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Visa Signature Concierge: Useless for Immediate Travel

by Flexo on September 7, 2009

in Reviews, Travel

As I’ve mentioned recently, my maternal grandmother passed away a few days ago, my second of two grandmothers to pass away in the past few weeks. A few years ago, she moved out to California to be cared for by my mother and brother who had also moved out to the west coast several years earlier. When my grandmother entered hospice care, I mentioned to my boss that I would be taking a few days off for the funeral with short notice, as I intended to travel to California to be with my family. On Tuesday last week, my mother called me to share the news while I was getting ready to leave work for the day.

I immediately began searching for a round-trip flight that would take me from the New York City or Philadelphia area to the Los Angeles area on Wednesday and back over the weekend. My primary tool for searching for flights online is SideStep, but I also look at websites for individual airlines. Not finding anything and wanting to leave the office to continue searching at home, I notified my boss that I would be out for the remainder of the week.

I decided to give the Visa Signature concierge service a try. I signed up for a Visa Signature card earlier this year for the purpose of putting its service through real-life tests and writing about them here. There is no annual fee, but the card is marketed offering exclusive perks and services, such as a 24-hour concierge and access to exclusive events. I called the Visa Signature concierge during the drive home with the intent of using the service to find and book my flight to California.

FlightThe concierge who answered the phone could not have been less helpful. To research flights, a travel specialist needs to be on call, and at the time I called, they had none. The best they could do is take my flight requirements and get back to me within 24 to 48 hours, and the impression I took away from the call is that all travel requests require this excessive turnaround time. Since this was Tuesday evening and I needed to travel Wednesday, this did not meet my needs. A regular travel agent would have been able to take care of my request immediately.

I thanked the representative for her help but I spent an hour or so doing my own research and booking the flight when I arrived home. I determined that bereavement fares, last-minute rates designed for people who need to fly in situations like mine, do no longer exist at most airlines. When they do, the rate is a five or ten percent discount off the full coach fare, not the non-refundable economy fare. I would be better off with the economy rate. I spent more than I would have liked, but the fare I chose was decent for a non-stop flight considering the circumstances.

I’m pleased I was able to be with my family in a difficult time, but I would have liked the process to be smoother, and the concierge service let me down.

Photo: Doug Letterman

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Credit Card Use Increases Prices for Everyone

by Flexo on August 10, 2009

in Credit

I use a total of three credit cards. The first is a card issued by Citibank that offers a rounded set of cash back rewards, my alternate is a Bank of America Visa Signature card, and for business expenses I use an American Express Blue Cash for Business card. But I don’t pay interest fees because I don’t carry a balance — I only spend what I can pay off before the due date.

For a conscientious consumer, there are a number of reasons to use a credit card for as many expenses as possible.

  • You can often automate regular expenses like cable and electricity. Your accounts are automatically charged rather than opening yourself to forgetting to send a check.
  • Credit card statements provide accurate records of your spending. Cash spending often falls under the radar.
  • When you pay for most expenses with a credit card, you do not have to carry as much cash around with you.
  • You are not liable for fraudulent charges on your credit card.
  • Many credit card companies offer rewards like cash back for their use.

Last year, I decided to reduce my credit card spending to practically zero while paying for as much as possible with cash. After a couple of months, I found that my level of spending did not significantly decrease but my level of accuracy in tracking my expenses did decrease. Sometimes, you can’t receive a receipt and it requires time and effort to track these expenses. There are studies that show people tend to spend less when they use cash rather than credit cards, but for people whose spending is already stripped down or optimized, there is no significant difference.

The real problem with credit cards is hidden. I first experienced this first-hand when I worked for a non-profit organization almost a decade ago. Somehow I inherited responsibility of managing the organization’s website, which wasn’t too far-fetched considering I had been running websites for several years at that point and it was a small company. The website included an online store, my first exposure with e-commerce from the management side. Our merchant agreement was with a monster of payment gateway services, Authorize.net. We were paying a third party to manage our store in addition to the merchant account.

I redesigned the store to be managed through what was called Yahoo! Store at the time. It was significantly less expensive and rather than dealing with an unresponsive third party, we managed the store from the office. But I had an interesting inside look at the cost of being a merchant.

It’s expensive to accept credit cards. This cost has to be built into the price of the products — for all customers, even those who pay cash — to ensure a modest profit. Per most merchant agreements, retailers are not allowed to charge a premium for credit card usage. (Some gas stations play fast and loose with these rules by offering what they call a cash discount.)

These fees make it possible for credit card companies to offer rewards even to those customers who pay their bills in full each month. Customers like me feel they are beating the system by earning rewards without paying interest or late fees, but credit card companies have the last laugh; our fervent use of credit cards to earn rewards simply increases their income from the fees charged to merchants for every transaction.

So widespread use of credit cards, with the high fees charged to merchants, increase the cost of goods — all goods — for everyone.

But what possible solutions are there?

We could encourage people to stop using credit cards. I think Dave Ramsey is one of the most influential people who has tried this approach. It has worked well on the individual level, but even if all of his followers were to stop using credit cards, it would not make a dent on the industry. Higher prices due to widespread use of credit cards is something we just have to deal with. Visa, Mastercard, and the others have too much power over retailers, and unless that changes, everyone pays the price for credit cards.

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Credit Card Fair Fee Act of 2009

by Smithee on July 3, 2009

in Consumer

Businesses are hoping to get more bargaining power when it comes to how much they are charged to accept credit and debit card purchases.

The Credit Card Fair Fee Act (read the whole bill), was reintroduced this year and is now being discussed in Congressional committees. I first heard about it when I was buying an emergency breakfast at one of the various 7-Elevens that are sprinkled on my way to work.

They had a binder of papers on the counter and were asking for people to sign their petition. It seems that groups like the National Restaurant Association feel the credit card companies are treating them unfairly with a lack of transparency in the way they do business and arbitrarily raising fees.

Convenience store owner Bruce Mitchell said his operation paid out more than $3 million in credit card fees last year.

“I am paying 25 percent more for credit card fees than I pay in wages,” he said.

Business owners say that these fees, and their frequent increases, are being passed along to consumers in the form of higher prices.

What do you think? Should the “free market” sort it out, or do credit card companies have too much power?

Small business pushes credit card reform, Susan R. Miller, South Florida Business Journal, June 8 2009

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Comparing the Visa Black Card With American Express Platinum and Centurion Cards

by Flexo on June 3, 2009

in Credit, Reviews

American Express created a frenzy among the wealthy when it decided to take advantage of rumors of an exclusive black-colored charge card, used by movie stars and music celebrities for purchasing jets and other items beyond the financial reach of us mere mortals. In 1999, American Express introduced the Centurion Card, a black charge card with no spending limits and a veritable cornucopia of exclusive benefits, all for a significant fee.

Last year, Visa saw the opportunity to market to the same demographic when this company launched its answer to the Centurion Card, the Visa Black Card which I’ve previously described in detail.

Although the assumption is that the Visa Black Card would compete with the American Express Centurion Card, it actually has more in common with the American Express Platinum Card.

Do you qualify?

If you want to hold a Centurion Card, you must be a Platinum cardholder for at least one year and you must have spent $250,000 on the card in twelve months. Both the Platinum and Centurion Cards are charge cards, not credit cards, so you are expected to pay off your entire charged balance each month.

To qualify for an American Express Platinum Card, the prevailing thought is that you will need an annual income of at least $100,000 and a high credit score in order to be approved.

Visa Black CardThe Visa Black Card is a credit card, not a charge card, offered to only 1% of the United States population. You and three million other people might qualify for this card. Some current Visa customers have received invitations or have had their existing Visa cards automatically upgraded. There have been reports of people with poor credit and little or no income being approved for this card, and an invitation package was sent to a man who had been deceased for seven years.

Annual fees

The Centurion Card is in a class of its own. When you qualify for the Centurion Card, you will be charged a $5,000 initiation fee and an annual membership fee of $2,500. That’s a total of $7,500 will will owe after the first billing period without having spent any money.

American Express PlatinumThe Visa Black Card carries an annual fee of $495 while the American Express Platinum Card requires a yearly membership payment of $450. This fee comparison makes it clear that the features of the Visa Black Card are more likely to be in line with the Platinum rather than the Centurion.

Concierge services

All three cards offer 24-hour concierge services. The purpose of a concierge is to have a personal assistant with the resources to take care of arrangements you do not have time for yourself. A good concierge should be able to order and deliver gifts to the people you specify, give dining recommendations and make reservations, even in the most popular restaurants. A concierge would be your proxy for shopping.

American Express CenturionThe Centurion Card goes further by assigning you a personal concierge, so you theoretically always deal with the same employee from the service, who gets to know you and your preferences. Additionally, the Centurion Card reportedly permits you to schedule private shopping at high end stores, such as Gucci, Neiman Marcus, and Sony.

Travel services

The Visa Black Card offers 24/7 legal, medical, and financial emergency travel services, as does the Platinum Card and the Centurion Card. All three cards offer travel accident insurance. The Visa Black Card offers up to $250,000 insurance while the Platinum Card offers $500,000 insurance. The Centurion Card offers $1,500,000 in travel accident insurance.

If your baggage is delayed while traveling, the Visa Black Card will credit you $100 a day for three days, while the Platinum Card will insure your baggage up to $2,000. The Centurion Card will insure up to $1,250 for carry-on items and $500 for each checked bag.

Purchase protection and warranties

If there is a problem with any purchase you make with the Visa Black Card, the card can reimburse the owner up to $500 before 90 days have passed since the date of purchase. The Platinum and Centurion Cards protects holders up to $10,000 per occurrence and $50,000 total per cardholder per year within the same 90 days of the purchase.

Summary

In most cases, the Visa Black Card, despite its appearance, is more competitive with the Platinum Card. Based on these benefits, the Centurion Card is in its own class despite some features in common with the Platinum Card. Many of the Visa Black Card’s services are more aligned with Visa Signature benefits, a level that usually does not carry any annual membership fees.

I’ll stick with a free Visa Signature Card, which also comes with concierge services, purchase security, and all features at levels identical to the Visa Black Card.

Review the details from the sources: Visa Black Card, American Express Platinum Card, American Express Centurion Card, Visa Signature Card.

Your opinions

With fees starting at $450, are luxury credit cards worthwhile? Have you received any offers for the Visa Black Card?

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More From Visa About Debit Cards

by Flexo on January 22, 2009

in Credit

Last month, a representative from Visa offered to answer a few questions for Consumerism Commentary readers about debit cards. It many ways, I find debit cards to be inferior to credit cards, but Visa claims the cards linked directly to bank accounts have some redeeming qualities. Here are three additional questions I asked Visa and the company’s responses.

What are your thoughts regarding Visa’s “defense” of debit cards?

Question 4: When using debit cards, do consumers generally spend more than they would
with cash?

Response: Debit cards offer a convenient, secure way to access funds that are already available in your checking account – which means you’re spending the money you have. You also get a record of all purchases so you know where the money went.

Paying with a debit card can actually a great way to manage your spending. Just last year we conducted a consumer survey and found that cash expenditures can be harder to keep track of than those on cards. We asked more than 2,000 U.S. adults about their cash spending habits and almost half of respondents admitted they suffered from “mystery spending” or cash they spend but have no idea where it went.

The results also showed that 48 percent of Americans surveyed who use cash say they can’t account for almost one-third of it, spending an average of $120 in a typical week, but losing track of $45. In fact, more than half (59 percent) of respondents who say their mystery spending is out of control feel it would be worse without using a debit card. Among debit cardholders we surveyed, the majority (64 percent) believe their debit card helps keep mystery spending to a minimum and four out of five say a debit card helps them track their spending. This feedback supports that debit cards can definitely be used as a money saving tool.

My comments: Keep in mind that this research cited by Visa compares using debit cards with using cash for payments. Also note that the survey asks about what consumers believe about their spending patterns, were they to opt with cash rather than debit cards, but doesn’t measure actual behavior. Many studies have shown that people spend more with plastic than they do with cash, even if cash expenses are often “mystery.” The company did a good job of not really addressing the issue raised in the question.

In November, I conducted a experiment to compare my spending with a credit card with my cash-only spending. Even though some of my cash transactions were not tracked to the cent, I spent a significant amount less than I did when I was using a credit card. I continued the experiment into December, and although I now I’ve ended the experiment and use my credit card, I am much more conscientious about my excess spending.

Question 5: One popular feature of credit cards is the availability of rewards, such as cash back bonuses, airline miles, etc. I have seen very few similar offers for debit cards. Are issuers interested in offering rewards to debit card customers?

Response: About 85 percent of U.S. households participate in at least one rewards program. Increasingly, consumers are looking for rewards and value for the transactions they make every day, like paying bills, buying groceries, or filling up their gas tank. As consumers turn to debit cards for these types of purchases, instead of cash and checks, more financial institutions are introducing debit rewards programs.

Often, issuers will pair up with a partner like an airline or hotel to give you the ability to earn points on a debit card toward rewards you care about. Some financial institutions also offer the ability to earn points for qualified purchases that can be redeemed through an online catalog, for items like gift cards, airline vouchers and hotel accommodations.

Many financial institutions also reward their debit cardholders for other relationships they have with the institution like a car loan, savings account, mortgage, etc., giving those customers the ability to earn additional points or other benefits.

It’s important to understand how you can earn points toward rewards: what purchases qualify, whether you earn points when you enter a PIN or sign for your purchases, etc. Make sure you ask these questions of your financial
institution, as policies may vary.

My comments: Reward programs are becoming more rare among credit cards, and even more so among debit cards. This is due to the state of the banking industry. I expect that once we definite signs of an economic recovery, and banks are concerned with making huge profits rather than avoiding bankruptcy, we’ll start to see more debit card reward programs. Until then, consider yourself lucky if you have a rewards program that you use to its fullest extent. Remember, banks that offer rewards programs do so to foster loyalty and above average use.

Question 6: To what type of consumer would you recommend debit cards over cash?

Response: Really, debit cards are a great tool for every one with a bank account. Some
of the benefits of debit over cash include:

  • Money Management and Control. Debit transactions are deducted directly from a checking account and recorded in one place on a monthly statement. This allows cardholders to easily track where every penny is going and better spend within their means.
  • Security. Debit cards offer better protections than cash or checks, and Zero Liability means consumers pay nothing for fraudulent purchases.
  • Acceptance. Debit cards can be used at millions of locations worldwide, and can be used over the phone and on the Internet.
  • Convenience. Debit card transactions are quick and simple, getting you out of the store faster; automatic bill pay via debit eliminates worries about missed payments.
  • Rewards. More debit cards are also offering rewards so purchases earn points toward travel, merchandise or even cash.

My comments: Visa is clearly focusing on the benefits of debit cards over cash, but the true showdown for those who use plastic is between debit cards and credit cards. The set of above reasons for choosing debit cards is a subset of the reasons for choosing credit cards over cash — and credit cards offer more protection, tougher security, broader acceptance, and more attractive rewards.

“Zero Liability” is a good policy, but if your debit card is stolen and used, your bank account can be overdrawn at a moment when you most need your balance to be there, like when your mortgage or rent check is cashed. Then you’re dealing with overdraft fees or bounced check fees and possibly other penalties. This is a deal breaker for me. I use debit cards occasionally, but I will avoid using a debit card as my main payment method.

I appreciate the representative from Visa taking the time to answer these questions. Are you convinced? What do you think about debit cards?

Photo credit: DeclanTM

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Visa Black Card: 1% Cash Back, 0% APR Balance Transfers, Concierge, and Luxury Gifts

by Flexo on January 9, 2009

in Credit

Related: Comparing the Visa Black Card With American Express Platinum and Centurion Cards.

Visa is introducing a new credit card catered to consumers who spend $50,000 or more a year. The VISA Black Card looks similar to the American Express Centurion Card, which was created about a decade ago after that company wanted to capitalize on rumors of a super-exclusive black card. The Visa approach is more on par with the American Express Platinum Card, however.

The first thing you notice, beyond the carbon graphite blackness, is the $495 annual fee. This is well below the $2,500 fee for the Centurion Card, but close to the AmEx Platinum’s $450. If you qualify for the VISA Black Card, this fee will pay for a 24-hour, 7-day concierge service to help with restaurant recommendations and reservations, golf reservations, travel assistance, and specialty research and shopping. In other words, you can call the concierge and accomplish just about anything.

Here’s an example of the card’s concierge service mentioned on AdSavvy:

[A professional NFL footlball player] was on vacation with his family when a massive storm essentially shutdown the resort and island they were on, no commercial flights at all. He called his concierge and has a charter flight arranged, which allowed him to avoid the mayhem resulting from the storm crushing [the] island. Sure, he paid handsomely for the charter, but he watched the aftermath of the storm on his television at home instead of living through it.

Throughout the year, you will receive “luxury gifts” from Visa for no additional cost.

According to the card’s application, only 1% of U.S. residents will qualify. I’ve seen reports, however, that people who are not necessarily big spenders are applying for and qualifying for the card. Some who are accepted have average credit scores and low income. This is not what you would expect from a card that claims to be super-exclusive, but it’s bound to make certain people feel good about themselves.

The Visa Black Card offers 1% cash back or points redeemable for travel on all purchases. While you’re traveling, you can access airport VIP lounges affiliated with Priority Pass. Right now, Visa is also offering a 0% balance transfer offer, which includes a 3% fee. This fee is restricted with a minimum of $5, and while the current offers is in place, a maximum of $50.

Introducing the Exclusive Black Card

For big spenders, the $495 annual fee is easily paid for by cash back and concierge services. As someone who has enough trouble making my Netflix subscription worthwhile, this card probably isn’t for me.

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