It’s Sunday so I’ll take a break from talking about credit cards. My Friend Kevin at www.satellitetvguru.net has some interesting tips for using coupons to save money on your entertainment cost. Many bloggers blog about supermarket coupons but very few blog about coupons for entertainment. So I thought it would be a good idea to ask him to write about this since everyone is in the “save money” mode these days

Earlier this week, Mr Credit Card featured a post about the importance of using coupons to save money on your daily expenses. Coupons are a great way to save on entertainment expenses as well, and are often overlooked. In fact it’s amazing just how much you can save on weekend entertainment by using the right coupons.

Movie Ticket Coupons

These days it costs more for a family of four to go to the movies, then to just buy the movie when it’s released on DVD or Blu-ray. We’ve talked about ways that your family can cut down on movie costs before, however one thing we didn’t mention in the previous post is that using online coupons to make going to the movies a little more affordable.

If you use Fandango.com and you’re a Visa Signature Card Holder, you can currently redeem this coupon that gives you a free second ticket with the purchase of any movie ticket up to $13.50 in value. There are quite a few other movie ticket coupons out there, most of which work with Fandango and give you free tickets, concessions, or a % off your purchase.

Concert Ticket Coupons

You can also use the same strategy to save on concert tickets you buy online. TicketsNow, Stubhub and RazorGator often have coupons that you can find online such as this one that allows you to save $20 on any purchase of $200 or more. While doing a quick search we also came across another coupon that gives you $15 off a purchase of $100 more more.

These coupons are widely available online and easy to find, the sad fact is that most people simply just don’t take the time to do a quick Google search and use them. By getting in the habit of searching for coupons every time before you buy anything online, you can save hundreds of dollars a year.

Satellite and Cable TV Coupons

If your looking to save money on Cable or Satellite service like Dish Network you can find a lot of promotions before signing up, again by simply doing a Google search. The important thing to note here is that you need to find these deals before signing up, if you’re already a subscriber there isn’t much you can do.

If your looking to order Dish Network, by using the promo code on that page you can save $45 and get a free DVR upgrade as well as free installation. You can also find similar coupons and offers when signing up for Comcast cable or Verizon FIOS.

The following is a guest post from www.MerchantCouncil.org – an unbiased site that helps merchants find the best merchant account for their business. While most of you are familiar with APRs, rewards and the typical stuff, I think this is an interesting look at the type of fees credit card issuers impose on merchants.

Many things happen behind the scenes to facilitate the process that’s initiated when a cardholder presents their credit card to a merchant as payment for goods or services. Balances are verified, authorizations are placed and funds are moved from one financial institution to another – and that’s only a brief summary. Cardholders and merchants each have very different views and responsibilities when it comes to using and accepting credit cards, but they have one important thing in common – the issuing bank.

When you use your credit card, your thoughts are probably focused on things like your current available balance and the APR on your account. These and other details of your account are set by the issuing bank of your credit card. That’s the bank that originated your card account, that lends you money to make purchases and the one that you send payment to each month. Some examples of large issuing banks are Bank of America and Citi Bank.

The businesses where you use your credit card to pay for products and services are also concerned about your issuing bank – but their thoughts are focused on something called the interchange reimbursement fee.

Issuing credit cards is a pretty profitable venture for banks that are large enough to handle the risks involved. On one side of the equation, they collect interest and other fees that are mainly a result of the APR on their cardholders’ accounts. On the other side of the equation, they collect interchange fees from the merchants that accept credit cards as payment from their cardholders.

If you’ve got a credit card you’re pretty familiar with interest rates and APR, but unless you’re also a business owner – you probably aren’t aware of interchange reimbursement fees and how they affect businesses.

Interchange rates are essentially the wholesale fees for Visa, MasterCard and Discover brand credit cards that a business must pay to a bank each time they accept a credit card issued by that bank. Interchange fees don’t apply to independent card brands like American Express – which I’ll talk more about later.

The stakeholders of Visa and MasterCard (which are primarily issuing banks) maintain something called an interchange reimbursement fee schedule that anyone can view by going to their respective websites (links below). These fee schedules dictate the percentage of a transaction that a business must pay to an issuing bank when they accept that bank’s credit card.

You’ll notice by looking at the interchange fee schedules that there are quite a few different categories – each of which can carry a percentage charge, a per transaction charge or both. This is done for a number of reasons that are beyond the scope of this article, but the fee is generally based on risk, a merchant’s processing behavior, or their business type.

Interchange is often quite confusing for merchants because there are so many different categories and reason why transactions fall under one category or another. It’s typical for merchants to have charges resulting from several different interchange categories in a single monthly billing period.

In addition to interchange fees, merchants also must pay assessments to Visa and MasterCard as well as a fee to their merchant service provider. With an average interchange charge of 2% and an assessment of 0.0925% imposed on each transaction, it’s no surprise that merchants spend plenty of time making sure that they have a cheap merchant account.

When comparing merchant accounts, business should look for either a flat rate merchant account or something called interchange plus pricing. Under this pricing model, a merchant service provider applies a fixed mark-up to the actual interchange charge as dictated by Visa or MasterCard. Interchange plus and flat rate pricing models are the best merchant account pricing structures a business can have for both cost-effectiveness and transparency.

Visa, MasterCard and Discover brand credit cards are referred to as bankcards because they’re backed by a number of actual banks. Brands that are wholly-owned and that are back by a single issuing (and acquiring) bank are called independent brands. Rising interchange fees for bankcards and large independents alike are creating opportunities in the marketplace for more independent brands to come up through the ranks – the latest of which is RevolutionCard.

Like the bankcard brands, independent brands dictate the charges that cardholders and merchants must pay to use and accept their cards. In the case of the largest independent card brand, American Express, a merchant generally pays a rate of about 2.5% per transaction to accept an American Express card as payment. American Express plays their cards (no pun intended) a little closer to their chest in terms of the rates and fees they charge.

Now that you have an idea of the costs associated with accepting credit cards, you can understand why many merchants impose minimums on credit card purchases, a convenience fee or other cost-mitigating strategies.

The most widely used practice among merchants to lessen the costs associated with accepting credit cards is to apply a minimum purchase amount to credit or debit card transactions. They do this to avoid losing money on transactions where the profit from the sale isn’t enough to cover the cost associated with processing it.

For example, let’s say you walk into a convenience store and buy a bottle of water for $1.59 and use your Visa card as a form of payment. The merchant’s cost for the bottle of water is $1.00, leaving them $0.59 gross profit. Of that let’s say that their operational costs total 50% of gross profits, leaving them with about $0.30 of NET profit in a typical transaction.

Since you’re paying with your credit card, the merchant will have to pay processing costs of roughly 2% for interchange, plus another 0.0925% for assessments, plus another roughly 1.75% and $0.20 for the merchant service provider’s fees. After processing fees, the merchant is left with less than $0.10 or just under a third of their initial NET profits.

To guard against this happening, some merchants place a minimum purchase amount on credit card sales, but doing so is against the agreement they signed with Visa and MasterCard. Merchants aren’t allowed to discriminate against cardholders for any reason – including the amount of a transaction. Businesses that are reported to Visa or MasterCard for violating their merchant service agreement may be fined, have their merchant accounts closed or both.

The next time that you’re in a store where you’re forced to a pay a minimum to use your credit card, consider a couple of options. You can pay cash for the transaction and be done with it. If you don’t have cash, you can point out to the merchant that they’re in violation of their agreement and ask for an exception. Lastly, you can threaten to report the merchant hoping that they’ll let you use your card for what is likely a purchase of less than $10.

Many merchants that get reprimanded for imposing minimums on credit card transactions are forced to raise their prices across the board for both cash and credit transactions. Keep that in mind before resorting to option number three above.

Resources

http://usa.visa.com/merchants/operations/interchange_rates.html
http://www.mastercard.com/us/merchant/support/interchange_rates.html

Every day brings a headline sillier than the last.    Today we have  “I Was Blind To Let You Go”: BofA Dumps Complaining Customer, Wants Her Back Two Days Later.     In this case, the cardholder was canceled for complaining about her limit being reduced.    Of course, the story has a happy ending in that BofA restores her card after the reporter’s inquiry.

Meanwhile..

Senator Chris Dodd of Connecticut has proposed legislation that will freeze interest rates before the effective date of the CARD act, which has now being proposed to  been moved up to December first. Personally, I don’t get it.   Unless the law is passed in a millisecond, why can’t credit card companies legally raise rates right before the law is passed?     This seems to be the problem with all legislation, regardless if it is effective February 22d, December 1st, or tomorrow.

Continental Officially At Star Alliance

There are three major airline alliances out there, SkyTeam, OneWorld, and the Star Alliance.    Continental, which had been a member of SkyTeam, is no officially part of the Star Alliance.   The Frugal Travel Guy has all of the details. This is a big deal for anyone who travels on US Airways or (uggh!) United.    This means that those travelers, or credit card miles collectors should be able to book flights on Continental.    Likewise, US Airways and United miles holders should be able to redeem their miles for seats on Continental.     I say should, because I have found Continental miles extremely difficult to use.     Even United award seats are slightly more available, provided you don’t try to redeem them for partner travel, which is often blocked.

Of course, if for some reason you do fly United, you can now credit your flights to your Continental account, and pick up a Continental credit card along with it’s sign up bonus.

You Just Can’t Make This Stuff Up

Finally, it seems that the singer “Dave Carroll” of “United Breaks Guitars” fame, had his luggage lost in Denver this week on his way to a presentation about customer service to United Airlines! Give it up and move on Dave.    There are lots of great ways to get to Denver without having to subject yourself to United Airlines!

Hello, Bank of America increased the interest on my small business acct from 12.9 to 24.9%. I have never paid them late , I always pay more than the amount due, and my credit score is 730. My original credit line was 40,000 which was reduced to 30,000. They increased my interest rates effective 6/09. I called them and cancelled the card and said I wanted to opt out. They said OK. I later found out you can’t opt out of a small business acct with Bank Of America. I am lost on this one, trying to pay it down asap. This is such a bad situation my balance when i closed the acct was around 20,000, its now 16,500. What can I do? To top it off i’m a stockholder of BAC. Roland

roland johnson

Answer – Roland, since BOA does not allow you to opt of of the rate increase, then my only suggestion to reduce your interest payments is to transfer your balance to a 0% teaser card. The unfortunate thing is that very few business credit cards offer 0% balance transfer deals these days. So you might have to resort to transferring to a consumer card instead. That is the best solution I can think of. Let us know which card you get in the end with your credit score. This would be great information for our readers.

Note – One of the reasons why this email is important is that we just found out you cannot opt of of a rate increase with a business credit card from BOA. If anyone has any experience otherwise, we would like to hear about it.

Some headlines sound ridiculous.   Obviously “Fees For Perfect Credit!” is one of them.    Here is the story. Bank of America and Citigroup are experimenting with the idea of annual fees on some of it’s credit cards targeted at people with very good credit.

Not So Shocking

I am not surprised by this headline at all, but not for the reasons you might think.  I know that the banking industry claimed that it was going to have to raise annual fees in light of the new CARD Act regulations.    That was a scare tactic then and now.   Banks are experimenting with these fees as I had predicted they would.    It is up to the credit card holders to decide whether they want to pay these fees in light of so many cards available to them with no annual fee.    What is even weirder is that they claim to be targeting those with good credit.     The reality is that they are just throwing this fee out there on the theory that some people will just pay it.

Ever Hear Of Telephone Rental Fees?

If you are above a certain age, you probably have.   Until AT&T was broken up in the eighties, it was common for the phone company (there was only one) to charge you a few dollars a month to rent your telephone.     Incredibly, there were some people who kept paying this fee for decades, long after you could buy a telephone for $10 at any store.

What does this have to do with credit cards?   The point is that some people will pay just about any fee on their bill that is not too outrageous.     A $59 fee in the middle of a $3000 credit card bill could easily be missed.    Or, the card hold might just accept the fee, feeling that there is no alternative.   It is easy to imagine that credit card companies could charge an annual fee, and that a significant percentage of people will just pay it.   The rest might complain and get the fee removed, but those who don’t could pay millions.

You Are Part Of The Experiment

I will not go on a populist rant and say that everyone should cancel their credit cards in a mass revolt.   This is not democracy, this is capitalism.   If your credit card company charges you an annual fee, you need to think really hard about what kind of return you are getting for it.    There are many, many cards out there with great rewards that charge no annual fees at all.   If your credit is good, not even great, but merely decent, you will have no problem loading your wallet with fee free cards.

What To Do If  This Happens To You

You have two options.   One is the nice way where you call up and demand the fee be removed.   This is nice in that you are actually providing the marketing feedback they are looking for at the expense of your time and aggravation.     Essentially, you are an unpaid market research subject who is being taken for a chump unless you tell them otherwise.

The other option is the upset way.    Tell the company that you don’t like being treated like a rat in a maze, and you would rather not participate in their experiment or be their customer.    Cancel your card and replace it with one that values your business and provides a respectable reward for no annual fee.

Note, I do not consider paying the experimental annual fee an option.

This is an email I just got from a reader telling about her bad experiences with Citi. I’ve decided to publish this for all to see. One of the things you realize is that credit cards are not just about rewards but customer service. If you wish to share any of your credit card experiences with us, please feel free to use our contact form.

You carry a good review for CitiCards programs, and while the initial agreement may be competitive and seem favorable to pursue, once you are in their program, that changes rather frequently and dramatically.

I transferred several balances about 2 years ago, and do not use a credit card on the account. I only pay down the debt. Every month, there’s a huge problem with on line payments and payment postings. Sometimes it’s a website down for maintenance on a due date, or a change in payment cut-off times. (I’ve seen 3 unannounced changes so far: midnight, 5:00PM, noon…you never know what you find on their website. I pay all my bills on supplier’s websites…they are not the norm of what you find on line.) Every month they either change payment dates or payment posting date and do not inform me.

Citicards no longer posts your payments the same day, even though my bank withdraws the funds immediately, and they have in the past. I have 2 other credit cards, nobody does this. Their website doesn’t disclose the delayed payment posting date. It varies between 3-5 days. Can you imagine the revenue they generate from this float and subsequent late charges and increased interest rates? With all the new consumer credit laws, this feels very unethical and nearly illegal.

This is fairly new, last 2-3 months, and they don’t inform you of the changes. My payment confirmation shows payment date, and no information about float on the payment posting. So now, if I log on before noon to pay the bill on the due date, they add late charges (in the category that never gets a payment posted against it), and bump up the interest rate. If it was discolosed on the statement and/or website, or if a notice was sent out describing the change, I could have avoided the significant rate increase and late charges, and better understood their new policy…absolutely nothing from them arrived by mail, email, or webiste information.

Also, I opted out of a rate increase this Spring. I did it by phone – it was an option of notification – I know date and who I spoke with. Their notice was ridiculous, there was no “important handling needed by ___date”, it purposely looked like junk mail that could easily be overlooked and thrown away. They will not roll the rate back…my interest rate has now tripled. I am working through customer service…they are a substandard “joke” to deal with.

Every month there are new payment due dates, new (undisclosed) rule changes, and later postings.

They have frustrated me beyond belief, and if I ever heard of a class action suit against them, or a way to sue them individually, I would jump all over it.

Prospective clients considering their accounts should be strongly warned about their payment practices, and lack of capability in customer service and documentation. Any opportunity to steer people away from this credit company is strongly suggested.

Ms. Susan Guffey

How can I get B of A to report to the credit folks for my personal credit score the activity on my two business credit cards that have my social attached to it. It also has my fed Id #S, but I am soley responsible for payment and I have no other source of credit reporting so I do not have a score at all. I am trying to get a loan to buy a second home! I spend thousounds of dollars a month on these cards and need that history to be reported personally.

Thank you
m david shurtleff

Answer – David, first a couple of clarification. Business credit cards in general to not report to your personal credit bureaus even though you are personally liable. However, have a couple of late payments or default on them and your personal credit score gets dinged!

If you have no other credit, then perhaps getting a “personal credit card” will do the trick. It appears that you use credit cards mainly for your business and do not use a personal one at all. Just get one and occasionally charge the card and pay it off fully every month. You should develop a decent history within a year or so. That should help you get better rates for your mortgage for your second home. You might to start off with checking out our list of best credit cards recommendations.

Having said that, in this environment, I suspect your credit score will not be the only factor in your ability to get the best mortgage rates. Your income will also be very important.

Travel and credit card bloggers are great sources of information when researching and planning your next trip.   We  have a wealth of information that has been acquired through hundereds of hours of research and a lifetime of experience.    Sometimes, people need assistance with a specific situation that goes beyond a mere blog posting.

Recently, two highly respected travel bloggers have taken up the challenge of helping individual travelers navigate the often confusing world of airline travel and rewards.

Help With Award Reservations

So you have earned gazillions of miles on your credit card, and now you are actually trying to redeem them for an award.    It might be easier to go to law school than to figure out all of the rules and restrictions preventing you from redeeming an award seat.   Then you have the tangled web of airline partnerships and alliances that can be utilized for redeeming awards.    Fortunately, View From The Wing blogger Gary Leff has begun offering a Frequent Flier Award Booking Service.      Gary will research itineraries, find award seats, facilitate award transfers, and even work directly with the airline.   Using his service, it is possible to book business or first class seats worth tens of thousands of dollars that you may otherwise may not have found.

The Cranky Concierge

Brett Snyder over at the Cranky Flier Blog is a self described “airline dork” who has worked in scheduling at one of the major airlines.    Regular readers may even recall that we exchanged guest posts last year.    Recently Brett has launched a service called The Cranky Concierge. This innovative offering is designed to assist the rest of the non-airline dorks out there in completing their travel plans with with a minimum of stress and hassle.    For a flat fee, he and his staff will help you find low fares, monitor the progress of your flights, provide delay and cancellation assistance, and post-dispute trip assistance.

As a fellow airline-dork, even I have to admit that there are time that I could have used this service.    I have been stuck in airports without accurate information about weather, alternative flights, and airline policies.    I have booked complicated itineraries that have come unraveled due to weather or mechanical delays.    Finally, I have spent months after my trip hounding airlines for compensation.    For those without and encyclopedic knowledge of airlines as well as those who value their time, this unique service could be a godsend.

Get Help From A Blogger

If you find yourself perplexed by all of the award travel redemption terms and conditions, or unable to navigate the airline bureaucracy while traveling, it may be time to enlist the services of these highly respected bloggers.   Even savvy travelers may wish to utilize these services on once in a lifetime trips such as their honeymoon.    Gary’s award redemption service can mean the difference between paying for your ticket and flying for free, or between a coach award and a business class award.     Brett’s concierge service can mean the difference between sleeping on the floor at an airport and reaching your destination.   Travel insurance may only provide compensation after there are problems, yet these services can solve problems before they happen.     I believe that Brett and Gary are the pioneers of a whole new niche in the travel industry.

My husband and I are retired. We are trying to get a card to earn miles for air travel — perhaps once or twice a year. We are planning on using it for most purchases — i.e. groceries, monthly bills, etc. to maximize the number of points/miles earned. We’re not too enthused about using the online buying sites offered by the card holders — may do it — but probably won’t use it a lot. We generally have narrowed our choices to Citi Premier Passcard – Elite Level (like the 2 points for every dollar on most purchases, the 1 point for every dollar spent on airline ticket purchase, and the “companion ticket” feature — which still is a bit confusing to us — can we qualify??) and the Escape by Discover Card (like the 2 miles earned for every dollar spent for ALL purchases — including airline tickest(??)- not sure about this). Between the two, which would be best for us? The Citi Premier is a Master Card I believe, and the Escape is a Disc over. Should this be factored in?

Susan Bach

Answer – Susan, both these cards appear to suit you. There are some subtle differences that you may want to consider.

Firstly, the Citi PremierPass Elite Level also allows you to earn points not just on the dollar amount that you spend on the card, but also on the miles that you fly. If you pay for your husband’s flight, the miles he flies also earns points. You also get a complimentary ticket if you buy a roundtrip domestic ticket that cost at least $299. You mentioned that you do not like to use online travel sites. But Citi (through their ThankYou Network reward program) requires that you book your flights and trips online with Expedia.com. That is something you have to think about.

The Discover Escape card has the advantage of letting you earn double miles for every dollar that you spend on whatever items. It does not have the companion ticket feature and you do not earn extra miles based on the “number of miles you fly”. However, you can use an “off line” travel agent if you prefer and as long as you charge it to your card and you tell Discover within 60 days, you should be able to use your points for a statement credit.

If you are traveling within the US, either cards will be accepted almost everywhere. But if you travel abroad, then a MasterCard would be preferable to a Discover Card.

Your final choice will depend on

I suspect the Citi PremierPass would be a better fit for you, but hopefully, you will come to the right decision for yourselves.

As a Denver based traveler, I have been a Frontier passenger for the last decade or so.    The Denver based carrier was the only alternative to the customer hating United here in Denver until Southwest showed up here a few years ago.    I have seen Frontier start it’s loyalty program, EarlyReturns, buy new jets, devalue EarlyReturns, enter bankruptcy, and get acquired by Republic.   At one time, I held their EarlyReturns credit card, offered by Juniper.

At first, Frontier offered domestic award flights for a mere 15,000, but they later devalued that to 20,000, and then again when they went to the two tiered system.   On the other hand, their reciprocal agreement with their fellow discount carrier Airtran was a real added value for travelers to the east coast.    I for one travel Airtran to Atlanta and Florida when Frontier’s schedule or price doesn’t seem work for my plans.    Unfortunately, the connection is not always seamless, and I occasionally have to request miles flown on Airtran be credited to my Frontier account.   EarlyReturns award redemptions on Airtran are slightly higher at 25,000 miles,  but the added option is worth it.    I would also expect to see more cooperation soon with Midwest airlines, another company owned by Republic.

A Real Deal

The credit card is still being offered, but there is now an unprecedented sign up bonus of 40,000 miles.    That is the equivalent of two tickets on Frontier.    Yes there is a $49 annual fee, but that is well worth the Frontier miles.    Here is the link. The offer is only valid until November 15th, and it requires a $750 in minimum spending by February 28th.    Like most airline reward cards, you get one mile per dollar spent, and two on every dollar spent at the airline itself.

Hilton Devalues Their Program

I came across this article recently about Hilton’s loyalty program being devalued.   The author is incredulous that they are taking this approach at a time when hotels are having real trouble booking rooms.      Nobody seems to understand the motivation behind such a devaluation when customer loyalty should be at a premium.   To their credit, they are giving sufficient advanced notice.     So all you Hilton HHonors point holders out there have until January 14th, 2010 to redeem your points at the old rates, which weren’t really all that great in my opinion anyways.