Truth about credit cards: They’re not always evil

Credit cards are not evil. There, I said it. But that’s not how some people see them. They see credit cards as the devils that tempt them to spend more than they should. Debit cards are the angels in their wallet who keep them from piling up mountains of high-interest debt.
I can understand that. Credit counselors say people who can only buy what they can pay for on the spot are more likely to spend less than those who charge it.

But let’s be honest — credit cards don’t make you spend more. And thanks to the Credit CARD ACT of 2009 , many of the worst tricks and traps commonly used by credit card companies have been outlawed.
“Credit cards can actually be extremely beneficial if you use them correctly,” says Bill Hardekopf, CEO of Lowcards.com. “That means paying off your entire balance on time each and every month.”
Credit cards are also the safest way to pay because they have built-in fraud protection required by federal law.

We Love Our Debit Cards, But Not our Banks

The recession served as a wake-up call for many of us to get a better handle on our finances, and for a lot of folks that meant replacing one piece of plastic, the credit card, with another, the debit card.
But now, regulatory changes have made those debit cards less of a cash cow for financial institutions. That’s left many banks scrambling to introduce new fees to make up for that lost money.
The problem: Consumers are dead set against the fees, and they don’t necessarily want to start using their credit cards again, either.

Some customers may not be able to use credit cards more because they have lower credit limits than before the recession and credit crunch. Others may have found it easier to keep their spending under control if they use a debit card rather than a credit card, even if they pay the credit card off each month.

And others may find that they just aren’t getting as good of a deal on their credit cards, said Bill Hardekopf, CEO of lowcards.com. His research shows that the average advertised annual percentage rate for a credit card is now 14.05 percent, compared with 11.64 percent when the an earlier set of credit card regulations, known as the CARD Act, was passed in 2009.

Story by Allison Linn

The Return of Small-Business Credit Cards
Lenders are courting small-business owners like you with growing numbers of new credit cards and generous rewards programs.

And it’s easy to see why. About 42% of small-business owners carry a credit-card balance, according to July 2011 data from the National Small Business Association in Washington, D.C.

If you are paying two different interest rates—one on purchases and another on a balance—the monthly payment that is above the minimum required could be applied to the balance with the lower interest rate first, according to Bill Hardekopf, chief executive at LowCards.com, which tracks credit card offers, including those aimed specifically at small-business owners.

In contrast, personal credit cards must apply the payment to the higher rate first to lessen the costs for the borrower.

Story by Anna Maria Andriotis for the Wall Street Journal

The Truth Behind Suze Orman’s Debit Card

Financial advisor Suze Orman has created a new prepaid debit card and she wants you — and everyone else — to buy it. The Approved Prepaid MasterCard is promoted as “better than cash” and “safer than cash.”
Like other prepaid cards, you can’t go into debt because you can only spend the money that’s loaded on the card.

Bill Hardekopf, CEO of LowCards.com, says the Approved card has some nice benefits and fewer fees than some cards.
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“If you have to get a prepaid card, Orman’s card is a very good card,” Hardekopf says. But we still believe that a debit card that’s tied to your checking account is a better alternative than any prepaid card.”

Terry Savage gives ways to pay down holiday debt. Recommends LowCards to find cards for balance transfers

Lower the interest rate on your plastic

What you need: An excellent credit score — 720 or higher

How to do it: Go to www.lowcards.com and click on Low Interest Credit Cards. Then search through the offerings and apply. With a high credit score, you should get a card with a rate in the 7%-to-8% range.

ANNUAL SAVINGS: $346 (switching from an average 14.17% rate to 7.25%, on a balance of $5,000)

THINGS DEBIT CARD ISSUERS WON’T TELL YOU
At least one bank seems to be encouraging its customers to make the switch from debit to credit. In September, Bank of America announced that it was discontinuing the rewards program on its Merrill Lynch debit card, which is used by its brokerage clients. Those cardholders have until May to redeem their rewards — or they can transfer their rewards to the Merrill Visa Signature credit card.

It’s part of an overall push by banks to get more consumers to sign up for credit cards in lieu of debit cards, says Bill Hardekopf, chief executive at LowCards.com, which tracks credit-card offers. A Bank of America spokeswoman says the bank isn’t steering clients to credit cards but only offering them the alternative.

Credit Card Balance Transfers Can Save Cash

New Year’s resolutions are supposed to be big and bold. Sure, you could resolve to alphabetize your spice cabinet in 2012, but why not shoot for something that will make a meaningful change in your life?

Good intentions will get you only so far, though. If you’re carrying around a credit card balance with a high interest rate, getting rid of debt is even more difficult than shedding those extra pounds you packed on over the holidays. One way to free yourself from a high interest rate is to take advantage of a balance transfer offer. In recent weeks, credit card companies have sweetened these deals, offering terms that haven’t been seen since 2008, says Bill Hardekopf, chief executive of LowCards.com. Some are offering 0% interest for up to 21 months.

There are, however, drawbacks to balance transfer offers. The biggest is this: If you’re really desperate to lower your interest rate, you probably won’t qualify for the best deals. Credit card companies are primarily interested in customers with good to excellent credit, Hardekopf says. That typically means a credit score in the mid-700s, if not higher.

Story by Sandra Block

Low Interest in Credit Card Reform

The Consumer Financial Protection Bureau announced a new initiative today aimed at further simplifying credit card agreements. But consumer advocates say it’s the even more confusing terms for checking accounts and pre-paid cards that are really in need of reform.

The CFPB’s “Know Before You Owe” project aims to make it easier for consumers to understand the terms and risks of their credit cards. They’ve put together a prototype of what the new agreements could look like. It highlights interest rates, fees, and the consequences of late payments, and shifts a lot of the fine print to separate websites that would explain the legal definitions of key terms like “prime rate” and “grace period.”

A spokeswoman for the CFPB says that this card agreement project has been in the works for a long time, and is just one of many projects (including checking account reforms) the agency plans to take on.

To be sure, some industry observers say they are thrilled the CFPB taking on card agreements. “This will help consumers. It’s something that should be done, and it’s a good step,” says Bill Hardekopf, the CEO of LowCards.com. Banks, for their part, support making card agreements simpler, but want to make sure those simpler agreements don’t leave the door open for lawsuits, according to a spokesman for the American Bankers Association.

Save Money by Paying Less for Credit

After successfully shaming banks into giving up debit card fees, now grass roots groups are urging consumers to switch out of high-interest credit cards. They’re calling December 11th “Balance Transfer Day.”

I love it! In my book, SAVE BIG, I noted that there are two ways to save on credit: to use less of it or to get it for less. Switching to a card with a lower interest rate is an example of getting credit for less.

But before the mob zeal overtakes me, one word of warning from Bill Hardekopf, CEO of LowCards.com. He notes, “Getting a lower credit card rate may not be as easy as transferring your account to another bank. The rates you receive are based on your credit score. If your score is low, then your interest rates are going to be higher and you are going to have fewer options.”

Story by Elizabeth Leamy

WILL ‘BALANCE TRANSFER DAY’ GET AMERICANS TO TO DITCH THEIR HIGH-APR CREDIT CARDS?
A new month, a new Facebook-led protest against big banks. Protesters have declared December 11 “Balance Transfer Day” in an effort to get Americans to ditch their high-interest credit cards for cards with lower rates or zero percent teasers.

But consumers might find this hard to accomplish, and it’s possible that the very big banks against which the movement is campaigning could be the unintended beneficiaries. The movement’s organizers are correct about one thing: Although the cost for banks to borrow is rock-bottom and rates on loans like mortgages and car loans are at historic lows, credit card APRs are flirting with record highs and have hovered very close to 15% for the past several months. In a new study from the Consumer Financial Protection Bureau, 11% of roughly 5,000 credit card complaints were related to interest rates. As a result, issuers have found that offering 0% interest is a good marketing hook and regularly dangle as much as 24 months of 0% interest for new cardholders.

Consumers who don’t want to shuffle their balances from one big bank to another one have a couple of options.

LowCards.com lists all 1,000-plus current credit card offers, so consumers can scroll through and see which ones have low introductory APRs.

Story by Martha White for Time

Credit Card Use is on the Rise

Credit cards are making a comeback.

Purchases made with credit cards rose 8.2% in the first quarter of 2011, 9% in the second quarter and 10.6% in the third quarter, according to First Data. That compares with gains in debit card use of 9.6%, 8.3% and 5.9% for the same quarters.
And a growing number of holiday shoppers are already opting for credit this year. Payments made with credit cards on Black Friday jumped 7.4% from the same day a year earlier, while debit card use only rose 3.4%.

Credit card mailings have surged 85% since the beginning of 2010 to 1.3 billion credit card offers in the third quarter of 2011, according to analysis conducted by research firm Mintel Compermedia.
Many of these offers come loaded with new perks. Several major issuers have eliminated charges like foreign transaction fees and balance transfer fees, and many are offering heftier rewards.

“Banks want you to reach into your wallet or purse for a credit card to make the payment since it means more profit to the bank,” said Bill Hardekopf, CEO of credit comparison site LowCards.com.

The push seems to be proving successful. Javelin Strategy & Research recently projected that online credit card use will surge 63% from 2011 to 2016, compared to a 2% increase in debit card use. Data on the projected increase in overall payment use — not just online — will be released later this month.
But if you’re one of the many people making the switch, be careful.

“If you switch to credit cards for payments, pay off your balance in its entirety each month,” Hardekopf said. “Otherwise, the interest payments could become overwhelming and are sure to be greater than any new debit card fee.

Story by Blake Ellis

Consumers may save on credit card cash-back deals

As Black Friday kicks off a holiday buying frenzy, credit cards can become a back-pocket arsenal for shoppers looking to save more than a few bucks on myriad purchases.

Credit card companies and retailers with credit cards will be more aggressive than ever this holiday season in promoting cash-back deals and savings benefits, credit card experts say.

Deals such as those can mean significant savings at a time consumers are buying more than usual.
“It becomes a wonderful financial tool,” says Bill Hardekopf, CEO of LowCards.com.

Story by Hadley Malcolm for USA Today

ARE BIG BANKS REALLY CHANGING THEIR WAYS?

Customer defections over fees and other charges may not drive the nation’s biggest banks out of business, but some institutions could stand to lose a significant chunk of their deposits if they don’t work harder to make customers happy.

“Big banks with their significant fees and high interest rates have become the villain of both Congress and consumers for the past few years,” said Bill Hardekopf, CEO of credit card comparison site Lowcards.com. “Now, some banks seem to be trying to polish their tarnished image by dropping fees and increasing rewards.”
In addition to putting an end to the $3 debit card usage fee it was testing, Chase is also getting rid of a $10 a month checking account fee it was trying out in Oklahoma and a $15 monthly checking account fee in Atlanta.

Other less controversial fees are being removed from credit cards, a move aimed at both improving the bank’s image, as well as pushing consumers toward using credit cards instead of debit cards (which have become increasingly expensive for the banks to offer), said Hardekopf.

Changes like these may not be enough to convince customers that a bank has turned over a new leaf, but it does indicate that banks are trying a little harder to listen to their customers’ concerns and needs, Hardekopf said.

Story by Blake Ellis

Want a Credit Card? New Rules Make it Tougher

Story by Carmen Wong Ulrich

Surprise: Card Issuers Trim Fees

The uproar over Bank of America’s decision to charge debit-card customers a $5 monthly fee—which they later recanted—may have obscured some positive developments in the credit-card landscape.

So far this year, some lenders have scrapped foreign-transaction fees. Discover Financial Services ditched its 2% foreign-transaction fee. That follows J.P. Morgan Chase’s decision to drop its 3% foreign-transaction fee on the bank’s Sapphire Preferred card. Meanwhile, Citigroup also eliminated its 3% foreign-transaction fee.

Lenders have also retreated from charging cardholders to transfer their balances. Chase, for example, now offers a Chase Slate card that waives the typical 3% fee if balances are switched in the first 30 days after the card is opened.

Some card issuers are also boosting rewards.

Virtually every issuer has upped rewards to woo customers with excellent credit, according to LowCards.com, a consumer-education website. Capital One Financial touted its “Match My Miles Challenge” where customers can earn up to 100,000 miles for switching to the lender’s Venture Card. Chase, meanwhile, offered its customers a promotion in which cardholders could get a big mileage boost if they reached a certain spending threshold.

Story by Jessica Silver-Greenberg

http://blogs.wsj.com/totalreturn/2011/11/16/surprise-card-issuers-trim-fees/

The Best Credit-Card Rewards for the Holidays

Credit-card issuers are bumping up their rewards for the holiday shopping season as they seek to lure consumers away from debit cards and competitors. For shoppers with decent credit scores, this can provide the opportunity to pick up extra cash or miles while they do their gift shopping.

“The rewards have become very, very attractive in terms of cash back and travel,” said Bill Hardekopf of LowCards.com. “Issuers have stepped up the rewards because it’s now more lucrative for the banks for you and me to use our credit cards instead of our debit cards.”

The Lowcards.com site will publish its list of best cards for holiday shopping on Wednesday, but gave a preview to Reuters. Here are its choices for best cards for holiday season 2011.

— Capital One Cash. Offers 1 percent cash back on every day purchases and a 50 percent anniversary bonus on cash earned on purchases in the previous year. It also gives a one-time $100 bonus once you spend $500 in the first three months. No annual fee.

— Chase Freedom. Get $200 cash back after you spend $500 in your first three months. Earn 5 percent cash back on dining, department stores, movie theaters, and charitable giving. No annual fee.

— Discover More. Zero percent APR for 15 months on purchases and balance transfers. Earn 5 percent Cashback Bonus on up to $300 in purchases at department stores, clothing stores, and restaurants (1 percent on all other purchases). No annual fee.

— Chase Sapphire. If you charge large purchases and expenses, you can earn 25,000 bonus points after you spend $5,000 in 3 months.

— Citi Thank You Preferred. Earn 10,000 bonus ThankYou points after $500 in purchases within the first 3 months, good for a $100 gift card. Earn 5 ThankYou Points for every $1 spent on all purchases at gas stations, supermarkets, and drugstores during the first 12 months and 1 point for every $1 spent thereafter. No annual fee.

— Continental Airlines One PassPlus Card. You can earn 25,000 bonus miles the first time you use this card. This is enough for a round-trip ticket within the U.S. and Canada. The $95 annual fee is waived the first year.

— BankAmericard Cash Rewards. Gives a $50 cash rewards bonus after you make at least $100 in purchases within 60 days of account opening.

— Citi Hilton HHonors Visa Signature. If you often stay at a Hilton Hotel, your Christmas spending can earn free hotel nights. Receive 40,000 Hilton HHonors bonus points after you spend $1,000 after the first four months of opening the account.

Making the Most of Rewards

Shoppers with the right cards can take their rewards to the next level if they use all of the right strategies, says LowCards.com’s Hardekopf. Some cards (such as the Upromise card) have their own shopping portals that combine their rebates with rebates from merchants.

Debit Card Fees are Dead, but Expect Others

Call it a victory for mad-as-hell consumers and diehard Occupy Wall Street protestors: All the big banks have backtracked on their plans to charge you to use debit cards to spend your own money.

But don’t hoot and holler too loud.

The banks will find ways to recoup what Javelin Strategy & Research estimates will be $6.6 billion in revenues lost to the new law that caps merchant fees on debit-card transactions.

“When banks have their revenue streams cut in one area, they will find a way to make up for that in another area,” says Bill Hardekopf, chief executive of credit-card information site LowCards.com, “and it is always the consumer who pays for it.”

Story by Jennifer Waters for MarketWatch

Credit vs. Debit Cards: What you Need to Know

Story by Vera Gibbons

Banks ax one fee–but watch out for others

With Bank of America rescinding its plan to charge debit-card users a $5 monthly fee, virtually all of the big banks have now scrapped controversial new programs that would have essentially charged customers for the privilege of spending their own money. Many of the banks had described the new fees as a test program—but what they were really testing is whether their customers would revolt.

The victory for consumers could be fleeting, however. With revenue and profit down sharply at most banks, there’s intense pressure from shareholders to boost their numbers. There are a lot of different ways for banks to impose fees and raise revenue, and with fees for debit cards off the table, banks will most likely look for less noticeable ways to wring money from their customers. “If the banks’ revenue streams are cut in one area, they’ll find a different area to make that up,” says Bill Hardekopf of lowcards.com. “New fees could be more subtle, more under-the-radar.”