From the CARD Act to the ever-changing policies of major issuers, it's hard to keep up with the latest developments in credit cards. Here's an easy way to figure it all out - and make out financially.
Over the July 4th weekend, two well-known newspapers ran intriguing stories about credit cards…
- “Bonuses are back for travel-reward cards,” The Wall Street Journal reported. “So many credit-card companies are offering deals and perks right now that frequent travelers may want to re-evaluate whether they should switch their card allegiance.”
- “Some businesses are putting the kibosh on credit cards to avoid paying processing fees,” the Los Angeles Times reported. “When you buy something for $100 with a credit card, it costs the merchant about $2 in processing fees.”
So credit cards have suddenly gotten better for their owners, but worse for the businesses who swipe them?
Ever since the recession, credit cards have been on a wild ride. Last year, the number of open credit card accounts dropped 24 percent from its peak in the second quarter of 2008. Of course, one big reason for that might have been the steep interest rate hikes in 2009.
But in March we reported that suddenly, credit cards were back in fashion – about 20 percent of banks reported having eased standards for approving credit card applications.
Then there was the CARD Act of 2009, which has changed the credit card landscape quite a bit over the past year or so – and for the better. But even as late of March, the government was still tweaking it.
So if you don’t keep up with the latest developments, you can end up with a credit card that doesn’t suit your needs. For instance, do you have a business card? Think you’ve benefited from the CARD Act’s new consumer-friendly rules? Think again.
1. Consider ditching the business card
The CARD Act only applies to personal credit cards, not business cards. As Reuters succinctly described it…
Consumers no longer risk exposure to two-cycle billing, unilateral APR increases, and certain fees. But since business cards lack these protections, and many business cards are still backed by their holders’ personal credit, credit card companies have kept a “back door” open to the old practices.
In the late ’90s, I had a business credit card as well as a personal card. Why? Because I needed to keep those two expense categories separate for tax purposes. These days, that’s a breeze to do with just one card, since my issuer (Chase) has online tools that make it easy to track my expenses. If you’re a small business owner, you might want to look long and hard at that business card.
2. Reward yourself
This is my favorite credit card topic, one I’ve written about before. (See My Credit Card Company Buys All My Christmas Presents.) During the depths of the recession, issuers cut back on rewards programs. But that’s been slowly changing.
As The Wall Street Journal reported, travel cards are making a comeback right now. Why? The paper says they’re “responding to the additional airline fees and increased travel hassles.” Among the deals being offered…
Waived fees on the first checked bag for you and those traveling with you, free passes to airline clubs, no foreign transaction fees, waived annual fees for the first year and generous bonus miles when you sign up and spend a little in the first few months.
I don’t travel much, so I prefer cards that offer cash back or loyalty points that can be converted into gift certificates or merchandise. Look for anything that offers a rewards return rate of at least 2 percent, and then look for special deals. For instance, I shop a lot on Amazon.com, so I have an Amazon card that triples the points when I buy on the site. Rewards are also making a strong comeback, so shop around. Best place to start: the Money Talks credit card tool.
3. Don’t hate those annual fees
Since I don’t have a travel-reward card, I avoid cards with annual fees. but I’ve yet to see a travel-reward card that doesn’t have one. The American Express Platinum card has a whopping $450 annual fee.
But as The Wall Street Journal reports, if you’re a frequent business traveler, you can easily cover the Amex fee with the card’s perks – “including free access to international airport clubs, elimination of foreign transaction fees, a $100 credit to pay for the U.S. Customs’ Global Entry program that speeds up the customs process, and $200 in airline-fee credits, which can be used for checked baggage, airline change fees or in-flight food.”
So don’t automatically turn up your nose at annual fees – crunch the numbers before deciding if such a card is right for you. And if you haven’t done so in a few months, try again. The perks keep changing.
4. Consider following the Blueprint
While I’m a Chase credit card customer, I’ve never availed myself of its Blueprint service. That’s because I pay off my balance every month, but for those who don’t, Blueprint could be a helpful tool. It’s a free feature that helps you manage interest charges, avoid them altogether on pre-chosen categories of expenses (even if you’re carrying a balance), and analyze your spending.
It’s been around for a couple years now, and it’s earned good reviews from notable websites, from Bargaineering’s “it’s great that Chase is offering up these tools” to MoneyCrashers’ “an innovative way to carry a balance on some purchases while still receiving an interest-free grace period on others.”
If you don’t have a Chase card, other issuers are getting on board with similar offerings. Wells Fargo and Discover, for example, have beefed up their web tools. Since these are sophisticated enough to help save money, you should consider them as seriously as any other factor on this list.
5. Bonuses and introductory rates
As we mentioned, credit card issuers want your business again. And they’re willing to make some special offers to get it.
Most common are free balance transfers or low introductory annual percentage rates, but these days you can also find promotions like the British Airways Visa Signature card, which offers “25,000 bonus BA Miles after your first purchase plus an additional 25,000 bonus BA Miles when you spend $2,500 in the first 90 days.”
Once again, your best bet is to search Money Talks News’ credit card page: You tell it what type of card you’ll looking for, it finds it.