2007 Credit Card Roundup

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Well, lots of developments in the world of credit cards in 2007. Here is a rundown of the major happenings this year.

End of Balance Transfer Nirvana – I think the year 2007 will be remembered as the year that the easy balance transfer deals are over. Since 2002, 0% APR balance transfer offers have been an important strategy to attract new consumers. However, since June this year, credit card companies have made life more difficult to do so.

Rather than remove the 0% offers, what credit card issuers did was to actually remove the caps on balance transfer fees. By doing so, they actually made it expensive to do a balance transfer, especially if the amount was large.

But why did they actually do this? Well, a couple of friends I know who work in credit card departments say it is precisely because consumers have caught on to the 0% APR BT deals. They would apply for a new card with 0% deals. But rather than staying with the card after the introductory period, they would move their existing balance to either another card with the same issuer, or to another card! Hence, rather than keep the customer (as most cable TV companies do), the credit card issuers actually started losing money on these 0% balance transfer deals. Right now, Citi, Chase and Bank of America have removed the cap on balance transfer fees for most of their cards.

American Express revamps its Membership Rewards Program – This year Amex revamped and rebranded slightly their Membership Rewards program. The scaled down version of the program used to be Membership Rewards Option. But, they have no changed it to MR Express. For Platinum and Centurion Card holders, Membership Rewards First the the upscale program with access to exclusive and high ends rewards by retailers like Gucci, Steinway Pianos, Piaget watches, Tiffany etc.

Membership Rewards also added Singapore Airlines Krisflyer as their airline partner. They also became the first (and still only) program to full a full range of Apple products from iPod, iPhones to iMac.

Overall, the improvements are quite significant.

Discover broadens their merchant partners – At the beginning of the year, Discover had about 70 merchant partners for their gift card rewards program. In the middle of this year, they have increased it to 80 and now, they have about close to 100 partners.

If you like to earn reward points to exchange for gift cards, then the Discover More Card is probably the card you would want to get.

Chase does away with 2-cycle billing method – Just before the major banks appeared before the Senate Banking Committee to explain “deceptive” credit card practices, Chase decided to do away with the 2-cycle average daily balance method of computing finance charges and revert to the more usual average daily balance method.

I used to caution cardholders who carry a balance against getting a Chase credit card, but now this is no longer a concern.

Late Fees and Over-the-limit Fees continue to rise – While headline inflation is around 2%, it certainly is much higher in credit card land with regards to fees. It used to be that late fees and over-the-limit fees were $15. It then went to $19, then $29. Late last year, most credit card issuers had them at $35. Now it is about $39 for most cards. I bet it will soon be $49 before long!

New Innovation in Cash Back Credit Card – The Chase Freedom Card is introduced a new concept in the world of cash rebate credit cards. Rather than giving cardholders 3% rebates for items like gasoline, supermarket expenses etc, Chase came up with 5 category of expense items and will pay cardholders 3% rebates on the top 3 items that they spend on the card each month.

Aside from Chase, HSBC also introduced a novel HSBC Weekend Card that actually paid 2% rebates when you use your card over the weekend! I’m not too sure how popular it has become. But I’m sure there is a place for that in someone’s wallet.

Well, that’s it (I think). I’ll be interested to see what new developments are installed for us in 2008

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One Response to “2007 Credit Card Roundup”

  1. Dividends4Life Says:

    I am a big fan of cash back credit cards. Thanks for the info on the Chase Freedom Card.

    Best Wishes,
    D4L

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