Category Archives: Credit

How to Choose Credit Cards With Rewards to Save Money – Part 1

This is a guest post by Mr Credit Card from Mr Credit Card reviews credit cards on his site. He also has a blog and you can subscribe to his blog here. Mr Credit Card will post a 2 part series on how to choose a credit card with rewards to save money on your spending.

Hi everyone! Firstly, I would like to thank Adam for the opportunity to guest post on his blog. Friends of mine inevitably ask me what credit card they should get when they find out that I actually run a credit card review site. This is a tough question to answer without first finding out about someone’s spending patterns. But the thing that always makes me shake my head is that fact that folks who pay in full every month carry a “vanilla” Visa or MasterCard. Worse of all, some even pay an annual fee to do so. If you pay your balance in full (or carry only a small balance occasionally), then you should be making money from credit cards by a getting a reward card, instead of letting credit card companies make money from you. It should be a two way street.

But how does one go about doing it? First, you have to be aware that there are two types of rewards. There are cash back credit cards that will pay you a certain percentage of cash rebates for every dollar that you spend on the card. Then there are rewards credit cards. These cards allow you to earn points or miles for every dollar that you spend on the card. You can then redeem your points for things like airline tickets, merchandise, gift cards etc.

Cash Back or Rewards?

The first decision you have to make is whether to choose a cash back card or a reward card. For this, the decision really comes down to preference. What sort of rewards do you prefer? Many travelers who fly frequently prefer to get an airline credit card with their favorite airline. Many folks who do not travel and do not want the hassle of redeeming points prefer to earn cash rebates instead.

How Do You Choose a Cash Back Credit Card?

For the rest of this post, I’m going to focus on explaining how I think one should go about choosing a credit card that pays you cash rebates. In part 2 of this post, I’ll focus on how to choose a reward card instead.

The first thing one has to understand is that different credit cards have different cash rebate formulas. And for someone who is researching it for the first time, it could be rather confusing. But here are the few features you have to be aware of:

Vanilla standard 1% formula – The vast majority of rebate cards fall into this category. They will pay you 1% rebate for every dollar that you spend on the card. While this looks like a decent deal and much better than a standard vanilla card, you can get better deals out there.

More than 1% on certain categories – These are the type of cards you should be looking at although there is less of them these days as credit card issuers cut back on the rewards they give. There are cards out there that pay more than 1% on certain categories that you spend. For example, a card like the American Express Costco Card pays 3% on gas, 2% on travel and restaurant spending and 1% on other regular stuff.

Rebates for online shopping – Some cards like Discover Card allows their card holders to earn between 5% to 20% if they use their card to shop at over 100 online retailers through their site.

Tiered Formula – Some cards also have a tiered formula. That means that you need to spend above a certain amount to earn more rebates. As an example, the Amex Blue Cash lets you earn 1% on gas, supermarket and drugstore spending for the first $6,500 of annual spending. Once you pass that threshold, you earn 5%. Having a tiered formula is not necessarily bad. It just means you have to use your card above a certain amount to fully make use of it.

How to Choose the Right Card For You

1. Figure out how much you spend on your credit card – Yes, go through your credit card bills and figure out how much you actually spend on your credit card.

2. Break down your expenses into different categories – The next step is to breakdown your spending into different categories. You should use the following breakdown as a guide:

Restaurant and Dining
Home Improvement

3. Calculate rebates you can earn on different cards – Now comes the tough part. You have to do some research on the different cards available and use a calculator and figure out how much you will save from using each card. Then, once you are done with this exercise, you will know which is the right card for you. To make your life easier, I have actually created a cash back credit card calculator to save you time. All you have to do is to simply key in your monthly expenses in various categories and the calculator will show you the top 3 cards that will earn you the most rebates.

OK – that’s it for this post. In part 2, I will write about the different types of rewards that are available in reward credit cards, whether you should choose a frequent flier card or a regular reward card and other things to look out for. Remember, you should extract as much benefit as you can from credit cards and not the other way round.

Chase to Add New Fee to Their Most Profitable Users

Nothing bothers me more than companies that nickel and dime you for almost anything. Now you can add Chase to that list (I imagine they would have already been on the list). They have decided to add a monthly $10 fee to their most profitable customers. Are they not making enough money on the transaction fees they charge companies in order to accept credit/debit cards?

If I saw this new fee on my account, I would cancel my card right away. I would imagine they are charging the fee to those customers that are more likely to pay off their balance each month. Honestly Chase, no one is going to want to keep their card if they pay off the balance each month and are now slapped with a large fee. So let me ask you this Chase, would you rather keep your customers a make a little money off the transaction fees or lose customers all together? I have a feeling they are going to piss-off a lot of customers and lose more money than they are going to gain.

Have any of you had this fee show up on your account yet? If you do see it, will you cancel the card even though it has a low rate?

The Age of No Negotiation: Credit Card Edition

As many of you may know, I have ranted before about how you cannot negotiate many things these days. I have had trouble negotiating for a bike at a big box store. After that, I had trouble negotiating my lease at my apartment complex. I am just so tired of businesses not wanting my business. The other day I ran into this problem again with my credit card company (Citi). As many of you may already know, Citi (as well as many other credit card companies) have begun to increase interest rates on all of their cards. Even for those who have been great customers like myself (I made them a lot of money). My rate with them was about 6% and they wanted to increase it to 16%. Now that’s what you call an increase!

So, I got a letter in the mail from them stating that they would increase my rate to 16% if I did not contact them by a certain date. The letter also said I had the option to keep my current rate but there was a catch. In order to keep my current rate, I had to have the card paid off in full by the expiration of my card (June 2009) and then they would close the account for good. I have quite a bit on the card so an increase in the rate by 10% would increase my cost of credit immensely so I figured I would call them and try to work something out. The lady on the other line was very friendly but she said there was nothing that they could do. You had to chose one or the other. I asked to speak to a manager and she said that they would not be able to do anything for me either. She already had several other people requesting a manager for the same thing. I then told her that they were going to lose a customer from all of this and she just did not seem to care that I was leaving them! I told her I would have it paid off by June and to close my account.

I just do not understand what companies are thinking these days. I know the credit market is bad right now, but do you really want to lose a great customer like me? If I were Citi, I would rather keep a good customer and earn a slightly lower interest rate then lose them all together. Especially a customer like myself. I have been with them for about 5 years and have never missed a payment. The went from making some money from me to none at all. I just do not understand!

Has anyone had the same problem with a credit card company? I have always had good luck with them in the past but not now!

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