Tag Archives: Credit

The 5 Best Secured Credit Cards

Posted on February 18, 2012 by admin| Leave a comment

Secured credit cards have a bad reputation, and most of these products deserve it. Too often, the companies that offer secured cards do so to prey on those with poor or little credit history by charging exorbitant interest rates and outrageous fees. Yet, the more I researched these products, the more convinced I became that the concept of a secure credit card is a sound one. Using the right product from a reputable institution, holders of secured cards can enjoy many of the benefits of standard credit cards that they might not qualify for. (See also: The Best 0% Balance Transfer Credit Cards)

How a Secured Card Works

Many loans are secured by collateral, such as those taken out for the purchase of a car or a home. In contrast, standard credit cards offer borrowers loans that are not secured by any property or deposits that can be repossessed in case of default. Therefore, applicants for unsecured loans must first be able to show banks a significant credit history. On the other hand, almost any applicant will qualify for secured credit card. With these products, the cardholder must first pay a security deposit that protects the bank against the risk of default. In all other ways, a secured card operates just like a standard credit card. Cardholders receive monthly bills that they must pay on time or incur interest and penalties. At the same time, banks will report payment information to the credit bureaus, allowing cardholders to build their credit history.

What to Look for in a Secure Card

Your first priority in shopping for a secured card will be to stick with a reputable bank and avoid the numerous products with high interest rates and unreasonable fees. Shoppers should look for a card with a low annual fee and perhaps one that might earn interest on their deposit. Finally, applicants should be aware that not all banks guarantee acceptance, so those with outstanding liens or a recent bankruptcy will not qualify for some of these cards.

1. Orchard Bank Secured MasterCard

credit cardNo matter how bad your credit is, you will be relieved to learn that Orchard Bank approves everyone after confirming the identity of the applicants. Once approved, customers will have to provide a $ 200 minimum security deposit. Their standard interest rate of Prime plus 4.74% is fantastic not just for secured card, but is lower than most standard cards as well. There is no annual fee for this card the first year, but there is a $ 35 annual fee after that.

Click here to apply now

2. Citi Secured MasterCard

credit cardThis secured card comes with many of the benefits of a standard credit card including car rental insurances and retail purchase protection. In addition, Citi places cardholder’s deposits in an interest-earning account. The standard interest rate is equal to the Prime Rate plus 14.99%, and there is a $ 29 annual fee for this card. Unfortunately, Citibank says that it does not automatically accept all applications for this card.

Click here to apply now

3. Wells Fargo Secured Visa Card

credit cardWells Fargo offers their secured card to applicants with any credit history, so long as they have not declared bankruptcy in the last 12 months and have no unsettled liens. Once accepted, cardholders must make a deposit of between $ 300 and $ 10,000, which becomes their credit limit. This card comes with standard Visa benefits including auto rental insurance. Cardholders who carry a balance will incur interest at a rate equal to the Prime Rate plus 15.74%. There is a $ 25 annual fee for this card.

Click here to apply now

4. Capital One Secured MasterCard

credit cardWith this card, a minimum security deposit of $ 50 will earn you a $ 200 credit limit. Since Capital One is extending you a credit line in excess of your deposit, it will consider the applicant’s ability to pay before acceptance. This card’s standard interest rate is equal to the Prime Rate plus 19.65%, and there is a $ 29 annual fee. Like all Capital One cards, there are no foreign transaction fees. This is a great feature not just for vacationers, but also for immigrants who have no credit history and may travel outside of the country to visit family.

Click here to apply now

5. U.S. Bank Secured Visa Card

credit cardThis card offers customers the ability to earn interest on their security deposits. Although the rates these days are not great, it is still nice to feel like the interest earned is going to you instead of the bank. On the other hand, if you carry a balance, you will incur interest at the rate of prime plus 17.74%. There is a $ 35 annual fee for this card.

Click here to apply now

When You Should Get a Secured Card

Those who have poor credit or no credit history may be tempted to just wash their hands of the entire credit card business. Unfortunately, that would be a mistake. Obtaining a secured card and making on-time payments is a critical way to rebuild one’s credit. Whether it is right or wrong, companies today use credit scores for background checks when hiring and for setting rates for services such as car insurance. Furthermore, travelers will find it difficult or impossible to reserve a hotel room or rent a car holding a credit card, even if it is a secured card.

By choosing the right secured card, you can build your credit history while enjoying many of the benefits of standard credit cards.

Note: Some links contain affiliate codes.


Wise Bread

Posted in Money

Tagged , , ,

Ask the Readers: How Often Do You Review Your Credit Report?

Posted on February 7, 2012 by admin| Leave a comment

Having a good credit score is an important part of your financial health. It is necessary to review your credit report from time to time to check on your credit health and make sure you have no discrepancies with your report. Some people review their credit report once a year while others do it more regularly.

How often do you review your credit report? Yearly? Monthly? When was the last time you reviewed your credit report?

Tell us how often you review your credit report and we’ll enter you in a drawing to win a $ 20 Amazon Gift Card!

We’re doing three giveaways — one for random comments, one for random Facebook “Likes”, and another one for random tweets.

Mandatory Entry: 

  • Post your answer in the comments below 

For extra entries (1 per action):

  • Go to our Facebook page, “Like” us, and leave a comment on this article telling us you did, or
  • Tweet your answer. You have to be a follower of our @wisebread account. Include both “@wisebread” and “#WBAsk” in your tweet so we’ll see it and count it. Leave a link to your tweet (click the timestamp for the individual URL) in a separate comment.

If you’re inspired to write a whole blog post OR you have a photo on flickr to share, please link to it in the comments or tweet it.

Giveaway Rules:

  • Contest ends Monday, February 13th at 11:59 pm Pacific. Winners will be announced after February 13th on the original post. Winners will also be contacted via email.
  • You can enter all three drawings — once by leaving a comment, once by liking our Facebook update, and once by tweeting.
  • This promotion is in no way sponsored, endorsed or administered, or associated with Facebook.
  • You must be 18 and US resident to enter. Void where prohibited.

Good Luck!


Wise Bread

Posted in Money

Tagged , , , ,

5 Best Credit Cards for People With Excellent Credit

Posted on February 5, 2012 by admin| Leave a comment

If you have excellent credit, the chances are you already know it. You always pay your bills on time, and you are very unlikely to carry a balance on your credit cards. In return for your responsible nature, you are deluged with offers for more credit cards. Overwhelmed and disillusioned with all of these choices, many of you are content to remain loyal to whichever card you had been using for years. It’s easy, comfortable, and hassle free to use the same card in perpetuity. But by doing so, are you betraying the sound principals of financial management that earned you your excellent credit score? (See also: Surprising Things That Can Kill Your Credit)

Snap Out of It!

Those with excellent credit are likely to be using their cards simply as a method of payment, and they may be earning some additional rewards. Nevertheless, this practice is akin to storing money in a bank for safekeeping, without concern to the returns being accrued on your investment. The reality is that like savings, credit card spending should also produce a competitive return. Although saving is always a preferable activity to spending, those with excellent credit are leaving money on the table by not attempting to maximize the returns on their credit cards.

The Ways to Earn High Returns on Spending

The best way to compare credit card rewards is through the percentage of value earned per dollar spent. For example, 1% cash back is the bare minimum that you should expect from any reward card. If you are earning that amount or less, it is as unwise as closing on a mortgage with a higher APR that what is available. The two most common ways to earn credit card rewards are in the form of cash back or loyalty points such as frequent flier miles. If you are earning points or miles, you should assign a value to them in order to assure you are receiving the returns you deserve. The more value you earn per dollar spent, the better you are doing. Finally, there are a few cardholders who do have excellent credit, but may carry a balance from time to time. These people should always carry a credit card with the lowest APR on the market.

The Best Cards for People With Excellent Credit

Each of the cards on this list are only offered to those with excellent credit, but they offer very high rates of cash back or points. The exception here is the Simmons First card, which as the card with the lowest interest rate on the market, is the best choice for those who carry a balance. There is no one card that is perfect for everyone, but each has its unique advantages that appeal to different types of cardholders.

Fidelity Investment Rewards American Express Card

At the top end of cash back rewards cards are those rare products that earn 2% cash back on all purchases, all the time. Fidelity offers several versions of its American Express card that do just that. In this case, the cash back is returned to the Fidelity account of your choice, such as a Fidelity IRA, Fidelity-Managed 529 Account, Brokerage Account, or Cash Management Account. There is no annual fee for this card and only a 1% foreign transaction fee.

Click here to apply now

Capital One Venture Rewards

Capital One offers this card only to applicants with the best credit scores. By using this card, customers can earn two of their “miles” for each dollar spent. Fortunately, their miles are not like those of any airline; they can be redeemed for one cent each towards a statement credit against any travel related expense. The end result is that this card consistently returns 2% cash back as statement credits so long as the cardholder can claim at least that amount in hotels, car rentals, or airfare. There is a $ 59 annual fee for this card that is waived the first year, and like all of their cards, there are never any foreign transaction fees.

Click here to apply now

Sapphire Preferred From Chase

Chase has been making an all-out effort to court those with excellent credit histories, and the Sapphire Preferred has quickly become their flagship product. Chase offers a single Ultimate Rewards point per dollar spent on most purchase, with double points for spending on travel and restaurants. Triple points are earned for spending on travel through their Ultimate Rewards site, and all points earned are eligible for a 7% bonus at year’s end. Once earned, points can be redeemed at a rate of 1.25 cents each towards travel, or one cent each towards other experience and merchandise awards. Finally, Ultimate Rewards points can be instantly transferred to points or miles in the program’s several different airlines and hotels. In fact, you can even transfer points to other people’s accounts, a feat impossible with most other programs. There is a $ 95 annual fee for this card that is waived the first year, but there are never any foreign transaction fees. Finally, this card is made of some type of plastic and metal sandwich giving it a heavy, solid feel that always draws comments when I use it.

Click here to apply now

Simmons First Visa Platinum

Not everyone with great credit is in a position to pay all of their credit card balances in full each month. Cardholders with near-perfect credit who occasionally carry a balance should do so on the card with the lowest standard interest rate on the market. The Simmons First Visa Platinum offers an APR equal to the Prime Rate plus 4%, the lowest rate that I am aware of. There is no annual fee for this card, but there is a foreign transaction fee of 2%.

Click here to apply now

Starwood Preferred Guest Card From American Express

Here is the card for those who understand and appreciate the value of hotel points and airline miles. The Starpoints earned by this card can be redeemed for any available standard room at any Starwood Hotel, including Sheratons and Westins. These points are extremely valuable because there are no blackout dates or capacity restrictions in the program. Alternatively, your Starpoints can be exchanged for miles in the programs of thirty different carriers around the world. Since each of those carriers can have dozens of partners, the award options are nearly limitless. Redeem your points for miles, and use those miles for premium class international travel, and it is easy to see returns of 5% or higher on each dollar spent. There is a $ 65 annual fee for this card, and American Express does charge a 2.7% foreign transaction fee.

Click here to apply now

If you have excellent credit and you are not getting at least 2 cents in value for each dollar spent, or the lowest interest rate on the market, you need take a serious look at the cards on this list. As a smart consumer with excellent credit, you should always be receiving the highest return on not just your savings, but on your spending as well.

Note: Some links contain affiliate codes.


Wise Bread

Posted in Money

Tagged , , , ,

Surprising Things That Can Kill Your Credit

Posted on February 3, 2012 by admin| Leave a comment

When it comes to credit scores, we’re all very familiar with the damage a late payment can do to your credit “worthiness.” We also know that having too much debt is bad as is having no credit references at all.

But surely that can’t be all that affects your credit score, right?

The truth is, there are several things that can tank your credit, some of which just might surprise you. (See also: 6 Credit Card Services You Don’t (Usually) Need)

Sneaky Inquiries

When you apply for a new credit card, you expect an inquiry to show up on your report. This is known as a “hard” inquiry, and too many of these within a 12 month period will lower your score.

But filling out that Visa application isn’t the only way to generate a hard inquiry. If you use a debit card when you rent a car for example, many rental agencies will check your credit before approving the transaction, and since few of us read all the fine print, you may not realize it’s happened until it’s too late.

Likewise, opening a new checking account will also typically generate a hard inquiry (even though you’re not applying for credit) as will applying for new phone service and — surprise! — requesting an increase on an existing account. Unfortunately, many consumers assume that credit card companies simply look at their own payment history to determine approval for increases, but the fact is that your existing creditors are monitoring your credit score on a regular basis.

Now, only the hard inquiries generated by a request for an increase will ding your score — those periodic “checkups” are considered soft inquiries and don’t cause a penalty. But that doesn’t mean that they can’t still hurt your credit, bringing us to the next item on this list…

Changing Your Ratio

When a creditor approves an application for credit, they will continue to monitor your score to ensure that your credit worthiness doesn’t change. And again, these soft inquiries don’t count against you. But should the creditor decide that you no longer meet their requirements, they can lower your credit limit or worse, close your account. By the time you realize it, the damage has already been done.

Your credit score depends greatly on the ratio between how much credit you’ve used and how much you have available. So, if you have an account with a $ 2,000 balance for example, and you’ve charged $ 400, then you’ve used 20% of your available credit, and anything up to 30% is considered to be responsible credit management.

But let’s say that the credit card company decides that you no longer meet their standards and as a result, they lower your limit to $ 250 (yes, they can do that — I speak from experience). Now, instead of having a credit ratio of 20%, you’re suddenly maxed out as far as your credit report is concerned, and your score will drop considerably as a result.

If they decide to close the account instead (yes, they can do that too), you not only suffer the ding for a high credit utilization ratio, but you also lose the benefit of that available credit once you’ve paid the balance off. Remember, your utilization ratio is based upon your total credit available, so when an account is closed, it reduces the amount of credit you have access to. And the less available credit you have, the higher your utilization ratio will be.

This is also the reason that financial experts discourage balance transfers. Debt-conscious consumers will often transfer their credit card balances to a new card with a lower rate, thinking that they’re making a smart move, but this can actually have an adverse effect on your credit.

Not only do you suffer the ding for a hard inquiry to secure that new, lower-rate account, but you’ll also skew your utilization ratio if — like many consumers do — you close those higher-rate accounts after the balance transfer is complete.

Let’s say for example, that you have two cards, each with a $ 1,500 limit and a $ 200 balance. That gives you a utilization ratio of about 13% ($ 400 used / $ 3,000 total available). Then let’s say that you get a new, lower-rate credit card with an additional $ 1,000 limit, and you shift your $ 400 outstanding balance to that new card. You now have a credit utilization ratio of just 10% ($ 400 used / $ 4,000 total available), but the minute you close those two older accounts with the higher interest rates, your ratio goes down the tubes.

Instead of having $ 4,000 in available credit, you now only have $ 1,000. Your ratio goes from an impressive 10% to a whopping 40%, and that’s bad, bad, bad.

Applying for the Wrong Type of Credit

Many consumers think that any kind of credit is good, and for those trying to rebuild their credit scores, getting approval on in-house financing plans might seem like a step in the right direction.

Unfortunately, that’s not the case.

These “local” finance plans — like those you see advertised by furniture stores and car dealerships — are considered to be “second class” credit…that is, credit for those who can’t get it anywhere else, and this makes you look like a high risk to potential creditors.

In addition, because these in-house programs don’t issue you a revolving limit, your available credit is typically the amount of your purchase. So, when you finance $ 1,000, it appears as a maxed-out account on your credit report and affects that all-important utilization ratio we were talking about before.

Skipping Out

When it comes to late payments, it’s not just your credit cards that you have to worry about. Those old library fines, parking tickets, and unpaid balances on your book club can also hurt you if the company decides to use a collection agency to resolve the account.

And once the collection hits your credit report, you and your score are stuck with it for seven years.

Swearing Off Credit

After having a few bouts of credit card debt in my early twenties, I swore I would only pay cash for my stuff and never use a credit card again. But knowing the importance of having credit, I kept a few accounts open and just locked the cards away. I thought I was being smart… I thought wrong.

When you don’t use your credit — as in, ever — there’s no payment history for potential creditors to evaluate and after an extended period of time, your creditors may close your account because of inactivity, both of which can make it harder for you to secure credit when you need it.

In addition, if you do ever decide to use one of those cards, you may find that your purchase is declined because it’s outside of your “usual” spending habits. Of course, this can be resolved, but not without some embarrassment as you step out of the checkout line to call your credit card company.

The Moral of This Story?

Managing and protecting your credit score is most certainly a pain, but it’s a necessary one. Use your credit, but use it wisely, and always ask about credit checks before securing new services…even (and especially) when those services seemingly would have nothing to do with your credit.

But most importantly, monitor your score. The only way to know what’s being reported is to check it yourself and then dispute any information that’s incorrect.


Wise Bread

Posted in Money

Tagged , , ,

5 Best Gas Rewards Credit Cards

Posted on January 27, 2012 by admin| Leave a comment

Americans are having a tough time adjusting to the reality of purchasing gasoline at $ 3.00 a gallon or more.  When possible, we’ve bought more efficient cars, moved closer to work, and taken fewer road trips. Nevertheless, gasoline continues to consume a disproportionate amount of our budgets, and we are always looking for a way to save anything we can in this critical area.

How to Pick the Best Gas Card

First, you want to consider the savings you will realize from each card. Some products offer a percentage off your total purchase, while others grant a fixed amount of savings per gallon. Next, think about where you buy gas and which stations in your area have the lowest price. Some cards are specific to a brand, while others allow you to choose most stations except for warehouse stores. Finally, consider the other benefits of each card. Several of the cards on this list offer excellent rates of cash back for purchases beyond gas, while others do not. This is important if you plan on using this card for more than just fuel purchases.

A few years ago, I signed up for a SimplyCash American Express Business card that offered fantastic 5% cash back on all gasoline purchases. Sadly, that deal is no longer offered, but I was able to save a few hundred dollars using that card. These days, a credit card that offers higher rewards for gasoline purchases can still slash your price at the pump by 15 cents a gallon. Here are my top picks.

1. Visa Platinum Cashback Rewards Card From PenFed

ChasePenFed is the Pentagon Federal Credit Union. While they are not well known, and they are not even a bank, they do offer some of the most consumer friendly products on the market. Their Platinum Cash Rewards card offers 5% cash back on all gasoline purchases. Unfortunately, this card offers a paltry .25% back on other purchases. On the other hand, PenFed has a great reputation for low fees. This card has no annual fee, cash advance fee, foreign transaction fee, or over the limit fees. To apply for this card, you must be a member of the credit union, which is open to current and former members of the military, many government contractors, their relatives, and household members. Even if you do not qualify on this basis, you can do so by making a one-time, $ 15 donation to a military charity.

Click here to apply now

2. Costco TrueEarnings Card (Business and Personal)

ChaseFor those familiar with this brand, the word Costco is synonymous with savings. The consumer version of the Costco TrueEarnings card offers 3% cash back on gasoline, while the business version offers 4%. Costco limits the higher returns on gasoline to the first $ 3,000 each year for the consumer card, and $ 6,000 annually for the business card. Other benefits included 2% cash back on travel and at restaurants, along with 1% cash back everywhere else. Strangely, the 1% rate also includes purchases from Costco, an odd feature in a world where extra rewards are typically awarded for purchases from the co-branded merchant. Another odd fact about thing about this card is that the rewards are issued in the form of a voucher each February. You can use your voucher for purchases at Costco stores, or redeem it for cash at their customer service counter. If your account is closed before February, your forfeit all of your rewards. There is no fee for this card with your paid Costco membership

Click here to apply now

3. Amex BlueCash Preferred

ChaseHere is a top notch, all around rewards card that happens to offer a competitive 3% reward rate on gasoline purchases (it is also the best credit card for groceries). While there is no limit to the amount of cash back you can earn, this higher rate does not apply to fuel purchased at superstores and warehouse clubs like Costco and Sam’s Club.  Other rewards include 6% cash back at supermarkets, 3% cash back at department stores, and 1% cash back on all other purchases.

Click here to apply now

4. Citi ExxonMobil Mastercard

ChaseCiti and ExxonMobil are two giants of banking and energy, and their ExxonMobil MasterCard offers competitive cash back on both gasoline and other purchases. Cardholders will receive a 15 cent per gallon rebate on Exxon and Mobile purchases at over 10,000 nationwide locations.  Essentially, customers receive a larger percentage of cash back when the price of gas goes down, and relatively fewer rewards when the price goes up. Customers will receive another 2% cash back on their first $ 10,000 of eligible purchases each year, and 1% cash back after that. Cardholders receive a free Speedpass device to make quick purchases, and there is no annual fee for this card.

Click here to apply now

5. Chase Marathon Mastercard

ChaseWhile Chase is a major national credit card issuer, Marathon only has stations in 18 states in the Southeast and Midwest. Nevertheless, this card offers a competitive 5% rebate on all purchases that is applied to future Marathon charges. Other charges also return a reasonable 1% cash back. There is no annual fee for this card.

Click here to apply now

The Downsides of Gas Cards

Now that you know about all the great deals out there, pause for a second and consider if one of them is really right for you. As with all reward cards, you are not saving any money unless you are paying each statement in full and on time. To do otherwise ensures that you will owe more in interest that you ever earn in cash back. Also remember that you are not saving much money if you have to pay a higher initial price or drive further to take advantage of credit card rewards. Finally, consider how much money your household can save with one of these cards over the course of the year. That amount has to easily exceed the cost of any annual fees, or the point is moot. 

Note: Some links contain affiliate codes.


Wise Bread

Posted in Money

Tagged , , ,

6 Credit Card Services You Don’t (Usually) Need

Posted on January 17, 2012 by admin| Leave a comment

Everyone who has opened up a credit card in the last five years has been pitched on various supplementary “services” from the company in question. The offers sound enticing and even logical at times, but are they really justified from a hard dollars-and-cents standpoint?

Everyone’s financial situation is different, but generally speaking, the answer is NO.

Here are six credit card services that you (usually) do not need. (See also: Best Credit Card Perks)

1. Identity Theft Coverage

This is typically framed as a way to avoid liability for fraudulent charges made after your credit card is stolen. It sounds appealing, but many consumers fail to realize they are essentially ALREADY covered from this by 1968’s Truth in Lending Act. This law states that if you report the stolen card immediately, your maximum liability for fraudulent charges is $ 50. As such, it makes zero sense to pay $ 5 per month (or anything) when, even in the worst case scenario, you are only out $ 50.

While some identity theft plans offer coverage for more extreme circumstances (such as losing other cards or your Social Security number), you would generally be better served investing in a paper shredder and monitoring your credit report than paying the fees your credit card company would charge.

2. Missed Payment Insurance

This was actually offered to me a few days ago while activating a credit card. The salesperson gleefully exclaimed how I could “put my payments on hold for up to two years” in case I lost my job or ran out of money. The cost? Something like $ 5 per every $ 100 on my outstanding balance. It actually sounded moderately appealing at first, until I paused and thought about it.

“Why would I ever be unemployed or unable to make credit card payments for two years?”

For one thing, I (like many credit card holders) rarely carry balances month-to-month. It might make sense if you carry huge balances, but even in that case, you probably ought to ask WHY you’re carrying those balances. Furthermore, a modest savings account would seemingly provide all the missed payment insurance you would need in a cash crunch.

3. Credit Score Tracking

Given the overall importance of your credit score, this is definitely a number worth knowing. Do you really need 24/7 access to it, as many credit card companies now offer in exchange for additional fees? It’s debatable (and there are definitely circumstances where it COULD make sense), but probably not.

Although credit scores do change dynamically to reflect your most up-to-date activity, obsessively monitoring it every single day is unlikely to reveal anything of importance. You would be much better off simply getting your free yearly credit score and report from AnnualCreditReport.com in the beginning of the year, and then perhaps paying one of the major credit bureaus (Experian, Equifax, and Trans-Union) for second and third peeks later on. Experian, for instance, offers $ 1 access to your score in connection with an easy-to-cancel trial.

4. Debt Consolidation

Typically offered by third-party organizations rather than credit card companies themselves, debt consolidation is far from the silver bullet its supporters make it out to be. Consolidating debt lowers your immediate monthly payment (which we always hear), but it also lengthens the amount of time you stay in debt and enlarges the total amount that you pay (which we almost never hear.)

Think about it — what creditor would voluntarily rewrite debt if it only benefited the borrower? No one would. Taking this into account, you should realize that debt consolidation doesn’t lower your debt. It simply moves it around and makes it (temporarily) more comfortable. Approach debt consolidation with caution.

5. Credit Score Repair

A number of credit card companies (sensing that many consumers have low credit scores) are beginning to offer credit score repair services. The offer is appealing to people who don’t understand credit and thus believe “the experts” can push a few buttons to raise their score overnight.

Yet in truth, credit scores are no mystery. As myFICO explains, your credit score is comprised of five things and five things only:

  • Payment history (35%)
  • Amounts owed (30%)
  • Length of credit history (15%)
  • New credit (10%)
  • Types of credit used (10%)

Repair services don’t have any shortcuts or special tricks. All they can do are the same common-sense things you could do yourself by consulting the list above (paying your bills on time, repaying outstanding balances, ceasing to apply for new credit for a while, etc.)

6. Balance Transfers

Before someone rushes to say how insane I am for calling balance transfers unnecessary, let me state that I do find them worthwhile sometimes. More often than not, however, they amount to little more than a band-aid on a bullet wound.

Because those highly sought 0% “teaser periods” often last just 3-6 months (and most borrowers will not pay off their entire balance that quickly), credit card holders might be left to either stick with the astronomical new APR or “rate-chase” by balance transferring to a new 0% card. This can actually compound your credit problems because constantly applying for new credit reflects poorly on your score.

If you can pay off a balance IN FULL during the teaser period, it can be a smart move. If not, it’s likely a waste of time and money.


Wise Bread

Posted in Money

Tagged , , , , ,

The Best 0% Balance Transfer Credit Cards

Posted on December 30, 2011 by admin| Leave a comment

Those who live under a mountain of credit card debt quickly realize that their suffering has two components. First there is the principle, the actual amount of goods and services that was charged to their credit card. Secondly, there are the financing charges imposed each month on their balance. With each statement cycle, their average daily balance is multiplied by one twelfth of the card’s Annual Percentage Rate (APR). Therefore, if you owe $ 10,000 on a card with an APR of 12%, you are incurring $ 100 in interest each month. Due to the effect of compounding interest, the finance charges incurred each month add to your balance, resulting in more interest being accrued with each passing month. (See also: The Best Low Interest Rate Credit Cards)

How a Balance Transfer Works

To help relieve the burden of debt and acquire new customers, banks have long offered credit cards with a 0% promotional APR, for a limited time, on balance transfers. Applicants who qualify for a new card with these promotional rates can have their existing balance paid off by their new card. During the time that the 0% promotional rate applies, interest is not being accrued on the balance transferred; however, the amount transferred is almost always subject to a one-time balance transfer fee. This fee, typically 3% – 5%, is added to the new balance. Also, cardholders are still responsible for making minimum payments on their account. New transactions may incur interest at the standard rate, although in some instances, the 0% promotional rate also applies to new purchases as well. Finally, no matter how much you are struggling with your debt, it is critical that you continue to make all of your payments on time, as only applicants with the excellent credit will qualify for most of these excellent promotional credit card offers.

How to Save Money With a Balance Transfer

First, it is crucial that those seeking a balance transfer do so as part of a comprehensive plan to eliminate their credit card debt. Such a plan should focus on maximizing their income, minimizing their expenses, and regularly paying down their entire credit card before the promotional rate expires.

As part of an overall plan to eliminate debt, the benefits of a balance transfer are clear. For example, if a cardholder has an existing credit balance of $ 10,000 on a card with a 15% APR, that cardholder is currently accruing $ 125 in interest each month. If the cardholder continues to pay interest while reducing the balance by $ 500 each month, that person will still have accrued $ 1,250 of interest over the 20 months it took him or her to pay off the balance (15% interest applied to an average daily balance of $ 5,000 over 12 months). Alternatively, that person could begin by accepting a balance transfer offer of 21 months at 0% interest with a 3% balance transfer fee. In this case, that person’s old balance of $ 10,000 will be paid off, while they will incur a new balance of $ 10,000 plus $ 300 in balance transfer fees. If all goes according to plan, at the end of the 21 months, the new balance will be paid off and the cardholder will have saved nearly $ 1,000 in interest.

Top Five 0% Balance Transfer Cards on the Market 

Like every aspect of the credit card industry, we are fortunate to enjoy an extremely competitive market for 0% balance transfer credit cards. Here are the top five offers currently available.

1. Chase Slate

credit card Chase shook up the market recently by returning to a type of balance transfer offer that had not been seen in years. With this offer, new cardholders will receive a 0% APR on balance transfers for 12 months, with no balance transfer fee on transfers performed within the first 30 days of opening an account. This offer’s terms also include 12 months of 0% financing on purchases, but only for applicants with good and excellent credit. Applicants with average credit will only receive a six month, 0% rate on new purchases. Furthermore, this card is eligible to participate in Chase’s fantastic BluePrint program, allowing cardholders with a balance to pay off new charges in full without incurring interest on them. There is no annual fee for this card.

Click here to apply now

2. Citi Diamond Preferred

credit card This card currently offers a 0% promotional APR on both purchases and balance transfers for a market-leading 21 months. There is no annual fee for this card, but there is a 3% balance transfer fee. Citi has this same offer available for their similar Platinum Select card as well. Nevertheless, I recommend the Diamond Preferred card, as it features perks such as trip cancelation insurance, lost luggage coverage, and a personal concierge service.

Click here to apply now

3. Citi Simplicity

credit card This is another card from Citi that offers a 0% APR for 21 months on both balance transfers and new purchases. Instead of granting the travel benefits of the Diamond Preferred, this card offers no late fees or penalty interest rates. Missing payments is still a bad idea, as your credit will suffer and your account may be closed. But at least your debt will not spiral out of control. There is no annual fee for this card.

Click here to apply now

4. Discover More

credit card The best offer for this card has a 0% introductory APR on balance transfers for 18 months, as well as a 6 month, 0% promotional rate on new purchases. Balance transfers completed in the first six months of a new account are subject to a 3% fee although a 5% fee applies thereafter. Although the Discover card is not as widely accepted as some others, customers rave about their excellent service. Finally, I am reluctant to mention that this is also a rewards card. Those who carry a balance should ignore that aspect and focus on paying off their debt as quickly as possible. There is no annual fee for this card, and there are no foreign transaction fees on any of Discover’s products.

Click here to apply now

5. Capital One Platinum Prestige

credit card Rounding out our list, this product offers a 0% introductory APR on both purchases and balance transfers for 15 months. Customers will have to pay a 3% balance transfer fee, but there is no annual fee for this card and no foreign transaction fees on any Capital One products.

Click here to apply now

A 0% balance transfer is not an instant solution to the problem of credit card debt. In fact, unless you receive the Chase Slate card without the balance transfer fee, you will actually owe more money after your balance transfer than you did before. You should think of these offers as a significant push up a big mountain, but you will still have to do most of the work yourself.

To the Credit Card Guide

Note: Some links contain affiliate codes.


Wise Bread

Posted in Money

Tagged , , , ,

The Best Low Interest Rate Credit Cards

Posted on December 24, 2011 by admin| Leave a comment

The only thing more challenging than managing credit card debt is getting out of it. To accomplish this important goal you need a sound budget, plenty of discipline, and a credit card with the lowest possible interest rate. (See also: Why Do a Credit Card Balance Transfer, and How?)

How to Find the Lowest Interest Rates

Every bank is legally required to clearly disclose each card’s Annual Percentage Rate, or APR. This is the rate you will see in the black and white box when you click on the “terms and conditions” link. While you might think these disclosures make choosing the lowest APR an easy task, it is not that simple. Most banks will disclose a range of possible rates, with each applicant being offered a particular APR according to his or her credit rating. Therefore, the lowest rates available will be granted only to those applicants with the highest credit scores, with all other cardholders receiving higher rates.

Another important aspect of a credit card interest rate is that nearly all of them will have a variable rate. The good news is that the CARD Act of 2009 prevents banks from arbitrarily raising their rates on cardholders in good standing. What you will find is that nearly every card on the market will offer a variable APR that is based on the Prime Rate. This rate, determined in part by the Federal Government, has stood at a record low of 3.25% since December of 2008. Nevertheless, the variable interest rates quoted by the credit card issuers will rise when the Prime Rate does. For example, if the Prime were to rise to 8.25%, as it did in June of 2006, cardholders would see their interest rate rise by 5% from the current rates (as of this writing in December of 2011).

Finally, the best interest rates offered for a particular card can vary based on the link you use to apply for it. For example, applications for Chase Freedom card mentioned below can be found in many different places, with a higher interest rate depending on the amount of initial cash back offered. I have even seen Capital One present different rates for the same card depending on which browser I used!

The Five Lowest APR Cards on the Market

These cards currently have the lowest interest rates.

1. Simmons First Visa Platinum

Simmons First Visa PlatinumThis card has an unbelievably low rate equal to the Prime Rate plus 4%. Better still, this is the rare card that offers applicants a single possible APR rather than a range of rates. So if your application is approved, you will receive this great rate. Needless to say, applicants must have excellent credit in order to be approved. Balance transfers are also subject to the purchase APR, plus a 3% balance transfer fee. This card has no annual fee and a 2% foreign transaction fee.

Click here to apply now

2. Iberia Bank Visa Classic

Iberia BankThis is another lesser-known institution with spectacularly low rates. Their Visa Classic has an APR equal to the Prime Rate plus 4%, matching the Simmons First Visa Platinum. Unlike Simmons, customers without excellent credit may receive an interest rate equal to the Prime Rate plus 7% or even 10%. Other than that, the terms are similar — there is no annual fee for this card, and there is a 2% foreign transaction fee.

Click here to apply now

3. PenFed Promise Visa

PenFed PlatinumPenFed is not a bank, it is the Pentagon Federal Credit Union. Membership is free to qualified applicants, which includes many military and government workers as well as members of their extended family and households. Those who don’t qualify on this basis can join after making a one-time contribution of $ 15 to a military charity. Once a member, you can apply for their Promise Visa card, which offers a fixed APR of 7.49% for three years, followed by standard APR equal to the Prime Rate plus 7.74%. As if that wasn’t good enough, this card has virtually no fees. That means no annual fees, balance transfer fees, cash advance fees, or foreign transaction fees. There are also no penalty fees for late payments, exceeding your credit limit, or having a payment returned. Missing a payment will hurt your credit score, but it won’t even result in a higher interest rate.

Click here to apply now

4. Chase Freedom

Chase FreedomThis is the card that is offered in several different versions. If you apply for the offer that has only $ 100 cash back, those with excellent credit can receive an interest rate as low as Prime plus 7.74%. But there are many other reasons to consider this product. This offer includes a 0% introductory APR for six months on purchases and for one year on balance transfers. This product is also eligible for Chase’s groundbreaking Blueprint program. This feature allows cardholders to avoid paying interest on the portion of their balance that they pay off each month. It also includes powerful online budgeting and goal setting features. When fully utilized, the Blueprint system can effectively lower the amount of interest paid. Finally, I am reluctant to mention that this card is also a rewards card, since those who carry a balance should always be looking for the card with the lowest APR and should never be tempted to spend more to earn a little cash back.

Click here to apply now

5. Wells Fargo Platinum Card

Wells FargoRounding out the top five is a card from the legendary bank that dates back to the Gold Rush days. Their Platinum Visa starts off all new cardholders with a 0% introductory APR for six months on both purchases and balance transfers. The standard APR given to their applicants with excellent credit is equal to the Prime Rate plus 6.9%. Unfortunately, less qualified applicants could receive a standard APR as high as Prime plus 18.9%. There is no annual fee, but there is a balance transfer fee of and a foreign currency conversion fee of 3% each.

Click here to apply now

Although the best way to use a credit card is to avoid paying interest, most Americans are unable live up to this ideal. If you do have to carry a balance, your primary goal should be finding a card with the lowest interest rate. Doing so will help you to minimize the amount of interest that you owe, making it easier to pay off your credit card debt as soon as possible.

Note: Some links may contain affiliate codes.

To the Credit Card Guide


Wise Bread

Posted in Money

Tagged , , , ,

The Best 5 Credit Cards for Groceries

Posted on December 4, 2011 by admin| Leave a comment

Last year my Chase credit card, with which I had earned 5% back on groceries and gas since 2007, suddenly changed. They switched to some sort of rotating-category-that-earns-more-points system that I didn’t particularly care for. Every few months, I have to opt in all over again to take advantage of whatever category they’re giving the most points for that month. Even though I do my best to keep up with credit card rewards, I don’t take credit card reward hacking to the extreme. I’d prefer not to have to carry around 10 cards in my wallet.

Nevertheless, I do prefer to get the most points in categories that I actually spend a lot of money on. After our mortgage, the highest percentage of our monthly expenses comes in the form of groceries. We prefer organic and local food, which can be pricey. So, I set out to determine which credit cards actually give the highest percentage back on groceries. (See also: Best Credit Cards for Travel)

Blue Cash Preferred From American Express

  • Amex Blue Cash Preferred
  • 6% back at supermarkets
  • 3% back on gas and department stores
  • 1% back on everything else
  • $ 75 annual fee

Note that the $ 75 fee for the Blue Cash Preferred card becomes worthwhile if you spend over $ 208/month on groceries. If you spent about $ 104/month, you’d recoup your costs — but you would have been better off with a no-fee 3% rewards card. Spending $ 208/month on groceries, you’d earn about $ 150 per year in rewards, so you’d have earned $ 75 above your initial investment. At $ 208/month with a 3% card, you would just break even on your annual fee, so anywhere above $ 208/month it becomes worth it to pay the fee. This doesn’t take into account the additional gas cash back or anything else.

Click here to apply

RedCard From Target

  • Target
  • 5% off everything at Target
  • $ 0 annual fee

If you shop at a SuperTarget for groceries, the Target RedCard gives you 5% off at everything you purchase at the register. This isn’t just a grocery rewards credit card; the cardholder will receive the same discount on all Target purchases. If you have a Target nearby that also sells groceries, this is a great way to save 5% on food, as well as a variety of other department store purchases. Unfortunately, this card has no affiliation with any credit card payment network such as Visa or MasterCard, so you can’t use it outside of Target stores.

Click here to apply

Blue Cash Everyday From American Express

  • Amex Blue Cash
  • 3% back at supermarkets
  • 2% back on gas and department stores
  • 1% back on everything else
  • $ 0 annual fee

The Blue Cash Everyday card is largely the same as the Blue Cash Preferred, but it has no annual fee and half the rewards across the board. Nevertheless, 3% cash back on groceries and 2% cash back at gas stations and department stores still represents a competitive rate of return. Finally, this is one of the few American Express cards offered without an annual fee.

Click here to apply

Cash Rewards Visa Signature Card From Bank of America

  • Bank of America
  • 3% on gas
  • 2% on groceries
  • 1% on everything else
  • $ 0 annual fee

With the exception of the extra cash back at department stores, the Cash Rewards Visa Signature card has a similar reward structure to the Blue Cash Everyday card from American Express. Cardholders can receive their cash-back rewards as a direct deposit in any checking or savings account, as a statement credit, or even as a payment towards a mortgage held by Bank of America. In fact, rewards redeemed into a Bank of America checking and savings accounts receive an additional 10% bonus. Unfortunately, the bonus percentages only apply to customer’s first $ 1,500 spent in each category each quarter.

Click here to apply

Capital One Cash Rewards MasterCard

  • Capital One
  • 2% on groceries and gas
  • 1% on everything else
  • $ 39 annual fee

This Capital One Cash Rewards offering brings up the rear of this list by offering only 2% cash back on gas and groceries, but don’t count it out. This card is offered to applicants with average credit, so it could be the ideal product for those who don’t qualify for other cards. Capital One also wins kudos for not charging foreign transaction fees on any of their cards. If you travel internationally, or just like to drive over the border for shopping, this card will save you some money over the other cards here.

Click here to apply

The Best Credit Card Offer for You

If you like credit card rewards programs, but have recently been unhappy with changes to your card, it may be time to consider a new one. The best way to choose a cash-back rewards card is to simply look at what your biggest category of spending is each month, and find a card that gives you the most cash back on that category. For me, this category was groceries.

What’s your biggest category of spending each month? Do you earn extra credit card points for those cards?

Note: Some links contain affiliate codes.


Wise Bread

Posted in Money

Tagged , , ,