Think Your Way to Wealth » credit cards

TrueEarnings(R) Card from Costco and American Express Review

RC — Fri, 29 Apr 2011 12:00:20 +0000

Warehouse clubs like Costco, Sams Club, and BJ’s are a great place to save money when buying in quantity. While you do need to be careful what you buy, their popularity over the last years. Costco consistently ranks at the top of list of warehouse clubs, due to their selection, prices, and great customer service.

Costco and American Express have teamed up with a really great credit card offer for Costco member as well, providing an great, additional benefit for those who love shopping at Costco, the True Earnings Card from American Express.

TrueEarnings® Card from Costco and American Express

No annual fee for Costco members

0% intro APR on purchases for six months

Earn cash back wherever you buy, including 3% for gasoline for annual gasoline purchases of up to $3,000 (1% thereafter), 3% for restaurants, 2% for travel, and 1% virtually everywhere else
0% intro APR for 6 months. After that, your APR will be a variable rate, currently 15.24%

Rated 4.5 out of 5 stars in Overall Satisfaction Rating, based on feedback from current TrueEarnings(R) Cardmembers from Costco and American Express

The Card issues a cash reward coupon annually, which you can redeem at any U.S. Costco warehouse for merchandise or cash – how you use it is completely up to you.

The cash rebate amount varies according to where the cardholder makes the purchase; 1% is earned on general purchases, 2% is earned for travel-related purchases, and 3% is earned for restaurant and on gasoline purchases up to $3000 (1% thereafter). There is no limit to the amount of cash rebates that can be earned.

In addition to the cash rebates, the card does provide several benefits and services that are commonly found with American Express® credit cards, such as purchase protection, auto rental insurance, and travel accident insurance.

The card has an above average interest rate for purchases and balance transfers (for a reward card). There is no annual fee with a paid Costco membership. Cardholders can also take advantage of the 0% introductory offer on purchases.

As you can see, this is a great card whether you a Costco member and frequent shopper or not. The 2% on travel related purchases and the 3% on the 1st $3000 for gas purchases is something you will not find with many other cards, and the other cash back categories definitely make it a credit card worth looking into, particularly if you are a Costco member.

Apply now for the TrueEarnings® Card from Costco and American Express

Disclaimer: This content is not provided or commissioned by American Express. Opinions expressed here are author’s alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.

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Paying Off Credit Card Debt is A Great Investment

RC — Tue, 29 Mar 2011 11:22:05 +0000

Everyone likes getting good returns on their savings and investments, right?

Whether its your 401k plan, emergency fund, or just money you have sitting around with no real purpose, getting the most for your money, and the highest interest or returns you can get, is frequently something think about- some people even obsess over it. After all, it’s your money, why not get the best return you possible can?

Frequently, your returns are based on your risk level- for example, in your 401k you may be invested mostly in stocks if you aren’t expecting to retire (and therefore won’t need it) for a long period of time -say 20 to 30 years.

On the other hand, for money you want to keep accessible and don’t want to risk any of it to the ups and downs of the stock market, you may keep that in an bank account, CD, or savings bond.

The problem with these types of savings or investments (even though you may consider them “savings”, they can still be considered investments) is that over the past few years, interest rates have been really low- most online bank savings account interest rates hover around 1% to 1.25% +/- right now, and CD rates are equally low, depending on the length of the CD.
One thing to keep in mind if you are carry credit card debt, particularly the high interest type-

Paying off credit card debt is a great investment.

If you have credit card debt at anything but 0% interest, you should strive hard to pay it off as quickly as you can. Its nothing but a liability, and paying 10%, 15%, 20% or even higher for credit card debt will keep you in a bad financial condition for a long time.

Paying off that credit card debt is a guaranteed return- If you credit card charges you 10%, ever dollar you pay off saves you $0.10 over the course of a year. Obviously it’s even more if your credit card charges 15%, 20% or higher.

That is why paying more than the minimum is so important- paying the minimum usually isn’t paying off much more than the interest you are paying every year, and progress is very slow when you do that.

Getting out of credit card debt can really send you down the path to financial success, so if you have a little extra money in a bank account earning 1% (which some people do- probably more than you or I think), throw it at your debt for a quick, guaranteed return. Finding ways to earn or save more money or even a zero percent balance transfer can help you speed up your credit card payments as well.

Remember, in a world where reward (high interest or return on investments or savings) usually involves risk , paying off high interest credit card debt is a guaranteed winner.

This article was featured in the Carnival of Personal Finance at Funny About Money.

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New Southwest Airlines Rapid Rewards Plus Visa- 20,000 Bonus Points Offer

RC — Sat, 05 Mar 2011 15:58:12 +0000

Southwest Airlines just revamped their Rapid Rewards program, going from a credit system (16 credits would get you a free flight) to a points based system, where you earn points based on they type of ticket you have (Wanna Get Away, Anytime, or Business Select tickets) and the amount of money you spend on your ticket purchase.

I just talked about the changes and details of the old rapid rewards program compared to the new program, and am still in the process of figuring out how they are rolling over old credits, etc., but you can see the features of the new program in that article.

As part of the new Rapid Rewards program, Chase has come out with a All-New Southwest Airlines Rapid Rewards® Credit Card, and is currently offering a 20,000 point bonus after making your first purchase.

New Southwest Airlines Rapid Rewards Plus Visa Card

All-New Southwest Airlines Rapid Rewards® Credit Card from Chase

With this card, you can earn 20,000 points toward free flights after your first purchase. You will also earn 2 points for every $1 you spend on Southwest flights, Rapid Rewards hotel and Car Rental Partner purchases. You’ll even earn 1 point for every $1 spent on all other purchases.

Additionally, earn 1 point for every $1 in balance transfers – up to 10,000 points within 90 days of opening your account. Every year, on your Card membership Anniversary, you’ll also earn 3,000 points.

As I mentioned in my previous article, you can redeem your Rapid Rewards points under the new program according to the following based on the type of ticket:

Business Select: cost 120 pts per dollar of fare
Anytime: cost 100 pts per dollar
Wanna Get Away: cost 60 pts per dollar

Obviously, when redeeming your points, Wanna Get Away fares are the best bang for your buck. For the 20,000 bonus points, you could redeem them for $333 worth of Wanna Get Away fare- a very good deal, in my opinion, after only making 1 purchase with the card.

Here are some of the other details on the Southwest Rapid Rewards Visa:

NEW! Get 20,000 Points toward FREE FLIGHTS after your first purchase!
No Blackout Dates, Unlimited Reward Seats, and Points Don’t Expire.
Now you can redeem for International Travel.
Earn 2 Points per $1 spent on Southwest Airlines purchases.
Earn 2 Points per $1 spent on Southwest Hotel and Car Rental Partner purchases.
Earn 1 point per $1 on all other purchases.
Get 3,000 Points every year on your Card member Anniversary that’s equal to $50 toward a Wanna Get Away® Fare. * September 11th Security Fee applies.

As with most airline rewards cards, there is an annual fee, which is $69 for this card. However, the 3,000 point bonus ( which is equal to $50 on a Wanna Get Away Fare) you will get on your card member anniversary will go a long way towards covering the fee every year- another perk that many airline cards do not offer.

If you fly Southwest airlines frequently, this is definitely a great airline miles reward card to have- particularly if you can use their rewards partners for car rentals and hotel reservations, where you will also get 2 points per $1 spent as you will with all of your Southwest Airlines ticket purchases.

Apply Now Southwest Airlines Rapid Rewards® Credit Card from Chase

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Discover® More Card No Balance Transfer Fee 0% Balance Transfer Offer

RC — Tue, 22 Feb 2011 07:53:12 +0000

This offer is no longer available, but the Discover Card 24 month 0% balance transfer offer has been extended!

A Zero Percent Balance Transfer Credit Card offer can be an effective tool for getting out of debt, if you are committed to doing so in the time frame of the 0% offer.

A few weeks ago I wrote about the 24 month 0% balance transfer offer from Discover, which can give you a little more time to pay off that balance at 0% than what most credit cards normally offer.

Discover also has a current promotion with the Discover® More Card – No Balance Transfer Fee 12 month 0% Balance Transfer offer, with no balance transfer fee, which is also a really great offer if the 12 month term is enough time for you for paying off your balance transfer at 0%.

Most cards charge between a 3-5% fee for balance transfers, which at 5% would be $250 on a $5,000 balance, so having no balance transfer fee can literally save you hundreds if you do a balance transfer with a no balance transfer fee offer.

Discover® More Card – No Balance Transfer Fee Offer

Limited Time – No Balance Transfer Fee
Promotion only valid through February 28, 2011
0% intro APR on balance transfers for a full 12 months, then the Regular APR
0% intro APR on purchases for a full 12 months, then the Regular APR
5% Cashback Bonus® in categories that change like travel, gas, groceries, restaurants, home improvement stores and more
Up to 1% unlimited Cashback Bonus on all other purchases
No Annual Fee

Two good benefits of the Discover More Card are cashback bonus categories, which are great if you use the card for purchases, and no annual fee, which is always good.

This offer expires February 28th, 2011, so if you are interested in more details and to sign up, check out the Discover® More Card – No Balance Transfer Fee

This offer is no longer available, but the Discover Card 24 month 0% balance transfer offer has been extended!

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Discover® More Card 0% Balance Transfer for 18 Months Offer (formerly 24 month offer)

RC — Fri, 28 Jan 2011 04:07:18 +0000

Zero percent balance transfer credit card offers have been around for many years, but the recent economic troubles and credit tightening have kept many credit card companies from offering really good deals and long terms on zero percent balance transfers lately.

The Discover 18 month balance transfer offer is still available!

Transferring a high interest credit card balance to a 0% balance transfer credit card can be a useful tool to help reduce any credit card balances you may have, and allow you to get out of credit card debt faster. Of course, you need to use any credit card wisely, and make sure to pay off your balances as quickly as possible.

Obviously, you want to pay off that debt during the 0% interest period, and having a longer term can give you a little more time to do so- I believe the 18 month period of the Discover® More Card – 18 Month Promotional Balance Transfer offer is one of the longest currently available- I don’t think any other card offers a 2 year 0% offer right now.

Discover® More Card – 18 Month Promotional Balance Transfer Details:

Limited Time – 0% intro APR on balance transfers for a 18 months, then the Regular APR
Promotion only valid through February 28, 2011-extended!
0% intro APR on purchases for a 6 months, then the Regular APR
5% Cashback Bonus® in categories that change like travel, gas, groceries, restaurants, home improvement stores and more
Up to 1% unlimited Cashback Bonus on all other purchases
No Annual Fee

Two good benefits of this card are cashback bonus categories, which are great if you use the card for purchases, and no annual fee, which is always good.

The balance transfer fee is 5% is a little on the high side (many shorter term cards charge 3% or so) but having a full 1.5 years to pay off the card can save you much, much more in interest fees over that period, depending on the amount you transfer, of course.

This offer has been extended, so if you are interested in more details and to sign up, check out the Discover® More Card – 18 Month Promotional Balance Transfer

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PerkStreet Financial Review- Online Checking with Debit Card Offering 2% Cash Back

RC — Mon, 28 Jun 2010 03:31:08 +0000

PerkStreet Financial℠, a relatively new online checking account is now offering 2% cash back when using the PerkStreet Financial Debit MasterCard for signature (non-pin) purchases if you have an account balance of $5,000 or more, or 1% back if your balance is less than $5,000.

Plus, you can earn 5% cash back for the rest of June and July(2010) when you:

purchase ice cream at Ben & Jerry’s, Culver’s, Dairy Queen and Cold Stone Creamery
make home improvement purchases at Lowe’s, Home Depot and Menard’s
buy gas by paying at the pump

5% cash back for gas and at home improvement stores is a great deal, PerkStreet also says there will be more opportunities to earn 5% back throughout the year.

Cash Back Debit Card

A cash back debit card tied to an online checking account is a great alternative for those who choose not to use credit cards for all of their purchases or don’t use credit cards at all and want to stick with cash based spending, still allowing you to get rewards back for your purchases which are on par with that of many rewards or cash back credit cards.

About PerkStreet Financial

PerkStreet Financial is an online financial services company offering online checking, offering “perks” in the form of cash back, music, or coffee when you make purchases with your cash back Debit MasterCard.

A PerkStreet checking account lets you:

Buy things with your PerkStreet Financial Debit MasterCard, cash or checks
Withdraw money without a charge at 37,000 ATMs nationwide
Find an ATM from your computer or mobile phone
Withdraw money without charge at any merchant that allows you to get cash back when making a purchase
Transfer money online between your other bank accounts and your PerkStreet checking account
Pay bills online
Check your balance online or over the phone and receive balance alerts via email or mobile phone
Get help over the phone any time of the day – we answer most calls within 30 seconds

Your money is FDIC insured up to the current limits (currently $250,000).

PerkStreet has no account minimums, and no monthly fees, save a $4.50 inactivity fee for months when you do not use your account at all- you can avoid this by making a transaction with your debit card, writing a check that clears the account, using Online Bill Pay, initiating a withdrawal or making a deposit to the account.

Opening an Account at PerkStreet Financial

The account opening process is relatively simple and only takes a few minutes- you enter your information, fund your account with a minimum of $25.00 (you can use a bank transfer from an existing account). PerkStreet will send you an email confirming they have received your application, and say they will contact you within 2 business days to notify you of the status. I just signed up myself over the weekend, and the entire process took less than 10 minutes.

ATM Usage-

PerkStreet gives you access to the largest free ATM network in the country (STARsf®), located in the at CVS®, Walgreen‟s®, Target® and 7-Eleven® and more. Usage of ATM’s withing this network are totally free.

Also, according to the FAQ page, they do offer checks for usage with your account, and the 1st book of checks is free, for times when you may need to write a check instead of using a debit card.

Visit PerkStreet.com to sign up for your free online checking account and the PerkStreet Financial^SM Debit MasterCard.

“The PerkStreet Financial Visa Debit Card is issued by The Bancorp Bank pursuant to a license from Visa U.S.A. Inc.”

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How Are Credit Cards Made?

RC — Wed, 03 Mar 2010 17:00:38 +0000

This guest post comes from Michael, a contributing editor of the Dough Roller, a personal finance and investing blog, and Credit Card Offers IQ, a credit card review site.

If you had to guess how many credit and debit cards were in circulation today, (active) what would your answer be?

With an estimated US population of 308,500,000 people, would it be safe to assume one card per person? Maybe two cards? Well, guessing aside, the actual number of credit and debit cards in circulation today is 2.1 Billion! (2,180,000,000). If you break it down to cards per person, everyone is responsible for an average of 7 cards, including kids born in the hospital yesterday. That’s a lot of plastic!

The average credit card weighs a fifth of an ounce (0.20oz) so the total weight of these 2.1 billion cards is a whopping 2.7 million pounds. Just thinking about that amount of plastic will ruin the day of eco-activists, but the demand will surely increase year after year and the supply will need to be met.

So how are these light but powerful pieces of plastic made? The entire process is fairly simple and tens of thousands of cards can be made in a matter of minutes. Depending on the issuer of the card, a special series of inks and dyes are used that are specific to plastic and the use of magnetic ink ensures the coded strip on the back of every card works every time. The actual manufacturing takes place in the following four stages:

1. Compounding and Molding – Credit or debit cards are created in sheets and the plastic for the sheet is made from melting PVCA (polyvinyl chloride acetate) with other materials. The mixture is then placed on a flat surface so it can be pressed down to the appropriate card thickness.
2. Printing – After the sheet has cooled down, it’s time to send it to the printers. Silk screening is used to print each card and the design on every card is the same so the process is seamless.
3. Laminating – That beautiful gloss that you find on every credit or debit card is created after the card has been printed and every credit card sheet that contains 63 total cards is laminated.
4. Embossing and Cutting – Finally, the last step in creating a credit or debit card is embossing it with a name and a card number then cutting it from the sheet of 63. It is in this step that a credit card becomes unique and is embossed with a number to verify its legitimacy. Each card endures a quality control check to make sure it can withstand normal wear and tear, it’s magnetic strip works and the information printed on the card is accurate.

The American National Standards Institute defines the quality that a credit or debit card must have before it is mailed to customers and with the change in technology every year; the quality standards for credit cards are updated regularly. Some issuers like Bank of America take the production of credit and debit cards one step further and include a picture ID on the card that can be used to identify you when purchases are made.

Thankfully, these credit cards can be recycled if you want them to be and many of the guitar picks and plastic key rings you use are made from old credit cards.

The next time you have an expired credit card in your wallet you have a decisions to make… do the financially smart thing and cut that card into shreds and toss it in the trash or be green and recycle it.

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Some New Credit Card Rules Put in Place- What Will The Effect Be?

RC — Sat, 22 Aug 2009 03:55:45 +0000

A few of the new credit card rules which were part of the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 took effect yesterday.

Card issuers must give 45 days notice before increasing fees or changing (raising) interest rates
Card issuers must send out monthly bills at least 21 days before the due date-which hopefully will help some people avoid paying late fees.

The rest of the CARD Act credit card rules are set to go into effect in February of 2010.

What will the effect of the changes in credit card rules be?

Although the rules seem to favor the consumer or credit card user by not allowing credit card issuers to change the rates on a card to quickly, and possibly decrease the amount and frequency of late fees being charged to individual card holders, we all know that the credit card companies will try to make up the lost revenue some how.

According to this article discussing the new credit card rules from Business Week, penalty fee income rose 43% between 2003 and 2008, and was $19 billion dollars last year. The article also discusses how the average credit card rate has increased recently, in part likely sue to a need by credit card companies to make up for the lost revenue.

Overall, I think forcing the credit card companies to be more transparent about the penalties and fees they try to impose on a card holder, as well as placing restrictions on the frequency or interest rate hikes is a good thing. It should make the fine print from credit card companies that most people don’t read and even fewer can actually understand- a little easier to follow.

But it may cause people to pay a little more, which may be a wash (hopefully it would not result in more money to the card companies-but it could). Some people may pay more in interest but not get nicked in fees, but someone who always pays their bill on time may be paying more overall.

photo credit: Andres Rueda

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A Look at the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009

RC — Sun, 24 May 2009 22:10:57 +0000

The Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 has been passed by both the House and the Senate, and was signed into law by President Barack Obama on Friday.

What will the ramifications of the CARD Act be?

It is supposed put a limit on credit card companies frequency of rate increases, make the credit card companies be upfront when raising rates, as well as limiting the severe penalties frequently place on people who are occasionally late by a day or two on their payments. The bottom line is that it should be good for credit card users. However, credit card issuers are going to find other methods to keep their income from decreasing, so there is the possibility that rates could go higher (even though they may not be increased as frequently as they are sometimes right now). Annual fees could become more frequent, and rewards could be reduced. It is too early to predict if or to what degree these will happen though.

Some of the highlights of the Act include:

Credit card companies must provide consumers with a 45-day advance notice of changes in rates and other significant changes to account. (Rate changes due to changes of prime rate are exempt.)
Credit card issuers cannot increase the annual percentage rate (APR) during the first 12 months of opening up a new account.
Promotional rates must remain in effect for at least six months from the beginning date of that promotion.
Credit card issuers are prohibited from charging a finance charge based on the double billing cycle method, except in limited circumstances.
If two or more different APRs apply to different portions of an outstanding balance, the amount of any payment above the required minimum payment needs to be applied to the balance with the highest APR first and then to lower APR balances.
Card issuers are required to send credit card statements at least 21 days before the due date of the outstanding balance.

New Credit Card Rules for College Students

Cards cannot be issued to those under 21, unless they have a parent or guardian co-signer, or proof of independent means of repayment. For college students without a co-signer, the maximum amount of credit extended will be limited to the greater of 20 percent of the student’s annual gross income or $500 dollars.
Inducements to college students prohibited- No card issuer or creditor may offer to a student at an institution of higher education any tangible item to induce such student to apply for or participate in an open end consumer credit plan offered by such card issuer or creditor.
No extra fees for making payments over the phone or internet- unless it is an expedited fee on the day before or day of the payment due date.

Read the full text of the 2009 CARD Bill approved by the House and Senate.

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College Students and Credit Card Debt

RC — Thu, 26 Feb 2009 04:05:40 +0000

I didn’t get into a whole lot of credit card trouble (i.e, credit card debt) when I was in college. I applied for 1 card, and used it rarely, throughout my time in college. My problem with credit card debt came a bit later, after I graduated and started working. So I know that not all college kids who get credit cards use them unwisely and run up debt.

But the statistics on college students and credit card debt is alarming. The average college student has $2500 to $3000 in credit card debt upon graduation, according to a University of Wisconsin-Madison news article.

It can be very difficult for some students, with the lack of financial education available at both the high school and college levels, to steer clear from the allure of getting your first credit card.

Why are credit cards so enticing to college students?

It can be seen as a sign of being an adult- College is a period of transition, you start not being able to drink or vote, for example, and when you graduate 4 years later (hopefully!) you are considered old enough and responsible enough to do those things. Getting a credit card can be seen as one of the steps to becoming an adult as well.

A credit card is a status symbol to some- It’s easy to want to impress your fellow classmates or friends by plunking down a credit card to pay for dinner, drinks, or something else. Adults still “pick up the tab” to try to impress co-workers or clients, so it is not difficult to see why students want to do it too.

Peer pressure can influence your desire for a credit card- Peer pressure can be a very powerful force when you are in your late teens or early twenties, surrounded by thousands of people your own age. Even seeing a line at a table with Visa or Mastercard reps. trying to sign students up can make someone want to “join the crowd”.

A credit card can represent freedom- Until the bill comes in, a student no longer has to make that phone call to Mom or Dad and say “Please Send Money!”. When the bill comes in, however, it can be a different story.

How Can College Students Avoid Credit Card Debt?

Don’t sign up for more than one card-One card is plenty when you are going to school, especially if you are not really working. Resist the temptation and free T-shirts you might get for signing up for multiple cards.

Better yet, don’t sign up for one at all- If you can, avoid signing up for one at all. You have plenty of time once you graduate and start earning an income to build up your credit history.

Use it wisely, for necessary expenses or emergencies- Using it for expenses such as books, or true emergencies, like car repair. Don’t use it when you are going out on a Thursday night.

Use it for convenience, when you already have the cash-If you are using it to build up your credit history, be smart and pay for things when you already have they money-and then pay off the bill quickly.

Resist the temptation to use it in front of friends- Don’t try to impress others by paying for dinner or a night out. If you or they don’t have enough money, find a cheaper alternative.

Leave it at home- It’s a simple strategy, but it works. If you leave it at home most of the time, you can’t use it, obviously.

Pay the bill in full every month- Once you start making the minimum payments instead of paying off the balance, you are setting yourself up for a long, expensive lesson. Trust me, I know.

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What You Should Know about the New Credit Card Rules and Regulations

RC — Sun, 21 Dec 2008 18:57:48 +0000

Very significant changes in credit card rules and regulations were passed last week, by the Office of Thrift Supervision, a division of the Treasury Department, as well as the Federal Reserve.

These were the most significant changes in decades, and will affect many credit card users one way or the other. The rules were based on feedback from the general public, and over 65,000 comments were received on the initial proposal back in May.

The most significant of these rules, which will take effect in July 2010, may help those in credit card debt (like myself).

Credit card companies will be required to apply any payment above the minimum to the part of the balance with the highest interest rate.

The new credit card rules will allow credit card companies to raise interest rates only on new credit cards and future purchases or advances, rather than on current balances.

These two rules could help people from sinking deeper into debt, even if they are not acquiring new credit card debt. Companies often raise rates on current balances, causing cardholders to get deeper into debt due to the very high rates they are sometimes charged. Any by applying payments to the lowest interest rate purchases on cards as they do now, the higher interest portions are paid off last and accrue interest for the longest period of time.

I am glad to see these common sense changes being made- although I believe everyone is responsible for the debt they incur-it will be nice to see a little more fairness in the way the system operates.

Additional changes to credit card regulations include:

Card issuers must give cardholders a reasonable time to pay, such as 21 days
Credit card companies cannot put exorbitant fees for a card user exceeding his limit
Card issuers will not be allowed to unfairly compute balances, such as by double cycle billing
Credit card companies cannot make deceptive credit card offers

But according to a study by by the law firm Morrison & Foerster, the new credit card regulations could cost the banking industry $10 billion a year.

Now, I certainly don’t feel sorry for them, but you and I both know they will try to recoup that loss, probably by raising interest rates even higher than they are now. But the changes do seem like a good thing in general, by making the rules more clear, and eliminating some of the “credit card companies dirty tricks“, so to speak.

Do you think that the new credit card rules will help the consumer? Or will the credit card industry just think up new ways to keep gouging card users?

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Credit Card Debt Elimination Using a Zero Percent Balance Transfer

RC — Fri, 08 Aug 2008 11:33:12 +0000

As part of my credit card debt elimination plan, I mentioned I was going to look into 0% balance transfer options, in order to reduce the amount of interest I am paying and help speed up the payoff process. Well, shortly thereafter, low and behold, I found a Citibank Citi CashReturns card 0% transfer offer in my mailbox (surprise, surprise- I get about 1 cc offer per day these days). Well, after a few days of deliberating (Do I really want to sign up for another card?) I signed up, and I got 12 months at 0% on my transfers, so I transferred about $9,000. If I spend $100 on the card by the end of September, I get an additional 3 months at 0% as well.

So what should you look for when transferring a balance?

What to look for:

Credit Card Terms

How long is the offer for? 6 months, 9 months, 1 year?
What is the Annual Percentage Rate (APR)? The current rate for purchases is 10.99%, but I don’t really plan on making any. If you get a card to use for a balance transfer, the APR may be on the high side for purchases.

Transfer Fees

How much are you charged to transfer the balance? 2%, 3%? You need to subtract this from the amount you anticipate you will save by lowering your interest rate. The transfer rate on the Citi CashReturns card is 3%, so it was about $270. I did get $15.00 cash back. Even after the transfer fees, I will save about $600-$700+ in interest payments if I pay the card off in 9-12 months.

Conditions

What is the default APR? This is the APR you will pay if you are late on your payments. Don’t be late! The rate on the Citi card is 23.99%, so I plan on scheduling my payments in advance to be extra careful that I am never late.

Before making a balance transfer, you need to investigate how long the offer is for, what the APR is, and what the fees may be, if any. You then need to run the numbers to see if it is a good deal and worth doing. Then pay that debt off!

Check out this list of credit cards with low introductory rates!

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