Posts Tagged ‘credit card fees’

With consumer spending at record lows and fewer credit card purchases during the 2009 recession according to the Federal Reserve, elite credit cards are feeling the pinch. Several premium credit cards that have been offering exclusive benefits to cardholders were born during the economic boom and have been struggling ever since. Social lending organizations have been trying to find unique ways to position their credit card programs ahead of the competition, but are still having trouble attracting and retaining cardholders.

Here’s a close look at some of the elite credit card programs that are struggling — or dying — during these turbulent economic times:

Ill: Visa Black Card from Barclays

The Visa Black card was originally pitched as an exclusive credit card with many similar benefits to the Amex Black. While the Visa Black was significantly different than Amex Black, it was still designed for elite cardholders who met certain income criteria. Cardholders pay an annual fee of $495, have access to a luxury concierge service 24 hours per day and earn rewards points for their purchases. Still, this program has fizzled since its launch, failing to offer truly exclusive and elite benefits for its cardholders.

Terminal: The Stratus Rewards Visa White Card

The Stratus Rewards Visa White Card was designed to compete with the Amex Black — after all it is white — boasting more travel features and other perks than Amex. However, this card simply didn’t get much traction or interest from consumers, and failed as a social lending program for avid travelers and VIP shoppers. Today, Stratus’s relationship with US Bank has expired and they’re negotiating with other issuers.

Passed: Sotheby’s World Elite MasterCard

The Sotheby’s World Elite MasterCard was among the most attractive exclusive cards available, and was “specifically tailored for those who earn over $250,000 per year and have over $2 million in investable assets.” This card offered complimentary admission to museums,and VIP services including concierge travel services abroad and access to airport lounges. The card ceased to exist as of September 2008 in the midst of the tumultuous economy.

From the Visa Black Card to Sotheby’s World Elite MasterCard, elite credit cards are struggling to stay afloat during the drop in credit card spending in recent years. Many cards are simply disappearing since consumers are no longer interested in the VIP services and exclusive benefits. Issuers may need to find new ways to attract cardholders and roll out programs that offer a wider range of perks and benefits.

Sabah Karimi

The new Current Card from Discover is one of many financial solutions aimed at the teen and young adult market. This particular tool is a debit card that offers an unprecedented level of control for parents, while helping teenagers learn how to manage their finances before they step foot in the “real world.”

Unlike credit cards, the Current Card allows teens and parents to load it with whatever cash they feel is appropriate. Once they have put cash on the card, parents can set parental controls on how their teenagers can use the card as well as where they can use it.

Loading the Card

The Current Card from Discover is different from most teen credit cards in that the amount available to use for purchases and withdrawals is established by how much is deposited into the account. For example, if a teenager’s parents load it with $500, he or she cannot spend more than $500. In other words, it works like debit cards do when attached to savings or checking accounts.

The Current Card can be loaded for free from any bank account or credit card. It is even possible for parents to establish recurring deposits, such as $200 per month from a credit card. There are no minimum balances, loading fees or credit checks required with this card.

Free direct deposit is also available for this teen debit card if it is more appropriate. For example, teens with summer or after-school jobs can have their paychecks deposited directly into their Current Card accounts.

Setting Limits

The most unique feature of the Current Card from Discover is the ability to set myriad parental controls so parents can monitor and control their teenagers’ spending habits. The available controls include:

• Spending Limits:
  Parents can decide how much money their teenagers can spend in a given period of time. If the teen tries to exceed that limit, the card is declined.
• Shopping Categories:
  With cash or other teen credit cards, teenagers can spend their money wherever they wish. This isn’t the case with the Current Card, as parents can restrict certain shopping categories, such as tobacco or liquor stores or hotels.
• Activity Alerts:
  In addition to letting parents decide how teens will use the Current Card, this card also informs parents of purchases and withdrawals. Messages can be sent via text message or e-mail.

Other Perks

The Current Card comes with the same convenient perks you might expect to find in other teen credit cards, such as no liability for fraudulent purchases. Card holders can withdraw cash from the card at any ATM if they are unable to use the card itself, and the card also comes with exclusive discounts at many favorite teen shopping destinations.

There are seven available designs for the Current Card from Discover, which makes it particularly attractive to the younger market. Teens can not only learn to manage their finances, but do it with a sense of style.

Steve Thompson

The Pantone Fall 2009 report takes the most fashionable colors of the season and interprets them for the world of print advertising. But it’s not only fashion and graphic designers who are taking note. This season’s top credit and debit cards are stylish, fashionable and functional - we’re staying economically wise by only rating prepaid debit cards. Here’s a roundup of the top five credit (debit) card designs for fall 2009:

#5: MetroPCS Prepaid Visa Card

The MetroPCS Prepaid Visa Card is a bold, two-color card designed with purple and “burnt sienna” from this season’s Pantone report. It’s a simple, eye-catching design that can be a good match for both male and female card holders.

#4: AccountNow Prepaid MasterCard

The futuristic design of the AccountNow Prepaid MasterCard may be a good fit for the tech-savvy cardholder looking for an edgy, fashion-forward look. The color combination on this card includes “majolica blue” from the Pantone color lineup that inspires “a sense of smoky calmness.” This card has a combination of blues, grays and black that may be a good match for both male and female cardholders.

#3: Facecard Prepaid MasterCard

“Warm olive” is a popular color for fall 2009, and the Facecard Prepaid MasterCard is a single-color credit card designed in this simple, eye-catching color. The light green tone can be a good match for both male and female cardholders.

#2: BabyPhat

For cardholders interested in a celebrity-inspired design, the BabyPhat card offers plenty of style with its slinky BabyPhat feline logo and its famous BabyPhat pink hue that has been named “rapture rose” on this fall’s Pantone color report. The card will help you make a bold fashion statement during any shopping trip, and can be a stylish addition to any fashionista’s wallet.

#1: Current by Discover

Current by Discover is designed exclusively for teens and their parents, and cardholders can choose from one of seven attractive designs. Parents have the freedom of setting spending limits and restricting use in unwanted shopping categories, but teens can choose from a variety of stylish designs that best suite their personality. Design choices include a pink skull and crossbones, dance club scene, blue and white stripes, silver eagle wing or goth design, green and white skull and crossbones, a rainbow retro look and a cityscape.

Credit card companies are bringing us some fresh and stylish designs to dress up our wallets and to show off our sense of style this season. From celebrity-inspired cards to simple, sophisticated designs, cardholders of all ages can choose from a variety of fresh new styles for fall 2009.

Sabah Karimi

At the beginning of the credit era, consumers used charge cards. Charge cards allowed people to make purchases with convenience, but charge cards had to be paid off in full at the end of the billing period. This relic of a bygone era may actually be helpful for consumers who are taking a second look at debt incurred by credit cards and looking for a new way of doing things.

Advantages of the charge card

With consumers turning increasingly to frugality in their daily lives, taking “staycations” instead of going long distance, eating out less and concentrating on building up savings and decimated retirement accounts, a charge card could be the ideal solution. Here are some of the advantages associated with using a charge card:

• No credit limit
• Fewer fees (avoid overdraft fees that can come with debit cards and over the limit fees that come with credit cards)
• Less chance of carrying debt, since the balance must be paid regularly
• The convenience of using plastic to pay
• No need to worry about reloading the card (and the fees that come with it)

Drawbacks to the charge card

Of course, there are some drawbacks to using a charge card. The low fees and favorable terms do come with an annual fee. However, this is often low enough that you can easily afford it–not to mention the fact that it is often lower than paying the fees (interest, etc.) that come with credit cards. Another downside is that American Express, which is the main charge card network, is not as widely accepted as credit card networks run by Visa and MasterCard. And, having to pay off the balance each month means that buying things you can’t afford right now is not really an option. But perhaps that is an advantage; you are forced to wait and make sure you can pay for what you purchase.

In the end, you have to assess your financial situation and needs. But you might be surprised to realize that a charge card might be the right fit.

Jean Marquit

Exclusivity is one way to generate buzz about your product, and Barclays has definitely taken advantage of this fact with the Visa Black Card. Billed as “the world’s most prestigious and versatile credit card,” the Visa Black Card is advertised as being available to only 1 percent of U.S. residents.

Some of the features included with this credit card are 24-hour concierge services, an exclusive rewards program and unspecified “luxury gifts.” However, the rewards program seems similar to those offered by other rewards credit cards, offers 1 percent cash back on all purchases, and is used for airline tickets and travel.

The Visa Black Card also offers a 0 percent interest rate for the first six months on balance transfers, which might appeal to those who need to consolidate some of their debt. The APR is higher than you would find on many other cards, however, and currently stands at the prime rate plus 9.99 percent. Many premium and platinum credit cards offer a 0 percent APR for 12 months on purchases and balance transfers.

Additionally, the Visa Black Card from Barclays comes with a hefty $495 annual fee. It is difficult to say whether consumers will benefit from this card at all, since the total rewards must exceed this high annual fee.

The exclusivity of the Visa Black Card has come under scrutiny in the media, which has questioned whether there is actually a limited membership at all. LuxuryPlastic.com surveyed several approved Visa Black Card holders, and the differences in income and credit score seem to back up the skepticism.

For example, one customer earns six figures per year with a credit score of 765, while another’s annual income is around $10,000 with a credit score in the high 500s. The discrepancy, combined with the rumors of easy qualification, call into question whether Barclays’ Visa Black Card is actually exclusive at all.

When shopping for credit cards, it is important to look past fancy Web sites and claims of exclusivity to the actual terms of the card. Financial institutions are all fighting for the best customers, and it is best to make your decisions based on raw numbers rather than skillful marketing.

It is also important to note that, although the Visa Black Card is billed as “limited membership” and “very exclusive,” the Visa Signature line of credit cards is actually ranked above the Visa Black Card, which is part of the Visa Platinum Plus line. Consumers with solid credit scores are often approved for low-interest credit cards with no annual fees and generous rewards programs.

Steve Thompson

Bad credit credit cards can be…bad.  When applying for one, beware of offers that require payment before acceptance.

If one has bad credit but needs a credit card—to buy airline tickets, make hotel reservations, rent a car, shop online, etc—there are options. With a secured or prepaid credit card, a deposit is made to the account and a credit line equal to the amount is available. Since it’s prepaid, the credit is not really credit. But the cardholder is given flexibility to use the card instead of paying cash, as well as make reservations or provide security deposits.

There are also credit cards specifically for people with bad credit. But before accepting one of these bad credit credit cards, the applicant should understand the terms and conditions.

The bad is in the fees

With some bad credit credit cards, there is an acceptance fee and a monthly participation fee. For example, for a $200 line of credit, you could be charged an acceptance fee of $144 and a monthly participation fee of $6, leaving you with a $50 line of credit to start. Basically, the new cardholder receives the card already owing $150. Beware of bad credit credit card issuers that charge you a fee before you accept the card. This is illegal and the Federal Trade Commission has ordered a crackdown on telemarketers offering “guaranteed” credit cards with upfront fees prior to acceptance.

In addition to fees, bad credit credit cards may carry a higher interest rate. Consumers should carefully review the credit card agreement and be sure to understand all the terms and conditions before accepting it. Under the federal Truth in Lending Act, credit card issuers are obligated to provide certain information in all credit card offers they make.

Schumer knows

The Schumer box should appear with every credit card offer. All card issuers are required to have this box–it outlines the fees and rates of cards. The information to be provided must include the APR (annual percentage rate of interest), the different rates that are charged (purchases, cash advances and balance transfers), as well as all penalty rates and the actions that trigger them. If the interest rate is variable, the information in the Schumer box must explain how the rate is calculated.

Other information in the Schumer box includes finance charges, annual fees, fees for credit insurance, the minimum payment required, how an outstanding balance is calculated, credit limit, the grace period and the name of the company offering the credit, which may not be the same as the company doing the marketing.

The best use of a bad credit credit card is to help someone rebuild their credit. To do so, the cardholder’s history with the card–such as amount charged and payments made–should be regularly reported to the three major national credit bureaus: Equifax, Experion and TransUnion. But in order to repair credit, one must be sure to not to repeat the behavior that causes bad credit.

Kevin Hagen