The Fed has drawn up a set of rules to police behavior by credit card issuers. On the surface, it all looks good. However, there may be some unintended consequences. Here are the proposed rules and my thoughts on the matter.

1. Placing unfair time constraints on payments - While consumers may cheer this, I honestly think this is the most ridiculous thing I’ve come across. In the corporate world, if a company misses a coupon payment on the bond, the bond trustee would immediately act on behalf of the bondholders. Lawsuits will be filed, and the company has to negotiate with creditors if they want to avoid filing chapter 11. If payment was missed due to extraordinary circumstances, the borrower may have to pay a fee to the creditors. Why should consumers be given leeway. The Feds are proposing that payments are not considered late unless we have been given 21 days to make a payment. My experiences so far is that credit card companies will not report late payments to the credit bureaus unless you have been late by 60 days. Well, I guess consumers will benefit as we may not be charged any interest unless we are late by 21 days. I’m really not too sure if that is a good idea.

Unfairly allocating payments among balances with different interest rates. - Presently, when you have transferred a balance on a 0% APR deal and you carry more balance on top of that, the payments that you make above the minimum amount will be used to reduce your balance that is charged the 0% rate. That is how issuers make their money on 0% deals. If you charge more expenses to the card, they will earn that higher interest and you cannot pay it off. Well, under the new Fed proposals, this practice will come to an end. An extra payments above the minimum payment will be used to pay the higher interest balance.

Sounds good? But credit card issuers will suffer. One unintended consequence may be that banks stop offering good 0% APR deals.

Unfairly raising annual percentage rates on outstanding balances. - Under the first proposal, issuers cannot raise your interest rates unless you are late by more than 20 days. This proposal will prohibit issuers from raising your rates just because you miss your mortgage payments. This effectively bans the practice of universal default clause.

On surface this sounds great. However, credit card issuers do have a valid point in that you are a more risky borrower if you miss a payment on another debt obligation. In the corporate world, if a corporation miss one couple on one bond, technically, the company has defaulted - not just on their bond, but on every creditor.

I think another unintended consequence is that credit card issuers will have higher issuing standards and APR will be higher than what it would be without this.

Placing too-high fees for exceeding the credit limit solely because of a hold placed on the account, usually by rental car companies or hotels. - This is long overdue and a wise proposal.

Unfairly computing balances with methods such as “two-cycle billing - I definitely second this proposal. Most people do not understand APR or how to compute their monthly balance. Having 2-cycle methods only add to the confusion.

Unfairly adding security deposits and fees for issuing credit or making credit available - The rules would ban fees that consumed a majority of a new card’s credit limit. Sounds familiar. Yes, sub prime cards! Subprime cards normally charge a one-time application or processing fee, a monthly maintenance fee and high APR. Most will only given you a credit limit of $300. By the time the fees are taken out, a new cardholder only has an initial limit of $100!

One is tempted to think that it is great for sub prime borrowers because all sub prime credit cards charge these ridiculously fees. But having said that the reason they do that is because regular issuers will not even issue cards to sub prime candidates.

Question is what happens if they are forced not to charge these fees. Will these subprime issuers feel that they are compensated for lending to less than desirable candidates? I don’t know the answer to that but time will tell. Another unintended consequences.

Making deceptive offers of credit - Issuers have to state clear what you need achieve the APR or teaser deal that was advertised. This is a great thing because if prevents impulse purchases. If only they would enforce that with cell phone companies or cable companies (with all their pay so little for 6 months but do not tell you what happens after the teaser deal is gone!).

I would certainly like to hear your thoughts on these changes.

Well, morality aside, I think there are important lessons to be learned in this whole Spitzer saga. While most people are asking how can Mrs Spitzer stand beside her husband after what happened, little has been written about how and why people will shell out $1000 an hour or $4,300 a pop on the services by an “escort” (to put it politely).

This is no different from asking why some lawyers get away from charging $900 an hour versus $250 for others? And I think there are important lessons for those who are in the service industry where you have to “bill” for your time.

But before we answer that, let’s try to put our heads in the mind of Mr Spitzer. What value was he getting from paying $1,000 an hour (not counting the cost of her train ticket etc).

1. A person of Mr Spitzer’s stature wants his dealings with prostitutes to be “highly discreet”. He cannot be seen looking for them in the streets. They have to come to him.

2. Emperor’s club is marketed as “high class service”. Hence, Mr Spitzer would expect his escort to be better dressed and discreet looking compared to most of Kristen’s “peers”.

3. Because someone like Mr Spitzer cannot be caught in the act, he would expect emperor’s club to be super efficient in organizing the whole “package”.

In a nutshell, Mr Spitzer wants to have a good time with a hooker discreetly and for someone of his stature, there is a price for providing such a service!

The moral of the story is that when you are targeting the high end market, there are other intangible factors (other that product performance!) that the segment values and are willing to pay for.

In the credit card industry, most credit cards do not charge any annual fee. Yet, cards like the American Express Black Centurion Card (which has a $2,500 annual fee and a $5,000 activation fee!) exists. The American Express Platinum Card has a $450 annual fee. Their gold card has a $150 annual fee.

How is it that one of the most popular combination of credit cards of frequent travelers is the Amex Black or Platinum Card with the Starwood Preferred Guest Credit Card even though these cards charge annual fees unlike most cards? The answer lies in the many little benefits that are simply not available in regular credit cards.

1. Concierge service - Amex used to be the only ones to offer this service on their charge cards. But these days, many visa and mastercards offer this too. However, Amex allows you to have your own personal concierge who can get to know you and provide more personalized service.

2. Ability to book hard to get restaurants - Having a Amex Platinum or Black card makes it easier to book hard to get restaurants.

3. Priority notices to popular events

4. Having the best reward program - in my opinion, Amex has the best reward program in membership rewards and I think they can get away with charging a fee for this.

5. Starwood has the best collection of 5 star hotels - let’s face it - a successful executive does not stay at the Hyatt or Hilton!

6. Prestige - we all judge a book by its cover. A man’s clothes maketh a man! Carrying an Amex Platinum or Black card is indeed a status symbol.

I can go on and on about examples in other industries but the moral of the story here is that there is always a lucrative market in the high end segment. More often that not, “product performance” is not really the differentiating factor. But other intangibles often allows one to charge higher prices as long as you meet the market’s needs. These needs have more to do with attributes like personalized service, making your clients feel important and other “high touch” service not available in average products.

So whether you are a web designer, a consultant, a mineral water manufacturer, branding and identifying the right attributes that the high end segment of your market craves can often bring great rewards if you find the right “package” and “value proposition”. Hey, after all, Mr Spitzer paid $1,000 an hour and I bet it wasn’t pro-rated if it was over in 10 minutes!

Regular readers know that presently, I carry three cards - the Amex Platinum (upgraded from the Gold Card), the Amex Blue Cash (hey since I recommend this card, I have to walk the walk), and the Chase Flexible Rewards Card (got it simply to check their rewards program).

Different people have different opinions on the number of credit cards that we should carry. Let’s take a look at the pros and cons of carrying just one, to carrying lots of them.

Just One Credit Card - If I have had it my way, I would only carry just one card. The card that I would personally carry would be my Amex Platinum Card. I find it more convenient to carry just one card. My wallet would be thinner and it would just be easier.

The only problem with this strategy is that if your favorite card is an American Express Card, then, you would probably need a visa or a mastercard for places that do not accept Amex.

In my opinion, here are the advantages of carrying just one card.

1. You get just one statement a month - I simply cannot imagine what it is like to have five or ten credit card statements every month.

2. Every credit card issuer issues a year-end summary of your expenditure broken down by category items. With just one card, you can easily see what you are spending each month of stuff.

3. I have found that by charging more to your card and having a favorable credit history with them, you can get away with the occasional late payment fees.

However, there are disadvantages to just having one card.

1. If you lose you card, you will probably have to wait a few days to get a new card. This is a major inconvenience.

2. If your card increases your APR for no good reason and does something nasty to you, then you are stuck.

Having a couple of cards

There are however some reasons to have a couple of cards as well.

1. You can optimize and maximize the amount of benefits you can get from a card. For example, many people who carry cash rebate credit cards have a couple of cards to maximize their cash rebates. For example, one possible combination would be to carry the American Express Blue Cash with a card like the Chase Freedom Credit Card. The Blue Cash for example allows you to earn 5% rebates on gasoline, supermarket and drugstore expenses once your annual expenditure exceeds $6,500. Cardholders will often use their Chase Freedom Card for these items (which pay 3% rebates) before they reach their Amex Blue Cash threshold and switch over after that.

Another interesting combination among frequent travelers is to have the Amex Black Card and the Starwood Preferred Guest Credit Card.

2. It’s good to have a couple of cards if you accidentally lose one - off course, if they are all in the same wallet, then….

3. If one card raises your rates and does something that displeases you, at least you have other cards to fall back on.

The disadvantages are :

1. You can more monthly statements - which we all could use without.

2. You cannot track or breakdown your annual credit card expenditure easily (although that can be overcome by using quicken or Microsoft Money).

So what’s my view? - Well, I think just having two cards is often enough. Three at the max. I just do not see the point of carrying more cards than necessary, both from the point of convenience and ease of managing the cards. What is your opinion? How many cards do you carry?

There has been lots of news articles in major newspapers recently about credit card companies raising rates on cardholders who were supposedly paying their bills on time. Companies that have been cited for such practices included Bank of America, Capital One and Chase.

The theory is that with bank profits being squeezed with write offs from sub prime mortgage loans and are trying to find means to squeeze as much profits from their other operations. It used to be that banks would practice “universal default clause” - raising rates not because you made a late payment, but because you paid late on some other debts you have. Most banks have now stopped this practice, but they still have the right to raise your rates if they wish to.

Well, the press has made it seem like this is becoming a wide spread practice. So I asked my friend from Chase (who works in the credit card department) if there was any truth in these stories. He denied that Chase practiced this at all. In fact, he admitted that they used to do it, but not anymore.

He then asked me not to believe these stories because he says that consumers tend to complain when their rates went up, but they do tend to forget that they were actually “late on one bill”. Hence, he is not convinced of the stories that are appearing in the press.

The one way to get around all the nonsense is to actually pay your credit card bills fully on time. I never carry a balance and so credit card issuers can raise the APR, late fees and all that for all they want and it would not affect me at all.

But that aside, has anyone had their interest rate increased unfairly? Share your stories here (and be truthful about any late payments!).

Well, lots have happened in the financial markets with the sub prime crisis. The crisis first triggered off when financial markets realized that housing prices will continue to decline and the value of many structured products backed with sub prime loans! Then money market funds stopped buying commercial papers issued by “black box” funds (SIVs) that buys CDOs! The the bubble burst and lots of banks have now taken substantial write downs. What does this mean for regular consumers.

With banks balance sheet weaker, loans will be harder to come for those with poor credit. Here is my prediction in credit card land for 2008.

Credit card issuers will make it harder to those with bad credit to get approvals - In a very drastic case, Citibank, who owns the credit card portfolio of Egg (in the UK) effectively told their cardholders that they can no longer use their cards in a months time! If you have a low 600 type FICO score, you will have a harder time getting credit card approvals.

Good 0% APR balance transfer deals becomes harder to find - Banks are taking huge write down on their sub prime portfolios. Consumer spending is expected to go down. Which means credit card spending is expected to decline as well. Those working in the credit card divisions will pay more attention to being profitable than simply expanding market share. Last year, credit card issuers started doing away with the cap on balance transfer fees. I expect this to continue this year. I suspect 0% for 12 deals (which used to be the norm) will slowly disappear.

Hidden Fees continue to go up - Late fees and over-the-limit fees have gone up each and every year for the last few years. In fact, inflation in credit card fees is much higher than the CPI average of 2%! Remember the times when late fees were just $19? Not too long ago was it?

Credit Card issuers will trim their portfolio - Right now, Chase and Bank of America have the largest portfolios. This was a result of their previous acquisition. In Chases’ case, it was Bank One. Bank of America bought MBNA. Having spoken to friends who work in the credit department of these companies, I’ve found out that many of these cards are simply not profitable. And that they are looking to trim their portfolio. If you are carrying a card that is affiliated with a retail store like maybe a Sony credit card, do not be surprised if the card is discontinued and your card becomes another type of card!

Further Consolidation in the industry - As credit card delinquency rates go , retailers or non-banks who have their own credit card portfolio will sell them to the major credit card issuers. GE financial have already sold their credit card portfolio. More will follow.

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

I am now in the midst of formulating a charity giving strategy. The truth is that I have not been giving enough or tithing enough. Some common excuses (real or perceived) is inhibiting me.

Financially, my mortgage (25% of gross income), need to save for kids college education and retirement, plus regular household expenses get in the way (at least mentally). I also have not done any research on my favorite charity or some homework needs to be done. I do tithe. But I guess it is not 10% that I should and I want do.

Then, just a few days ago, I received my regular Amex emails. In this particular mail, they mentioned that you can set up an automatic charity donation from your credit card every month. Aside from a set and forget automatic charge to my Amex card, I can actually earn reward points! (Double points if I enroll before the end of December!). Amex also has over 1 million charitable organizations on their Membership Rewards program as well.

I have given myself a couple of task.

1. Research charity organizations - This will probably take a while, but I would like to donate to one which has a cause that resonates with me.

2. Decide on a monthly amount to donate - I now treat 10% as a goal rather than an ultimatum. Though I’m not at 10% yet, the aim is to gradually reach that goal and perhaps exceed it. Mentally, this sits better with me as I feel that I will be “consistently giving” even though it may fall shy of the 10% number. Consistent giving with a purpose in my opinion is better than random spur of the moment giving.

3. Put giving on autopilot - Since Amex allows you to automatically donate to charities through their credit cards, this is what I will do. This allows me to put everything on autopilot

I will provide updates on this progress in the future.

I personally love my credit cards. But I do know that there are people who do not like carrying credit cards. Most of the time, they have had bad experiences with them - like getting into mountains of credit card debt. Many of my friends also feel the “urge” to carry a balance if they carry a credit card. For myself, I have never carried a balance and it is for this reason that I really love my credit card. Here are my reasons why a credit card is actually a good thing if you can use it responsibly.

1. Earn reward points - If you pay your bills on time every month and do not carry a balance, then reward credit cards allow you to earn “points” that can be used to redeem a variety of rewards. I have used reward points for airline tickets and many merchandise and I find it such an useful feature.

2. Earn cash rebates - I presently use the Blue Cash and I have been earning cash rebates with this card. For the last two years, my rebates work out to about 2+%. Every anniversary statement, I get a credit from the rebates I earn and I have a much lower credit card bill for one month in the year.

3. Credit Cards help me build a credit history - Let’s face it, my first credit card years ago helped me get started in building my credit. A good credit is essential for you to get the lowest rates for your mortgage and auto loans. Obviously, abusing your credit card can also hurt your credit.

4. Credit Cards allows me to carry less cash - I seldom have cash in my wallet. That is because I use to pay everything on my credit card. Mrs Credit Card is always having a go at me because my wallet is always empty! But hey, why carry cash which can be stolen when a credit card will do.

5. Credit Cards have purchase protection features - I used this feature a couple of time when I accidentally broke the product I bought from a retailer. American Express simply accepted the responsibility and I managed to exchange the product.

6. Extended warranty feature - Credit cards these days have extended warranty feature whereby they will take care of any repairs beyond the warranty period. Amex has this feature in their cards and I have used this for an old camera that I had.

7. Baggage Insurance - My Amex card has baggage insurance and I have lost my luggage once at an airport and I got given a lump sum of cash. Don’t underestimate how important this can be!

8. Emergency Line of credit - My credit limit provides me with an emergency source of credit should I need any funds. In my opinion, this is important to have because when you actually need cash, it is very difficult to get!

9. Credit Cards have concierge features - I use my Amex Platinum to book restaurants, help me when I have trouble with my airline tickets. You do not need an Amex Platinum card to enjoy such features. Many no annual fee Visas and Mastercard also have concierge features which are massively underutilized by cardholders.

10. Roadside Assist - Earlier this week, I left my keys in the car. I called Amex and their “Global Assist” helped me call up a roadside assist company and after an hour and a half, I got my keys of the car. The service was ‘free’.

In the November issue of Kiplinger’s magazine, they had a section where they wrote their thoughts on what they thought were good credit cards. I list them down here, but I have some critiques about them and the fact that the recommendation appear to broad based without going into details and caveats.

Cash Rebate Card - For the Cash Rebate Card category, they chose the Blue Cash from American Express as their choice. They correctly mentioned that you earned 1% rebates on gasoline, supermarket and drugstores until you reached $6,500 in annual spending and that once you exceed this threshold, you earn 5% rebates. I personally carry the blue cash and it is a card I highly recommend. However, what they fail to realize is that because of the tier structure, it may not be the best card for you. For those who spend less, the Chase Freedom Card will probably be a better alternative. It pays 3% rebates on gas, groceries and drugstores, but has no tiers. Best way to find out which card is right for you is to use our Cash Back Credit Card Calculator.

Airline-Miles Card - For this category, Kiplinger close the Citi Premierpass Card Elite Version. While this is a very good card, I think there are just too many types of travel reward cards to simply pick one. What they failed to mention is that this card will only suit those who travel a lot because you can earn points from the dollars you spend and also from the miles you fly. For those of us who are not really frequent flyers, then this card may not be suitable. Plus, Citi’s ThankYou Network airline reward system could get complicated as they have “fixed options” and “flexible options” for redeeming points for airline tickets. Check out our review of Citi’s Rewards for more details.

Low Rate Card - Kiplinger’s recommended the Simmons First National Bank Platinum Card which comes with a 7.25% APR (low indeed). I agree with their recommendation. Aside from having a low rate, they also give cardholders a 25 days of grace period (longer than the standard 20 day given by most other cards). What this card lacks though is a 0% APR Deal - which is why I still recommend the Advanta Platinum BusinessCard with Rewards - which comes with a 0% APR deal for 16 months and a low APR of 7.99%.

Travel Card - For this category, the Capital One Platinum Plus Mastercard was chosen as all Capital One cards do not charge any foreign transaction fee. I agree with their choice on this one.

Gasoline Card - The BP Rewards Visa was chosen because they pay 5% rebates on BP purchases and aso 2% on travel and dining expenses. I also recommend the BP credit card and agree with their choice. However, not everyone uses BP gas stations. What if you don’t. Well, my choice would be the American Express Simply Cash Card. It is a business credit card that pays 5% rebates on gasoline and certain types of business expenses. (Note : you do not need to have a business to get a business credit card as you will be treated as a sole propriertor).

Parting Notes : While I agree with most of their choices, I feel not everyone would find the recommended cards to be the best for them. I hope I have added some value by highlighting where one might find slightly better cards. For a list of cards that we recommend, please check out our best credit cards

Alright, despite the fact that I’m always raving about certain cards and that I encourage students to get a credit card as soon as possible to build their credit, there are things that I dislike about credit cards and their issuers. Below are my top 10 pet peeves.

1. Sending too much junk mail - Yes, I could easily choose not to receive any junk mail from credit card companies. But because I’m Mr Credit Card, I really do go through each and every mail just to see if there is anything new or is there any new marketing tactic that these credit card companies come up with. I know a friend of mine who works in Chase and he says that their response rate on these credit card mailings is less than 1%!

Now, if instead of sending cards with 0% APR Balance Transfer Deals, I would warm up to a company if they sent me mails on how to improve your credit score, what to do before you apply for a credit card, how to avoid certain disputes etc. If they sent me some education materials, I would be much more receptive to their card offers. The credit card industry have a thing to learn from sophisticated direct marketing folks!

2. Sending Me Offers for Cards I already have! - Yes, even after I got my Chase Flexible Rewards Card, they kept sending me mails with the offer! Come on, sort out your computer systems and perhaps we’ll be more likely to open your next offer!

3. Sneakily raise fees - Remember the times when a late fee or an over-the-limit fee was just $19? Then it went to $25, $29, $35 and now $39 (the maximum fee so far). I’ve no doubt it will soon be $49! Credit Card fee inflation has sure been rising faster than the normal goods inflation!

4. Inconsistent Method of Balance Calculations - While companies like Citibank and American Express use the normal average daily balance method to calculate monthly balances, Discover Cards use the one-cycle and two-cycle methods. For example, all Discover Cards use the two-cycle method except for the latest Discover Motiva Card. Chase use to use the two-cycle method, but a few cards used the normal one-cycle method. Come on now, if you want to use the two-cycle method, then use it for all cards. Be consistent.

5. Removing Maximum Balance Transfer Fees - I think credit card companies realize it is a money losing proposition to keep offering 0% teaser deals. Heck, many people (taking advice from us pf bloggers) are doing the arbitrage - getting the 0% deal and putting it in an online bank like HSBC and earn a one-time higher yield! So rather than stop offering money losing 0% deals (cause no one wants to be the first to blink), some issers have decided to screw the consumer instead.

Bank of America for example have no longer any cap on their balance transfer fee. So if you transfer $20,000, you may be slapped with a $600 balance transfer fee! (3% of balance transfer amount). Some cards are sneakily doing that as well. Before you attempt a balance transfer, it is best you check with customer service and get the updated terms and conditions on this point! Citicards also have some cards with no cap on the maximum balance transfer fee!

See my post on Balance Transfer Credit Cards and Balance Transfer Fees

6. Having Different Fees for Different Cards - I’m not talking about annual fees here. Citibank is the most guilty of this. Different citicards have different maximum balance transfer fees. Some have a cap at $99, some at $250. Some have no cap, but waive the BT fee for the introductory offer. Not only are there different fees for different cards, they change the fees among the cards as well! I have no doubt they are conducting some kind of marketing test. But this is clearly absurd. I’m sure lawsuits will arrive.

7. Not showing their reward program on the web - Chase and Capital One are the most guilty parties here. The only reason I got the Chase Flexible Rewards is to actually find out about their reward program. It turns out to be quite good actually. But why can’t they simply display their rewards on the web just like american express and citibank? It will make comparing programs more easy (hmm! perhaps that’s why they’d rather not have us see it?)

8. Not showing Consumers the Effective Interest Rate - The APR is not the real effective interest rate you are paying on your balances. The real interest rate depends on whether you are using a monthly periodic rate or daily periodic rate. Most cards these days use the daily periodic rate while a couple of credit cards still use the monthly periodic rate. To find out how this affects the real interest rate, see our article on how to calculate the effective interest rate.

9. Increasing Your APR for no good reason - I’m not talking about the universal default clause, which credit card companies have abandoned since the Senate Banking and Finance Committee started poking their noses into credit card practices. But I know friends who got their APR bumped up for no apparant reason.

10. Charging Monthly Maintenance Fees - Subprime credit cards like to charge a “monthly maintenance fee” on top of exorbitant annual fees. Alright, when you have bad credit, you cannot be fussy. But charging an annual fee north of one hundred dollars, charging more monthly maintenance fees and an APR approaching 20% seems like daylight robbery. This is one good reason why you want to make sure you have great credit!