While most mailboxes are enjoying a respite from the daily deluge of credit card offers, major credit issuers are clearly still interested in dropping big bucks to pursue one type of consumer – those with top-notch credit and big-time spending habits.
I’ve seen ads everywhere lately for premium credit cards, such as the new Visa Black or Chase Sapphire card, and it’s no secret their marketers are hitting mailboxes around the country pretty hard as well.
According to a recent press release from Comperemedia, a firm that tracks direct marketing strategies, credit card issuers continued last year’s trend into the 2nd quarter of 2009 by cutting their direct mail offers to consumers “as a whole by 8%.” However, of the offers that were delivered, they also sent “28% more offers for premium cards than they did the quarter before.”
Some industry experts believe this is a positive sign of life in the credit card market and that more robust marketing to all consumers will soon follow suit. But while it might be a positive thing there’s at least some competition and innovation going on to attract new customers, I think it’s safe to say small businesses and the average consumer are still in for a long dry spell before credit issuers come knocking on their doors again.
For now, it’s simply in the banks’ best interest to focus on developing low-risk products for affluent consumers that will produce guaranteed revenues from annual fees. The “patent-pending” carbon Visa Black card, at a cost of $495 bucks per year, shouldn’t let them down.
Last week, I told you about a Bank of America customer, Ms. Ann Minch, who made a YouTube video in protest of her interest rate being hiked. At that time, I applauded her for her strategy of making a public appeal to executives, yet criticized her for encouraging people to default on their credit card debt in protest.
BofA Caves
Now comes word that her strategy worked, for her. Specially, she did hear from a BofA executive with whom she was able to negotiate her rate down. The article reports that her video received 240,000 views on YouTube, and that she has since posted a follow-up video boasting of her victory. It is unclear if she still is encouraging others to default on their credit card debt.
Conclusions
No matter what your grievance with a company is, they will cave if you can give them enough bad publicity, or make a credible threat of doing so. So long as her YouTube rant continued to be viewed, it was only a matter of time before the bank decided the bad publicity was not worth it. This is called the Unscrewed method, as described by Ron Burley in his book by the same name. The idea is that companies, large and small, are in business to make a profit by any means necessary. Some may still believe that the customer is always right, but most just want to make as much money as possible. According to Burley’s book, often the only way to compel a company to do the right thing is to take actions that will make it in their best interest to give you what you want.
When seen through this paradigm, it is clear that BofA thought they had more to gain by acceding to her demands than not. Sometimes, it takes some creativity and a little bit of chutzpah to successfully pull off an Unscrewed attack. A close relative of the unscrewed attack is the Executive Email Carpet Bomb (EECB). This is the strategy of sending your complaints directly to the executives of a company, rather than be denied by customer service. I personally have had success by combining the EECB with the Unscrewed method. When I have been seriously mistreated, I merely threaten to make my complaints public in an email to a company’s executives. It is not an empty threat, and companies prefer to do the right thing before I go public, rather than after I publicize their mistreatment. In the end, everyone wins.
Where She Went Wrong
What bothered me about her approach was that she was encouraging others to behave in an irresponsible way. If she wants to ruin herself financially, or threaten to do so, that is one thing. It is an entirely different thing to incite others, who may not be very savvy, to ruin their own finances to be part of her “revolt”.
Over at CreditLaw.com, they have an interesting post detailing some of the consequences of her threatened actions, and some of the steps that could have taken.
The other thing that I found objectionable, was her personalization of the problem in which she referred to Bank of America executives as “evil, thieving bastards.” Just because a company raised the interest rate they are charging you, that doesn’t make it right to slander people. It is acceptable to refer to a policy or practice as being evil or thieving, but not individual employees of that company.
Finally…
I have never actually used an EECB or the Unscrewed method on a credit card company. The credit card business is an extremely competitive marketplace, especially when you pay your bills on time and maintain a good credit score. When I have problems, I often get them fixed very quickly over the phone on the first try. That is rarely the case with the airline industry for example. When my problems are not resolved quickly, I can always just cancel my card, another benefit of not carrying a balance. There are so many other cards to choose from, I don’t loose much sleep over dumping a bank that is not acting reasonably.
Ann Minch put herself in this situation by incurring debt on a credit card that can vary it’s rate at any time. She got out of this fix with a clever video in which she threatens to default on her debt while encouraging others to do the same. I am glad she had her situation resolved, but I hope none of her viewers were inspired to follow her off a financial cliff.
Change is always in the air in the credit card industry. This has never been more true than it is now that companies are quickly adjusting to the new realities of the CARD act.
At Discover, Change Comes Early
The Consumerist points out that the Discover Card is notifying customers changes to it’s terms and conditions in advance of the CARD act becoming effective next year. Unfortunately, the Consumerist didn’t read the notice all the way through when it concluded: “that the terms and conditions for the card are basically coming in line with the CARD act ahead of schedule.”
Granted, these notifications are full of long, rambling legalese, yet if they had read the whole thing, they would have noticed that most of the changes do not take effect until February 1st, 2010. That is just three weeks before the deadline for CARD act compliance. They are ahead of schedule, but just barely so. In fact, they are probably early because it was easier for them to make the changes on the first of the month than on the 22d, when the law mandates.
What Are The Changes?
One of the big ones that jumps out is that the “open road” rebate on gas and automobile maintenance is going from 5% to 2%. That is a major drop that mirrors my Amex OPEN Platinum Business card, that will be going from 5% to 3% next month. Another change is that you will only be able to receive a check for your cash back when your balance reaches $50. In the past, that threshold was a mere $20. This is no big deal for large spenders, but for those of you who use your Discover card sparingly, this will mean that you will get a return less often.
Other changes are positive and are a preview of what we might expect from Mastercard, Visa, and Amex as they retool their terms and conditions to become CARD act compliant. Some highlights changes include:
- Longer grace period
- Elimination of “over the limit” fees
- Elimination of “pay by phone” fees
- Application of payments to the highest APR balance first
- Same day credit of payments when received by 5pm (previously payments had to be received by 1pm)
What Do I Think?
The Consumerist feels that the negative changes are Discover’s way of making good on the banking industry threats of higher costs and fewer rewards. In absence of the CARD act, I think most consumers would gladly trade these new protections for the 3% reduction in cash back on gas and maintenance. I am a little confused about the change in the threshold for getting cash back. One would think the idea behind a reward card would be to highlight the rewards to encourage people to spend. Now, Discover will be issuing rewards less often, and generating fewer reminders of the benefits. The interest they make on the $30 extra they are holding on to for a month or two, here and there is trivial.
In order to achieve CARD act compliance and remain profitable, each credit card issuer is going to have to change their terms and conditions. Most changes will be positive, and there will be some negative ones as well. Cynics will conclude that they are just punishing consumers for the CARD act. Either way, the market will eventually determine which new fees will be accepted by consumers, and which will be rejected. On the whole, I think Discover Card holders will be happy with the net effect of these changes.
Every person would enormously consent that newly, a credit card is one of the smartest, safest, easiest means of payments. Nearly all important merchants in all over the world have previously utilized credit card as their means of payments. As a matter of fact, indeed, a credit card is a dazzling way to purchase something. It is easy, open as well as convenient. An person will also be able to obtain a lot of absurd features and benefits offered by the credit card issuers such as free annual fees, point rewards, free balance transfer fees, 0 interest credit cards as well as lowest credit card rates.
Newly, an personal will find it quite easier to apply for credit card compared to quite a few years ago when the requirements were very exact so as to it was not easy for an individual to apply or a credit car. However, due to the competitive market of the credit cards products, a lot of card issuers try their best to draw as many customers as they can by simplifying their requirements in positive an individual application. One of the highest ways to draw such clientele is by donation fantastic features and benefits to the customers. Lowest credit card rates are among those fantastic offers. As a matter of fact, discovery lowest credit card rates and 0 interest credit card will definitely benefits the customers. However, it might take a little effort from your part to find out such lowest credit card rates.
Generally, such lowest credit card rates are quite not easy to find. Or if you are able to find it, the card issuers would likely restricted the period of time for such lowest credit card rates with a strict terms and conditions. Lowest credit card rates will indeed benefits the customers. It will be able to release the load in paying their high balances with high interest rates. At least, the limited period of time of such lowest credit card rates will do quite a significant errand to the customers in releasing their burden in paying high interest rates on their credit cards. The lowest credit card rates are something worth to look for though you may find it would be pretty difficult to do. Moreover, the lowest credit card rates issuer will also burden the customers with a very strict terms and conditions.
You could start to shop around for such lowest credit card rates online. Easily look for several reliable websites that provide you with the most comprehensive information on such credit card and begin your quest. You could also directly visit the official websites of the credit card issuers and start to learn the available credit card products. Aware what you need best will be tremendously help you in formative the best credit card for you. However, if you are a first time credit card applicants, you could visit an professional to ask for some advice to help you choose the best card for you.
If you have excellent credit ratings, it will be easy for you to apply for the lowest credit card rates and you can take the best advantage of such credit card with 0 interest credit cards.
Every person would enormously consent that newly, a credit card is one of the smartest, safest, easiest means of payments. Nearly all important merchants in all over the world have previously utilized credit card as their means of payments. As a matter of fact, indeed, a credit card is a dazzling way to purchase something. It is easy, open as well as convenient. An person will also be able to obtain a lot of absurd features and benefits offered by the credit card issuers such as free annual fees, point rewards, free balance transfer fees, 0 interest credit cards as well as lowest credit card rates.
Newly, an personal will find it quite easier to apply for credit card compared to quite a few years ago when the requirements were very exact so as to it was not easy for an individual to apply or a credit car. However, due to the competitive market of the credit cards products, a lot of card issuers try their best to draw as many customers as they can by simplifying their requirements in positive an individual application. One of the highest ways to draw such clientele is by donation fantastic features and benefits to the customers. Lowest credit card rates are among those fantastic offers. As a matter of fact, discovery lowest credit card rates and 0 interest credit card will definitely benefits the customers. However, it might take a little effort from your part to find out such lowest credit card rates.
Generally, such lowest credit card rates are quite not easy to find. Or if you are able to find it, the card issuers would likely restricted the period of time for such lowest credit card rates with a strict terms and conditions. Lowest credit card rates will indeed benefits the customers. It will be able to release the load in paying their high balances with high interest rates. At least, the limited period of time of such lowest credit card rates will do quite a significant errand to the customers in releasing their burden in paying high interest rates on their credit cards. The lowest credit card rates are something worth to look for though you may find it would be pretty difficult to do. Moreover, the lowest credit card rates issuer will also burden the customers with a very strict terms and conditions.
You could start to shop around for such lowest credit card rates online. Easily look for several reliable websites that provide you with the most comprehensive information on such credit card and begin your quest. You could also directly visit the official websites of the credit card issuers and start to learn the available credit card products. Aware what you need best will be tremendously help you in formative the best credit card for you. However, if you are a first time credit card applicants, you could visit an professional to ask for some advice to help you choose the best card for you.
If you have excellent credit ratings, it will be easy for you to apply for the lowest credit card rates and you can take the best advantage of such credit card with 0 interest credit cards.
The current existence sometimes services us to follow its trend, whichever I like it or not. One of the familiar trends that also apply to all of the people in the world is a credit card as a means of payments. As a matter of fact, a credit card could be the most effective, safe, practical way to purchase goods as well as services, but it can also be mess if the particular holder has a inattentive spending habits. With such bad habit of spending his credit card, a person might deeply fall into credit card debts. However, a lot of people seems does not concern about such bad upshot. Instead, they try for their best to take the particular credit card they want to meet their modern lifestyle. Though they would fall into credit card debt, it does not become a severe problem. Today, many manufacturers provide a lot of credit card offers for those who have bad credit reports. They issued the credit card offers with credit cards with no credit check and instant credit card applications.
If you are a first time credit card applier, it is better or you to do some study on the particular card you wish to apply. Consider the many benefits as well as detriments of a credit card for your economic life. Try your best to look for a credit card that meet your needs and requirements as well as your lifestyle so as to you can make the best use of such credit card. One of the options on a famous credit card to care about is a visa credit card. However, you have to believe several procedures, steps to apply for visa credit card. The next piece will show you a short reviews on the method to apply or visa credit card. A fundamental reminder for you to apply for visa credit card is that you should be convinced in paying off every purchase you made as well as for every cash advance you draw. Such good habit should be smoothly done to avoid you from any harm of deep credit card debts.
Before you apply for visa credit card, it is better for you to plan every information as well as paper you need. However, the most principal preparation is to prepare a good financial condition, a good bank account history, a good career history as well as your history of staying in your house. These actual things could be the vital aspects that may be measured by the bank or the credit card issuers in determining whether or not your request would be approved. Below are several procedures to apply or visa credit card. They are among others are:
-Make sure that you have a good if not excellent monetary clause that can be proofed by your bank account history as well as have a good credit rating. These two things are among those important factors to determine whether your application will be approved or not.
-Unfortunately, some people could not sustain their good credit rating that they default payments and cause them to have a bad credit ratings. Generally, credit card issuers will not approve such application. However, there is still a way credit cards for people with bad credit that is to say by applying for a secured credit card that enable them to rebuild their bad credit ratings.
-Determine the best visa credit card that suits you best.
The current existence sometimes services us to follow its trend, whichever I like it or not. One of the familiar trends that also apply to all of the people in the world is a credit card as a means of payments. As a matter of fact, a credit card could be the most effective, safe, practical way to purchase goods as well as services, but it can also be mess if the particular holder has a inattentive spending habits. With such bad habit of spending his credit card, a person might deeply fall into credit card debts. However, a lot of people seems does not concern about such bad upshot. Instead, they try for their best to take the particular credit card they want to meet their modern lifestyle. Though they would fall into credit card debt, it does not become a severe problem. Today, many manufacturers provide a lot of credit card offers for those who have bad credit reports. They issued the credit card offers with credit cards with no credit check and instant credit card applications.
If you are a first time credit card applier, it is better or you to do some study on the particular card you wish to apply. Consider the many benefits as well as detriments of a credit card for your economic life. Try your best to look for a credit card that meet your needs and requirements as well as your lifestyle so as to you can make the best use of such credit card. One of the options on a famous credit card to care about is a visa credit card. However, you have to believe several procedures, steps to apply for visa credit card. The next piece will show you a short reviews on the method to apply or visa credit card. A fundamental reminder for you to apply for visa credit card is that you should be convinced in paying off every purchase you made as well as for every cash advance you draw. Such good habit should be smoothly done to avoid you from any harm of deep credit card debts.
Before you apply for visa credit card, it is better for you to plan every information as well as paper you need. However, the most principal preparation is to prepare a good financial condition, a good bank account history, a good career history as well as your history of staying in your house. These actual things could be the vital aspects that may be measured by the bank or the credit card issuers in determining whether or not your request would be approved. Below are several procedures to apply or visa credit card. They are among others are:
-Make sure that you have a good if not excellent monetary clause that can be proofed by your bank account history as well as have a good credit rating. These two things are among those important factors to determine whether your application will be approved or not.
-Unfortunately, some people could not sustain their good credit rating that they default payments and cause them to have a bad credit ratings. Generally, credit card issuers will not approve such application. However, there is still a way credit cards for people with bad credit that is to say by applying for a secured credit card that enable them to rebuild their bad credit ratings.
-Determine the best visa credit card that suits you best.
In this modern era, a credit card has suit an important part of individual life. As a matter o fact, we can identify that such credit card has become a lifestyle of nearly all people in all over the world. However, due to the unwise or reckless spending habits in using the card, countless numbers of people have go down into a deep credit card debt that definitely cause them to have bad credit ratings. These particular bad credit ratings will definitely cause them to find a lot of difficulties in applying a further credit cards, loans and mortgages. Thus, is there any opportunity for people with bad credit to be able to obtain a credit card? Fortunately, the answer is yes, there is. So, perhaps, if you are among those who have bad credit ratings there is a hope for you to obtain your credit card, such as Credit card no credit check.
One of the possibilities in obtaining a credit card for people with bad credit is by applying for secured credit card instead of unsecured credit cards for people with bad credit. Essentially, a secured credit card has the same functions like the conventional ones. It also works the way a typical credit card works. The dissimilarity is that a secured credit card will definitely need the person to pay for a certain amount of security deposit as collateral. His particular spending limits would be the exact amount of the security deposit he paid. Such secured credit card could be the best way for people with bad credit to advance his credit ratings as well as to help him knowledge the wiser way in spending his particular card. An individual with bad credit should not spend more than his security deposit or his credit limit so as to he has a good reports. The secured card issuer will report this report history i.e. on time and regular payments to the three major credit reporting companies. With such effort, this particular person will soon be able to qualify for the regular credit card. Other than a secured credit card described above you can also try to offer credit card with no credit check.
Other possibility instead of applying unsecured credit card for people with bad credit is by conclusion a consigner. The particular cosigner should be an individual that has good if not excellent credit ratings. The best cosigner should be one of your family members.
Instead of applying for unsecured credit card for people with bad credit, an person who happens to have a bad credit rating due to his reckless spending habits could try to recreate his credit ratings by choosing an alternative solution that is to say credit card consolidation. A credit card consolidation is a kind of loan that is used to pay for your debts.
Unsecured credit cards, credit card no credit check and credit card consolidation is part of an alternative for those of you who have bad credit ratings to get a credit card. Perhaps, for your best result you could visit an expert that will help you to choose the best unsecured credit card for people with bad credit. Skill professionals will definitely have the ability to give several alternatives for you in determining the best solution for your particular problems. Usually they will help you to consolidate your debts. Such professional may also want to know your financial condition to determine which best solution might suit you best
In this modern era, a credit card has suit an important part of individual life. As a matter o fact, we can identify that such credit card has become a lifestyle of nearly all people in all over the world. However, due to the unwise or reckless spending habits in using the card, countless numbers of people have go down into a deep credit card debt that definitely cause them to have bad credit ratings. These particular bad credit ratings will definitely cause them to find a lot of difficulties in applying a further credit cards, loans and mortgages. Thus, is there any opportunity for people with bad credit to be able to obtain a credit card? Fortunately, the answer is yes, there is. So, perhaps, if you are among those who have bad credit ratings there is a hope for you to obtain your credit card, such as Credit card no credit check.
One of the possibilities in obtaining a credit card for people with bad credit is by applying for secured credit card instead of unsecured credit cards for people with bad credit. Essentially, a secured credit card has the same functions like the conventional ones. It also works the way a typical credit card works. The dissimilarity is that a secured credit card will definitely need the person to pay for a certain amount of security deposit as collateral. His particular spending limits would be the exact amount of the security deposit he paid. Such secured credit card could be the best way for people with bad credit to advance his credit ratings as well as to help him knowledge the wiser way in spending his particular card. An individual with bad credit should not spend more than his security deposit or his credit limit so as to he has a good reports. The secured card issuer will report this report history i.e. on time and regular payments to the three major credit reporting companies. With such effort, this particular person will soon be able to qualify for the regular credit card. Other than a secured credit card described above you can also try to offer credit card with no credit check.
Other possibility instead of applying unsecured credit card for people with bad credit is by conclusion a consigner. The particular cosigner should be an individual that has good if not excellent credit ratings. The best cosigner should be one of your family members.
Instead of applying for unsecured credit card for people with bad credit, an person who happens to have a bad credit rating due to his reckless spending habits could try to recreate his credit ratings by choosing an alternative solution that is to say credit card consolidation. A credit card consolidation is a kind of loan that is used to pay for your debts.
Unsecured credit cards, credit card no credit check and credit card consolidation is part of an alternative for those of you who have bad credit ratings to get a credit card. Perhaps, for your best result you could visit an expert that will help you to choose the best unsecured credit card for people with bad credit. Skill professionals will definitely have the ability to give several alternatives for you in determining the best solution for your particular problems. Usually they will help you to consolidate your debts. Such professional may also want to know your financial condition to determine which best solution might suit you best
Welcome to the post-recession credit market, where banks are paranoid about lending, consumers are wary of fees and everyone’s keeping a closer eye on their credit rating. In this new dawn of shell-shocked borrowing, many card carrying consumerists are reconsidering revolving credit, while others are merely treading very, very carefully. What do you carry? Credit? Debit? Charge? To a cashier, it’s all the same (as long as you punch the right button when prompted) – but depending on your spending habits, it can mean a world of difference to your bank account and your credit score. Read on for a brief guide to all the latest fall fashions in plastic:
Credit Cards
You know all about credit cards now. It’s that 3 1/8x 2 1/8 inch piece of plastic in your wallet that is your passport to increased spending power or a downward spiral of crippling debt. Credit cards give you the longest leash of the three options, but oftentimes, this is just enough rope to hang yourself with. Let’s look at some of the pros and cons.
Advantages of Credit Cards
- Let’s you carry a balance – A true “buy now, pay later” option.
- Convenient – Purchases are a swipe away with exact change every time. No one will force you to carry those ridiculous pennies around.
- Secure – Some thug grabs your purse with $300 cash in it and you’re boned. On the other hand, if a hacker lifts your digits from an unsecure website and you catch it, you’re only liable for up to $50 in fraudulent purchases (if that).
- Rewards – Racking up points towards big discounts or your next vacation makes spending feel nice. If you play your cards right, it can be quite lucrative.
- Builds your credit score – You’ve gotta start somewhere. Being a responsible credit card user can set the stage for an excellent credit rating for when it comes time to finance a home or car.
Disadvantages of Credit Cards
- Those finance fees add up – The saying really should be, “Buy now, pay more later.” That $299 ASUS EEE PC will actually cost you $358 if you pay the minimum payment at an interest rate of 18%.
- Convenient – Wait, wasn’t this a pro? It’s a con, too. With a hefty credit line at your disposal, the only thing standing between you and an impulse buy is willpower. And if that fails you, you’ll have a nice, shiny widget that you can’t afford along with interest you can’t afford.
- Minefield of Fees – Finance charges are the bread and butter of credit card profitability, but that doesn’t mean that there isn’t full featured menu of other sneaky fees and charges that can get put on your tab. Balance transfer fees, cash advance fees, annual fees, reward membership enrollment fees, foreign transactions fees, over-the-limit fees (until Feb. 2010) – the list goes on. Sure, if you are truly blindsided you can usually argue with a customer representative until it gets taken off – but that can be a major drain (not how I like to spend my Monday morning, personally).
- Hurts your credit rating – One late payment or a high debt to credit ratio and your credit history’s got a black eye that’ll take years to fade. Credit cards are a double-edged sword when it comes to building credit.
If credit cards were a ski slope, I’d classify them as a black diamond. In other words, for experts only. The ride is steep and there may be some moguls and an occasional patch of ice. Seasoned skiiers will find it thrilling, but if you’re still snowplowing on the bunny hill, this slope is guaranteed to be a pretty bruising experience.
Debit Cards
Looks like a credit card. Feels like a credit card. Works like a credit card. Hey, it’s even issued by Visa and MasterCard, just like a credit card. But there’s a world of difference between these two lookalikes. Most importantly: if you ain’t go the money, you can’t spend it.
Advantages of Debit Cards
- Safer for your credit rating – You’re not receiving a loan (under normal use) so if you make a mistake, it doesn’t go on your permanent record. You can’t spend more than you have, and if you do, then it’s between you and your bank (who will likely charge you a hefty overdraft fee).
- Convenient – Just as convenient as a credit card. Possibly more so, since you can use it at an ATM to get cash. More importantly, you can get your own cash. You can get a cash advance at an ATM with a credit card, but it’ll cost you much, much more than that $2.50 transaction fee due to a higher than normal interest rate. With a debit card, you pay no interest because you’re not borrowing anything.
- Rewards – Debit cards give you rewards, too. The ways to earn aren’t always as inclusive as with a credit card, but you certainly won’t feel like your spending in vain.
- Secure – Debit cards have the same security features as credit cards.
Disadvantages of Debit Cards
- Can only spend what’s in your account – Debit cards aren’t quite as handy in a pinch, since you can only spend what’s in the checking account that’s directly tied to your card. If you find yourself stranded on the highway with a shot transmission, then you’re either going to have to call your bank to shift around your funds or start washing dishes.
- Fees, fees, fees – Just like the credit card, there’s a whole host of fees related to debit cards. You can avoid overdraft fees (which garners the most complaints) by either canceling your overdraft protection or simply not overdrawing.
- No good for your credit – You can be a responsible debit card user for a decade and no one’s going to care. When a lender screens you for a loan, they’re going to complain that you don’t have any credit history. If you need to build credit, you may want to consider a basic credit card.
Debit cards are the BB gun of plastic spending. Not quite as deadly as a credit card, but you can still put an eye out if you’re not careful. And without the credit clout, you won’t be taking down any big game with a debit card. But if you’re nervous about wielding a credit card but still want to avoid carrying cash, earn rewards and make online purchases, then a debit card is for you.
Charge Cards
Although it sounds similar, a charge card is not the same as a credit card. You may not have even heard of a charge card – after all, Chase only recently announced its first charge card. Chase’s Ink Bold is the first charge card to be offered by a Visa or MasterCard issuer and it’s mostly geared towards small businesses. Here’s how it works:
Advantages of Charge Cards
- Reduces risk of default – Charge cards must be paid off in full at the end of each month. Because of this, it makes banks a bit more willing to hand them to small businesses and also lowers the chances of a company racking up insurmountable debt.
- No interest – With no balance carried month to month, there’s no interest charge.
- Convenient – Charge cards can be distributed to employees on the road and all be linked to a common account, which makes tracking spending easy on a manager or accountant. This is commonly how fleet cards are used by trucking companies.
- Paperless – Most of these company purchases would normally be paid by check. Charge cards make paying for non-payroll expenses easier and more secure.
- Rewards – Like debit and credit cards, charge cards can accrue rewards, as well. Points can rack up quickly when you have scores of employees out in the field swiping cards.
- Builds credit – Since a purchase on a charge card is, in essence, a very short term loan, you do indeed build credit with it.
Disadvantages of Charge Cards
- Not as much spending power as a credit card – Businesses need to be careful to only spend what they can afford to pay off at the end of the month. This may demand some tight budgeting.
- All or nothing – Unlike credit cards that let you make a minimum payment and stay in good standing, if you cant’ afford the full balance of your charge card at the end of the month, then you are either in default or liable for a hefty penalty.
- Annual fee – Charge cards are profitable for banks because they have an annual fee. Chase’s Ink Bold has a $95 annual fee, which is waived for the first year.
Charge cards are sort of a middle ground between credit and debit cards. Like the Chase Ink Bold, it’s more geared towards businesses. But if you’d like a little bit more breathing room than a debit card and think you are responsible enough to pay it off each month, it can be a good way to build your credit.
How about you? Have any of our readers ever used a charge card? What other details should a person know about before carrying a charge card? Let us know in the comments.
Related posts:
- Debit Cards Vs. Credit Cards: Plastic Showdown
- Understanding Debit vs. Credit With Your Debit Card
- Why Banks and Credit Unions Charge Fees
