Credit & Money Management
Credit Cards You'll Love
With card issuers hiking rates and slashing limits, here are 11 cards that still are appealing.
By Anne Kates Smith, Senior Associate Editor, Kiplinger's Personal Finance
Joan Goldwasser, Senior Reporter, Kiplinger's Personal Finance
April 29, 2009
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Are you mad as hell at your credit-card issuer? Take a number.
Recently we've gotten e-mails from Kiplinger readers complaining of dramatic interest-rate hikes (in one case from 9.9% to 17.9%), fixed interest rates being converted to variable rates, sudden account closures and other changes in terms. Most of the letter writers are mystified -- they say they pay their bills on time and send more than the minimum monthly payment.
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A survey released in March by Credit.com found more than one-third of cardholders surveyed were somehow penalized by their credit-card companies. Fifteen percent reported higher interest rates, 11% said issuers had raised their minimum payments, 9% said due dates were changed, and 8% said their credit limits were lowered or their rewards program cut back. Seven percent of cardholders had their account closed.
Times are tough, say credit-card companies, and a rising tide of delinquencies and defaults leaves little choice but to toughen up on consumers. But fueled by populist anger, lawmakers on Capitol Hill are determined to pass legislation that gives consumers more rights, and President Obama has outlined his support for reform.
The House passed a Credit Cardholder's Bill of Rights on April 30, and the Senate has its own reform bill pending. Despite the powerful banking lobby, legislation could well be signed into law as early as this summer, although implementation of many provisions may be delayed up to a year after enactment. At a minimum, a new law will likely incorporate Federal Reserve regulations scheduled to take effect in July 2010. It's a good bet you'll see an end to arbitrary rate hikes on existing balances, for instance, and issuers will likely need your permission for approving charges that exceed your credit limit, triggering fees
Consumer-friendly cards
Some lawmakers are calling for a freeze in rate hikes until new legislation protecting consumers is enacted or new regulations kick in next year. But for now, credit-card issuers are free to arbitrarily raise rates and cut benefits. Still, smart credit users with good credit can assemble a hard-working portfolio of cards -- especially by applying for cards from community banks and credit unions, which often have lower rates than money-center banks.
Credit unions by law must cap interest rates on any type of lending at 18%, but most credit-card deals are much better. One of our favorites: Pentagon Federal Credit Union's Visa Platinum Rewards card. There is no annual fee, and you get a 5% rebate on gas, 2% on groceries and 1.25% on everything else. The card, with an interest rate of 13.99%, is usually best for holders who pay off the balance each month. But it also has a balance-transfer offer with a 2.99% rate good for the life of the balance, with a maximum transfer fee of $100.
Another balance-transfer offer worth considering is a Visa Classic card from Pulaski Bank & Trust (soon to be known as Iberia Bank), in Little Rock, Ark. The 0% balance-transfer offer is good for six billing cycles, and there is no transfer fee.
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Reader Comments (13)
Posted by: Russ Butson at 04/30/2009 01:36:47 PM
My Discover card recently raised the rate on my balance transfer from 4% to 20%. No, wait, 19.99%. And why? For not making the minimum payment one month. I'd been making MORE than the minimum payment electronically every month, then they raised the minimum payment to $20 more than I'd been paying without making a peep other than what showed up on my statement. I was cruising using my bank's auto pay, so never caught it. I called and they immediately offered to lower it again as long as they could take out of my account about double the minimum payment for the next 4 months...I wonder how many people haven't noticed it on their bills yet. Think of it. A $5000 balance transfer goes from about $200 a year in interest to $1000...OK, $999.50.
Posted by: bob at 05/01/2009 01:44:34 AM
...BANKS ARE (ADDING) INSULT TO INJURY. IT IS OUR TAX DOLLARS THAT BAILED THEM OUT AND THIS IS WHAT YOU GET.
Posted by: cnm at 05/01/2009 07:49:40 AM
I can beat that...When Chase took over Wamu they doubled my rate from 14.9% to 29.99%. I had a $0 balance and paid off any balance in full every month. But I don't think we need more regulation. Let the free market work. If your bank is screwing you, close the account and take your business elsewhere. I have plenty of other accounts that still give me a decent rate.
Posted by: dave at 05/01/2009 12:56:41 PM
Credit cards should be used to bridge a short gap, as a convenience to avoid carrying cash, and for transactions by phone or on-line where cash is impractical. If you can say "I have plenty of other accounts...", then you quite possibly have more open accounts than you need. If you are routinely carrying over balances on multiple revolving credit card accounts every month, you could be headed for trouble - especially if you are paying anywhere near the minimums for more than a month or two. I've seen people who nearly max a card and pay just enough to keep it that way - until a check is applied a day (or an hour) late - and the interest goes to 30.99% - and the late fee of $39 is imposed - and the late fee takes them over the limit so there is a $39 over limit fee - and they can't get off the slippery slope without professional guidance.
Posted by: Curt at 05/01/2009 01:45:40 PM
I would take my business somewhere else... like get even a secured loan... however, by slashing my credit lines and closing my accounts, the CC companies have lowered my score 200 points! even though I have NEVER EVER missed a payment or been late in 28 years of credit history. What this means is that I CANT get any type of loan, even secured. They have ruined my credit score and I did nothing but pay my bills on time. I had 0% balances by the way... but now because I can't move things around and the lines have been slashed and can't get any other kind of loan, now I'm TRAPPED in CC double digit land. This is screwing over my business, which is what the debt is from (not my irresponsible spending). This all happened suddenly and without warning. And I don't really care (if in the spirit of the BS "FREE" market) they want to jack up rates or close accounts. What is absolutely criminal is that they have ruined my credit score, making it impossible to get any other type of loan. That's what's really vile here and needs immediate remedy and retroactively!
Posted by: cathtrac at 05/01/2009 10:42:34 PM
We too found our...account hijacked from a fixed 3.99 for life to an insane 29%. We make a auto pay for almost 200% of the bill every month. We too were current and had only tranfered over because...they offered a 3.99 for life. Bottom line it lasted almost 2 years then they arbitrarily upped our rate. We are never late and have the payment auto deducted from our account. To reiterate, we pay almost 200% ( auto pay / bill pay ) of the minimum because we can and they still upped our rate. If I could switch out I would. The fox is in the henhouse and we are getting slaughtered
Posted by: gb at 05/03/2009 09:52:52 PM
My wife and I both have 800+ credit scores and have for years. We've had a Citi Diamond card for nearly 8 years, and for all that time it's been 6.49% for purchases and balance transfers. We use the card sporadically, for routinely "small" purchases. Thus, we pay the balance when one exists. About 6 months ago, they sent us a letter saying they were raising our 6.49% to 13.99%! Then, just two months ago, it shot up to 19.99%! It's outrageous what credit card cmpanies are doing to consumers, and I'm an advocate for extreme and sweeping changes in this industry.
Posted by: Art at 05/06/2009 04:48:20 AM
While I would prefer to let the free market work, the reality is the banks offered cheap rates for several years and now use default clauses to double or triple rates on existing balances when a billing cycle is missed by a few days. Think your safe with automatic payments? Think again, due dates are often advanced a day or two each month so a fixed date payment eventually is paid late - triggering the default rate. Think you're safe because you pay on time or only use for emergencies? Not true, the banks get a percentage of every charge (inter-change fees). If the card is not being used you're now just an expense to be cut. Unfortunately the regulation to prevent retro active rate changes to existing balances is not scheduled to take effect until next year, so in spite of record low cost of funds 2-3% and tax payer bailouts, expect higher rates. As noted by others, our best defense is to use credit cards wisely and only for short term financing. As for credit scores, I've worked in consumer and mtg lending for 20+ years, review credit reports daily and converse with reporting agencies often. Reducing or closing credit limits may have a minor affect on scores, (as the percentage of credit available is one factor). But, the primary factors are timely payments, length of credit history, amount and type of debt (e.g. secured, unsecured, mortgage etc) and too many inquiries. If your score changes by more than 10 to 20 points look for reasons other than a change in credit limit. For a free credit report from each of the three agencies: www.annualcreditreport.com
Posted by: scott at 05/06/2009 10:40:25 PM
I have yet to see in any ranking of the best credit cards for consumers any mention of the Amazon.com Visa credit card. It pays back 3% on all amazon.com purchases, and it pays 1% on everything else purchased. The only catch is that you are "paid' through the mail in $25 increments for merchandise purchased at amazon.com website. But considering how much variety of stuff, including food and clothings, electronics, car parts, you name it, combined with all the discounts on their daily deals (which are plentiful), and considering this organization is the behemoth of the internet, the omission, in my opinion, is baffling!
Posted by: Leo Leone at 05/31/2009 08:48:29 AM
One reason Amazon Visa isn't considered a top shelf credit card is because it is backed by Chase Bank and their often quirky and questionable customer service. Requesting even a minor increase in your credit limit results in an automatic hard pull inquiry that will lower your credit score. This is just plain mean when they can get the same info with a soft pull that leaves your credit score unharmed. I also find their customer service reps to be less friendly and responsive. Having said that, I do have the card in a sock drawer for emergencies and an occassional minor purchase. But in truth, it's my least favored credit card.
Posted by: Vin at 06/10/2009 06:19:37 PM
If your CC company is not performing to your satisfaction, DON'T USE THEM! Credit is a product like anything else. If you did not like the food or service in a particular restaurant, you would not return, right? Same thing here.
Posted by: Marlon Weaver at 08/11/2009 11:02:56 AM
I would advise everyone to stay away from anything that Chase has to do with. I have held two card with them for sometime and was an excellent customer. i requested a cash advance with a convienance check(which I have done several times) on my regular Chase card and they lowered my credit limit when the check was presented for payment that caused me not to have enough available credit for the check to clear. this is the thanks I got for many years of mistake free business with the idiots!!
Posted by: Mary at 10/04/2009 08:24:36 AM
Ditto on the Chase experience. I have been a long time customer with checking acct.,as well as charge cards. I always pay on time and more than the minimum, but recently they lowered my credit limit, raised my interest, and all with very poor customer service. These cards are getting paid off quickly, and I am changing banks too...