Card Hub

Chargeback Policy Report

Liana Arnold — Tue, 21 Feb 2012 11:00:38 +0000

Posted by: Liana Arnold

A chargeback is when a merchant refunds a customer after a customer successfully disputes a charge made to their credit card. Although all major credit card networks and issuers have a chargeback policy in place, the methods and standards that a customer must meet when seeking a chargeback varies among credit institutions.

Therefore, CardHub.com conducted its 2012 Chargeback Policy Report to determine the key information needed in order for a consumer to successfully dispute charges made to their credit cards. To conduct the report, CardHub.com contacted the 4 major credit card networks and the 10 largest U.S. credit card issuers for information on how they would proceed in common chargeback scenarios, including when a merchant is unresponsive to a costumer’s dispute, when a customer receives the wrong item, and when a customer disputes an inflated tip with and without supporting documentation, among others.

Key Findings:

The credit card networks (i.e. VISA, MasterCard, American Express, and Discover) set the framework for credit card issuers (i.e. Chase, Capital One, etc.) to deal with chargeback situations, but the issuers also have some control over how they deal with chargebacks.
Among the credit card networks and issuers that responded, all have consumer-friendly charge back policies and tend to favor the customer over the merchant.
There is little discrepancy among the networks and issuers that responded in terms of how they would handle each chargeback scenario outlined by CardHub.com. USAA stood out a little as being extra consumer-friendly because they credit the customer account even when the customer is unable to produce a receipt.
Among the issuers and networks that responded, all of their policies stipulated that a merchant is charged back in the event that the merchant does not respond to a customer’s dispute.
The most common scenario in which the customer is not credited for a dispute is when a customer is unable to produce a receipt when claiming that a tip was inflated.
It is notable that VISA, the largest of the credit card networks, was unable to respond to the common chargeback scenarios outlined by CardHub.com for this report. The other three major networks, MasterCard, American Express, and Discover, all explicitly disclosed how they would proceed under the circumstances in each chargeback scenario that CardHub.com proposed.
Chase and U.S. Bank were the only 2 of the 10 largest credit card issuers that declined to disclose how they would handle common chargeback scenarios.

Detailed Findings:

Below is a summary table of the responses from each credit card network based on the above scenarios (American Express and Discover are both a credit card network and a credit card issuer):

Network	Scenario 1: Customer disputes and merchant doesn’t respond, what happens?	Scenario 2: Customer disputes and merchant acknowledges mistake, what happens?	Scenario 3: Customer disputes, documentation points to customer’s case, merchant acknowledges that what was delivered was not what was initially ordered, but that this was due not to a mistake on his part, but instead because the customer changed the order verbally. What happens?	Scenario 4a: Merchant inflates tip, according to customer. Customer has receipt to back up claim. What happens?	Scenario 4b: Merchant inflates tip, according to customer. Customer does not have receipt to back up claim. What happens?
VISA*	Declined to Respond	Declined to Respond	Declined to Respond	Declined to Respond	Declined to Respond
MasterCard	Merchant gets charged back	If the merchant acknowledged a mistake and arranged to deliver the valid merchandise or a credit to the cardholder, there isn’t a need for a chargeback. However, if the merchant agrees to do something and fails to do it, then a chargeback will occur.	If a cardholder changes their order after the fact verbally, and the merchant fulfills the order as originally taken, the chargeback can only address what happened when the card was presented (the original order). There is not a chargeback if the merchant can show documentation that they did everything as requested by the cardholder or work with the cardholder to remedy the situation first. If that is not the case, then the merchant gets charged back.	Merchant gets charged back	Documentation will be requested by both parties (merchant and cardholder) to validate the tip amount. If that information is not available from the cardholder, there is no confirmation of the discrepancy and there is not a chargeback. If the merchant/acquirer cannot provide the receipt, there is a chargeback.
American Express	Merchant gets charged back	Merchant gets charged back	Merchant gets charged back	Merchant gets charged back	American Express requests copy of receipt from merchant and acts accordingly. In the event merchant is not able to produce a receipt, merchant is charged back.
Discover	Merchant gets charged back	Merchant gets charged back	Merchant gets charged back	Merchant gets charged back	Discover requests copy of receipt from merchant and acts accordingly. In the event merchant is not able to produce a receipt, merchant gets charged back.

* As noted in the table above, VISA declined to respond to the specific chargeback scenarios outlined by CardHub.com. They said their reason for doing so was that the scenarios were too broad to endorse. They also said that VISA provides the framework, but it is ultimately the issuer that decides how to handle chargebacks.

Below is a summary table of the responses from each credit card issuer based on the above scenarios (American Express and Discover are both a credit card network and a credit card issuer):

Issuer	Scenario 1: Customer disputes and merchant doesn’t respond, what happens?	Scenario 2: Customer disputes and merchant acknowledges mistake, what happens?	Scenario 3: Customer disputes, documentation points to customer’s case, merchant acknowledges that what was delivered was not what was initially ordered, but that this was due not to a mistake on his part, but instead because the customer changed the order verbally. What happens?	Scenario 4a: Merchant inflates tip, according to customer. Customer has receipt to back up claim. What happens?	Scenario 4b: Merchant inflates tip, according to customer. Customer does not have receipt to back up claim. What happens?
American Express	Merchant gets charged back	Merchant gets charged back	Merchant gets charged back	Merchant gets charged back	American Express requests copy of receipt from merchant and acts accordingly. In the event merchant is not able to produce a receipt, merchant is charged back.
Bank of America	Merchant gets charged back	Merchant gets charged back	Depends on the supporting documentation	Merchant gets charged back	Bank of America requests copy of receipt from merchant and acts accordingly. In the event merchant is not able to produce a receipt, merchant is charged back.
Capital One	Merchant is responsible for the charge	Merchant is responsible for the charge	Merchant is responsible for the charge	Merchant is responsible for the charge	Capital One requests copy of receipt from merchant and acts accordingly. In the event merchant is not able to produce a receipt, merchant is responsible for the charge.
Chase*	Declined to Respond	Declined to Respond	Declined to Respond	Declined to Respond	Declined to Respond
Citi	If a cardmember contacts Citi and disputes a charge, Citi will then contact the merchant regarding the purchase and dispute. If the merchant does not respond within 45 days, the Citi cardmember receives a permanent credit for the transaction.	When a merchant acknowledges an error, they may process a credit to the Citi cardmember’s account.	Citi will work with the merchant on behalf of the cardmember to help resolve the dispute. The resolution will be based on factors including the cardmember’s agreement with the merchant, return policy, as well as any supporting information from the cardmember on the purchase.	The Citi cardmember can dispute the gratuity based on information from their receipt. Citi will notify the merchant of the error and provide a credit for the disputed charge based on the customer’s receipt.	Citi will work with the merchant on behalf of the cardmember to resolve the billing discrepancy.
Discover	Merchant gets charged back	Merchant gets charged back	Merchant gets charged back	Merchant gets charged back	Discover requests copy of receipt from merchant and acts accordingly. In the event merchant is not able to produce a receipt, merchant gets charged back.
HSBC	Merchant gets charged back	Merchant gets charged back	Merchant gets charged back	Merchant gets charged back	Customer is held liable for the charge.
USAA	Customer is credited for disputed amount.The merchant normally gets charged back. For small dollar amounts, however, USAA takes the loss.	Customer is credited for disputed amount.The merchant normally gets charged back. For small dollar amounts, however, USAA takes the loss.	Customer is credited for disputed amount.The merchant normally gets charged back. For small dollar amounts, however, USAA takes the loss.	Customer is credited for disputed amount.The merchant normally gets charged back. For small dollar amounts, however, USAA takes the loss.	Customer is credited for disputed amount. USAA will credit the customer’s account as long as the disputed amount appears reasonable based on the amount and type of the transaction.The merchant normally gets charged back. For small dollar amounts, however, USAA takes the loss.
U.S. Bank*	Declined to Respond	Declined to Respond	Declined to Respond	Declined to Respond	Declined to Respond
Wells Fargo	Merchant gets charged back	Merchant gets charged back	Merchant gets charged back	Merchant gets charged back	Merchant gets charged back

* As noted above, both Chase and U.S. bank declined to respond to the specific chargeback scenarios outlined by CardHub.com. Reasons for doing so:
- U.S. Bank said that their understanding is that all VISA and MasterCard issuers follow the same policy since it is their policies that U.S. Bank follows for charging back.
- Chase said they could not speculate on or confirm the described scenarios, but that they diligently work with customers to resolve situations, like the ones CardHub.com described, as quickly as possible.

For questions or more information on this report, please contact our media department.

Nasty Credit Card Fees

Liana Arnold — Thu, 09 Feb 2012 14:33:25 +0000

Posted by: Liana Arnold

During the course of evaluating over 1,000 credit card offers, two fees in particular stuck out to us at Card Hub as being particularly alarming for consumers, and interestingly enough, they are both charged by the same issuer: First Premier Bank. More specifically, these fees are:

25% Credit Limit Increase Fee: First Premier charges customers who ask for and receive a credit line increase a fee equal to 25% of the amount by which their credit limit rose. For instance, a customer receiving a $200 credit limit increase will get charged a $50 fee. As if being assessed an unusual fee is not enough, First Premier’s fine print dictates that this fee will not be refunded unless the customer notifies the bank that they do not wish to keep the higher limit within 30 days of the date of the periodic statement on which it appears.

Card Hub CEO Odysseas Papadimitriou commented on this alarming fee: “I think the most concerning thing about this fee is that while First Premier only gives customers credit limit increases upon request and clearly discloses the fee before assessing it, according to CNN, the fine print of their card agreement gives them the right to both grant credit limit increases and charge the corresponding fee unsolicited. When you consider this together with the fact that customers have a limited window to request a reversal of their limit increase, First Premier could very well pull a fast one.”

$170 in First-Year Fees for $300 Credit Limit: The main card displayed on FirstPremier.com charges $170 in first-year fees, which is equivalent to 56.6% of its credit line. Now, you might be wondering how this is legal in the post-CARD Act environment, where first-year fees are limited to 25% of the card’s initial credit line. Well, the limit currently only applies to fees charged during the first year an account is open because the courts granted First Premier’s request for a preliminary injunction to the Federal Reserve’s October 2011 amendment to Regulation Z that would include fees charged before an account is open as well. Legal nitpicking aside, the reason why this First Premier fee is bad is that instead of paying a $170 non-refundable fee for the right to use a credit card, with $30 more, consumers can simply put their cash toward a secured credit card’s security deposit, which is completely refundable.

Odysseas Papadimitriou: “I suppose we’ll just have to wait and see how things play out in the courts, but the issue is interesting in the sense that we as a nation criticized regulators for falling asleep at the switch and helping bring about the Great Recession, but now regulators are facing roadblocks in trying to eliminate clearly unfair, burdensome fees. I think it’s time for credit card companies to really get on board with working together with regulators to do what’s right for their customers and the economy.”

Valentine’s Day Credit Card Savings

John Kiernan — Tue, 07 Feb 2012 12:00:26 +0000

Posted by: John Kiernan

Roses are red, violets are blue, Valentine’s Day can be expensive, but your credit card can help you! According to the National Retail Federation, not only are consumers expected to spend an unprecedented $17.6 billion on Valentine’s gifts this year, but also the $126.03 that each lovesick reveler is expected to shell out represents an 8.5% increase over last year.

Given that the 10 largest credit card issuers control nearly 80% of the market, any special Valentine’s Day promotions they offer would certainly help people get the most out of the money they spend in the name of love this year. Card Hub surveyed these issuers to find out whether there will be any such promotions, and you can find a list of the identified deals below:

American Express: Amex has partnered with celebrity gifting expert Julie Kenney to create the American Express Platinum Card Concierge Gift Guide, a list of “unique and surprising gift ideas.” The Top 10 gift ideas are available to the public here, but the full guide is reserved for Platinum Cardmembers. Platinum Card Concierges will help with sourcing these gifts and making sure they’re delivered on time. All other Amex cardholders with Membership Rewards can get extra points on flowers and jewelry from Teleflora, 1-800-Flowers, ProFlowers, and BlueNile through Amex’s online shopping mall.
Barclays: On Valentine’s Day, Barclaycard US is launching a new set of merchant offers for its Rewards Boost program. This will allow cardholders to garner 4 points per $1 on Lancome purchases, 9 points per $1 on ProFlowers purchases, 3 points per $1 on Fragarence.net purchases, and 3 points per $1 spent though QVC.
Capital One: From 2/1 to 2/14, cardholders will get 20 bonus miles on 1-800-Flowers purchases made online through Perk Central or over the phone.
Chase: From 2/4 to 2/14, Chase Freedom cardholders get 20% off all purchases at RedEnvelope.com and a package of 20 sweetheart tulips, a teddy bear, chocolates, and a vase for only $29.99 at ProFlowers.com (over 50% off). Consumers who have the Hyatt Credit Card in their wallets can buy room packages with Valentine’s Day themes, such as the Amour Package or the Love Lasts Package. Those with the Amazon.com credit cards can also get 20% off select jewelry and watches through February 14.
Discover: Cardholders currently get 20% cash back on the following brands through ShopDiscover: 1-800-Flowers, FTD.com, ProFlowers, Teleflora, 1-800-Baskets, Wine Enthusiast and Restaurant.com.
USAA: Members get a 25% discount on flowers from FTD.

Card Hub CEO Odysseas Papadimitriou weighed in on these Valentine’s Day promotions: “It’s great to see credit card companies sharing the love, and any opportunity to save should be welcomed by consumers. People now have a number of ways to save, ranging from coupons and daily deals to discounted gift cards to traditional credit card rewards and special holiday promotions, and when combined strategically, these saving methods can equate to a lot more money staying in your wallet. The key is to use savings to save, not to buy more with the amount you originally budgeted for Valentine’s gifts. Being able to buy the $100 gift you originally planned to get for $50, for example, would be ideal, especially when you consider the rising credit card debt levels.”

George Lopez Prepaid Card Evaluation

John Kiernan — Wed, 01 Feb 2012 20:21:45 +0000

Posted by: John Kiernan

Yet another celebrity has decided to get involved in the prepaid card market: comedian George Lopez. Lopez today announced a multi-year marketing partnership with Mango Financial, whose flagship product is the Mango Prepaid Card. While Lopez is not offering a co-branded card, as was the case with fellow celebs Lil Wayne, the Kardashian sisters, Russell Simmons and Suze Orman, his name will certainly be linked closely with the product. So, it’s fair to wonder: How does the Mango Card stack up, and do its terms jive with sentiments expressed by Lopez regarding his decision to partner with Mango?

“This is not only an opportunity to promote a great company with great products, but also a chance to make a difference in people’s lives,” Lopez said in a statement announcing the partnership. “My grandparents, a factory worker and construction worker, who raised me, taught me the importance of hard work and financial discipline to reach my goals. I’m proud to support a company that has made it easy and affordable for people to manage and save their money to help them realize their goals.”

The best way to evaluate whether the Mango Prepaid Card does indeed make it “easy and affordable for people to manage and save their money” is to compare this card to some of the best prepaid card offers on the market. As you know, prepaid cards have two different applications: 1) replacement checking account; 2) financial literacy teaching tool. The Green Dot Prepaid Card and the American Express Prepaid Card are the best for these two purposes, respectively, according to Card Hub’s Prepaid Card Report. The following analysis of the Mango Card – which uses the same methodology as the Report and is accompanied by quotes from CardHub.com CEO Odysseas Papadimitriou – will begin with a direct comparison to these products.

Cost

Replacement Checking Account: The Green Dot Prepaid Card is free to use as a replacement checking account, whereas the Mango Card will cost $10.66/mo. (4 ATM withdrawals at $4.33 each – includes average ATM owner surcharge; minus $5/mo. in earned interest; minus $20 direct deposit bonus spread over 12 months).
Financial Literacy Tool: The American Express Prepaid Card costs $6.66/mo., whereas the Mango Card costs $13.58/mo. ($5 monthly fee + 2 ATM withdrawals; minus $0.08/mo. in earned interest).

Odysseas Papadimitriou (OP): “While the Mango Card does not charge a maintenance fee for months that you load at least $500, the fact that you have to pay $2 per ATM withdrawal regardless of the ATM in addition to the average ATM owner surcharge fee of around $2.33 means that it will be prohibitively expensive when used as either a replacement checking account or a financial literacy teaching tool. It’s just unfortunate that these high fees completely wipe out the 6% APY that the Mango Card offers on balances up to $5,000 for cardholders with direct deposit.”

Pros

6% APY: A Mango Prepaid Card can apparently serve as a replacement savings account as well, since funds up to $5,000 will grow at an annual rate of 6% for cardholders with direct deposit (2% otherwise). Funds above $5,000 get a 0.1% APY. Keep in mind, however, that this is a promotional offer, so there’s no telling how long you will benefit from the good kind of interest.
Direct Deposit Bonus: You get a $20 bonus for starting direct deposit within 90 days of account opening and having a monthly deposit amount of a least $50.
Free Customer Service: You won’t be charged for customer service, whether it’s via phone, online chat, e-mail, or snail mail.

OP: “I love the Mango Card’s 6% APY, not only because it’s over 33 times the current national average for savings accounts, which is 0.18%, but also because it encourages people to hold onto their money for longer instead of just spending whatever they bring in each month. I’m also all for customers being able to ask questions about their accounts for free. People are inevitably going to have questions and it’s unfair to use this against them, especially since confusion is often the result of unclear terms or marketing. In this regard, the Mango Card shines in comparison to competition like The Approved Card from Suze Orman, which only gives you one free customer service call each month and charges $2 for each subsequent call.”

Marketing Fluff

Renter’s Insurance: While you might assume that the renter’s insurance advertised in conjunction with the Mango Card would be free for cardholders, it’s completely unclear whether the price is better or worse than getting renter’s insurance independently.
Investing Services: It seems as if Mango is just funneling business to Goal Mine, an investing service that matches you with a mutual fund or savings account, as the service is free whether or not you have a Mango Card.
No “X” Fee: Mango Card marketing emphasizes the fees that it does not charge, including no sign-up fees, no card shipping and handling fees, no activation fee, no card to card online transfer fee, no bank transfer fee, no direct deposit fee, and no fee to check your balance via text message. The problem with this approach, which a number of other issuers employ as well, is that many of these fees are hardly ever charged for prepaid card use or are simply the same fee reiterated a few different ways. For example, instead of saying “no initial fees” or no “one-time fees,” Mango says “no sign-up fees,” “no card shipping and handling fees,” and “no activation fee.”

OP: “Card issuers like to list catchy features, counting on people not looking into them too deeply before signing up. They’re also fond of overstating the things they do not charge for. This is unfortunate because it leads to misconceptions amongst consumers. For example, people are already stating in Card Hub forums that Suze Orman’s prepaid card helps your credit score, which is most certainly not the case – not with Suze’s card or any other prepaid card.”

Cons

High ATM Withdrawal Fee: The Mango Card does not offer free ATM use. A $2/withdrawal fee will be assessed no matter what ATM you use.
Balance Inquiry Fee: It’s interesting that while the Mango Card does not charge for account balance inquiries made via text, online, or the Mango iPhone app, inquiries made via ATM, automated phone system, or customer service representatives cost $.50 each.
No Online Bill Pay: Unlike most other prepaid cards, the Mango Card does not provide users an online bill pay feature. While the fact that the Mango Card is on the MasterCard network means that you can use your card number to pay bills, like with any credit card or debit card, some companies only accept checks or money orders. The Mango Card therefore comes up short as a replacement checking account in this respect.

OP: “While the Mango Card’s cons aren’t many in number, they are quite important given that there is little reason to get a prepaid card that doesn’t allow you to access your money inexpensively or that makes it difficult to pay certain bills.”

Overall

OP: “Overall, the Mango Card seems to be an expensive option, albeit one with trendy branding. Mango doesn’t seem to be trying to hide anything about its terms or services, which is, of course, a good thing, but when you really consider how the fees add up for common usage, there’s no escaping how costly it will be. My advice: Get a Green Dot or Amex Card and put the money you’d save toward something like utility payments, a gym membership, or a trip to the movies. An extra $10 a month can really come in handy.”

How Quickly Will My Credit Card Company Remove Fraudulent Charges From My Account?

John Kiernan — Wed, 18 Jan 2012 01:04:34 +0000

Posted by: John Kiernan

Having fraudulent charges on your credit card account can be nerve-racking, so it’s understandable why you’d want them removed as quickly as possible. Before we get into the timetables – both legal and practical – for this to occur, it’s important to note that The Fair Credit Billing Act limits your liability for unauthorized credit card charges to $50 and all major credit card companies have voluntarily extended $0 liability guarantees. This means that you will not be held responsible for purchases that you did not make if you report them promptly.

In most cases, a simple phone call to your creditor will be sufficient and you should expect the entire process to be resolved within a couple of weeks. However, if you want legal protection under the aforementioned Fair Credit Billing Act, there is a formal fraud reporting process that you are required to follow.

This necessitates that you send a letter to your credit card company’s billing inquiries address so that it arrives within 60 days of your first monthly statement containing an error being made available. This letter should be sent via certified mail and should contain your name, address, account number, the date and amount of the fraud in question, and any police reports pertaining to it. That’s your part of the deal. When it comes to your creditor, it must acknowledge your complaint in writing within 30 days of receiving it (unless the issue has already been rectified). It must then resolve the issue within 90 days (two billing cycles) of receipt of your letter.

Finally, it’s important to point out that while most people think of credit cards and debit cards bearing either the Visa or the MasterCard logo as being the same when it comes to fraud protection, debit cards are actually governed by the Electronic Fund Transfer Act. Different rules and reporting procedures therefore apply.

5 Ways to Put Unused Gift Cards to Use

John Kiernan — Tue, 17 Jan 2012 11:00:18 +0000

Posted by: John Kiernan

A record $27.8 billion in gift cards were sold this past holiday season, according to the National Retail Federation, and given TowerResearch’s estimate that $41 billion in gift cards have gone unredeemed since 2005, consumers will undoubtedly be looking for alternative ways to put unused gift cards to use this year.

In order to help people get the most out of their money, Card Hub – the only marketplace that allows you to sell ANY gift card, regardless of denomination or store affiliation – today released its list of 5 ways to use unwanted gift cards, which is accompanied below by insights from Card Hub’s founder and CEO Odysseas Papadimitriou:

1. Sell them for cash: An online gift card exchange enables consumers to sell gift cards for cash and fetch up to 95 cents on the dollar in return. Considering that the National Retail Federation (NRF) expects the average consumer to spend $116.21 on Valentine’s Day-related purchases, some extra cash will sure come in handy in the coming weeks.

Odysseas Papadimitriou (OP): “While many people simply don’t know that you can sell unwanted gift cards online for cash, others are discouraged from doing so for one or more of the four following reasons: 1) their card is not affiliated with a major national retailer and therefore will not be accepted by an online gift card exchange; 2) they’ve used some of the card’s funds and an unusual denomination remains; 3) they have store credit instead of an actual gift card; 4) they don’t want to give up any value to middle men. There’s no reason to worry about these things if you use Card Hub’s gift card exchange, as it is the only one that allows you to sell any gift card you wish for any price without charging any fees.”

2. Re-gift: People give gift cards not only during the holiday season, but for birthdays, anniversaries, and other special occasions throughout the year as well, which means you will have ample opportunity to give an unwanted gift card to someone else who may like it more than you.

OP: “You know the tastes of friends and family members. If you think an unwanted gift card has someone else’s name written all over it, why not hang onto it, re-gift, and save the time, money and energy you would have expended looking for another present. Most stores allow you to trade in old gift cards for new ones, so there is no need to worry about giving a card that bears outdated branding.”

3. Pay down debt: During tough economic times, help making ends meet may be in higher demand than new clothes, music or whatever else one may purchase directly with a gift card. Selling an unwanted gift card in order to help pay the bills is therefore a good example of using holiday presents for the things that really matter.

OP: “According to Card Hub’s latest study, U.S. consumers were projected to end 2011 with roughly $64 billion more credit card debt than they began it with. Every little bit counts when it comes to paying down what we owe, which means that the $41 billion that U.S. households have in unused gift cards would sure come in handy.”

4. Swap them: Card Hub offers the only gift card exchange that incorporates Facebook, thereby allowing consumers to simply swap gift cards with friends, neighbors or colleagues if they so choose.

OP: “Finding a willing partner for a gift card trade is a great way to turn an unwanted gift into something that you desire without sacrificing value. Simply use your social network to find someone who likes the gift card you have and has a comparable gift card from one of your favorite stores.”

5. Donate to charity: Charity organizations usually accept donations in a variety of forms, which may include gift cards. Even if a particular charity will not accept a physical gift card, you can always redeem it and donate the resulting goods.
OP: “If you’re looking to unload an unused gift card, your holiday season has yet to conclude, so why not stay in the holiday spirit and give to a good cause? Besides the obvious benefit of helping others, this donation will be tax deductible!”

(Obvious) Bonus Tip: If the above options don’t work for you, simply using your gift card is always a possibility, especially since you’ll be hard pressed to find a store from which you want or need nothing. You see, almost all stores carry the essentials for their genre. For example, all clothing stores will have socks, all electronics stores will have headphones, and all hardware stores will have light bulbs.
OP: “Using a gift card just to use it is certainly a sub-optimal strategy and a waste of money in most cases, but if you haven’t been able to get rid of an unwanted card for quite some time, then it might be the best remaining course of action. Having something is better than having nothing, after all.”

Suze Orman Prepaid Card Evaluation

John Kiernan — Mon, 09 Jan 2012 21:34:38 +0000

Posted by: John Kiernan

The best way to evaluate this card is to compare it to the best prepaid card offers on the market. As you know, prepaid cards have two different applications: 1) replacement checking account; 2) financial literacy teaching tool. A recent Card Hub Prepaid Card Study identified the Green Dot Prepaid Card and the American Express Prepaid Card as being the best for these two purposes, respectively. Using the same methodology, we can determine how the Approved Card from Suze Orman stacks up. The evaluation of the Approved Card below is also accompanied by quotes from Card Hub founder and CEO Odysseas Papadimitriou, a former Capital One executive:

The Cost

Replacement Checking Account: The Green Dot Prepaid Card is free to use as a replacement checking account, whereas the Approved Card will cost $3.25 per month ($3 monthly maintenance fee + $3.00 one-time purchase fee spread over 12 months).
Financial Literacy Tool: The Green Dot Card costs $5.95/mo., the Amex Prepaid Card costs $6.66/mo., and the Approved Card costs $3.25/mo., making it currently the best option for teaching young people how to manage their money.

Odysseas Papadimitriou (OP): “Orman’s Approved Card has a pretty low basic fee structure as long as you regularly deposit money onto the card and use one of the over 35,000 ATMs AllPoint has nationwide. However, there’s a fee floor, so to speak, which means this card will always cost you something.”

Pros

Identity Theft Protection: The Approved Card provides a service through TrustedID that monitors your personal information and alerts you about any suspicious activity. This is undoubtedly beneficial for consumers.
Emergency Fund: This feature, which allows users to set aside money that cannot be spent by accident (you have to contact the Approved Card people first), is interesting in that it can help people add some discipline to their spending and budget more effectively. However, all you have to do is ask in order to use your money, so inconvenience is the only impediment to overspending that it really provides.

OP: “Consumers often worry about identity theft, and the TrustedID service not only helps safeguard one’s money, but it also offers some peace of mind. The Emergency Fund feature also makes budgeting a little easier and overspending a bit more difficult – good things when you consider the rate at which people are adding new credit card debt these days.”

The Marketing Fluff

Suze’s Advice: Suze Orman’s advice may very well be helpful, but it’s definitely not personalized and it’s unlikely to be anything you can’t find elsewhere, so I would not count it as a real reason to get her card.
The Approved Dashboard: Just a nice-sounding way to market their online account management, which all major prepaid cards offer.
Teach Your Kids Financial Responsibility: This is indeed a reason to use a prepaid card, but Orman’s card doesn’t provide extra features relative to the competition to help promote this objective.
The Credit Project: It appears that this is just an anonymous information gathering program that allows TransUnion to determine whether prepaid card information should impact one’s credit score two years down the road. It therefore doesn’t do anything for cardholders.
Money Tools: Online and mobile account management is nothing unique. The same holds true for the card sharing and bill pay features highlighted on the Approved Card’s website.

OP: “The fact that so many features do not provide any substance and can be classified as marketing fluff is problematic when you consider that Orman has made a career out of helping consumers better understand their finances and make good financial decisions.”

Cons

TransUnion Services: TransUnion already gives credit reports and scores away for free, so consumers don’t really get anything out of this feature. In fact, cardholders only gain added risk, given that after a year, they will be charged $11.95/mo. for the service.
Customer support cost: You only get one live-agent customer support call per calendar month ($2.00 per call thereafter) with the Approved Card. Both the Green Dot and Amex cards offer unlimited free live support.
Complicated Fee Structure: The Approved Card charges 20 different fees, while the Green Dot Card has only 8 different fees and the Amex Card has only 1 fee.

OP: “Not only are there more fees to worry about with Orman’s Approved Card than with other leading prepaid card options, but you have to pay extra for more than minimal customer service, which means that this card could be somewhat difficult to manage. The complicated fee structure merely underscores the need for regulators to step in and limit the number of different fees that prepaid cards can charge to five. What’s more, the only real reason TransUnion services are offered is to garner new subscribers after the free one-year introductory period concludes.”

Overall

OP: “Overall, this card is a decent new option, which could be the least expensive choice for certain types of consumers. However, the sheer number of different fees that it charges, the conditional assessment of many of these fees, and the fact that many of the card’s purported features are simply marketing fluff means that it’s neither as useful nor as easy to use as you might think. Orman does appear to have made a greater effort to provide a beneficial financial product than other celebrity endorsers have in the past, and she should be commended for that. Consumers should not overpay for branding though, which means that they should only get this card if it represents the least costly option available.”

Q4 2011 Credit Card Landscape Report

Liana Arnold — Mon, 09 Jan 2012 11:00:36 +0000

Posted by: Liana Arnold

Key Findings:

Regular APRs rose across the board relative to Q4 2010 – Relative increases between 3.5% and 9.5% were observed among credit cards for excellent, good, and fair credit as well as secured credit cards, whereas interest rates for student and business credit cards rose less than 1% in relative terms.
0% introductory terms are over 27% longer than in Q4 2010 – 0% intro terms now range from 6 to 21 months, a development that most likely explains the aforementioned rise in regular APRs. It appears that issuers are willing to sacrifice interest revenue in the early stages of the customer life cycle in the hopes of attracting more new customers and recouping this revenue later on through higher regular APRs.
Balance transfer fees & foreign exchange fees fell, cash advance fees rose - With fees now more transparent thanks to the CARD Act, it seems that competition is driving down those most important to consumers. Cash advances continue to signal risk to creditors, however, making it unlikely that cash advance fees will fall anytime soon.
Initial rewards bonuses increased significantly – The average cash back initial bonus is over 100% higher relative to Q4 2010; points and miles bonuses are up nearly 10%.
Cash back rewards are 60% more lucrative – While the card with the best cash back rate across all purchases offered only 1.25% in Q4 2010, base rates as high as 2% are now available.

Please find a breakdown of pertinent credit card data for Q4 2011 below.

Interest Rate Landscape

The table below summarizes average interest rates based on consumers’ credit standing.

	Q4 2011	Q3 2011	Q4 2010	Change from Last Quarter	Change from Last Year
Excellent Credit	12.93%	12.81%	12.49%	0.94%	3.52%
Good Credit	17.03%	17.04%	16.18%	-0.06%	5.25%
Fair Credit	19.37%	19.34%	17.91%	0.16%	8.15%
Secured Credit Cards	19.40%	19.40%	17.72%	0.00%	9.48%
Student Credit Cards	15.91%	15.97%	15.87%	-0.38%	0.25%
Business Credit Cards	15.28%	15.22%	27.83%	-0.39%	0.66%

Balance Transfer Landscape
The table below summarizes key information for consumers interested in getting a credit card in order to transfer an existing credit card balance.

	Q4 2011	Q3 2011	Q4 2010	Change from Last Quarter	Change from Last Year
Average Length of 0% APR Intro Period (in months)	9.67	7.44	7.44	7.08%	29.97%
Range of 0% APR Intro Periods (in months)	6-21	6-21	6-24	N/A	N/A
Average Regular APR for Cards that have 0% Intro APR on Balance Transfers	16.68%	16.66%	16.15%	0.12%	3.28%
Range of Regular APRs for Cards that have 0% Intro APR on Balance Transfers	7.24% – 24.99%	7.24% – 24.99%	7.24% – 23.99%	N/A	N/A
Average Balance Transfer Fee for Cards with 0% Intro APR on Balance Transfers	2.89%	2.82%	3.09%	2.48%	-6.47%

Long 0% APR Intro Period for Balance Transfers:

Citi Platinum Select MasterCard

Citi Simplicity Card

New Purchase Landscape
The table below summarizes key information for consumers interested in getting a credit card in order to make certain purchases they will not be able to pay back immediately (i.e. revolve a balance).

	Q4 2011	Q3 2011	Q4 2010	Change from Last Quarter	Change from Last Year
Average Length of 0% Intro Period (in months)	9.26	8.99	7.29	3.00%	27.02%
Range of 0% APR Intro Periods (in months)	6-21	5-21	6-15	N/A	N/A
Average Regular APR for Cards that have 0% Intro APR on New Purchases	16.43%	16.50%	16.10%	-0.42%	2.05%
Range of Regular APRs for Cards that have 0% Intro APR on Purchases	7.50% -24.90%	7.50% -24.90%	7.50% -23.99%	N/A	N/A

Long 0% APR Intro Period for New Purchases:

Citi Platinum Select MasterCard
Citi Simplicity Card

Rewards Landscape
The table below summarizes key information for consumers interested in rewards credit cards (i.e. consumers who use their credit card often and pay their balance in full every month).

Cash Back

	Q4 2011	Q3 2011	Q4 2010	Change from Last Quarter	Change from Last Year
Average Base Earn Rate	0.99	1.00	0.94	-1.00%	5.32%
Range of Base Earn Rate	0.25% – 2%	0.25% – 2%	0.5% – 1.25%	N/A	N/A
Average Initial Bonus	$57.94	$49.70	$28.79	16.58%	101.25%
Range of Initial Bonus	$10 – $250	$10 – $250	$10 – $100	N/A	N/A

High Initial Cash Back Bonus: Ink Cash Business Card

Miles or Points

	Q4 2011	Q3 2011	Q4 2010	Change from Last Quarter	Change from Last Year
Average Base Earn Rate (in miles or points)	1.06	1.06	1.05	0.00%	0.95%
Range of Base Earn Rate	0.5 – 5 miles/points	0.5 – 5 miles/points	0.5 – 5 miles/points	N/A	N/A
Average Initial Bonus (in miles or points)	9,221	9,620	8,422	-4.15%	9.49%
Range of Initial Bonus	500 – 60,000 miles/points	500 – 50,000 miles/points	500 – 40,000 miles/Points	N/A	N/A

High Initial Bonus for Points/Miles:

Hilton HHonors Surpass Credit Card

Fees

	Q4 2011	Q3 2011	Q4 2010	Change from Last Quarter	Change from Last Year
Average Maximum Late Fee	$32.70	$32.65	$32.79	0.15%	-0.27%
Average Foreign Transaction Fee	2.42%	2.46%	2.50%	-1.63%	-3.20%
Foreign Transaction Fee Range	0% – 3%	0% – 3%	0% – 3%	N/A	N/A
Average Balance Transfer Fee for Cards with Intro Balance Transfer APR	2.85%	2.75%	3.03%	3.64%	-5.94%

Penalty APRs

	Q4 2011	Q3 2011	Q4 2010	Change from Last Quarter	Change from Last Year
Average	28.46%	28.40%	27.83%	0%	2%
Range	17.99% – 31.99%	17.99% – 31.99%	15.99% – 30.99%	N/A	N/A

Cash Advances

	Q4 2011	Q3 2011	Q4 2010	Change from Last Quarter	Change from Last Year
Average APR	22.26%	22.46%	22.08%	-1%	2%
APR Range	6.25% – 49.90%	6.25% – 49.90%	6.25% – 30.45%	N/A	N/A
Average Cash Advance Fee %	3.75%	3.74%	3.59%	0.27%	4.46%
Average Cash Advance Fee $ Amount	8.86%	8.85%	8.83%	0.11%	0.34%

Credit Card Debt

	Q4 2011	Q3 2011	Q4 2010
Accumulation	N/A	$16.8 billion	N/A
Percent Change from Previous Year	N/A	+154%	N/A

Delinquency and Charge-Off Data (Not Seasonally Adjusted)

	Q4 2011	Q3 2011	Q4 2010	Change from Last Quarter	Change from Last Year
Delinquency Rate	N/A	3.47%	N/A	N/A	N/A
Charge-Off	N/A	5.63%	N/A	N/A	N/A

Unemployment

	Q4 2011	Q3 2011	Q4 2010	Change from Last Quarter	Change from Last Year
Unemployment Rate	8.5%	9.1%	9.4%	-0.60%	-0.90%

Notable New Credit Card Offer

Slate from Chase: No balance transfer fee with 0% APR on balance transfers for 6 – 12 months based on creditworthiness

This report was compiled using data from the 1000+ credit card offers that CardHub.com monitors on a daily basis.

For questions or more information regarding this report, please contact our media department.

Discover Axes Foreign Transaction Fees

John Kiernan — Sun, 08 Jan 2012 14:00:15 +0000

Posted by: John Kiernan

In an important, yet widely underpublicized move, Discover recently announced the elimination of foreign transaction fees for all of its credit cards effective Nov. 6, 2011. Discover thereby joins Capital One as the only two major U.S. credit card issuers to offer only credit cards without foreign transaction fees, making them appealing choices for overseas travelers as well as small business owners who transact with foreign-based merchants.

“Discover is always seeking and evaluating new ways to offer more clear value to our cardmembers,” Discover spokeswoman Kathryn Henry is reported to have said regarding the decision. “We removed our 2 percent foreign currency fee as an added convenience to our card members, so that it is one less thing for them to worry about when traveling internationally.”

Foreign transaction fees are typically assessed on any transaction processed outside the United States and usually amount to 2-3 percent of the total amount being charged. According to Card Hub data, over 90% of credit cards have foreign transaction fees.

“Foreign transaction fees can significantly inflate the cost of foreign travel or international business,” said Card Hub CEO Odysseas Papadimitriou. “Discover eliminating this type of extraneous cost is certainly good news for consumers. I predict that more and more issuers will follow suit as well, not only to keep up with the competition, but because post-CARD Act transparency makes such fees more obvious and consumers seem to now be more careful about looking into the terms of prospective credit card offers prior to applying.”

Papadimitriou went on to say, “I’m just surprised Discover didn’t make this move earlier to compensate for their disadvantaged position in terms of global acceptance. Visa, MasterCard and American Express all boast more merchant locations in more countries than Discover cards.”

While foreign travelers should still be sure to open a no foreign transaction fee credit card and to compare offers across all issuers prior to doing so, Papadimitriou’s prediction would seem to fit the string of pro-consumer developments over the past couple of years.

In addition to the passage of the Credit CARD Act, which improved transparency and consumer rights in the personal credit card space, many credit card companies have begun offering lucrative initial rewards bonuses and lengthy 0% credit card offers in return for the most trustworthy consumers opening accounts. Chase has also struck a number of interesting rewards partnerships with major travel-related companies, and a settlement was recently reached in a class-action suit over alleged collusion and other impropriety in the setting and disclosure of foreign transaction fees by numerous major card networks and issuers.

At the very least, not all financial news these days spells doom and gloom.

Chase and Southwest Airlines Strike Rewards Program Partnership

John Kiernan — Sat, 07 Jan 2012 14:00:51 +0000

Posted by: John Kiernan

Chase Bank on Jan. 5 announced a new partnership with Southwest Airlines that will allow Sapphire Preferred, Ink Plus, and Ink Bold cardholders to transfer their Chase Ultimate Rewards points to Southwest Rapid Rewards accounts instantly and at full value. The move comes just a few months after the October announcement of a similar relationship between Chase and United Airlines and significantly increases the value of Chase rewards credit cards.

“By adding Southwest to its network of rewards affiliates, Chase is continuing its efforts to build the ultimate co-branded credit card,” Card Hub CEO Odysseas Papadimitriou said. “A Chase credit card can now act like a centralized hub for rewards points, which the customer can then deploy to different rewards programs depending on their needs. This gives Chase credit card customers the opportunity to redeem for travel with some of the world’s leading airlines, hotel chains, and railroad companies, in addition to the standard merchandise, cash back, gift cards, etc. The fact that you don’t sacrifice value in doing so also provides a stark contrast to most other points credit cards, which usually only allow full-value redemption for one type of good or service.”

Chase’s stable of rewards partners now includes the likes of British Airways, United Airlines, Continental Airlines, Korean Air, Hyatt Hotels, Marriott, InterContinental Hotels Group (IHG), Amtrak, and of course, Southwest Airlines. That means that any Sapphire or Ink credit card can now serve as a de facto affinity card for all of these companies simultaneously, and people other than the most brand-loyal customers can now truly benefit from a card offering company-affiliated rewards.

As was the case with the partnership between Chase and United, the Chase-Southwest joint venture creates an interesting opportunity for savvy consumers. Both the Southwest Rapid Rewards Plus and Rapid Rewards Premier credit cards offer 25,000 bonus miles after your first purchase. The Chase Sapphire Preferred, on the other hand, offers twice as many points and does not charge a membership fee during the first year – the Rapid Rewards Plus and Rapid Rewards Premier charge $69 and $99, respectively. That means Chase now offers a better Southwest-oriented initial bonus than the Southwest-branded credit cards themselves.

Furthermore, the Chase credit cards eligible for point transfers (Preferred, Ink Bold, and Ink Plus) do not have foreign transaction fees either, which should be music to the ears of consumers looking for travel rewards to help pay for overseas journeys. This also perhaps indicates a growing trend in the overall credit card industry – Discover recently joined Capital One in abolishing such fees for all of its cards.