expire, as long as you make 1 purchase every 3 calendar years.

You will get all these benefits from PremierPass Card Elite Level with the price of $75 annual fee. With the Elite card, the maximum points you can earn in a calendar year is 200,000, of which 100,000 can be earned through miles flown. And to redeem points earned from fly miles, you must also earn the equal number of points from purchases.

If you don’t want to pay the annual fee, there’s a basic level card with watered-down benefits:

• Earn 1 point for every 3 miles flown with any airline on tickets you buy for anyone with this card;
• Earn 1 point for every $1 spent on all purchases;
• Redeem points for flights on any airline with no blackout dates; discounts on hotel stays, retail gift cards and more through ThankYou Network rewards program;
• Points never expire, as long as you make 1 purchase every 3 calendar years.

ThankYou Points Redemption

Rewards, including the account opening bonus, are earned as ThankYou points which can be redeemed through ThankYou Network, the unique rewards program for eligible Citi credit cards and Citi banking products. ThankYou points can be redeemed for a wide verity of products, gift cards, flight tickets, or hotel stays.

• You can redeem 10,000 ThankYou points for $100 gift certificates at Macy’s, Sears, or Gap, etc,;
• If you favor cash, then you can exchange 16,000 points for $100 cash rewards;
• If you choose airline tickets, you can book any ticket or itinerary through Expedia.

If you fly a lot, then this card, the Elite Level card, can definitely help you accumulate ThankYou points faster because you earn one point for every mile flown and the bonus points they are offering now can give you a jump start.

I got the PremierPass Elite Level Card with no annual during a promotion. Otherwise, I probably won’t get and keep the card because I don’t like paying an annual fee to use a credit card.

BTW, Citi recently introduced a new Citi Forward card that also has a good promotion. Not exactly a travel card, but the benefits look good. Check it out.

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We have been using Scott 1000-sheet single ply paper bought at Costco in our house for years. Though we don’t have much complain, it does seem that we are just, well, flushing money down the toilet. The CR test concluded that

At just 6 cents per 100 sheets, Scott 1000 delivered the most sheets for the lowest price. But because it was also the thinnest and wimpiest toilet roll we tested, you could wind up using more of this lower-scoring roll than you bargained for.

Next time when we shop toilet paper, we will have to check out one of CR’s best buys: Kirkland Signature.

In early February, Chase quietly started to impose an annual fee of $120 on some credit cards with a large amount of balance at a low rate. Even though Chase said that the fee only applies to those accounts that made a little progress in paying off the balance, the move provoked angry reactions from cardholders as well as consumer advocacy groups. Under pressure, Chase abandoned the plan and said it will refund card members the $10/month fee late last month.

However, Chase isn’t alone in punishing cardholders who don’t pay their balance in full every month. Last week, The Wall Street Journal reported that Bank of America plans boosts interest rates on credit cards carrying a balance. According to the Journal,

Starting with June account statements, any credit-card customer who carries a balance and has an interest rate below 10% will see his or her rate jump into double-digit territory.

Even though government agencies have passed new rules to regulate the credit card industry early this year, the stronger restrictions will take effect until July 2010. At the same time, credit card issuers seem to be on the rush to change the terms of credit cards when they still can at will.

Finally, the Insurance Institute for Highway Safety today released a report on the matter of the size and weight of a car in a crush. The IIHS study found that, even though minicars, such as Honda Fit, Smart Fortwo, and Toyota Yaris, have many advantages (low price, fuel efficiency, etc) over larger cars, they performed poorly in front collision tests. They just don’t provide good protections to the passengers when colliding with midsize vehicles. After all, laws of physics still prevail

photo credit: otherthings

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• JC Penny MasterCard (opened in 2002 as a store card)
• Lows MasterCard (opened in 2004 as a store card)
• Bank of America AAA Visa Card (opened in 2002), WorldPoint MasterCard (opened in 2002)
• Citi Driver’s Edge Card (opened in 2008)
• Discover Miles Card (opened in 2006)
• Chase Rewards MasterCard (opened in 2003)
• Citi Dividend MasterCard (opened in 2004)

Some cards were opened years ago as store credit cards, but later they also become credit cards bearing MasterCard or Visa logo, others were opened for balance transfer only but never got canceled after the promotion was over. With nothing attractive to me now, there’s no reason for me to keep them. However, I didn’t just close the cards. For those I have other cards with the same issuers, I always asked for credit line consolidation to move credit limits to a surviving card. This way, I won’t lose the overall available credit after closing the accounts and the credit utilization ratio (total balance divides total credit) will not increase. For those store cards, I just closed them because the credit lines are very low anyway (usually a couple of thousands).

After closing the above accounts, the total number of credit cards I own have reached a reasonable number and each of them has its own purpose:

• American Express: Optima Card (opened in 1998, $10,000 CL, oldest card, not actively using), TrueEarningots Card (opened in 1998, $29,200 CL, for shopping at Costco);
• Bank of America: UPromise MasterCard (opened in 2002, $46,700 CL, for shopping online through UPromise);
• Chase: Amazon Visa Card (opened 2006, $11,000 CL, for shopping at Amazon.com to earn 3% cashback), Freedom Visa Card (opened in 2007, $49,150 CL, for shopping at grocery stores and gas stations to earn 3% cashback), Sony Visa Card (opened in 2000, $6,000 CL, old card, not actively using);
• Citi: PremierPass MasterCard (opened in 2007, $35,500 CL, for travel);
• Discover: Discover Card (opened in 1999, $11,300 CL, old card, not actively using);
• FIA: Fidelity 529 College Rewards MasterCard (opened in 2006, $7,400 CL, for shopping elsewhere to earn 2% cashback).

As you can see, I am careful not to close those old accounts which have a big role in determining the length of my credit history, even though I am not actively using them (I don’t however have to use them at least once every year or two to prevent them from being closed by the issuers). By keeping some old cards and preserving credit limits, I am trying to minimize the negative impact on my credit score.

Have you voluntarily closed any credit cards lately? If so, anythng special have you done so it won’t hurt your score?

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I don’t know about you, but I never destroyed a single card and never thrown away one. Instead, I put them in a box and after more than ten years since I got my first credit card, I have *collected* a bunch of credit cards that are no longer in the market. For example, Chase once offered a StockBack credit card that let me invest cashbacks in a mutual fund, Citibank had a card with which I used to pay Bell Atlantic (now Verizon) phone bills and earn rewards, which was probably my first card with a reward program, and I can shop and donate to Smithsonian with Discover Smithsonian Card. I guess none of them exists any more.

BTW, do you know Discover also had a black card in the past?

We know American Express has a Centurion card and Visa recently introduced its own Visa Black Card. But in my card collection, there’s a also a *black* card from Discover.

Never heard of? I bet that’s the case unless you, like me, actually owned one. Well, it’s just an ordinary card that’s all black. There was no special requirement to get the card and there’s no privilege associated with the card either (obviously, if I can get one, everybody can).

From my collection, I can see that credit cards have changed a lot since I first became a cardholder. Not just the program, but the card itself as new cards come and old cards gone. I even had a Discover card that’s like those grocery cards you can put on your key china, though I never did that. Going through the old cards is kind of fun sometimes.

Do you still have your first credit card? If so, what is it? My oldest is an American Express Optima Card that I got in 1998.

BTW, credit cards are not the only items I collect. I also collect stamps and coins. Last year when I went back to China, I filled the entire 22″x14″x8″ luggage with only a portption of my stamp collects. And I had a box full of paper cigarette packs that are 30 to 40 years old

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I have been a UPromise credit card member since 2002, using it to shop mostly at grocery stores and online through UPromise to earn additional rebates. The card generally gives members 1% cashback on all purchases (see my UPromise review for details). So far I have accumulated nearly $500 rewards, all invested in the UPromise 529 College Fund for my daughter. But that’s not the only way to spend the rewards. In fact, if you have a Sallie Mae student loan, you can use your rebates to pay the loan as well.

Now the new UPromise card comes with two flavors, allowing cardholders to receive additional rewards when shopping at certain locations:

The Upromise World MasterCard credit card with Gas & Grocery Rewards

• Earn 1% college savings on all purchases
• Earn 10% extra college savings on thousands of Upromise participating grocery and drug store items
• Earn 2% extra college savings on eligible gasoline purchases at Exxon or Mobil locations

The Upromise World MasterCard credit card with Dining & Grocery Rewards

• Earn 1% college savings on all purchases
• Earn 10% extra college savings on thousands of Upromise participating grocery and drug store items
• Earn 10% extra college savings on purchases at Upromise Dining by Rewards Network restaurants

The card doesn’t have an annual membership fee and there’s no limit on the amount of rewards you can earn. If you are interested in getting the UPromise card for yourself, there’s a $25 bonus if you are approved for the card and make a qualified purchase.

BTW, the UPromise credit card isn’t necessary to earn UPromise rewards to save for college. You can simply sign up with the UPromise program, which is free to join.

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Citibank launched a brand new credit card today, called Forward Visa Card, which the bank claims will “help you see rewards of maintain healthy credit.” After a quick glance, it does seem to be a very rewarding card because card member will not only enjoy rewards (in ThankYou Points) with this card, but also the benefit of paying credit bill on time (lower interest rate). Main benefits of the new Forward card include:

• 100 ThankYou Points each billing period when paying bill on time and staying under credit limit;
• 5 rewards points for every dollar spent on books, movies, music, and at restaurants; 1 point for $1 on purchases elsewhere;
• Reduce your APR by .25% when you make a purchase, stay under your credit line and pay at least your minimum amount due on time 3 billing periods in a row (at most 2% can be reduced);
• No annual fee;
• Citi Forward Spend Tracker helps you estimate the amount you spend on common purchases and compares it with others.

If you eat out a lot, then the 5x reward points at restaurants is pretty generous. The most I can get now is 3% cashback with AMEX Costo TrueEarnings Card. The card also has a 6-month 0% APY for purchase and balance transfer promotion, but you will have to pay 3% balance transfer fee, not worth it when you can only earn a little better than 2% from your savings account.

Interested? If you apply now and get approved for the Forward card, you will also get

• 3,500 points after making $250 purchase within the first three months;
• 2,500 points after signing up to receive paperless statements within the first three months.

The 6,000 ThankYou Points can be redeemed for a $60 gift card from many merchants.

Actually, I am thinking getting one myself

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Let’s see what they say behind our back:

1. Universal Default – “We’re just waiting for you to screw up“: Even if you pay your credit card bills on time every time, you could still see your rates skyrocket if you are late to pay your utility or medical bills. The best way to avoid universal default is paying your bills, all your bills, on time.
2. Identity Theft – “When it comes to identity theft, we’re part of the problem“: Do credit card companies have any role in the ever increasing identity fraud cases? You can shred or burn every unsolicited credit card application sent to your house, but “Data about you is not under your control.”
3. Your Children and Credit Cards – “Your children are our future“: Credit card issuers really mean it when it comes to marketing credit cards to your children, who can get a credit card when they are as young as 16 years old even though they are still financially dependent on you. To help them develop good financial habit, parents should teach “teens about credit well before they get their first cards and monitoring their spending as they learn to use them.”
4. Credit Card Rewards and Freebies – “Our ‘freebie’ rewards are anything but“: Did you ever apply for a credit card just because of its rewards program? I did. Though I am satisfied with the program I am using, credit card rewards aren’t just for everyone. Do your homework and figure out exactly what it takes to get that rewards before signing up.
5. Debit Cards – “Debit cards should come with a warning: “Use at your own risk’“: The problem is there isn’t and since debit cards offer fewer protections for consumers than credit cards do, sometimes it’s hard to dispute an erroneous charge. The reason? You draw from your own checking account when paying with a debit card, but borrow the bank’s money with a credit card.
6. Two-cycle Billing – “Paid in full? Not necessarily“: If your card issuer uses two-cycle billing instead of daily average balance to calculate interests, you will start to pay interests for your purchase as soon as when the charge is made, before you even you get your bill. Stick with cards using daily average balance.
7. Hidden Charges – “We’re accepted anywhere on the globe, but our exchange rates are from Planet Rip-off“: Know how much your credit card company will charge you on currency exchange and ATM withdrawals before using your card oversea.
8. Due Date and Time – “We close early on payment-due dates“: That’s why I always pay my credit card bills one-day or two before the actually due date they printed on the statements because there are banks set their payment deadline at 9:00 am on the due date, believe it or not.
9. Credit Card Incentives – “Our whims are legally binding“: What seemed to be an irresistible incentive at the time you opened a new account could be gone in as soon as 15 days as long as the issuer gives you a 15-day notice in written. Always pay attention to notice coming from credit card companies, even if they appear insignificant.
10. Exceeding Credit Limit – “Go ahead and exceed your credit limit — we like that“: If you charge more than the available credit line on your card, the transaction may not be rejected. And if it does go through, there’s one thing likely to happen: the increase of your interest rate. And on top of that, banks will change you as much as $30 over the limit fee. Be wary.

Did you fall victim to any of these?

photo credit: Fosforix

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I applied and was approved for a Citi Driver’s Edge card in early 2008. The reason for me to get that card wasn’t for the rewards it offers, but solely for the purpose of getting an interest free loan from the card and using the money to pay off our loan, at that time at $16,306 remaining balance with a 4.90% APR. The car loan was indeed paid off last February after receiving a $17,000 check from Citi with 0% interest rate for 12 months.

In the past 12 months, I have been making a monthly payment of $640 to the credit card, far more than the requried minimum as if I were still paying the car loan because I didn’t want to have a much bigger bill when the balance transfer expires, which is now. Last week, I sent a check of a little over $10,000 to Citibank to pay off the remaining balance of the free loan. The check was cleared and we are now officially having only one debt to pay: the mortgage.

And for three reasons, it could also mark the end of credit card arbitrage that I have played for years to earn free money from 0% balance transfer offers from credit card companies. First, credit card arbitrage is more profitable when banks are paying 4+% yield. I didn’t spend the money I received from card issuers when I got the balance transfer. Instead I put it in an online savings account to earn me interests during the offer period (usually 12 months). Now that interest rates of online banks are going down fast, it doesn’t make too much sense if I can only get a little over 3% return from an online bank of the money I borrowed. Secondly, credit card issuers are tightening the rule. As we all know, credit card companies have become very cautious when giving out credits. Not only the APR has increased, sometimes without any reason, but also fees for balance transfers have been imposed. When I got the Driver’s Edge card, I still had no fee offer, but Citi has already charged 3% balance transfer fee for most, if not all, of its cards. Chase, another issuer from which I got several 0% APR cards in the past, recently started to charge a $120 annula fee for low-APR promotional offer. All these changes make it hard to play the game going forward. Finally, credit card companies are very aggressive in closing unused cards. Most of the cards I got in recent years are for balance transfer only. After the promotion was over, I usually just threw the card in the drawer and never touched it again. It was fine in the past when I can let the card idle for years, but not now. Recently, I got card cancellation letters from both Citi and Chase for my inactive cards. It won’t do my credit score any good if I keep opening and closing new accounts.

All these considered, I am going to stay away from any new card from now. I don’t know for how long, but at least until the conditions get better, if ever.

BTW, I recently checked my FICO credit score and I am that close to the 800 mark. Maybe I can finally get over it after paying off the $10,000 balance on my card

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• Travel Credits — Book any airline, any flight your want. Simply pay the flight and redeem travel credits with miles earned. You can redeem 10,000 Miles for a $100 travel credit.
• Gift Cards — You can also redeem for gift cards from 90+ Discover partners with as little as 1,000 miles.
• Cash — If you prefer, you can also request cash for your miles. 5,000 miles can be redeemed for a $25 account credit.

Right now, Discover is running a promotion which will give new card member up to 25,000 bonus miles over the first 25 months after the account is opened, 1,000 miles per month as long as you use the card at least once every month. The card also comes with a 12-month 0% APR balance transfer offer, but there’s a 3% fee of the amount transferred. With most online savings account interest rates in the sub-3% range, there isn’t much to do with the balance transfer unless you have high interest rate balances.

Looks good, right? Well, the offers from the new Escape card are indeed quite impressive, but they all come with a price: a $60 annual fee

If you don’t care about the fee, then the Discover Escape Card may be for you. If, on the other hand, you don’t want a card with an annual fee, you can try the Miles Card by Discover and earn 12,000 bonus miles in 12 months.

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Watch this video on Good Morning America yesterday first if you missed the show on TV.

Kevin Johnson, who, at 29 years old, is the CEO of a PR firm in Atlanta and has an excellent FICO credit score of 764, has recently got the credit limit on his AMEX Blue Credit Card slashed by $7,000 even though he paid his balance in full every month and never late. The reason, according to the letter sent to Kevin from AMEX,

Other customers who have used their card at establishments where you recently shopped have a poor repayment history with American Express.

After examining his past charges on the card, it seems that the only place where he shopped could raise the red flag is, well, Wal-Mart, even though American Express refused to tell Kevin exactly which establishments “have a poor repayment history with American Express.”

What AMEX did was using the so-call behavioral analysis to examine card member’s shopping patterns then determine the credit worthiness based on the result, in a way to try to keep default rate down.

Is there anything wrong with what AMEX did? Yes, I think there is, but not because AMEX profiled its card members (yes, people should get different treatment based on their credit history), rather they punished good people for the fault that is not theirs. And, according the the news report, the use of behavioral analysis by issuers are increasing.

Be careful where you shop now!

*Thanks @thewriterscoin for the tip.

Note: You may need to go to the site to watch the video embedded in this post.

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Which method do you prefer? And which one is better, or neither?

Last month I posted the first part of the interview with Visa, where the difference between a debit card and a credit card is discussed. In this part of the interview, Visa answers questions on security of debit cards and debit card transactions.

Question: How do debit cards and credit cards differ when it comes to protecting the cardholder against fraud?

Visa answer: Despite the popularity of debit cards, consumers are often confused about the security features and consumer protections debit cards offer. Many of the same features and protections provided by credit cards are also offered with debit cards.

It’s important to know that Visa debit cards carry the same protections as Visa credit cards. For example, all Visa cardholders (prepaid, debit or credit) are protected by Visa’s Zero Liability policy. This policy means you pay nothing if unauthorized purchases are made on either a Visa Credit card or Visa Check card when you choose to sign for your transactions. Some financial institutions offer Zero Liability protections for certain PIN debit transactions as well, but the best way to ensure you are protected is to sign for your purchases. Visa’s Zero Liability policy also applies to purchases made on the Internet.

Continually monitor your account, and review your monthly statement carefully to identify any unauthorized transactions. If you notice fraudulent activity on your card, you should contact your financial institution as soon as possible and report it – this may help to reduce your liability.

Full details on Visa’s Zero Liability policy can be found at www.visa.com/security or by contacting your Visa issuer.

Question: A common piece of advice is to write something like “Ask for Photo ID” on the back of your credit or debit cards instead of signing them to prevent mis-use. On the other hand, most cards state that they are “Not Valid Unless Signed.” What’s your take on signing the back of the card? And what’s the point, really, when nobody ever checks to see if the signature matches your driver’s license or other ID? (Though some clerks do ask for ID if you specify that on your card.)

Visa answer: Some people write “See ID” or “Ask for ID” in the signature panel, thinking that this will help prevent fraud or forgery. That is, if their signature is not on the card, a fraudster will not be able to forge it. In reality, criminals don’t take the time to practice signatures. They use cards as quickly as possible after a theft before an account is blocked. They are actually counting on merchants to not to look at the back of the card and compare signatures—they may even have access to counterfeit identification with a signature in their own handwriting. Bottom line: “See ID” or “Ask for ID” is not a valid substitute for a signature. A merchant has the right to ask the cardholder to sign the card before using it and if the cardholder refuses, to not accept the the unsigned card.

Although Visa rules do not prevent merchants from asking for cardholders’ IDs, merchants cannot make presenting an ID a condition of the sale. Therefore, merchants cannot refuse to complete a purchase transaction because you refuse to provide ID. If a merchant does refuse to complete your purchase, please call the number on the back of your Visa card or 1-800-Visa-911 and provide the customer service representative with the name and location of the merchant.

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