Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Piggy-backing on the Costco Amex card discussion and what to replace this card with, I came upon this review of several options out there, Many of those discussed where already suggested by MFO'ers but there are a few new suggestions. For what interest it holds.
The Sallie Mae looks like an interesting substitute for people who have an Amazon card. I know that DiscoverCard offers free FICO scores, but I don't see anything about their providing free credit report access (as stated in this article).
Also, the Quicksilver card has no foreign transaction fee, making it a good international travel card.
I was not aware of the US Bank card, which also looks interesting, and possibly superior to Chase's rotating 5% categories, since it gives you control over the categories. Unfortunately, I don't see any way to get a sense of what category choices one might have. All we know from the article is that the choices don't include restaurants.
I don't know the min amount at Fido for getting their Amex card, but for anyone who charges 10k or more a year (making this part up) I would think it would be worth it to have an account of any sort there, even money fund, just for the 2%-on-everything card. My wife and I must 'earn' a thou a year into our Fido cash account just from using that as our chief charge credit card. Ooh, it looks like no min, just an account to put the 2% into.
Just signed up for the Sallie Mae card for the Amazon and grocery benefits. PenFed card pays 5 % for gas (and 50,000 mi/yr mounts up) and 3% at grocery stores, but the 5% at Amazon may reduce the cost of my purchases originated thru MFO for various and sundry items, including cherry juice and various primitive grains, and the very occasional book or sci-fi novel. And makes my support of MFO a bit cheaper. (TYVM) Already used the Amex card thru Fido for other purchases when it was accepted. Not all that much money (except for the gas), but it makes my alleged Scottish forebears rest more quietly in their graves - no need to disturb the grass in the old country - and a strong argument for cremation.
About 20-25 years ago we had a "cash-back card." However, we dropped it and have avoided these like the plague ever since.
The problem: We found that our spending increased when using the card to purchase everything from clothing to ketchup and that we paid less attention to price and value when shopping. Because increased spending translated into increased "benefits" in the form of rebates, our perceptions of "need" and value were distorted. Spending increased.
Dumping the cards was part of an overall revamping of household budget and savings patterns including the payoff of all revolving debt. It put us in a good position to retire 5-10 years later.
I suspect today we would probably be able to manage one of these more to our advantage. Kudos to those who benefit from them. For now we'll rely on a single no-fee "no frills" charge card from a national bank (mostly for travel) as well as cards linked to our checking accounts.
The problem: We found that our spending increased when using the card to purchase everything from clothing to ketchup and that we paid less attention to price and value when shopping. Because increased spending translated into increased "benefits" in the form of rebates, our perceptions of "need" and value were distorted. Spending increased.
@hank, I couldn't agree more with your keen observation. The credit card companies charge the merchants 3-5% of the transaction (that cost gets pass down the consumers in form of higher price) and give back much small percentages (i.e. 1%) as a cash back to the cardholders. I have no problem using these credit cards, paying off the entire bills at the end of the month, and the cash rebate is just a minor by-products of the transactions. I view this tactic as a form of habitation of consumers to spend more.
I understand that American Express charges the higher fee in the industry. That is one of the reason large retailers such as Costco are moving to lower cost credit cards.
I find there is a certain amount of pain in pulling bills out of a wallet, which is why like Hank I was slow coming to credit cards. I made the major move several years ago when rebates started adding up to real money - roughly 1% and no fees. If I paid cash I would be subsidizing all the card users. But it does take more mental discipline to watch the spending even now (without seeing those physical dollars flying away).
A very new prepaid card (just came out in August) could be a good compromise, at least for people living in NY, Vermont, or Texas (where the card has no fee). The Amex Serve Cash Back card. There are three versions of the Serve card; this one gives a 1% reward (reloaded onto the card). Here's Nerdwallet's writeup of the cards. Provides at least as much discipline as a charge card (because you're paying it off instantly, rather than monthly), and gives rebates.
No costs (in the three states) if you reload via ACH link. A longer list of features and fees is here (click on the features & fees tab)
Regarding Costco's switch from Amex. This has little to do with Amex's usual fees. Costco is the elephant in the room and negotiates its own swipe fees. It currently pays just 0.6% to Amex, and that will drop to zero with its new Visa contract. (This is from Bloomberg.)
If you have a nice rebate card, but it won't be accepted at Costco soon, a workaround is to purchase Costco Cash cards. For online purchases, Costco accepts pretty much any form of payment.
I don't know the min amount at Fido for getting their Amex card, but for anyone who charges 10k or more a year (making this part up) I would think it would be worth it to have an account of any sort there, even money fund, just for the 2%-on-everything card. My wife and I must 'earn' a thou a year into our Fido cash account just from using that as our chief charge credit card. Ooh, it looks like no min, just an account to put the 2% into.
Not particularly advertised, but there seems to be a $50 offer for getting this card:
I know I started this whole fiasco by saying that I was looking at the Fidelity Amex 2% cashback on everything card but now I'm not so sure given a Bloomberg report that Fidelity may be dropping Amex as well. See here:
I'm already losing one Amex card (to Costco) and the thought of another disappearing in a year gives me pause. I just don't have a clue on how the credit rating agencies look at this shuffleing about even though the individual being rated has nothing to do with the loss of the card.
I know I started this whole fiasco by saying that I was looking at the Fidelity Amex 2% cashback on everything card but now I'm not so sure given a Bloomberg report that Fidelity may be dropping Amex as well. See here:
I'm already losing one Amex card (to Costco) and the thought of another disappearing in a year gives me pause. I just don't have a clue on how the credit rating agencies look at this shuffleing about even though the individual being rated has nothing to do with the loss of the card.
If Amex sells the Costco credit portfolio to Citi and Citi issues you a new credit card, are you getting a new account/closing old account or is your account just moved over and you get a new card for it that isn't Amex but Visa?
Interesting thing about that Bloomberg story - there's been no second source. Every single story cites the Bloomberg article. So at this point one might treat it as little more than rumors.
On the other hand, I dug up this NYTimes article from 18 months ago (almost to the day): " Fidelity promised in an interview this week that the 2 percent rate would not fall for at least 18 months."
Switching cards - hard to tell the FICO impact, but if done sensibly, it isn't supposed to have a major impact. I "upgraded" my rewards by switching cards about six months ago (first getting the new card, then dropping the old one). According to FICO based on one credit agency's data this had no impact, according to another agency's data set, I took about a 10 point hit. Hard to tell in any case, because there's at least that much noise in the figures.
Do this several times in short order, and you'll likely see a bigger drop. Also, from what I've read, more than shuffling what matters is credit utilization (what percentage of your credit limit you're using). As near as I can tell, you don't want that to be very high, but you don't want it to be near zero, either. That's one reason why I tried to do a "swap".
Spending $5000 in 60 days for a $50 bonus would be insane. The offer is for 5,000 points (worth $50) if you charge $500 in 60 days. (Yes 60, not 6, not 600)
Rumor has it that when Citibank Double Cash came out, Citibank sent invitations with signing bonuses to select people. It seems impossible to get that any other way. But I don't think I'd feel ripped off because others got invited. I would just be wishing that they had invited me as well. It's all marketing, and a question of how much work one wants to put in looking for "coupons".
I find I have more problems using Discover Card than Amex, though obviously YMMV. It should be easy enough to spend $500 over two months if one gives up using cash for everyday purchases. But one risks spending more, as hank wrote above.
Speaking of hidden bonuses, it turns out (or so BofA says) that you can get their online-only application bonuses when applying over the phone. If you look for questions (either to the right of the application page, or with an FAQ link), you'll see a question about applying by phone. That gives a code that you use with the phone application to get the online bonus.
Why would one do this? If one wants to get a card with co-owners. BofA does not seem to allow that online.
Scott asked - "If Amex sells the Costco credit portfolio to Citi and Citi issues you a new credit card, are you getting a new account/closing old account or is your account just moved over and you get a new card for it that isn't Amex but Visa?"
That's what the folks at Costco tell me and there is no way that I can know that for sure until I see the actual offer come switching time. I don't mind waiting to make a decision until then.
@msf - I hope that you're right about "a minimal effect" to ones credit score. We work hard to keep them solid and it's somewhat unfair to have them degraded so to speak because of events we have no control over. But such is life.
Comments
The Sallie Mae looks like an interesting substitute for people who have an Amazon card. I know that DiscoverCard offers free FICO scores, but I don't see anything about their providing free credit report access (as stated in this article).
Also, the Quicksilver card has no foreign transaction fee, making it a good international travel card.
I was not aware of the US Bank card, which also looks interesting, and possibly superior to Chase's rotating 5% categories, since it gives you control over the categories. Unfortunately, I don't see any way to get a sense of what category choices one might have. All we know from the article is that the choices don't include restaurants.
Already used the Amex card thru Fido for other purchases when it was accepted.
Not all that much money (except for the gas), but it makes my alleged Scottish forebears rest more quietly in their graves - no need to disturb the grass in the old country - and a strong argument for cremation.
The problem: We found that our spending increased when using the card to purchase everything from clothing to ketchup and that we paid less attention to price and value when shopping. Because increased spending translated into increased "benefits" in the form of rebates, our perceptions of "need" and value were distorted. Spending increased.
Dumping the cards was part of an overall revamping of household budget and savings patterns including the payoff of all revolving debt. It put us in a good position to retire 5-10 years later.
I suspect today we would probably be able to manage one of these more to our advantage. Kudos to those who benefit from them. For now we'll rely on a single no-fee "no frills" charge card from a national bank (mostly for travel) as well as cards linked to our checking accounts.
I understand that American Express charges the higher fee in the industry. That is one of the reason large retailers such as Costco are moving to lower cost credit cards.
A very new prepaid card (just came out in August) could be a good compromise, at least for people living in NY, Vermont, or Texas (where the card has no fee). The Amex Serve Cash Back card. There are three versions of the Serve card; this one gives a 1% reward (reloaded onto the card). Here's Nerdwallet's writeup of the cards. Provides at least as much discipline as a charge card (because you're paying it off instantly, rather than monthly), and gives rebates.
No costs (in the three states) if you reload via ACH link. A longer list of features and fees is here (click on the features & fees tab)
Regarding Costco's switch from Amex. This has little to do with Amex's usual fees. Costco is the elephant in the room and negotiates its own swipe fees. It currently pays just 0.6% to Amex, and that will drop to zero with its new Visa contract. (This is from Bloomberg.)
If you have a nice rebate card, but it won't be accepted at Costco soon, a workaround is to purchase Costco Cash cards. For online purchases, Costco accepts pretty much any form of payment.
https://www.fidelity.com/go/rewards-american-express
http://www.cnbc.com/2015/08/27/fidelity-considers-dropping-amex-bofa-as-partners-bloomberg.html
I'm already losing one Amex card (to Costco) and the thought of another disappearing in a year gives me pause. I just don't have a clue on how the credit rating agencies look at this shuffleing about even though the individual being rated has nothing to do with the loss of the card.
On the other hand, I dug up this NYTimes article from 18 months ago (almost to the day): " Fidelity promised in an interview this week that the 2 percent rate would not fall for at least 18 months."
Switching cards - hard to tell the FICO impact, but if done sensibly, it isn't supposed to have a major impact. I "upgraded" my rewards by switching cards about six months ago (first getting the new card, then dropping the old one). According to FICO based on one credit agency's data this had no impact, according to another agency's data set, I took about a 10 point hit. Hard to tell in any case, because there's at least that much noise in the figures.
Do this several times in short order, and you'll likely see a bigger drop. Also, from what I've read, more than shuffling what matters is credit utilization (what percentage of your credit limit you're using). As near as I can tell, you don't want that to be very high, but you don't want it to be near zero, either. That's one reason why I tried to do a "swap".
Rumor has it that when Citibank Double Cash came out, Citibank sent invitations with signing bonuses to select people. It seems impossible to get that any other way. But I don't think I'd feel ripped off because others got invited. I would just be wishing that they had invited me as well. It's all marketing, and a question of how much work one wants to put in looking for "coupons".
I find I have more problems using Discover Card than Amex, though obviously YMMV. It should be easy enough to spend $500 over two months if one gives up using cash for everyday purchases. But one risks spending more, as hank wrote above.
https://www.fidelity.com/go/rewards-american-express
with the "regular" link:
https://www.fidelity.com/cash-management/american-express-cards
Speaking of hidden bonuses, it turns out (or so BofA says) that you can get their online-only application bonuses when applying over the phone. If you look for questions (either to the right of the application page, or with an FAQ link), you'll see a question about applying by phone. That gives a code that you use with the phone application to get the online bonus.
Why would one do this? If one wants to get a card with co-owners. BofA does not seem to allow that online.
That's what the folks at Costco tell me and there is no way that I can know that for sure until I see the actual offer come switching time. I don't mind waiting to make a decision until then.
@msf - I hope that you're right about "a minimal effect" to ones credit score. We work hard to keep them solid and it's somewhat unfair to have them degraded so to speak because of events we have no control over. But such is life.