Worst…Idea…Ever

By: Jason Steele

05/15/2009

Just when I am thinking that the future looks bright for credit card holders, yesterday’s Wall Street Journal features an article titled,” Paying With Cash Could Soon Pay Off “. It seems that Senators Richard Durbin (D., Ill.), and Christopher Bond (R., Mo.) are pushing a measure that would prevent credit card companies from requiring their merchants to charge the same price for cash or credit.

If this amendment were to pass, merchants would be free to tack on whatever fee they feel like to credit card transactions. The idea is that retailers should be allowed to advertise a price that doesn’t include payment fees.

Why This Is Terrible

First of all, the last thing we need in this world is less price transparency. Price transparency is what allows you as a consumer to make informed decisions about your spending. Right now, the ultimate in price transparency is in gasoline retailing, where all taxes are included in the advertised price. You can tell which transaction is the cheapest with a simple glance at the sign as you drive by.

The worst case scenario in price transparency is probably in health care, where you frequently don’t even know the price until long after the services are rendered. Following up closely behind is rental car companies where the price you pay can be %40 higher than the price you are quoted.

The last thing you need right now is for grocery stores, gas stations, and travel companies to start adding three or four percent to every credit card transaction.

Why Merchants Pay Fees To Credit Card Companies

Like consumers, these fees are voluntary as part of an agreement with the credit card industry. While I have sympathy for anyone who does business with this industry, processing credit cards is a valuable service for merchants. It allows them to avoid the hassles and risks of cash. Once the transaction is approved, they are assured of payment for their goods and services, even if the card holder defaults. They do not have to worry as much about employee theft or even armed robbery when their store contains little cash. In many situations, such as gas stations, credit card transactions take place without cashiers, saving them an immense amount of labor. New businesses are also able to attract customers, since those paying by credit card are assured that they won’t lose their money if goods or services are not provided. In short, the credit card provides safety to both sides of the transaction, ultimately facilitating commerce. Less safety equals less commerce. That explains why you don’t make big purchases from unfamiliar vendors with cash.

I know that small business owners hate paying credit card transaction fees, yet they are all free to quit. For example, my favorite bagel store does not accept credit cards. Their product is so good, and their prices are so reasonable, that I am willing to scrounge up a cash or check to be a customer. Sure, they are taking the risk that a check will bounce, but I imagine the lack of transaction fees, which are a higher percentage on smaller transactions, outweigh the risk of people writing bad checks for bagels.

Who Supports This Idea?

Many small retailers do, however, I imagine large companies do not. They know that accepting credit cards makes their life a lot easier, and they will not benefit much from having to process time consuming transactions involving cash and checks. If you have ever been stuck in line at the grocery store behind an old lady digging through her purse for change or filling out her checkbook, you know what I mean.

The National Association of Convenience Stores supports this. I honestly have no idea why. Would they be better served if they take convenience out of their stores? Are they really going to profit if they have to hire more cashiers to process gasoline transactions that used to take place quickly at the pump?

Why I Would Give Up Credit Cards?

It is no secret, as your Reward Card Guru, that credit cards are my preferred method of payment. Since I pay them off in full, every month, they are merely an alternative to cash, not a method of financing purchases. Beyond that, I am used to receiving an award when use my card, not being charged a transaction fee. In fact, I refuse to use any card when I travel that charges a foreign transaction fee. If this amendment were to be included in the final bill that becomes law, we will essentially see foreign transaction fees on most purchases in the United States!

If that were to happen, I would quickly do two things differently. First, I would avoid, as best as possible, any company that adds fees to credit card transactions. Second, I would start doing my best to carry cash or checks in order to pay for goods and services that are charging me extra for credit card transactions. In short, my credit card use would decline dramatically.

WorldPoints Reward Program Review

By: Mr Credit Card

The WorldPoints reward program was originally MBNA’s, until they got taken over by Bank of America. Like most other credit card reward programs, the WorldPoints program allows credit card holders to earn points and then exchange them for rewards like travel rewards, merchandise and gift cards. We will now look at each of these component rewards.

Travel Rewards

There are two ways to redeem airline rewards for the WorldPoints program. The first way is to exchange a fixed set of points for a particular destination. Below is a table that highlights the point requirements (you cannot get this information on WorldPoints site without having a card and being able to log in).

25,000 Pts	Continental US (roundtrip) – up to $400
35,000 pts	Canada, Mexico, Panama – up to $600
45,000 pts	Alaska, Hawaii, Caribbean, Bermuda, Bahamas – up to $600
60,000 pts	Europe – up to $800
85,000 pts	International – up to $1150
–	100,000 additional pts for First Class Upgrade

WorldPoints also has another program called the Flex Air where you can book your own flights (through WorldPoints) and use points for your purchase (100 points for $1). This is slightly more flexible than the above method where you are subject to the availability of WorldPoints “in house” travel agents.

Restrictions – Though there are “no blackout dates”, there are a couple of restrictions for the WorldPoints program. Air travel reservations must be made at least 21 days in advance and include a Saturday night stay. Car rental and hotel reservations must be made at least 7 days in advance.

The number to call for reservations is 1.800.433.5662 and select option 2, 24 hours a day, 7 days a week. You can also redeem points online.

Merchandise

Like other credit card reward programs, WorldPoints also allow you to redeem points for merchandise rewards. Brand names include Sony® and Bose® electronics, KitchenAid® appliances, Callaway®, Ping®, and Taylor Made® golf equipment, Waterford® crystal, Nikon® cameras, Coach® and Dooney & Burke® purses, Black and Decker® tools. Your orders will be shipped within 48 hours of the orders being processes and with free standard shipping.

worldpointsmerchandise

Gift Cards and Certificates

WorldPoints also allow you to redeem points for gift cards. Their merchant partners include retailers such as J. Crew, Pottery Barn, Pottery Barn for Kids, Eddie Bauer, T.G.I. Fridays, The Sharper Image, Barnes and Noble. You need 3,250 points to redeem for a $25 gift card (12,500 for a $100 gift card). This does not compare well with other programs like the American Express Membership Rewards which requires 2,500 points for a $25 gift card, 5,000 points for a $50 gift card and 10,000 points for a $100 gift card.

worldpointsgiftcards

Cash Rebates

You can also redeem points for cash. But I would advice against it because you would get less than 1% cash back (2,500 points for $12.50!). It is only when you get to 25,000 points that the rebate percentage becomes 1%.

worldpointscashrewards

Charity

WorldPoints charity partners include Brighter Planet, Make-A-Wish, Make a Charity Choicer (which has over 100 charities), Ducks Unlimited, The Humane Society, Juinior Achievement, National WildLife Federation, Working Assets.

You will be redeeming points for a monetary value to be donated to charities.

worldpointscharity

Concierge Service

MyConciergeSM offers many customized services including: dining arrangements and reservations, gifts and personal shopping, your ticket source for sporting events, concerts and shows, unique transportation, and more. They can also arrange access to sporting events, concerts, theater tickets, and other activities of interest. MyConciergeSM also has access to this year’s hot events including: Cirque de Soleil’s “O” in Las Vegas and The Producers in Los Angeles. I personally have not used this service so I can’t say for sure if their service is good or not.

Ultimate Access

Ultimate Access is a category of rewards that is supposed to be very exclusive. They include tickets to high profile events, exclusive memorabilia, and tours. (see screen shots below).

worldpointsultimateaccess

How does WorldPoints Compare to Other Reward Programs?

The way I’m going to look at this is actually to breakdown the different rewards.

Travel – I would say that their travel rewards is pretty typical for most reward programs. You can redeem an airline flight for a fixed amount of points. But you have to use their “in-house” agent and the disadvantage of that is that you may not get the flight that you want. The advantage is that the number of points required may make this option worthwhile. You can also book your own trip (but through worldpoints) with any flights or hotels that you want and use points to redeem or pay for them. In this respect, I like the flexibility of their travel rewards. This system will suit those who

Do not travel frequently but would like to use their points for airline travel once in a while

Are flexible enough to accept WorldPoints flight availability

There are other types of travel rewards to consider as well. For example, if you are the sort of person that does heck of a lot of research and like to get the best bargain, then this reward system may not suit you. A better alternative may be the Discover Miles Card whereby you can book any flights, hotels you want from anywhere and you can get rebates from your points.

If you are a frequent flier with one particular airline, then you are probably better getting a dedicated airline credit card. But if you are are a frequent flier member of several airlines, then you are probably better off than getting a card with a reward program that allows you to transfer points to different airlines. The two better programs are the starwood preferred guest program and the American Express Membership Rewards program.

Merchandise Rewards

If you are looking for merchandise rewards, then I would say that the WorldPoints program is pretty good. It is actually very hard to compare apples to apples in this category because there items are constantly being updated. The only thing that you can realistically look at is the breathe of products and the points required to redeem them (to make sure they are reasonable). However, bear in mind that if you redeem your points for merchandise, the value you get from using your points is less than 1% in most cases, so there is a case to be made for not using points to redeem for merchandise.

Gift Cards

The gift card rewards from MBNA falls short in a few ways. Firstly, they do not have as much partners as say the Membership Rewards and the Discover Card. What I do not like is the fact that you need for points than other programs to redeem for a certain value of gift cards. For example, with the Membership Rewards, you need 5,000 points for a $50 gift card. With the WorldPoints, you need 6,500 points!. If you are a gift card person, then the card that you should consider is the Discover Card. Discover card let’s you earn cash rebates and you can exchange your rebates for a higher value if you exchange them for gift cards (double the value for certain merchants).

Ultimate Acess – It’s really difficult to judge this one as it is all a matter of taste and preferences. But it is a great feature to have and to know that the folks at WorldPoints are always coming up with novel rewards.

Verdict – I would say that overall, the WorldPoints reward program is a pretty good and decent program. It could be better, but it is generally comprehensive. If you are not picky about rewards, this will be a good program to get.

But if you are interested in travel rewards, you must figure out your preferences in redeeming travel rewards and choose the appropriate program to be in. The WorldPoints may or may not fit the bill. If you are a gift card rewards junkie, then the Discover More Card is probably the card to get.

Personally, I still prefer my American Express Membership Rewards program.

Important Fine Prints – There are a couple of things that you have to take not of. Firstly, WorldPoints Reward Points are valid for 5 years. So make sure you use them within that period. If you are not a disciplined person, this is one factor to consider. Secondly, Bank of America has recently changed their definition of “foreign currency transaction fee”. It used to be that you were charged a 3% for processing any transactions that was done in a foreign currency. But now, if you charge a US Dollar transaction that was processed by a foreign merchant, you will be hit with a 3% fee (3% as a percentage of the transaction amount converted back into USD). This could become a problem if you an airline ticket to Europe with a European Airline and if the transaction was “processed” overseas (these are things that you can never find out in advance), you may be charged that 3%.

The Banking Industry Responds

By: Jason Steele

05/14/2009

Here is a letter from the American Banking Association (ABA). I will attempt to translate, my comments will be in bold italics

Dear Senator Reid and Senator McConnell:

These are the Majority and Minority Leaders of the Senate, respectively.

I am writing you on behalf of the American Bankers Association (ABA) with respect to our position on H.R. 627, the Credit Cardholders’ Bill of Rights Act of 2009, currently being considered on the Senate floor.

I mention this because we supply so many campaign contributions, not because the credibility of our organization is at an all time low following the worldwide financial crisis we caused which necessitated the subsequent government bailout.

ABA recognizes that the Senate bill contains a number of important consumer protections embodied in recent regulatory action, and acknowledges that change is forthcoming in the way the credit card industry and its customers interact.

As much as we would love to kill this bill, we don’t stand a chance of doing so now (see previous comment).

However, we strongly believe that any legislation in this area needs to achieve the correct balance of consumer protections and market flexibility so as to not jeopardize access to credit.

We have contributed so much to your campaigns, so please, please, water this bill down as much as you can.

ABA remains very concerned about the contents of H.R. 627 (as amended), and believes that if it is enacted as it currently stands, it will have a dramatic impact on the ability of consumers, small businesses, students, and others to get credit at a time when our economy can least afford such constraints.

As big banking interests, our only concern is for the little people. Sure, they support this measure whole heatedly, but they really don’t know what is good for themselves. Only we do, and you should trust us because we are big banks who always manage our own affairs so wisely.

The bill contains various provisions that limit a lender’s ability to manage risk, price fees, allocate payments, and otherwise prudently conduct business.

We won’t be able to charge interest on balances card holders have already paid, or charge $40 late fees if you pay your $10 bill a day late, how will we stay in business!?

We believe these limits will necessitate reductions in available credit given current economic conditions, while increasing the price of credit where it remains available.

Consumers may receive several pounds fewer “pre approved” credit card offers in the mail every month, Oh The Humanity!

We are likewise concerned that amendments could be adopted on the Senate floor (such as interest rate caps, interchange, and bankruptcy provisions) that could seriously exacerbate these problems, with serious ramifications for consumers and the economy above and beyond those already in the bill.

We are just looking out for consumers, as they really like high interest rates. Really!

For the above reasons, we oppose H.R. 627 as it is currently constituted, and urge opposition to amendments that will further harm our ability to meet the credit needs of consumers and others.

Please do not actually speak with any actual consumers or anyone from consumer groups. I am sure they all agree with me, so don’t bother asking them.

We ask that these concerns be addressed before this legislation is delivered to the President for his signature.

Thank you for considering our views.

Did we mention that we make lots of campaign contributions?

Sincerely,
Floyd E. Stoner
Executive Vice President, Congressional Relations & Public Policy
American Bankers Association

My Conclusions

The industry thinks the sky is going to fall if this bill becomes law. I am clearly not shocked. I am reminded of how the movie industry testified to Congress in 1982 that their industry would die if VCRs were not outlawed. 27 years later the local megaplex is still going strong.

I think the worst part is the paternalistic rationale they use to pretend that they are just looking out for the interests of consumers.

Had they offered some moral or legal reasoning for opposing this bill, I might disagree, but at least I would respect their position. If they were opposing this bill because it would hurt their profits, I would have at least applauded them for their honesty.

Instead, I am forced to ridicule the most poorly managed and least credible industry in the world today, as they have the audacity to claim that they are in a better position than I am to represent my interests as a consumer.

With any other industry, this would be outrageous, with the credit card industry, this is merely par for the course.

Tomorrow’s Column

Your Reward Card Guru exposes one terrible proposed ammendment to the Credit Card Bill of Rights that should never see the light of day. On this proposal, I actually agree with the both the credit card industry and even the loan sharks! This proposed ammendment is so heinous that it would make even me switch to cash!

Which Delta SkyMiles Credit Card To Get?

By: Mr Credit Card

Delta Skymiles members have a choice of various American Express Delta Skymiles credit card to choose from, the Gold, Platinum, and Reserve Card. But which one is the most suitable. In this post, I’m going to highlight how to choose between the three.

What to look for? – One thing I have to say about Delta credit cards is that they are all good. All allow you to earn double miles (like most frequent flyer credit cards). Having any Delta card gives you the unique opportunity to pay by points partially and the rest by cash. This option is not available if you do not have a Delta credit card. Depending on the card, you will either get discounts or even free annual companion tickets.

Obviously there are differences in annual fees, the type of companion tickets you get and bonus miles (see chart and table below). But the main thing in deciding which card to get is this:

How many Medallion Qualifying Miles do you get from flying?

Why is this so important? The reason is because the different delta credit cards give cardholders additional MQMs depending on how much they spend on the card.

Understanding Delta Skymiles Elite Level Qualifications and MQM Requirements

Below is the table showing how much MQMs you need (or sector you fly a year) to qualify for the Silver, Gold or Platinum status. Getting elite status confers great perks like complimentary companion ticket upgrade, earning extra skymiles etc. If you are a skymiles member, you know how valuable these are.

Various Scenarios

For those who qualify for the highest status just by flying – If you are just one of the true frequent flier with Delta and earn enough MQMs or fly enough sector to get the Platinum or Diamond status, then you could actually just get the Gold Delta SkyMiles® Credit Card from American Express (Gold version) because they do not offer any bonus MQMs (but you do not need them anyway). Their annual fee is also obviously lower at $95 ($45 if you have an American Express charge card).

Platinum Delta SkyMiles� Credit Card from American Express
Folks who can consider the Platinum version – if you meet the spending requirements of $50,000 annual spend on the Platinum version by spending (see screenshot) you can get 20,000 Bonus MQMs, which means that you are just short of 5,000 MQMs to qualify for Silver status. If you earn just 5,000 MQMs from flying, that gets you at least an elite status. If you earn 30,000 MQMs from flying alone, the additional MQMs (20,000 MQMs) you will get will qualify you for Gold Status. If you earn 55,000 MQMs from flying, the additional MQMs will get you top Platinum status instead of the Gold status.

Folks who can consider the Reserve version – Even without flying, meeting the card’s spending requirement of $60,000 a year will earn you 30,000 bonus MQMs qualifies you automatically for Silver status (since you only need 20,000 MQMs for a Silver Elite Status)! If you earn 20,000 MQMs just from flying, you will qualify for a Gold Status with the card (note that with 20,000 MQMs alone, you will not qualify for any elite status!). If you earn 55,000 MQMs from flying, the card will help you qualify for Platinum Status instead of just the Gold status if you did not have the Delta Reserve Card. The Delta Reserve Credit Card also allows you to to access SkyClub for you and your flying guest. You also get a free annual first class companion ticket every year. With access to SkyClub (which cost anywhere from $300 to $450 depending on your elite status) and the first class companion ticket, plus a concierge service, the $450 annual fee pays for itself.

Summary – Your choice of which Delta credit card to get really depends on how many MQMs you can earn just from flying. If you earn enough to qualify for Platinum status, then stick with the Gold version. Otherwise, either the Platinum or Delta Reserve version will get you the elite status that offers all the perks you want. Frankly speaking, the annual fees on these cards isn’t even the issue. Having elite status will more than cover the cards annual fee.

You can apply for Delta credit cards here

Ups and Downs of the Latest Credit Card Bill

By: Jason Steele

05/13/2009

A new version of the Credit Card Bill of Rights has hit the Senate floor this week, and this one has some interesting provisions. Here is a complete run down of the features of the new bill.

The first two things that jumped out at me were these:

• Requires penalty fees to be reasonable and proportional to the omission or violation;
• Enhances protections against excessive fees on low-credit, high-fee credit cards.

Maybe the article is abbreviating the details, but this seems awfully vague to me. I don’t know how it will be determined what is “reasonable and proportional,” or who gets to determine this.

The next thing that caught my eye was this:

• Prohibits issuers from setting early morning deadlines for credit card payments;

I have never been caught by this, because I use my bank’s electronic payment system. I suppose I should not be amazed by this kind of thing anymore, but I still am. I can’t believe that companies are doing this!

In my opinion, the greatest achievement of this bill is this:

• Prohibits interest charges on debt paid on time (double-cycle billing ban);

I have known that it was in the bill, but I just had a thought. This provision is going to be a blessing in disguise for the credit card industry. I bet there are some people who avoid all interest charges because they end up paying interest purchases they have already paid for. I imagine that some of the “dead beats” that always pay their bill on time might be more likely to actually pay interest, if they are only paying it on their balance due, not including last month’s balance paid. I don’t think the credit card companies will make a net gain from this provision, I just think that it won’t be as bad as they think (it never is).

Here Is Where The Bill Takes A Wrong Turn

Under the guise of “Ensuring Adequate Safeguards For Young People” the bill has the following provision:

• Requires issuers extending credit to young consumers under the age of 21 to obtain an application that contains: the signature of a parent, guardian, or other individual 21 years or older who will take responsibility for the debt; or proof that the applicant has an independent means of repaying any credit extended;

• Prohibits increases in the credit limit on accounts where a parent, legal guardian, spouse or other individual is jointly liable unless the individual who is jointly liable approves the increase in writing.

Whoa! Since when, outside of a bar, are U.S. Citizens aged 18, 19, and 20 treated under the law like minors? I strongly object to the idea that young adults should be legally required to haveparental permission for anything, let alone a mere credit card. These are people who have all of the same legal rights and responsibilities as those twice their age. They can enter into contracts, get married, serve in the armed forces, and be tried for crimes as an adult. Under this bill, no one under 21 can have a credit card without a co-signer.

Imagine a soldier calls in from Afghanistan to request a credit card limit increase so his wife can pay the bills and feed their children, and they are told they need their parent’s permission? I have known soldiers in that position and that would be nuts! I have no idea who thought this was a good idea, but it sets a dangerous precedent that goes far beyond financial products.

Just imagine what financial transactions, and other rights will be prohibited one day if this provision remains in the bill. In the future, will my children be able to purchase a car, a house, or authorize medical treatments without my permission?

Look, I am fortunate to have wonderful parents with whom I have a great relationship, but that is not the case for everyone. Many people are “cut off” when they turn 18 and are essentially on their own. Others are the children of abusive parents. Will these people be required to go begging to their parents for basic financial services?

The big question is will the parents be on the hook for their children’s spending? Is this merely a collections measure by the credit card industry to go after the parents of college students who are unable to repay their debt? No matter how you slice it, this provision needs to die a swift death before the bill is passed on to President Obama’s desk.

Overall

One bizarre provision notwithstanding, I strongly support this bill. Tomorrow, will examine the industry’s response to this measure.

Man Vs Debt Interview – Adam Eliminates Credit Card Debt in 15 Months

By: Mr Credit Card

About a week ago, I interview Tricia from blogging away debt after she eliminated over $37k in credit card debt in about 3 years. During that week, Adam Baker from Man Vs Debt was hosting the carnival of debt reduction and he listed my interview with Tricia as his Editor’s Choice. Well, I proceeded to check out his blog and turns out that Adam too got rid of his credit card debt and some in 15 months as well. So I requested an interview which he obliged (in fact we’ll probably do a radio interview as well soon – watch this space).

Adam is married to Courtney, has a daughter Milligan and is planning to move to Australia soon to experience life somewhere else. All I can say is that is really cool and what is more cool is that he has got rid of his credit card debt in just over one year. You should check out his blog and subscribe to it. He has an extremely personal style of writing and you actually feel that he is sitting right next to you and actually talking to you. I’m sure his blog is going to take off.

So below is the interview:

Mr Credit Card: Adam – on your blog you listed and broke down you debt via some some names – can you actually list down your actual debt when it was $80+k between your student and credit card debt.

Adam: At our peak, our debt was roughly broken down into 55k of student loans, a 12k consolidation loan from family, 10k credit cards, 2k store loans, and 3k in car loans.

Mr Credit Card: How much did you pay down?

Adam: Of the 82k, we’ve roughly paid off 29k in around 15 months. We also saved up around 13k in savings. During this time around income has probably been around 50k, which has mostly been one income. So we’ve been living on about 1/3 of our income in order to really attack our debt.

12k of the debt came in one lump sum from the sale of our apartments. If they do well we have an opportunity to make a little more off of them down the road. The other 17k or so have come from other sacrifices we made in our budget and lifestyle.

Mr Credit Card: That’s actually a great achievement and more so living on just 1/3 of your salary. You are 25 years old (young) and already you managed to racked up some debt pretty early, how many cards did you apply for when you were in college?

Adam: Oh man, what a question. I can remember having at least 4-5 cards during that time span. My first card had a $500 dollar limit, which I remember thinking was high. Without having almost any income, I eventually obtained cards with $2000 and even $10,000 over those few years (different times than now)!

Mr Credit Card: Why did you get those cards? What sort of marketing tactics did the credit card issuers employ at your school?

Adam: At least one of the cards was a direct result of a booth that was set-up to help the Rugby team. Haha, I remember that clearly. Most of the others were from switching banks and applying for one every time I switched. I had a couple Visa, and Mastercard, and a Discover. I thought it was necessary to have one of each.

Mr Credit Card: What type of expenses did you put on your credit card?

Adam: Everything. I used them almost exclusively. That continued even after college. At the time they were simple, easy, made me feel good, and did a great job a detaching me from my actual spending. Let me be very clear though, they didn’t anything. I made the purchases and I dealt with the consequences. They just helped me justify it for several years.

Mr Credit Card: In your about page, you mentioned that you’ve been Blogger, Real Estate Agent, Landlord, Business Owner, Tax Specialist, Professional Video Game Player, and Degenerate Poker Addict! Can you elaborate on each of these! Like how long were you a real estate agent? How successful were you? How many and what types of properties did you have as a Land Lord? What sort of business did you have? I really like to know more about the life of a professional video player!

Adam: How much time do you have? Just kidding!

Failing out of college initiating a random, but very interesting serious of life experiences for me. Initially, I traveled the country playing in Halo 1 tournaments. This went on for a little over a year. I wasn’t the best of the best, but I was good enough to pay for most of my travels. I ended up helping host and run some of the bigger tournaments in the country. In all I probably visited 15-20 cities around the U.S. Eventually, some of the people I associated with ended up creating what is now Mlgpro.com.

Slowly, another type of gaming took over my time and I drifted away from the traveling video game circuit. I started dealing and playing poker on a regular basis. This was right during the beginning of the new Texas Hold ’em craze that fired back up several years ago. Eventually, I began running tournaments for well over 100+ people a night at some local clubs. I made insane money for my age and maturity level and blew all of it as fast as I could. I also formed a habit for gambling that extended beyond the poker table. Luckily, with the help of my high school sweetheart (now wife), I gave up gambling cold-turkey several years ago. In addition, Indiana changed the laws on how they viewed Poker Rooms, which caused several of the rooms to shut down.

After giving up gambling, I decided to get my Real Estate license. I immediately felt like the industry was a great fit. I spent the first 6 month in traditional sales, helping close a couple million dollars in homes. After a couple month, I realized I wanted to concentrate on the investment side of the spectrum. I switched to a smaller company which specialized in foreclosure, short-sales, and small investment properties. It was an absolute ton of work, but I learned more than you ever could from a book. Within a couple months, my soon-to-be partner and I decided that we were missing out on an untapped market; Property Management. Our local area was practically begging for a reliable, responsible, but yet affordable option for management. We “bootstrapped” the business with just a few clients to start, but within 6 months grew to managing over 120 units for 40 different clients. In addition, we bought an 8 unit low-income apartment complex of our own. I worked longer and harder than I ever had in my life.

Before the business was even a year old, my first daughter was born, which totally changed our lives. My wife and I had several long discussions about the path we were on and decided that we weren’t quite ready to settle down permanently. After discussing options with my partner we decided to split ways amicably. He bought the business from me and I took his interest in the 8 unit we had bought. This allowed me to stay home with my daughter for the first 8 months of her life, while my wife went back to the classroom as a teacher.

Lastly, this year I worked part time as a tax specialist, helping prepare taxes for individuals and small businesses for a local company. Once again, I learn a large amount in a very short-time span. It helped fortify my passion for personal finance.

Mr Credit Card: What is your official occupation now?

Adam: Right now, I’m a husband, father, and blogger. I’ve been just these three things since late April as we plan for our move to Australia. I’m not sure where our travels will end up taking us or what field I may be entering in the next few months overseas. Writing has come out of nowhere to be a huge passion for me, so I hope I’m able to continue that as much as possible.

Mr Credit Card: What was the trigger that made you realize that you have to do something about your debt?

Adam: Getting married and planning to have a baby. Without a doubt. For the first time in my life, I had to take the focus of of my personal wants and really think about the future needs of a family. It was a much needed shock in the pants.

Mr Credit Card: You mentioned that the first year of living without credit was tough. What sort of sacrifices did you make?

Adam: Mostly it was a mindset shift. I was in Real Estate and that was also the point when I started the business. One big sacrifice was our cars. The combined value of our cars was between 3-4k. Initially I desperately wanted a newer car, as I felt embarrassed about meeting with potential home owners, clients, and tenants in what could be considered a “junker.” I could of easily bought a new car on payments, but luckily common sense prevailed. I did park around the block and/or at the far end of parking lots, though!

On the home front the biggest sacrifice we made was committing to a small apartment. Once again, it would have been easy for us to go overboard on a rental or to even purchase a home since I was in the industry. We maintained low rent and utilities and really focused any large income swings on our debt. We gave up cable (even sold the t.v.) and committed to only eating out once or twice a month at most. A lot of small sacrifices really combined to make a big difference.

Mr Credit Card: How are you different from Courtney in your views of money?

Adam: Luckily, we have very similar views on money now. It’s amazing being able to be on the same page as your spouse and it makes everything that much easier. She was much more responsible in her years before marriage, though. She didn’t really research any gurus or system, but would commonly use different jars to save up or budget for different things in college. I on the other hand spent my time looking for credit cards with better rewards and 0% balance transfers.

Mr Credit Card: How did your debt reduction adventure affect your relationship? What did you folks fight over?

Adam: Our “War on Debt” has really strengthened our relationship. Even though we are sacrificing we have had very little fights over money related issues. Don’t get me wrong, we still have times we want to strangle each other, however money is almost never the issue. We are lucky to have it be a source of strength in our marriage.

Mr Credit Card: Have you thought about how you are going to teach Milligan about money?

Adam: Yeah. I’d like to raise her to be a giver first and a saver second. I would like to make sure she’s exposed to all aspects of finances including credit cards. While I certainly won’t promote her to get involved with credit, I don’t think “sheltering” kids is the right way to go. Hopefully, I’ll be a good enough parent to show her all of her options and help her see why we’ve chosen to handle out finances a certain way. I have a lot to learn about parenting, though!

Mr Credit Card: Did your parents talk to you or teach about money and money skills?

Adam: Not really. I was raised in a very middle-income household. We weren’t spolied, but never really went without things, toys, or vacations. We had an absolutely fantastic childhood by any measurement, but I really didn’t learn much about finances until I went to college.

Mr Credit Card: If you were sitting down with a group of 17 year olds, what would you say to them about money etc.

Adam: I would tell them that they need to educate themselves sooner rather than later. When I was 17, I simply couldn’t find any reason to prioritize getting this kind of knowledge. I would tell them my specific story in an attempt to relate the importance of taking control of their finances early. College can be an amazingly fun, yet affordable experience. I had good friends that managed this much better and I wish I would have learned from them sooner.

Mr Credit Card: You have sweared off all credit cards. You sure you will not use credit cards ever again?

Adam: I’m not the type of person that likes saying “never” a lot. However, I am extremely confident we will never be in a position to use credit cards again. It would take some sort of unforeseen catastrophe for us to even consider the possibility. I’d take multiple jobs, move in with family, and sacrifice just about anything other than the safety of my family to avoid credit cards. I don’t think they are evil, but they certainly aren’t a neccesary part of a succesful financial plan. In fact, they are much more closer to being a “neccesary” part of an unsuccesful plan.

Mr Credit Card: What is the reason for the move to Australia? How long will both of you be there?

Adam: The reason for the move is to experience life. We decided when my daughter was born that we wanted to travel while it was still a reasonable option. I guess reasonable is always subjective, but you get the point. My wife has spent some time in Australia and was amazed by the culture and the beauty. We’ve decided to start out journey there and see where life takes us.

My wife is a teacher and will be trying to secure a opportunity in education once we arrive. Depending on the job market our trip could be as little as 2 month and as long as several years. My employment is a lot more flexible. I make a little income from some minor consulting and am currently working on several online projects that can have the potential to create a some “mobile” income.

Mr Credit Card: When will your student loans be paid off? Any plans to reduce that debt more quickly than the original term?

Adam: We absolutely have plans to accelerate the pace. Actually taking a break from making extra payment to save up money for the trip was one of the hardest financial decisions we’ve ever made. It’s hard to balance these aspects, but I think we’ve done a good job. If we are able to secure employment in Australia, we plan on drastically lowering our emergency fund thresholds and paying off several of our smaller student loans right away. I, personally, am really looking forward to this. In addition, we will continue to live and travel extremely frugally until we can get these fully paid. We have a goal of trying to get these knocked out in two years. It’ll be tough, but is certainly still within our ability given our income potential.

Mr Credit Card: Adam – thank you very much for sharing your story with us

Adam: My pleasure.

Readers Success Story: Auto Loan After Bankruptcy

By: Christina

05/12/2009

Over the weekend, I got this email from Randi, who thanked us for providing information on this site which helped her. After getting through chapter 7 bankruptcy, she has managed to get an auto loan, correct numerous errors on her credit report and improved her credit score. It is emails like that which really makes the effort we put into this site worthwhile. After reading her email, I asked her to write her story for us to publish. I figured that all of us could learn from Randi’s experience. As a guide, I asked a few questions and asked her to include answers to them in her post. She then actually proceeded to answer them (so this looks more like an interview – Q&A style). Below is the email she sent me followed by her story in her own words (totally uncensored).

Back in February I had posted about needing to obtain a new car loan after a bankruptcy discharge (but had reaffirmed our 2 car loans and mortgage) and the debate between having a co-signor or doing it on our own. I am happy to say that we did wait a couple of months and fixed all the errors on our credit reports and were able to qualify for a decent rate car loan from GMAC for a newer used car. I am grateful for the information we obtained from this blog and it was instrumental in our trying to get the loan on our own. Yes, it probably is at a higher interest rate than we would have gotten if my dad with his excellent credit has co-signed but in the long run, I do believe it will save us money because it will continue to improve our credit post bankruptcy and will make it easier in the future for us to get a loan on our own with better rates.

Thanks again for your wonderful information.

Randi Fechter

These were some of the things that I wanted Randi to share with us and this is her story. Read on to find out

How she got into bankruptcy?

What she did to improve her credit score?

Which lender actually gave her an auto loan and who declined her

Mr Credit Card : How did you get into bankruptcy (or why)? And which one 7 or 13?

Randi: We got into bankruptcy as a result of several things all combined. The first was having a few months of huge COBRA insurance payments when my husband changed jobs in Spring 2005. Because our younger son and I have asthma and I was in physical therapy for a shoulder injury, we needed to be sure to continue insurance without a gap in order to avoid pre-existing condition restrictions. We did not have any money saved to pay the $1000 per month charge. Up to this point we were living paycheck to paycheck but were able to make a little more than the minimum payments on the credit cards which were not even close to being maxed out. We had stopped using all of them about a year prior to this. Before the cobra payments we always paid everything on time. We would use tax return money and holiday bonus money to get caught up with bills or even send additional money to pay towards the balances due. I am not sure what our credit score was at this time since we had not tried to purchase a vehicle or refinance our home or even obtain new credit cards but figure it could not have been too bad since we were always getting preapproved credit letters.

In addition to the COBRA payments, in late fall of 2005, the Federal Government changed the way the banks had to calculate the minimum payments which then caused our minimum payments to almost double and was just more than we could afford. So, I had to start paying this card this month and that card the next. We continued on this way for a year or more. Eventually it got to the point when I just could not keep up. I repeatedly contacted the credit card companies and tried to work out something with them but they would not work with us. We continued to send them as much as we could but since it was not the minimum amount due, we had late fees assessed every month, credit limits significantly reduced and our interest rates skyrocketed. All three of these resulted in us maxing out our credit limits on each card and caused over-the-limit fees in additional to everything else. Every month or so, I would answer the phone and speak with the collection department in hopes they would work with us to stop the extra fees so that we could get caught up. For some reason we did not qualify for hardship and they would not reduce rates, wave late fees or anything else. They just wanted what we owed them. I would end up in tears and got nowhere with them. I had them tell me to stop stealing from them, that they might sue me for my house or garnish my wages to pay what I owe them or even that my husband and I should get second and third jobs in order to honor our commitment to them. I have since learned that what they did was illegal and I wished I had known then they were not allowed to threaten me that way. We continued to make enough money to pay utilities, mortgage, car payments and purchase food as well as continue to send as much as we could to each credit card company. Our tax return refunds had shrunk and the bonus money became less as the economy started its gradual decline which made it harder to keep up.

This all came to a head in the Fall of 2008 when I just could not take the threats and constant phone calls and no luck working out anything to get caught up. We started getting the threats of “your account is going to charge off and we will report it to the credit bureau”. Unfortunately we still could not pay them what they wanted and they would not work with us so the threat was pointless. One of the cards did charge off and the collection company that purchased the debt, sued us. The others were threatening the same thing. We had 8 credit cards with close to $50,000 in debt – a good 1/2 of that from interest rates, late fees and over the limit fees. The collection agencies would not work with us either to accept the amount we could afford to pay them. I was willing to send them financial statements showing what we earned and what we had after paying basic living expenses. They were not interested.

When we received the first summons in the mail, we decided to consider bankruptcy. We consulted a lawyer and decided that Chapter 7 was the best solution for us. Our attorney even advised us to see if we could secure new cars so that we could include the older cars and their respective loans in the bankruptcy rather than reaffirm them. Either way, we needed to have cars. We did not want to junkers to tide us over so we planned to reaffirm the loans if we were not able to purchase new ones. This was early October. We tried to get a loan to replace one of the cars – The car we were looking to replace all this time was a 2001 Grand Caravan with over 100,000 miles. Due to some poor financial advice we had financed the balance of the lease on the van a few years back which resulted in the loan being for more than the value of the van which did not help our situation. Our credit scores were in the high 400’s/low 500’s and were having a hard time getting a loan for a monthly amount that we would be able to maintain after the bankruptcy so we decided to reaffirm the loans and keep our cars. Since the equity in our house was not excessive, and the mortgage payments were ALWAYS on time, we were able to keep the house. NJ does not reaffirm real property so that was not reaffirmed and therefore included in the bankruptcy but since we continue to pay on time each month, we keep the house. I am still learning about the impact this will have on our credit. We are planning to look into a refinance but want to continue to improve our credit before doing that since our interest rate right now is lower than what they are giving to people with fair credit and what we would probably qualify for at this point would be significantly more than that. I don’t want to pay more in my refinance than I am now.

Mr Credit Card: How did you rebuild your credit after BK? credit cards etc?

Randi: Thanks to the information I have obtained through this blog, I accessed all three credit reports just as the bankruptcy was discharging in February 2009. At this time, our credit scores were 425-475. I started to challenge/dispute all those things that did not belong on our credit reports in the first place, home equity loans that had been closed and paid years ago, authorized users on cards that were included in the bankruptcy, etc. I challenged the way things were listed on there as being charged off but were also listed on there as included in the bankruptcy so they were dinging our score twice with the same account. The loan for the van was being listed as discharged when we had reaffirmed it. The second loan was reported as current which was a good thing and we had decided to keep this car since it was a newer car and working great. I was never able to find out whether the reaffirmed loan should be reported as a current loan so had a statement added to our reports that we reaffirmed it and that we continue to make timely payments on it. Although the mortgage is still listed as included in the bankruptcy, the mortgage company reports that we are making monthly on-time payments which is good for us. I do have one credit card for Chadwick’s that was not included in the bankruptcy but have yet to use it. I want to make sure I have the money to pay it off when I do use it so it will wait a little while longer, not to mention I don’t really need any new clothes right now.

Mr Credit Card: Describe the process and strategy you went through to finally get this auto loan (might as well describe the various auto lenders and their policies as well if you have shopped around).

Randi: After our experience in October 2008 when we tried to purchase the new or used car for a reasonable monthly payment amount with no success, we decided to approach it again in late January to replace the van when my father who has stellar credit offered to help up obtain a new car. He was going to purchase it for us and let us make the payments. He has a GM credit card and had been offered extra points up to $2000 worth toward the purchase of a new car and GM was running amazing rebates but he would have to be the owner or co-signor on the loan in order for us to use his reward points. He had hoped to keep our names off the loan application so that we would get the advantage of his credit score of high 700’s. We found out that my husband and I would not be able to insure or register the car in our name if we were not listed on the loan application and soon realized that since the bankruptcy had not yet discharged that the banks would not even consider us for a loan. We were also hesitant about having my dad co-sign on the loan based on info from this blog about how having a co-signer for one loan could result in needing a co-signer for any loan in the future. So, it was actually a blessing in disguise that the bankruptcy had not yet discharged.

I took the time to continue to monitor our credit and subscribed to the three-credit monitoring so that I could keep an eye on the credit scores and reports. In April, a friend considered purchasing our van which put us into the shopping mode again to replace the van. When they chose not to purchase the van, we decided it was time to shop again and trade it in since the van needed about $2000 worth of maintenance work and was only worth about that much while we owed $3100 on the loan. I did a lot of shopping on the internet to find the best price on a newer used vehicle with low mileage that would suit our needs. Buying used also enabled us to keep our payments at close to the current van loan payment which meant we would be okay paying that loan. We were able to include gap insurance and a 2-year bumper-to-bumper warranty extension in the sale as well.

We did not do any loan shopping prior to arriving at the dealership although I realize I should have done that but was concerned with taking too many hits on our credit report or applying to a scam loan company. The dealership we went to was the one we had worked with in January and had been extremely helpful and upfront with us (as upfront as a car dealership will be I guess). I was very honest about our financial history and bankruptcy. Before having us come in, they ran an initial credit check and their credit manager was confident we would qualify for a loan. So, we headed there this past Saturday, test-drove the vehicle and sent our application to 5 banks – World Omni (Southeast Toyota Finance) which is where our van loan was from, Sovereign Bank (which has our car loan), Bank of America, Wachovia and GMAC (which is actually who has our mortgage). The first three came back as rejected immediately due to the bankruptcy. They would not even look any further into our credit report. Wachovia came back as accepted but wanted to verify income (not a problem with paystubs) and had a high interest rate of almost 15%. Luckily for us, GMAC came back as accepted as well with an interest rate of 9.5% but did not need to verify income since we already had our mortgage loan with them. The interest rate is probably higher than we would have gotten had my dad co-signed but we did it on our own and I am sure that it will now help continue to improve our credit. I hope to try to refinance it for a better rate as our credit scores continue to improve.

Mr Credit Card: What was your credit score before BK, just after, and now?

Randi: Before the bankruptcy, our credit scores were 425-475. Just after the bankruptcy discharged in February, they were 475-525. After challenges/disputes, a little bit of time and some on-time car and mortgage payments, our credit scores are currently 600-675.

I am grateful to the Ask Mr. Credit Card blog for all the amazing advice and information I was able to find on the blog which helped us make some wise financial decisions to start the road to recovery after bankruptcy. It was a VERY hard decision to file the bankruptcy because we did not intentionally incur that debt with no plan to pay it off. We had guilt about not being able to pay it. I tried very hard to make those arrangements. It amazes me to this day that the banks did not want to work with us in any form. They left me with no option but bankruptcy and am now looking to the future to improving my credit and getting on with my life. Lesson learned and we are very careful with our finances. We are working towards saving some money and at some point in the near-future will look to obtain a credit card -whether it be secured or un-secured depending on what we will qualify for to help us continue to improve our credit.

Thanks,
Randi

Final note from Mr Credit Card: I want to thank Randi for her time in putting this together. I hope all of you have found this useful. If you have any questions, feel free to leave a comment and we’ll try to answer them (or get Randi to do so). If you have any success stories about rebuilding credit or any credit tips and you want your story published and shared, please use the contact form here.

Recent Credit Card Developments In The UK

By: Mr Credit Card

05/11/2009

Much has happened in credit card land in the US since the credit crisis blew up in 2008 – cash rebates reduced, no more caps on balance transfer fees, credit card issuers reducing credit lines and increasing rates. Today, I have got a guest post from a UK credit card site about what is happening across the Atlantic.

This is a guest post by the Editor of www.compareandsave.com, a leading website that compare credit cards in the UK. Firstly, I would like to thank Mr Credit Card for letting us share our thoughts on what is happening in the UK. In this article, we will be updated about recent credit card developments in the UK by our overseas source. As Mr Credit Card himself said ‘the credit crisis started in the US’, but it didn’t take long for the impact to be felt over here in the UK. Now I’m going to fill you in on exactly how it has affected us, aside from the obvious tightened lending criteria, which is making it harder for people to get the credit card they want.

Credit card fraud
Unfortunately, fraudsters have tried using the current economic situation to their advantage by playing on consumers’ insecurities and their desperation for a bit of extra cash. Recent news revealed that a new phishing scheme had begun where fraudsters were sending emails to taxpayers telling them they were entitled to a tax rebate. The email would more than likely contain an embedded link which would send the consumer to a fake website where they would be encouraged to give their credit card details so that they could be given their tax rebate. Indeed, it is on the government’s agenda to tackle credit card fraud and phishing because British consumers make twice as many internet transactions than the European average and therefore they are “twice as likely” to be a victim of online fraud.

Credit cards for everything
Experts in the field have been encouraging those consumers in the UK who can afford to pay their credit card bills off in full at the end of the month to steer away from using debit payment cards and instead start making use of cash back credit cards. Plus, more bizarrely, some airlines are considering making people pay to use the toilets on their aircrafts. Because Boeing can’t come up with the technology for the toilets to be coin-operated, they are trying to make them accept credit cards. In addition, coin-operated parking meters are increasingly being replaced by units which accept credit card payments in the hopes that this will reduce the number of people getting tickets because they don’t have the correct change to ‘feed’ the meters.
Balance transfer credit cards.

The offers on balance transfer credit cards have fluctuated a little over the past eight or nine months. Before Christmas they started to reduce in length slightly and admin fees, which are charged when you choose to transfer debt from your existing credit card to a balance transfer credit card, remained at between 2.5% and 3%.

In the past couple of months, offers have started to pick up with the current market-leading offer standing at 16 months on the Virgin Credit Card and most others ranging from nine to 13 months.

0% purchase offers
Gone are the days of credit cards coming with 12 months 0% on balance transfers and 0% on purchases. Instead, 0% purchase offers have come down to as little as three months in some cases, with the general rule being the longer the balance transfer offer, the shorter the interest-free purchase offer. We have also seen an increase in the number of providers offering low-rate products which offer the consumer a low rate of around 8.5% on both balance transfers and purchases for the life of the balance and with no admin fee.

What’s to come in 2009
We expect to see an increase in the number of people looking for credit building cards and prepaid cards as they seek to gain back control of their finances.
We think lending criteria will loosen slightly as the economic situation improves. However, we think that credit card rates will stay high to compensate for the extra risk consumers are perceived to be posing to providers because of the current economic climate.

Capital One’s Apples to Orange Comparison Marketing

By: Mr Credit Card

05/07/2009

Recently I got a credit card offer from Capital One (I’ve started getting those mails again). This time they were telling me that I was pre-approved for their No Hassle Miles Card.

30,000 bonus miles – get 10,000 bonus mils with your first purchase. Then, spend just $3,000 a year and you’ll get 10,000 more bonus miles on your first and second anniversaries as a cardholder
Earn 1 mile per dollar on purchases
No annual fee

Fine – but what was written on the second page of the mail was more interesting. Basically, Capital One tried to show me what a great card this was by comparing it to some other cards. Here is how the table looked like.

Features/Cards	Capital One No Hassle Miles Rewards	Chase United Mileage Plus Visa Signature card	American Express Platinum Delta Skymiles Credit Card	Citi Platinum Select Aadvantage World MasterCard
Get 30,000 Bonus Miles	YES	Yes	Yes	No
Miles Good On Any Airline	YES	No	No	Yes
Fly Anytime With No Blackout Dates	YES	Yes	Yes	Yes
Free Ticket Worth $150 for every 15,000 miles	YES	Yes	No	No
Redeem Miles for cash	YES	No	Yes	No
Annual Fee	$0	$60	$150	$0 for 12 months, $85 thereafter

To most people who are not familiar with credit cards, the table above makes the No Hassle Miles Card look like a no brainer. But fortunately or unfortunately for Capital, I’m Mr Credit Card and I’m going to tell you why this comparison is simply misleading and it is like comparing Apples and Oranges.

Firstly, Capital One chose to compare them with specific airline credit cards. This is simply wrong. Why should for a United Mileage Plus frequent flier consider the Capital One card over their United Airlines Visa? True, there is an annual fee, but Visa Signature holders earn double miles for every dollar that they spend.

Delta Platinum card holders also earn double miles for every dollar that they spend on the card. Capital One conveniently chose not to disclose this fact. The Citi American Airlines card is probably the worst of the lot because they do not allow you to earn double miles, so that should be highlighted (in fact, I have suggested a better alternative to the American Airlines Credit Card issued by Citibank.

Another misleading fact is that they said that United and Delta’s Miles are no good on any airline. That is simply nonsense. Both airlines are part of the airline alliances and their miles are good for other airlines in the alliances. Delta Skymiles are also good for Northwest Airlines (which they have merged).

The fact that Capital One chose to highlight that you can exchange miles for cash is meaningless. That is because if you do that, your payout will be less than 1%! You should never exchange points for cash in a reward card. If you want to earn cash rebates, get a cash back credit card instead.

The annual fee comparison is misleading as well because as mentioned earlier, most airline cards let you earn double miles. They very often give anniversary bonuses like free companion ticket, access to airport lounges etc. The value of these perks more often than not offset the annual fee.

But if Capital did compare apples with apples, what cards would they compare with? Well, here’s what they should be comparing with.

Features/Cards	Capital One No Hassle Miles Rewards	Discover Miles Card	Citi PremierPass Card – Elite	BOA Accelerated Rewards American Express Card
Bonus Miles	Get 30,000 Bonus Miles – 10,000 each year if you spend $3,000 a year	20,000	20,000 after $600 purchase during first 3 months	n.a
Miles Formula	1 Mile/$1	1 Miles/$1 – Double Miles for food and travel for up to $3,000 in each year	2 Miles/$1 – supermarkets, gas stations, drugstores, commuter transportation and parking merchants 1 Miles/$1 on other purchases 1 Mile For Every Mile Flown on Airline paid by the card	1.25 points/$1
Miles Good On Any Airline	YES	Yes	Yes	Yes
Fly Anytime With No Blackout Dates	YES	Yes	Yes	Yes
Free Ticket Worth $150 for every 15,000 miles	YES	Yes	Yes	Yes
Redeem Miles for cash	YES	Yes	Yes	Yes
Annual Fee	$0	$0	$75	$0

If the proper comparison had been made, then Capital One’s card would look average. I’m not going to go on about which is the better card. But I just wanted to make the point that it can be so deceptive just looking at how they compared their card with other cards which should not have been compared at all.

A card like the No Hassle Miles is suited for those who are perhaps not frequent fliers with any particular airline but would like to earn reward points for airline tickets occasionally. Hence, the comparison should be with similar type of cards.

Wrong Card Application By Bank of America – What To Do?

By: Mr Credit Card

05/06/2009

Here’s a crappy story about BOA from our reader:

My situation is I’m trying to establish my credit for employment purposes, my score is ~550, I have no accounts in good standing b/c I actively tried to avoid having credit cards in the past.

I took advice from you and others & decided to try self-credit repair by borrowing against my own money using small secured loans and secured credit. I went to Bank of America and applied for a $500 secured credit card. A week later I got a denial letter that said I applied for a “Platinum Plus Mastercard”. This is obviously not what I asked for and I knew before I went I don’t qualify for that. I was totally honest with the bank employee, the vice president of that small branch, in telling her I have 2 old chargeoffs for utility bills amounting to $300 of past debts that will be on my report, can’t qualify for unsecured cards, etc– and that I have $500 of savings I want to borrow against using a secured card with intention to establish a good standing account on my report.

I feel like I was misled by BoA policy & procedure by not considering me for the correct product which I asked for and they advertise. This feels like a game to justify why they can’t give me a secured account with no risk. Now my credit report has a new pull for a credit product I didn’t even ask for. I guess I’ll send them a letter, but what else can I do?

Thank you for the site

J Smithwick

Thank Mr Smithwick for your email. We’re sorry to hear about what happened and that is really another idiotic thing BOA did. Bank of America is really a strange creature. I know for a fact that for example, their secured credit cards are not issued to those out of bankruptcy (even though it is “secured” by a deposit!). But I wouldn’t hold everything against BOA. Chances are that the branch manager did not know any better and he probably has very few folks come to him wanting a secured credit card.

If I were you, I would worry about the pull on the credit report. Yes, it’ll ding a few points in the short run. But what you are concerned is building your credit history. Getting a secured card is still the best way to go.

You can take your $500 and try getting a secured card with say a Public Savings Bank Secured Card. They are one of the rare secured credit card that does not charge an annual fee, allows you to deposit up to $100,000 (though that is not so important in your case), reports to the 3 credit bureaus and has a 25 day grace period. They also claim not to check credit reports, income or employment. You might want to give this a shot.

Or you can shop around for any credit unions near your place. Just make sure they report to the three credit bureaus as you want to rebuild your credit. Also, do not carry balance. Just pay in full every month and as far as credit score is concerned, you should be able to get your scores to above 600 in about a years time or even shorter.