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Cash Back Rewards Stolen

This article was written by in Credit. 15 comments.

Using cash back credit cards is rewarding in two specific ways. First, you’re earning money when you spend. That’s the obvious part. But when you know that you’re getting a rebate when you use your credit card, you also feel better about spending than you would otherwise. Feeling good can be dangerous, as you might make mistakes like spending more than you should while chasing that good feeling.

That’s why I’ve identified ten traps for using cash back credit cards. The issuers know that many people will fail to handle their credit cards properly, and the resulting profit from customers’ mistakes helps pay for those cash back rebates.

Credit card users are generally aware of these traps and can avoiding them, but sometimes other problem occur, beyond the spenders’ control. Consumerism Commentary reader SteveDH recent encountered a problem with his cash back credit card.

Here’s his story:

Burglar alarmWhen I received my last VISA statement it showed that I had redeemed $275 in Cashback awards — I hadn’t. I got in touch with my bank and also started looking at all of the web pages and we found the someone had added a “Transfer Account” from GE Capital Retail Bank in Draper Utah to the redemption page and apparently requested the redeemtion. The information that they had to enter was the ABA number and account number. That’s how I know which bank it is even though only the last four digits of the account number were there. How they got to the redeemtion page without going through my login (which my bank says wasn’t compromised) is a mystery.

Although my bank killed the credit card and promised to apply the missing money to the new VISA card, I’m stilling waiting for final resolution. I download into Quicken almost everyday but I hadn’t even thought of checking rewards balances. In fact I’m amazed I noticed it on the statement this month. Yet another example of the crooks out there — some are pretty darn creative.

This is insanity. Cash back rewards should be something consumers should be able to forget about; they should be able to trust that each purchase earns the correct cash back amount (it occasionally doesn’t) and that the cash back will be there when you retrieve it. It’s a mystery how this redemption bank account was added to the cash back rewards page without SteveDH’s account being compromised. Perhaps it was an inside job.

I confess that I rarely look at my accrued rewards balances. As I primarily use airline miles rewards cards now, I generally see my rewards only when I visit Continental’s and United’s websites. The miles I earn from spending are deposited monthly, and I’ve not yet noticed any discrepancies. Cards that earn cash back, however, can be less organized.

Since cash back information is not downloaded into Quicken or reported in other software like Mint.com, it takes extra effort to verify your cash back is accruing correctly and is available according to the rules of your agreement. Don’t forget to check once in a while. You won’t be able to prevent every problem, but you’ll be able to report it to your issuer promptly, and hopefully have the problem resolved without difficulty.

Thanks for staring the story, SteveDH. If any other readers have stories to share, please contact me.

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10 Cash Back Credit Card Traps

This article was written by in Credit. 16 comments.

For my own finances, I’ve been a fan of credit cards with cash back programs. Some financial experts advise avoiding credit cards completely, even those cards that offer rewards like cash back or offer on best gas credit cards and small business credit cards. I’ve never been a fan of this approach — again, for my own finances — because I see a credit cards as just another tool for personal finance. A hammer is inherently neither good nor evil; it’s a tool that someone can use to fix a roof or to send another person to the hospital.

For a large portion of consumers, credit cards cause trouble. That may not be a reason to avoid credit cards entirely, as consumers can learn how to use credit cards effectively. Those of us who do believe we use cash back credit cards responsibly, paying bills in full every month, never paying interest, and buying only what we can afford, are relatively comfortable with the use of this tool, but even the best of us are subject to issuers’ traps.

Cash back credit card programs include traps that help issuers recover the cost of paying out benefits to their customers. While some traps can be avoided by managing finances closely, other traps take advantage of the psychological aspects of using plastic rather than cash. These traps can be more difficult to avoid, because consumers cannot control their subconscious tendencies. Here are the cash back traps to avoid, if you can.

1. Credit card users spend more

Cash Back Credit CardsThe process of taking cash out of your wallet and handing that money to another person is a very deliberate activity, both physically and mentally. Parting with cash has psychological ramifications. In most people, particularly those who best understand the value of having money saved, the act of giving the cash away triggers the same reaction as a painful activity. Spending money and pain are linked in the brain.

When you use credit cards, you add a buffer between your cash and the process of parting with it. Spenders are less likely to hesitate and less likely to get that twinge of pain associated with handing over bills and coins. People familiar with computer science would call this a layer of abstraction. You’re controlling your money by using a representation of that money, not the cash itself, and that makes the process feel better. In addition, cards with a rewards program like cash back encourage higher spending, because that cash back is seen as a reward that can be maximized by spending more.

Avoid this by making a concerted effort to buy only what you could afford with cash at any time.

2. Late fees and interest negate any cash back benefits

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The Best Credit Cards, February 2012

This article was written by in Credit. 38 comments.


With hundreds of credit cards available today, it’s difficult to find the best credit card for your particular situation. Whether you need a travel rewards card or a great cash-back card, the best offers are getting more difficult to find. The best credit cards of 2012 are just not as rewarding as they once were, but as the economy improves, credit card issuers are beginning to make a concerted effort to get your business back.

Credit cards, and in particular the type of credit card use that’s associated with maximizing rewards, is not the best option for people who do not pay the bill in full and on time each month. Be sure to read the note at the bottom of this article before changing your credit card situation.

These are the best credit cards available today, updated for February 2012. I’ve included a brief explanation as to why each credit card made the list. I update this page frequently, so check back often.

Citibank

Citi® Platinum Select® CardCiti® Platinum Select® MasterCard®. The Citi® Platinum Select® MasterCard® offers a 0% introductory APR for 18 months on purchases and balance transfers. If you need to transfer a high balance, I recommend this card. The Citi® Platinum Select® MasterCard® has no annual fee and carries a very low APR of 11.99% to 21.99% variable. To obtain this card, you need good credit, but if you want to receive the best introductory offer and APR available, you need excellent credit.

Citi ThankYou(SM) PremierCiti ThankYou℠ Premier Card. The Citi ThankYou℠ Premier Card includes a 30,000 bonus point offer after signing up and making $2,000 in purchases during the first three months. Those 30,000 points can be redeemed for a $300 gift card, and cardholders can also earn bonus points for signing up for an online account with paperless statements. Each year you own the Citi ThankYou℠ Premier Rewards Card, you earn an annual bonus. The card carries a hefty $125 annual fee, but the fee is waived for all first-year cardholders.

Citi® Diamond Preferred® CardCiti® Diamond Preferred® Card. While the Citi® Diamond Preferred® Card does not include a rewards program, there is a 0% introductory APR on purchases and balance transfers for a full 18 months. The regular APR is 11.99% – 21.99% variable, depending on credit history, and this card includes no annual fee. The Citi® Diamond Preferred® Card provides cardholders a concierge service, which can be used for just about everything, from booking hotel rooms and flights to purchasing concert tickets and making restaurant reservations.

Citi ThankYou(SM) Preferred CardCiti ThankYou℠ Preferred Card. The cousin of the ThankYou Premier, the Citi ThankYou℠ Preferred Card is a scaled-down version of the card with slightly smaller bonuses and rewards. If you spend $1,000 within the first three months, Citi provides cardholders with 15,000 bonus ThankYou® points, good for a $150 gift card. Customers earn five rewards points for each dollar spent on gasoline, drugstore and supermarket purchases during the first 12 months and one rewards point for each dollar spent thereafter. The Citi ThankYou℠ Preferred Card does not carry an annual fee.

American Express

Starwood Preferred Guest® Credit Card from American ExpressStarwood Preferred Guest® Credit Card. One of the leading credit cards for travel rewards, the Starwood Preferred Guest® Credit Card offers up to 25,000 bonus points in the first six months you are a cardholder, and has no annual fee for the first year ($65 thereafter). At the recent Financial Blogger Conference, there was a significant consensus at my dinner with a number of top bloggers that the rewards offered on this card and its business counterpart are the best. And your Starpoints can be redeemed for nearly any travel expense.

Blue Cash Everyday(SM) from American ExpressBlue Cash Everyday℠ from American Express. Blue Cash Everyday℠ from American Express offers $100 cash back bonus after spending $1,000 in eligible purchases in the first 3 months, as well a cash back tier of: 3% cash back on supermarket purchases, 2% cash back on gas and department store purchases and 1% cash back on everything else. There is an introductory 0% APR on purchases for 12 months and no annual fee associated with the card. A $25 referral fee is awarded if you sign up and recommend the Blue Cash Everyday℠ from American Express to a friend.

TrueEarnings® Card from Costco and American ExpressTrueEarnings® Card from Costco and American Express. Rounding out the best American Express cards, the TrueEarnings® Card from Costco and American Express offers 3% cash back for annual gasoline purchases of up to $3,000 (1% thereafter), 2% on travel and restaurants, and 1% on everything else. The card has a low comparable APR and an introductory offer of 0% APR on purchases for six months.

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.

Chase

Chase Sapphire Preferred CardChase Sapphire® Preferred Card. The Chase Sapphire® Preferred Card provides 50,000 bonus points if you make at least $3,000 in purchases during the first three months, worth $625 toward airfare or hotel accommodations. This card has a 1% standard reward rate on all purchases and 2% for all travel and dining purchases. There is a $95 annual fee associated with the Chase Sapphire® Preferred Card which is waived for the first year but all cardholders will receive a 7% anniversary bonus on points earned every year. For travelers, this card can really come in handy because there are no foreign transaction fees. This is a limited time offer.

Chase Freedom® Visa - $200 Bonus Cash BackChase Freedom® Visa – $200 Bonus Cash Back. The best of all cash back credit cards, the Chase Freedom® Visa – $200 Bonus Cash Back offers cardholders a $200 statement credit after making just $500 in purchases during the first three months of card ownership. This card also includes 5% cash back on up to $1,500 spent on rotating categories throughout the year and 1% cash back on everything else. Cash earned never expires and the Chase Freedom® Visa – $200 Bonus Cash Back has no annual fee.

Capital One

Capital One® Venture℠ Rewards Credit Card. The Capital One® Venture℠ Rewards Credit Card is as straightforward as it gets. Earn two miles for every dollar you spend and an additional one-time bonus of 10,000 miles when you spend $1,000 in your first three months. There is a $59 annual fee, but it is waived the first year you have the card. The Capital One® Venture℠ Rewards Credit Card is a Visa Signature card, so the card offers the Signature set of extended benefits such as complimentary concierge services and travel upgrades.

Capital One® No Hassle Cash℠ Rewards Credit Card. The Capital One® No Hassle Cash℠ Rewards Credit Card offers unlimited 2% cash back on gas and groceries and 1% cash back on everything else. The card offers a 0% APR introductory offer on purchases until September 2012. The card carries a $39 annual fee and of all the cards that made this list, the Capital One® No Hassle Cash℠ Rewards Credit Card is the only one that is available for customers with average credit.

Discover

Discover® More® CardDiscover® More® Card. The Discover® More® Card can be a strong cash back card if used properly. With the opportunity to earn 5% cash back on rotating categories throughout the year, up to the total purchase dollar amount specified in each program, the Discover® More® Card has been a customer hit for years. Category purchases in excess of the specified amounts will earn up to 1% cash back. In addition earn 1% unlimited cash back on purchases after your total annual purchases exceed $3,000; purchases that are part of your first $3,000 earn .25%. The card also carries a 0% APR introductory offer on balance transfers and purchases for 15 months. There is no annual fee to carry the Discover® More® Card.

Bank of America

BOA-card-1BankAmericard Cash Rewards™ Card. The BankAmericard Cash Rewards™ Card offers 3% cash back on gas, 2% on groceries and 1% on all purchases thereafter. Cardholders have the opportunity to earn an additional 10% cash back if they redeem into a Bank of America® checking or savings account. The BankAmericard Cash Rewards™ Card does offer an introductory rate of 0% APR for the first twelve billing cycles on purchases and for any balance transfers made within 60 days of opening your account. This card does not carry an annual fee.

BOA-card-2Bank of America® Accelerated Rewards® American Express® Card. Two issuers combine to form this great cash back credit card, currently offering up to $50 in statement credits. The Bank of America® Accelerated Rewards® American Express® Card offers 1.25% cash back for every $1 in net retail purchases and does not have an annual fee. The card also carries a 0% APR introductory offer for your first 12 billing cycles only for purchases and for balance transfers made within 60 days of opening your account. If you don’t pay your card off each month, you might discover this card’s one drawback: a purchase APR as high as 20.99%.

Simmons First

Visa Platinum RewardsSimmons First Visa Platinum Rewards. The Simmons First Visa Platinum Rewards Card made the list because of its low standard purchase APR. At 9.25%, the only card with a lower standard purchase APR we could find was the Simmons First Visa card but that card didn’t have a rewards program. With the Simmons First Visa Platinum Rewards Card, you earn one point for every net dollar you spend, and the card carries no annual fee. If you’re planning to make a balance transfer onto this card, you’ll be happy to know there is no balance transfer fee either.

Reader favorite

Fidelity Investment Rewards Visa Signature Card. The Fidelity Investment Rewards Visa Signature Card offers a unique reward program. Earn 1.5 points for each $1 spent on the first $15,000 in purchases per year, and if you spend more than $15,000 annually that reward is increased to 2 points per $1 in purchases. When you reach 5,000 points they can be converted into deposits into your eligible Fidelity investment account. The card also participates in the WorldPoints program, so if you do not want cash back in your Fidelity account or if you don’t have an investment account, you can redeem for travel on major U.S. airlines with no blackout dates or for purchases from a selection of available merchandise.

Note: If you use credit cards as a tool for convenience, pay your bills in full every month, and are otherwise financially self-aware, consider some of these credit cards. If you use credit cards to pay for things you can’t afford, paying interest every month, then start thinking about paying off debt.

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Citibank to Charge $20 a Month for Checking Account

This article was written by in Banking, Featured. 32 comments.

For the last few years, savers have been punished by banks offering low interest rates. If that weren’t enough, banks now want depositors to pay for the privilege of putting money in a bank. In the world until recently, banks sought depositors because they used the public’s money to increase lending to borrowers who were willing to pay for the privilege of using someone else’s money. The tables have been turned. Rather than borrowers paying for the bank’s services, depositors are paying through an increasing barrage of fees.

A number of banks have been testing debit card fees. Bank of America is moving beyond the testing phase and will begin charging all debit card users a $5 monthly fee soon. Citi found another path towards customer-generated revenue. Until now, the Citi checking account (called the “Citibank Account”) has featured a $20 fee for customers who haven’t maintained a $6,000 balance. With the introduction of the new fee structure, the new minimum balance to avoid the $20 fee will be $15,000, combined across savings and checking.

Citi Checking Account Piggy BankAnother Citi option, the “EZ Checking” account currently has no fee, but the bank will now be charging a $15 fee to all customers who have this account with a balance lower than $6,000. The “Basic Checking” account will receive a fee increase from $8 to $10 for accounts with less than $1,500.

In order to make the $20 fee for the Citibank Account easier to swallow — and the fee may not be significant to customers who do keep that $15,000 minimum balance — Citi is offering a few perks for new customers. At the same time Citi is changing the fee structure, they are introducing a promotion to acquire new customers. I’ll write about the promotion in a separate article. For most customers, the $20 monthly fee outweighs any possible rewards.

This is the new state of the banking industry. It’s easy to blame increased fees on new regulations that limit the industry’s ability to generate revenue from merchants, as banks turn to customers to become the next cash cows. Other reasons for the industry’s desire to find new fees include Basel III compliance which requires banks to increase their financial strength and new SEC regulations for money market funds which require banks to make safer (and less lucrative) investments with their own money. Banks are eager to jump at the chance to punish customers and blame the government. No one is forcing banks to turn to customers to keep profiting, but without banks profiting from offering loans either, it’s the only untapped source.

As public companies that answer to shareholders, banks are obligated to find as many methods as possible to profit — even to earn outsized profits while taking advantages of customers who feel they have no option other than sitting back and taking it and customers who aren’t paying enough attention to know they’ll be paying more fees.

The more I see the banking industry’s path, the stronger I believe in the importance of credit unions. Find a credit union and move your money before banks find more ways to part customers from their money. If you can’t find a convenient credit union for which you qualify, take a look at PerkStreet’s checking account with a 5% cash back debit card.

alancleaver_2000

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Discover Credit Cards Review

by Flexo

Sears introduced the Discover Card in 1985 and sold off the business to the independent company Discover Financial Services. Over the last few years, Discover has made some excellent strides in strengthening their somewhat ill-respected brand by expanding coverage. The company’s credit cards are now accepted almost everywhere Visa, MasterCard and American Express are. Discover ... Continue reading this article…

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Surprise: Citi Dividend American Express Card

by Flexo

Although it’s not my primary card, I still have a Citi Dividend World MasterCard in my wallet. The card, in its former incarnation as the Dividend Platinum Select MasterCard, was one of the best cash back rewards credit cards of its time, with 5 percent cash back on all purchases. Today, though, the card offers ... Continue reading this article…

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Schwab Invest First 2% Cash Back Card Officially Dead

by Flexo

Now that the Schwab Invest First 2 percent Cash Back credit card is officially closed, consider one of the alternatives below. Owners of the very popular Schwab Invest First Visa credit card, which offered 2 percent cash back on purchases deposited directly into a Schwab account, have started receiving word that their favorite card will be converted ... Continue reading this article…

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Best Buy Reward Zone Credit Card Review

by Flexo

Several times, I’ve done what is considered unthinkable by most personal finance experts: I signed up for store credit cards at the point of sale. I have a Macy’s card, which I signed up for a discount on clothing I was planning to buy — clothing that is probably overpriced in the first place. But ... Continue reading this article…

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