Yesterday, Chase released a new version of the Freedom credit card, the Chase Freedom® Visa – $50 Bonus Cash Back Offer. While this offer may seem less generous, it is in fact the opposite. This new Chase Freedom card lets you earn $50 cash back after your first purchase and, more importantly, offers a 0% APR on balance transfers for 12 months and a 0% APR on purchases for 6 months.

Consumers who don’t carry credit card balances and thus don’t need a 0% APR on balance transfers can clearly benefit more from the $100 cash back bonus offer. However, consumers who carry balances and could benefit from a 0% APR for a year are much better off with the new deal.  While the balance transfer offer carries a 5% balance transfer fee, the $50 cash back bonus offsets this fee on the first $1000 transferred, essentially providing a no fee balance transfer.

Like Chase, Discover is also running a special cash back bonus promotion with the  Discover® More® Card – $75 Cashback Bonus®. However, this offer is similar to the $100 cash back offer from Chase in that it requires customers to spend $500 during the first three months of card membership. However, the $75 cash back bonus does offset the balance transfer fee on a $1500 transfer.

To get the most value out of these offers, it is important to consider how you will use your card. A person who carries $1000 of credit card debt at a 15% interest rate can likely save around $100 in interest with a 0% APR for a year, plus get an extra $50 cash back with the Chase Freedom® Visa – $50 Bonus Cash Back Offer, bringing total savings to about $150.  However, if you don’t need to transfer a balance, the best Chase credit card deal is likely the one that offers $100 cash back. 

For more information on current Chase credit card offers and details on cash back promotions, please visit the main section of Smart Balance Transfers where you can compare credit cards and apply online for approval.

*Important Note: Credit card offers change frequently. All information is accurate as of the date of publication, but may change at any time. Please see the terms and conditions of any credit card application refernced for complete details. All information is presented “as is” and “without warranty.”

I recently found a rate increase notice on page 9 of a 13 page credit card statement from American Express.  Presently, the rate on this particular business card is a very reasonable 12.24%.  On August 1st, the rate increases by nearly 30% to 16.24%.

If I want to opt out of the interest rate increase, I have until August 20th to call in and close my account.  This would allow me to repay my current balance at the lower interest rate.  However, if I want to keep my card open, I must accept a higher interest rate.

Small business credit card holders across the country may get similar, hard to find notices buried deep in their credit card statements.  If I didn’t write about credit cards, I would have tossed that portion of the bill in the garbage.  If I had done so, and I carried a $10,000 balance on the card, the oversight could have cost me $400 in additional interest due to the higher interest rate.

Prior to the implementation of the CARD Act, credit card companies embarked on a massive spree of  rate hikes, leaving some consumers with 29.99% interest rates.  While it is unlikely that credit card companies will get that aggressive with small business credit cards, interest rate increases are always a threat to small business owners.

Companies that don’t revolve monthly balances obviously aren’t going to be hurt by rate increases such as the one American Express imposed on my account.  However, all small businesses that carry credit card debt need to carefully review all 5, 10 or 50 pages that arrive in the mail every month to make sure they don’t accidentally accept substantial interest rate increases that could strain their finances.

-Jeffrey Weber

Below is Irina’s experience with a bouncing credit card check from Citibank. Fortunately, she did not incur great expense. However, anyone considering use of these credit card checks should think twice before using them.

From Irina:

 1. My fiance has a credit card with Citibank. He is paying it off and has never incurred in default. His APR is about 7%.

9. Today, he received a letter from the bank apologizing and saying simply that we was no longer eligible.

As you can see from Irina’s story, credit card checks can create numerous problems no matter how diligent one is in verifying these deals. The best thing to do with balance transfer checks is to throw them in the trash. Irina was fortunate to have not incurred fees. However, I fear others have been much less fortunate.

The 1 percentage point increase by Citibank puts its cash advance fees on the same footing as Discover and Chase, who also charge 5% cash advance fees. Bank of America charges a 4% fee.  American Express and Capital One currently charge 3% fees which are the lowest among the major credit card companies.

In 2008, most major credit card companies charged 3% cash advance fees. By 2009, 4% fees became the norm. Now that Citibank has upped its fee to 5%, American Express and Capital One may follow suit. And there is still room to maneuver, as there is no government mandated ceiling on what banks can charge for either cash advances or balance transfers.

For the most part, consumers who use cash advances likely won’t learn of the increased fees until their bills arrive, though even this will require a little math. Unfortunately, 5% fees are the last thing consumers who make these transactions should be concerned about.

The main issue with cash advance transactions is the hefty interest rates they carry, which are often double standard purchase or balance transfer interest rates. The APR on these transactions typically range from the low 20 percent range up to 29.99%.

If twenty percent interest rates aren’t enough of a deterrent, the way credit card companies allocate monthly minimum payments should be, particularly for consumers who tend to pay only the minimum. Under the CARD Act, credit card companies can allocate minimum payments to whichever balance they choose. Thus, if you have a $500 balance at a 14% rate and $500 at a 29.99% rate, your credit card company will use your minimum payment to reduce the balance at the 14% rate while you continue to rack up interest at a 29.99% rate.

Ultimately, the increase in cash advance fees would be a positive if it deterred consumers from making these transactions. However, the increased fees will probably not be enough to discourage consumers whose desperate need for cash leads them to engage in these pricey transactions.

-Jeffrey Weber

Interchange fees, which are paid by merchants, generally run at 2% of the transaction.  When you spend $100, $2 is split between your credit card issuer and the credit card network, such as Visa or Mastercard.  Of the $2, the lion’s share goes to the credit card issuer.  Part of this money is returned to customers in the form of credit card rewards.

While some credit card companies offer generous rewards of 2% or more, most credit card rewards are about 1%.  This can be 1% cashback, 1 reward point, or 1 frequent flyer mile.  If interchange fees are limited, credit card companies may stop offering these rewards altogether.  However, even if these fees aren’t reduced, credit card companies may take proactive steps to protect themselves.

Fortunately, consumers who have earned cash back rewards are unlikely to lose out.  After all, they’ve earned cash.  However, anyone sitting on a pile of airline miles or rewards points could feel the sting.

Both airline miles and credit card rewards points have no cash value.  Sure, you can use them to purchase plane tickets, gift cards, or even cash rewards.  But the number of points or miles needed to get these rewards are not set in stone.  Today, it may take 2,500 points to get a $25 gift card for the Olive Garden.  Tomorrow, your credit card company could charge you 5,000 points.

The same issue could pose a problem with airline miles.  At any point in time, and for any reason, credit card companies could decide that a ticket that once cost 25,000 miles now costs 50,000 miles.  They have complete control over the value of your rewards and when push comes to shove, they’re going to do what’s best for themselves.

As many of us learned last year, credit card companies will go to great lengths to preserve their profits, even if it means chasing customers away.  So if you’ve accumulated a substantial amount of credit card points or miles, it may be time to spend them before they lose their redemption value.

-Jeffrey Weber

While most anyone with a credit card balance stands to save a substantial amount of money by taking advantage of 0% APR balance transfers that last up to 18 months, people who have used their credit cards for cash advances as well as purchases stand to reap even more savings.

According to a story by AP Personal Finance Writer Candice Choi, many of the nation’s largest credit card companies are applying all payments up to the minimum to balances that have the lowest interest rate. 

Consequently, if you owe $1,000 from a cash advance at a 29.99% interest rate and $1,000 from purchases at a 14% interest rate, your monthly minimum payment will likely be used to reduce the low interest balance, not the 29.99% rate that is driving you to the poorhouse. 

New CARD Act rules require credit card companies to apply payments above the minimum to balances with the highest interest rate, but these rules do not cover the money you are required to pay monthly.

This can also be a problem if you get 0% balance transfer checks in the mail.  Let’s say you currently owe $3,000 at a 14% rate and transfer $3,000 to your card to take advantage of the 0% rate.  Unless you pay more than the minimum, every payment you make will reduce the 0% balance, while the balance with 14% rate continues to rack up interest.

If your bank sends you balance transfer checks and you have a balance on your card, put those checks in the shredder and transfer your balance to a new card from a different company that offers 0% balance transfers. 

If you currently have cash advance balances on your card, you’re likely to save $200 or more for every $1,000 you transfer to a new 0% balance transfer card, regardless of how your credit card company applies your minimum payment.

-Jeffrey Weber

For more information on zero interest balance transfers, please see the credit card comparison section of www.SmartBalanceTransfers.com where you can view credit card offers and apply online for money saving balance transfer deals.

The key reason to pay online is to prevent “lost in the mail issues.”  Many people rack up late fees because their checks, for one reason or another, arrive a few days (or even minutes) late.  With online bill pay, you know your payment is on time and you get nearly instant confirmation. 

If you’re the type of person who waits until the last minute to mail in your check, you’ve probably paid more than a few late fees.  In the past, credit card companies often waived these fees and related penalties.  Under the strict rules of the CARD Act, banks are now limited from charging many lucrative and expensive fees.  Thus, they are much less likely to waive fees, even on good customers.

Another, more pressing issue that can arise from late payments are credit limit cuts and interest rate increases.  In 2010, credit limit cuts have garnered the most complaints on Smart Balance Transfers.  And many banks are looking for any reason they can to reduce credit limits.  A late payment, even if it is only one day late, might be enough to put your credit limit on the chopping block.

Interest rate increases are yet another issue.  Although banks can’t raise rates on your existing balances, they can raise rates on your future purchases with 45 days notice.  One late payment may not trigger a rate increase, but two could easily do so.

Clearly, there is much to gain and little to lose by using online payments.  Don’t, however, start getting online credit card statements.  Getting a paper bill is a great reminder.  But paying that bill with a check can be costly, even if you mail your check on time.

-Jennifer Davide

Currently, the longest 0% balance transfer deals come from Citibank.  At 18 months, these deals are 30% longer than most competing offers.  A person who transfers $5,000 from a credit card with a 14% interest rate and qualifies for a 0% for 18 months can expect to save over $1,000 during the introductory period.  This is nearly $400 more than could be saved with a 0% for 12 months.

Unfortunately, not every applicant will qualify for the longest 0% interest rates.  In the fine print, Citi states that the lengthof 0% rates is based on a review of the applicants credit history and application.  Applicants that do not meet certain criteria may be approved, but offered a 0% rate for 12 months or even 7 months.  People with excellent credit should have no problem getting a 0% rate for 18 months, while those with good credit will likely be able to get a 0% rate for 12 months. 

Citi has two credit cards that offer a 0% APR for 18 months. Essentially, the only difference between these offers is the color of the credit cards.  Below are the details for these offers as of April 30th, 2010:

Citi® Platinum Select® MasterCard®:  Offers a 0% APR on purchases and balance transfers for up to 18 months*, based on a review of your application and credit history.  After the 0% rate expires, offers interest rates as low as 9.99% variable*.  Plus, approved applicants receive a $30 statement credit*.

Citi® Diamond Preferred® Card:  Offers essentially the same deal.  A 0% APR on purchases and balance transfers for up to 18 months*, a long term APR as low as 9.99%* and a $30 statement credit*.

Because this offer is new and credit card offers change regularly, it is probably best to apply for one of these cards sooner rather than later.  A month ago, the longest 0% balance transfer offers lasted 12 months.  The same could be true a month from now.

On www.firstpremier.com, an application link leads to the following message:

“Based on the recent passage of Federal Credit Card legislation, the credit card you showed interest in is no longer available.

If you are still interested in a credit card offer from First PREMIER Bank, please click “Continue” below to apply for the product shown above. Be sure to review the terms and conditions of this offer, as they may be different from offers you may have previously reviewed.”

Following the link leads to an application for the Centennial® Secured Credit Card.  To the untrained eye, this may look like an improvement from the unsecured credit cards First PREMIER® recently marketed under the Aventium, First Premier and Centennial labels just a few weeks ago.  However, on closer inspection, this is one of the most fee-laden secured credit cards on the market.

Any applicant that fails to closely inspect the fine print is likely to be surprised to learn that this credit card, which carries a $50 annual fee, requires a $200 deposit to establish a credit line that, after fees, is $150.  The deposit requirement is buried in the fine print, as are a number of other unusual fees including an internet access fee, an auto-draft fee, and an express delivery fee if your card is lost or stolen.

First PREMIER® Bank is one of the few purely subprime oriented credit card companies remaining.  However, it is currently not offering unsecured credit cards; it is offering the same secured credit cards available at most banks and credit unions.  And it is harvesting substantially higher fees. 

For example, Capital One offers a secured credit card with a $24 annual fee that allows consumers to deposit as much as $3000.   This offer doesn’t come with a bevy of hidden fees and, perhaps most importantly, clearly discloses the fact that it requires a deposit on the application page.  Other major banks, as well as many credit unions, offer similar terms and conditions to those offered by Capital One.

Consumers with bad credit are unlikely to get a fair deal from any company offering unsecured credit cards; prime consumers are even having difficulty.  Thus, consumers with bad credit should look to secured credit cards to help them rebuild their credit.  The first place not to look, however, is First PREMIER® Bank.  Two months after the CARD Act, their unsecured credit cards disappeared from the market.  The secured cards that replaced these offers appear to be no less transparent.  Perhaps these offers will soon disappear as well. Until they do, its likely best to avoid them.

-Jeffrey Weber

A week after my first call, the credit card arrived via snail mail.  And I wasn’t the lest bit surprised. Lying, it seems, is a skill overseas customer service reps are required to list on their job applications.

My experience with dishonest credit card reps is not unusual. In my case, the lies were frustrating, but didn’t disrupt my life.  But what if I were on vacation and had no other card to pay for a car rental or hotel?  Or what if the customer service rep had offered to lower my interest rate and then did not?  That’s when customer service lies can wreak havoc on lives.  And this happens more frequently than you might imagine.

On Smart Balance Transfers, guests frequently share credit card complaints.  And a common, disturbing complaint is that customer service reps will lie about everything from interest rate reductions to when payments are credited.  In many instances, these lies can prove costly.  A recent visitor reported that she was promised a substantial rate reduction if she partook in a payment plan requiring her to increase her monthly payment.  After completing the plan, she was told that the laws did not allow them to reduce her interest rate.  Really?  You would think they could have come up with a better lie than that.

Unfortunately, credit card customer service reps, especially those located overseas, will essentially say and do whatever they can to get customers to send in money and get off the phone.  Many are as unscrupulous as debt collectors.

To prevent the lies of a customer service agent from costing you money, I have two suggestions.  The first, and best,  is to send in all inquiries via email from your online account management page.  Most companies have a secure contact form where you can submit your questions.  Because the answer will be in writing, the likelihood of being lied to decreases substantially.  Plus, in the event that  the credit card company reneges on the agreement, you have proof in writing.

The second option is to record your calls to customer service.  The legalities of this vary from state to state, but if you choose to go this route, you should state that you are recording the call and ask for their permission.  One recent site guest posted that he likes to give credit card reps a taste of their own medicine.  He tells them he records the calls to, “insure the quality of customer service.”

Now, not all customer service reps at credit card companies are liars.  However, if you are negotiating an important financial arrangement, don’t stake your finances on the spoken word of a customer service rep.   Try to get your arrangement in writing or on tape.  With this evidence, you can prove wrongdoing should you need to fight back against your credit card company.

-Jeffrey Weber

Author’s Tip:  If your credit card company has mistreated you and you have good credit, get back at them by utilizing balance transfers.  With a balance transfer, you move the money you owe the bad company to a new credit card from a (hopefully) better company.  In addition, you can get a 0% interest rate for up to 1 year when you do a balance transfer.  This can save you hundreds on interest and help you get out of debt faster.  For more information, please ee the 0% balance transfer section of Smart Balance Transfers.

Unlike the major banks that issue credit cards, Discover is primarily a credit card company with an online banking business.  As a stand alone credit card company, Discover couldn’t risk angering its customers and damaging its reputation.  So, while other banks could afford to alienate customers, Discover made a very smart decision to treat their customers with respect. 

Unfortunately, Discover hasn’t been recognized for their humane behavior.  News stories about credit card companies behaving badly fill this blog and mainstream media outlets.  But a story about a credit card company acting  justly isn’t attention grabbing–that is the reason you haven’t heard too much about Discover in the past year.  Hopefully, more consumers will come to recognize how truly commendable Discover’s behavior during the credit crisis was. 

J.D. Power’s annual survey often ranks Discover second in customer satisfaction.  But as someone whose job requires reading and responding to stories from people whose financial well-being was jeopardized by unscrupulous credit card companies, I can say without equivocation that Discover is not only the best credit card company around but, more importantly, the only one which respects and cares about the relationships it has with its customers. 

-Jeffrey Weber

To learn more about Discover credit card offers, please see the Discover Card section of Smart Balance Transfers where you can compare current offers and apply online for approval.