Rejected By Capital One! Which Cash Back Card To Get?

By: Mr Credit Card

07/26/2010

I just recently got this email from a reader

I apologize in advance for this long post. I’ll try to keep it as brief as possible. I’d like to get the above- mentioned card. I don’t have a debt problem, nor am I carrying any balances. I have always paid my balances off early. I have no current outstanding loans. I own my home outright – I took out a 30 yr. mortgage and paid it off completely in 15 years with no missed or late payments. I have never declared bankruptcy. In Nov. 2009 I applied for the Capital One card and was turned down. Reasons given: 1) income insufficient for amount of credit requested (I didn’t request any given amount of credit) 2) too many revolving accounts 3) revolving account balances are too low 4) new account balances are too low.

It’s true that I have a lot of credit cards – 15 in all, which I realize is way too many. I want to reduce that number greatly. I also have a couple of lines of credit and 2 charge accounts at department stores. I’ve never used them. In total, I could POTENTIALLY rack up over $90,000 in debt if I worked at it. I have a low income, so I realize that I could never support a debt load like that.

So my question is, how do I make myself attractive to Capital One for their cash rewards card? Do they see the potential for my getting deeply into debt the biggest problem? Or is the fact that I never carry a balance the issue? I can understand that if they’re giving someone cash back on purchases, would they want them to always carry a balance so they can make their money back on the interest? I hesitate to just start closing accounts. Things that I’ve heard reflect badly on your credit report are closing a lot of accounts quickly, closing older established accounts, or asking to have your credit limits lowered.

I’m tired of all the points and mileage rewards cards and want to make the Capital One card my “go to” card for everything. I just don’t want to apply again and not get approved and have to wait another six months before applying again. Thanks for reading.

So I asked him a few more questions..

don’t mind me asking how much is your income and how much do you spend on your card?

and can you list the cards you have…perhaps one of them is actually really good?

cos to be honest, cap one does not have the best cash back cards!

This was his reply:

Thanks for taking the time to give me advice. My income is about $34,000/yr., but I’m single with no dependents. I paid off my 30 yr. Mortgage completely in 15 years and have no other debt. I got my credit score the other day from CreditKarma.com and it was 788, although I’ve heard that might not be accurate.

My current cards are:

Citi Business Card – Thank You Network – 1 point/dollar spent. I’ve used this as my primary card and charged about $4,000 to it last year
Chase United Mileage Plus – 1 mile/2 dollars spent
Citi Aadvantage – 1 mile/2 dollars spent
American Express Delta Skymiles – 1 mile/2 dollars spent
US Bank Flex Perks – 1 point/dollar spent
USAA Platinum – no rewards program

The following cards I’ve either never used or only used once:

Chase Priority Club – 1 point/dollar spent
Bank of America World Points – 1 point/dollar spent
US Bank REI – 1 point/dollar spent
Chase United Mileage Plus (same rewards as above, basically a duplicate card – different acct. #)
Chase Slate – no rewards program
PayPal Plus – not sure if there’s a reward program
Wells Fargo – 1 point/dollar spent

I also have two charge cards for JC Penney and Sears that I’ve never used, and have a $5,000 line of credit with US Bank.
I want a pure cash back card now because I’m tired of points and airline miles and having my rewards limited to what is offered. Also I’ve found that points rewards usually work out to about just 1% anyway and I might be able to do better with a cash back card. Also, the Capital One card doesn’t charge a foreign exchange fee, and I travel overseas frequently. Do you think that if I closed my seldom used accounts it will damage my credit score?
Any suggestions would be appreciated. Thanks again!

Dave

Answer – David – firstly here are a couple of observations.

1. You do have a lot of credit cards – considering how much you spend.

2. You have quite a few frequent flier credit cards which you are actually paying fees on and are not using!

3. You must have recently applied for a new credit card because you have the Chase Slate card (which is relatively new)

4. Capital One does not like your absolute level of credit lines.

Here’s what I think you should do – Rather than getting a new card right away, since you got turned down recently, I would actually call Chase and ask to convert your Slate card into a Chase Freedom(Sm) Visa&#174 card (which is a cash back credit card). Given the amount you spend, this would be an appropriate card. You can earn cash back and use your points to book airline tickets on their travel portal as well (without the headaches of frequent flier points).

Secondly, over the course of the next year, you should slowly cancel the frequent flier cards you have because you should not be paying fees on cards that you do not use. The Citi AAdvantage, Chase United, Amex Delta, and your US Bank Flexperks.

Thirdly, after about six months of so (after you have got rid of your airline credit cards, you could then apply for another cash back credit card. I would suggest that you get the PenFed, Visa Platinum Gas/Cash Back Rewards Card because you can earn extra rebates on gasoline (5%) and supermarket (2%). But more importantly, unlike other cards, there is also no foreign transaction fees with this card. You do have to pay a one-time $20 fee to join PenFed if you are not connected to the military, but the small fee is probably worth it. I would only apply for this card after you have taken step one and step two.

Credit Card Advice For A Freshman Road Warrior

By: Jason Steele

07/23/2010

A friend of mine just got a new job where he will be traveling for the first time in his career. He asked me what advice I have for how to maximize his rewards gained during his travel.

Where To Start

While being on the road can be a downer to someone with a family back home, one silver lining is that a savvy business traveler can derive many perks from their travel. The key is to essentially look at your travel as a side business. While your primary mission is to represent your company, your secondary goal is to derive the maximum personal benefit from every travel experience. Every airline ticket, hotel, rental car and meal should have a reward component that you can derive from the transaction.

Starting with you credit card, you should be earning the most valuable reward points that you can every time you use it. The consensus is that the Starwood American Express Card is, by far, the most valuable and flexible card you can get. Surprisingly, this advice holds true regardless of whether or not you ever plan to stay in a Starwood hotel, which includes budget brands like Sheraton, Four Points, and Aloft, all the way up to higher end places like Westins. By earning Starwood points, you accumulating a very flexible currency that can be transferred at great exchange rates to any one of many airlines. In fact, because you get a bonus of 5,000 Starpoints when you transfer 20,000, you end up with an exchange rate of 1:1.25 to most programs, so you are essentially getting more airline miles per dollar spent than if youhad made the purchase with an airline credit card. If you use your starpoints for a hotel stay, you are still getting plenty of value without having to worry about blackouts or capacity controls.

Airline Cards Are Still Valuable

This particular traveler is based in Atlanta, which means his choices for non-stop airline travel are largely restricted to Delta, and to a lesser extent, Airtran. Sadly, Delta Skymiles are often referred to as SkyPesos as they have less value than most other airline miles due their horrendous award structure and lack of availability of reasonably priced awards. Nevertheless, his goal should be to attain the highest status in Delta’s frequent flier program in order to score free upgrades to first class, and to get the highest standby priority.

Standby priority is great to have. As a former road warrior myself, I always had to commit to stay at the client site until the end of the day, purchasing a return ticket in advance for late in the afternoon or even early evening. Yet nine times out of ten, I would complete my work early enough to get to the airport in time for an earlier flight. Every other business traveler would do the same, and the last remaining seat would go to the one with highest status.

Fortunately, your credit card can actually help you with that. Delta’s Amex cards in particular offers both Medallion Qualifying Miles (MQMs) as well as granting standyby priority to cardholders within Medallion levels. That means if there is one seat left, and two Gold Medallions on standby, the one with the Delta Amex gets the seat. If that means getting home at 7 pm and saying goodnight to your kids, versus arriving home at 10 pm when your wife is asleep, the card has already paid for itself. I would recommend starting with the basic Gold card that does not offer MQMs as it is too late in this calendar year to hope to really get high status, as status is only accumulated during the calendar year. Next year, you could upgrade to the Platinum or perhaps even the Reserve card that offer 5,000 and 30,000 MQMs respectively. Finally, if he has the opportunity to charge his airfare to his personal card, that would be the one time that he should keep his Starwood Amex in his wallet and use the Delta card as it earns two miles per dollar spent with Delta.

Other Strategies

If he can use your Starwood Amex at an actual Starwood hotel, you can get some amazing value. Even if you can’t stay in a Starwood, make sure to get airline and/or hotel points at every hotel you stay at. He will also want to sign up for the Skymiles Dining program, and visit restaurants that qualify. Make sure to give out your Skymiles number to rental car companies as well. In fact, take a few minutes to read through the offers from every mileage partner they have.

Take Advantage of Promotions

The real windfall in the frequent flier game is to get hooked on promotions. Delta and most other airlines regularly offer promotions that you have to register for. A couple years ago, Delta briefly offered a huge promo where you got a 150% bonus on top of any partner activity. A week after they offered it, they withdrew it but still honored it for all who registered. Last year, US Airways had a promotion where they gave a 250% bonus on partner miles. Ultimately, I spent $3,000 to get about a half of a million points that I will redeem for tickets worth well over $10,000 in premium class international travel. Since registration is free, he should visit the Skymiles promotions page regularly and sign up for everything.

The really big promotions come by only every year or two, but there are plenty of great sign up bonuses out there. At the moment, Starwood is offering 30,000 points as a sign up bonus for each of their business and personal Amex cards, an unprecedented offer. In the past I have seen sign up offers from Frontier for 2 coach tickets and from British Airways for 100,000 miles and a free companion.

How To Find Information On Great Deals

First, bookmark some key blogs, such as this one. Others I recommend include One Mile At A Time, View From The Wing, The Wandering Aramean, Upgrade Travel Better, and The Frugal Travel Guy. Finally, no information on award travel would be complete without a discussion of FlyerTalk. Flyertalk is a forum that is used by the world’s most experienced travelers to trade tips and tricks. It can be a little intimidating at first as they have developed their own culture and lingo. Read plenty before posting, but there is some great information. Drill down into the forum for your favorite airline, hotel, and rental car, as well as browse the MilesBuzz discussion. There is a fountain of valuable information for anyone with the time and patience to digest it.

Why Bother?

Since my days as a road warrior, I don’t get to travel more than a few times a year. My travel was once limited by my ability to afford airlines, hotels, and rental cars. Now, it is only limited by my vacation time. I estimate I am receiving over $10,000 a year in travel awards such as business class airline tickets and luxury hotels, while hardly spending anything other than an occasional annual fee on a credit card. As an actual business traveler, you have the ability to earn far more rewards. There is no reason why your next vacation shouldn’t be flying in first class and staying in luxury hotels for free.

Refund On A Closed Credit Card

By: Jason Steele

07/21/2010

A reader asks:

Hello,

My husband and I recently opened a dispute with a company over the BBB website. The BBB dealt with the company and got them to agree to refund us the money. We have waited and waited and have not seen a refund.

I again contacted the BBB and told them what was going on. They contacted the company that said the refund was issued to one of our credit cards on July 12th. We have not seen the refund. Nor do we know what card they are refunding this amount to.

My concern is that since that time frame, we have paid off and closed several credit cards. What will happen if they refunded the amount to a closed credit card. I have no account numbers because the cards were closed, I also do not know what card they may have used to put the refund on.

The company is refusing to deal with us on this matter, so I cannot speak to them to find out what card or account number we used and I am afraid that they may have refunded the amount to a closed credit card that I do not have the account number for anymore. What will happen?

What Will Happen

Recently, I answered a similar question from another reader along those same lines. When a merchant attempts to credit a purchase to a closed account, one of two things can happen. If the account has been closed for some time, the credit may fail. If the account was closed relatively recently, say in the last three months, the credit may post. From there, the credit card company should issue you a check, or at the very least provide you with a statement indicating that you have a credit on your account and that you may request a check.

In this situation, you should still contact the merchant and tell them that you have not received the promised refund. They should be willing to process the credit to an active credit card, or issue you a check. If they are unwilling to speak with you, you may wish to follow up with the BBB as the matter cannot be considered closed until you have received the promised settlement.

Calculating The Damage

By: Jason Steele

07/19/2010

Regular readers know that I am a devout “deadbeat”. That is credit card industry slang for someone who avoids paying interest and fees by ALWAYS paying his credit card bill in full and on time. Not usually, not most of the time, but EVERY SINGLE MONTH for my entire life. In the rare case when a technical glitch prevents my payment from being received on time, I have successfully asked for all interest and penalties to be waived.

That said, I am always trying to understand why the majority of credit card holders pay interest every month. There appears to be several reasons. I have come to the conclusion that most people do not have the slightest idea how banks charge them interest on their credit cards. I don’t blame them. The methods banks use to charge interest on your credit card is very complex, and one could argue that they do this on purpose. It seems more likely that it’s complexity was merely a side effect that was was created when they designed a system to collect the maximum interest for a given rate.

Let’s Take A Look

Most people imagine that because they can pay their credit card in full and pay no interest, that the interest does not start accruing until after their due date. In fact, from the credit card company’s point of view, interest begins accruing from the moment you make the purchase. That interest is then waived if you pay off your entire balance in full by your due date. Pay one penny short of your balance, and you will owe interest on each purchase from the time of purchase to the time payment is received. The explanation is woven into the fine print, yet it comes as a surprise the first time you see how much interest you owe on the bill following the one where you didn’t pay your balance in full.

For example, imagine you have just received a new credit card. If you were to charge $1,000 to your credit card in May, and pay $900 of it when the bill is due in June, your next bill will have interest charges reflecting interest on the $900 from the date of purchase until the date of payment, as well as interest on $100 from the date of purchase until the date of the next statement.

It gets worse. Because you failed to pay your balance in full, any additional charges that you made since that original $1,000 charge in May are going to continue to accrue interest from the moment you make the purchase up to the day all charges and interest is paid in full. Every cup of coffee, every gallon of gas, and every loaf of bread is going to ultimately cost you more than you appear to be paying when you swipe your credit card. Even if you come up with the cash to pay the entire balance by the due date, you will still see interest on your next statement from the time the last statement closed until the payment was received. If you make any more purchases between when the statement closes and when your payment is received, you still continue to accrue interest until such time as you truly have a zero balance.

As bad as this sounds, it was actually much worse until February of this year. Before that time, banks were free to employ “double cycle billing”, a scheme that as far as I know only applied to credit cards. This truly despicable practice allowed banks to charge you interest on the average of your last two billing cycles. In effect, you were paying interest on the balance that you had already paid off. Imagine if you went to the supermarket and purchased a lobster tail for $20. The next day your returned to purchase ramen noodles for 18 cents, and the cashier asked you to pay $10.09, the average of your current purchase and your last purchase. That is exactly what credit card companies got away with for decades before the CARD Act went into effect in February of 2010.

Figuring It Out

One feature of the CARD Act is that your statement now shows how many months it will take you to pay off your balance if you pay the minimum, and how much you will end up paying in the end. I recently came across a web site called The Real Damage that attempts to calculate the same thing. Using these tools, you can see for yourself how financially damaging it is to pay interest on your credit cards.

http://en.wikipedia.org/wiki/Credit_CARD_Act_of_2009

HSBC's Practice of Sending out Pre-Activated Debit Cards Coming under Scrutiny

By: Mr Credit Card

07/18/2010

With the level of attention that identity theft and financial crimes, it’s a wonder to some that HSBC is still sending out pre-activated ATM cards and debit cards. These pre-activated cards require none of the authorization or activation methods required for most standard debit cards that arrive by mail. Activation methods are typically used to protect both the bank and the consumer. A typical new card activation method requires a cardholder to call a toll free number from the cardholder’s home phone to activate the card. This helps the issuing bank confirm that the cardholder actually received the card before use. Typically, a card is unusable until it has been activated.

Apparently, HSBC has been mailing some cards that are active and that do not require a user to perform such an activation process. This potentially dangerous practice is nothing new to HSBC. They came under fire in 2004 for mailing pre-activated cards, resulting in an increase of fraud and stolen identities.

Knowzy.com recently published an in-depth article on how HSBC Bank commonly mails pre-activated cards and does not follow this fundamental security procedure.

In the article, Knowzy points out the potential harm to consumers that could occur: Since some of these debit cards draw money directly from your checking account, HSBC’s carelessness puts all of the money of your account at risk.î And, should fraud occur, you could not see your money again for weeks.î

In Knowsy’s investigation, it found two HSBC divisions with long-standing practices of sending pre-activated ATM and debit cards through standard mailings, which any malevolent thief could intercept and use to their heart’s content. While credit cards often offer immediate refunds for unauthorized purchases, debit cards usually require weeks-long investigations before account-holders see their money returned. Apparently, HSBC does not intend to change this practice anytime soon.

Based in London, HSCB bills itself as the world’s local bank, and has over 8,000 offices in 88 countries across the world. As it turns out, it is not the only financial institution that is sending pre-activated cards through the mail. According to multiple reports, First Premier, which issues a fee harvester card (a term branded by the National Consumer Law Center to describe credit cards for which almost anyone can qualify if they pay substantial up-front, annual, and credit-boosting fees), and Coutts, which is recently announced its new Visa debit card, are also in the practice of sending out pre-activated cards.

EFT-POS.com, a UK-based company that offers credit- and debit-card processing systems, announced that 2004-2005 card fraud figures rose dramatically, especially mail non-receipt fraud,î as the result of criminals intercepting such pre-activated cards.

When Knowsy confronted HSBC about this careless custom, the company would not commit to fixing the issue. And, unfortunately, there are no laws prohibiting the sending-out of pre-activated cards, so don’t expect that other banks will necessarily not engage in the practice.

The best bet for cautious consumers who do not want their checking accounts suddenly wiped out is to ensure whatever bank in which they choose to invest their hard-earned funds does not allow pre-activated cards to be sent in the mail. Otherwise, as the saying goes, they are just asking for trouble.

This is a guest post by the Editor of GetDebit.com, a site focusing on debit cards including reviews of some of the best prepaid debit cards.

The Parent Trap

By: Jason Steele

07/16/2010

It seems like the way things work in the world is when the parents are responsible, and it is their kids who are rebellious and prone to poor decision making. In that world, it would be the adult children who would beg their parents to co-sign a loan for them on a new car or that loft downtown to impress their friends.

One unusual aspect of today’s current financial crisis is that it is severely affecting the credit of all Americans, even older ones. One of the ramifications of this is that it is often parents who are asking their adult children to co-sign a loan, according to the Denver Post .

Like conventional loans, credit card holders also face the challenge of having family members ask them for a card on their account, the equivalent of a co-signed loan. Like the loans discussed in the article, joint credit card account holders are each responsible for the balance.

Should You Do It?

It is very rare that this arrangement makes sense, outside of a married couple or a parent and a minor child. When you give someone a credit card on your account or a joint account, you are going to be responsible for paying all charges. For a married couple that manages their finances jointly, this make perfect sense. As a teenager, I always had a credit card on my parent’s account. I was only to use it in emergencies or for purchases that they approved of in advance. It would be very difficult for me to think of another situation where I would have a card in another person’s name.

If I wished to help someone out financially, I would much rather extend them a personal loan then to give them an authorized credit card or worse, a joint account. I have always organized my finances around the principle that I will pay off each balance in full and on time, every month. To do so, I keep track of my spending so that I know that I will be able to pay it back at the end of the month. Giving a credit card on my account to another person means giving up the direct control of my spending.

The article points out how it is difficult to say no to a parent in the situation where they are asking for you to co-sign a loan. I suspect it would be no less difficult to turn down a parent’s request for a credit card.

On Loans To Friends And Family

This is a hugely tricky subject. A good friend is worth more than money, and the same is true of a strong relationship with a family member. I once read that when a good friend or a family member is in financial trouble, it is better to offer a gift than a loan. A gift, of course, does not carry the requirement that it is paid back. If you are unable to gift the money necessary, you should not be loaning it. By gifting it, you ensure that you will retain the same relationship whether or not the person is ever able to return the money.

I know this is a blog about credit cards and personal finance. I am not a psychologist, a family counselor, or even a relationship advice columnist. Nevertheless, almost everyone knows someone who is in financial trouble these days and you should consider the long term effects on your credit and your relationship before entangling your credit with your friends or family.

What to do if a Creditor Contacts You After Bankruptcy

By: Christina

I have a question I filed for bankruptcy in 1989, it’s been twenty-one years since this unfortunate incident. I have since built my credit score up to a 798 which I am veryy proud of. By primary question is this today I received a letter in the mail from a creditor that was listed in my original bankruptcy stating that I know this money from 1989. What can I do and what are the laws that will protect me against us.
Kim Anderson

ANSWER:

Kim,

When you file bankruptcy, you are granted an automatic stay which means that creditors are not allowed to collect the debt or contact the debtor.

If you have included a creditor in your bankruptcy, it is illegal for the creditor to try to collect the debt. Usually if you let them know the debt was included in your bankruptcy they will not contact you again. You may need to provide your bankruptcy court file number or mail a copy of your bankruptcy discharge.

Although illegal, creditors do occasionally contact debtors for payment. This usually occurs because the debt has been sold and resold numerous times and notification of the bankruptcy was mailed to the original creditor. It doesn’t matter though, if a debt is included in bankruptcy, whether it is owned by a different creditor or collection agency, the debt is still the same debt and you are not obligated to pay it.

If you are continuously contacted by the creditor it is a good idea to contact your attorney as well as keep a log of the dates and times that you were contacted. There have been lawsuits where debtors were awarded damages from creditors that harassed them during or after bankruptcy.

Financial Reform Passes

By: Jason Steele

07/15/2010

The much debated financial reform bill, known as the Dodd-Frank Wall Street Reform and Consumer Protection Act, has passed both the Senate and the House of Representatives, and there is a lot in there that pertains to credit card users.

The Good

One of the biggest criticisms of the CARD Act was that credit card companies would simply find ways to get around the new regulations, just as they always had. So long as there was no agency out there that actively looked out for the interests of consumers, new forms of abuse were destined to emerge. One of the great things contained in this legislation is a consumer financial protection bureau. This was conceived as being analogous to the Consumer Product Safety Commission that looks after the safety of physical products. This new arm of the of the Federal Reserve will serve as a watchdog for the interests of consumers when they interact with a company offering financial products.

The Bad

The interests of merchants and retailers have finally succeeded in inserting provisions to move some of the costs of debit and credit card transactions away from merchants and towards consumers. Retailers will now be able to set minimum and maximum charge amounts for credit card transactions, although the highest minimum they can specify is $10. Merchants can also offer discounts for using cash or debit cards, but they can’t discriminate between Visa, Mastercard or other processors. It is a little known fact that credit card companies already permit merchants to offer cash discounts, but few actually do. What remains prohibited is a surcharge for credit card use. While the difference between a credit card surcharge and a cash discount seems semantic, it is significant in that the price advertised will not be less that what you will pay if you use a credit card.

The bill does allow the Federal Reserve Bank to set limits on the fees that banks can charge retailers, but only for debit cards. The credit card industry dodged a major bullet by avoiding fed regulations on credit card fees paid by merchants. Although I am quick to jump on the credit card companies when their interests are not the same as consumers, this is a rare instance where consumers and banks are on the same side, trying not to be saddled with fees traditionally paid by merchants. It remains to be seen how the debit card regulations will play out, and how it will affect the credit card market, albeit indirectly. Debit cards are growing in popularity as an alternative to credit cards, but if banks start charging more fees for debit card accounts, their growth may be stunted.

The Ugly

This is the first victory for merchants in their long standing quest to shift the cost of interchange fees, also known as swipe fees,from themselves to consumers. While they failed to shift credit card swipe fees to consumers, they came tantalizingly close, winning a partial victory on debit cards. I fear they have only whetted their appetites on this issue, and they will be looking to insert the same provisions from the original version of the Durbin Amendment in the next piece of legislation that is even vaguely related to this issue.

One of the most disappointing aspects of this debate has been the complete failure of both banking industry organizations and consumer groups to make their opinions heard. Retailers largely succeeded in convincing gullible reporters like Ryan Grim that swipe fees were paid by consumers, when they are in fact paid by merchants. Banks, having lost all their credibility with consumers during the financial meltdown and the CARD Act debate, were essentially mute on the subject of the Durbin amendment that will hurt themselves as well as their customers.

Here is to hoping that consumer advocates and banks are able to find their voice next time the retailers attempt to shift their costs to their customers.

Challenges You Face Using Your Credit Card In Europe

By: Jason Steele

07/13/2010

It used to be that every time you went to Europe, you were faced with a confusing array of currencies. It seemed like every time you travel a few miles in any direction, you crossed a border and had to change all of your money. Well, that era has ended and we now have the convenience of the Euro. On the other hand, most people will use credit cards for almost all of their transactions anyways.

You would think that would be a good think, as they should have the same Visa, MasterCard, and American Express acceptance that we have here in the States, but don’t expect everything to go seamlessly in the Old World.

Some Potential Gotchas

One of the big ones is the Chip and Pin system. This is a great system that, as it’s name implies, uses a chip in your credit card in combination with a PIN number entry. From what I understand, it works very well, except for the fact that virtually no US issued credit cards have that feature. When an American cardholder tries to use this system, they will get an error and be forced to see a person to try to figure it out, creating inconvenience from convenience. Worse, many of these systems are deployed in unattended areas such as train stations.

Another problem you might encounter is MasterCard acceptance. Many times, applicants can choose Visa or Mastercard when they apply for a card. For the most part, it makes no difference as I have yet to encounter an American merchant that accepted one without the other. This is not the case in Europe, as many merchants will only accept Visa. One high profile example will be the 2012 Olympics in London. They have announced that they will only accept Visa for ticket purchases. If you are planning on traveling to Europe, and you have a choice, pick Visa or at least carry one as a backup.

Another major issue that travelers to all parts of the world face is the foreign transaction fee that credit cards charge. This is a scam, pure and simple. Credit cards offer what is actually a good exchange rate, but then they tack on a 2-3% fee for no other reason than the fact that they can. For example, Amex recently increased their fee from 2% to 2.7%. When I am traveling outside the country, I will put away my Amex reward card and use my Capitol One card that has no foreign transaction fee. There are a select few banks that offer cards that don’t have this fee, such as the PenFed, the Pentagon Federal Credit union.

Another, more insidious scam is the Dynamic Currency Conversion system. A merchant offers you the option of charging something in your home currency. It is more complicated, but in this case the merchant is getting a huge kickback by getting your to agree to pay in dollars, with a huge conversion fee included. Naturally the huge conversion fee is not typically mentioned. The worst part is that your credit card company will also charge you the foreign transaction fee, regardless of what the merchant tells you. You just won’t find out until a month down the road.

One Cool Thing

It is not all doom and gloom over there for credit card holders. One neat device you will see in Europe is a portable, wireless credit card processor. This device looks like a cross between a standard credit card machine and an accountant’s printable calculator. Many restaurants will present this device to customers at the end of the meal. You swipe your card, enter a tip, and print your receipt without having to wait for the waiter to do anything. This is a huge advantage when confronted with European style service which places an emphasis on not interrupting the diners.

Some Suggestions

When traveling in Europe or anywhere outside of the United States:

Use a credit card like Capitol One or PenFed that has no foreign transaction fees.

Decline all offers from merchants to convert your charge to your home currency.

Save your receipts, especially on big ticket purchases like hotels and rental cars. Request a chargeback on any purchase where a merchant uses this scam without your consent.

Europe is a lot of fun, especially now that the price of the Euro has been falling. Although you can now enjoy the convenience of a single currency throughout much of the continent, you still need to be aware of both the scams and the technical challenges that currently face Americans in Europe.

Capital One Guaranteed MasterCard

By: Mr Credit Card

07/08/2010

Summary: The Capital One Guaranteed MasterCard is a guaranteed card for residents of Canada that have either no credit or possible past credit problems.

Features and Benefits: There is an annual fee for this card of $59 and an annual interest rate of 19.8%. Cardholders may be required to provide a security deposit when approved for this card. There are also a number of card designs to choose from.

Other benefits for cardholders include $0 fraud liability for unauthorized use, 24/7 customer service online or by phone, and access to MasterAssist Travel Assistance Service for 24 hour emergency road service.

Cardholders are also eligible for Capital One’s Gold Benefits which include Price Protection, Purchase Assurance, Extended Warranty and travel benefits that include Travel Accident Insurance, Car Rental Collision/Loss Damage Waiver, Baggage Delay and MasterAssist Travel Assistance.

Conclusion: The Capital One Guaranteed MasterCard is ideal for those that either have no credit established and are trying to establish a credit history as well as those that may need assistance in strengthening or re-establishing problem credit. This card includes almost all of the same benefits as a regular Gold MasterCard with the added benefit of a low annual fee.