What Is a Balance Transfer?

by Alicia Bodine
what is a balance transfer

Last updated on March 4th, 2024

Consolidating credit card debt through balance transfers can be a savvy financial move, helping you streamline payments and save on interest. While this process is an excellent tool to use when tackling debt, you’ll need to be aware of a few common missteps before you take advantage of it. Once you fully understand the balance transfer process and the mistakes to avoid, you can proceed confidently.

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Balance Transfer Basics

Balance transfer credit cards are exactly what they sound like. They allow consumers to move their debt from one card to another. Typically, this is done to secure more favorable terms, such as a lower interest rate or better rewards. Before transferring a credit card balance, you must apply for and be approved for the new card.

How to Make a Balance Transfer

Here is a detailed discussion about the balance transfer process, from start to finish:

Step 1: Make a Plan

Planning should be your first step in any process involving your financial well-being. Before you start the balance transfer process, ask yourself the following questions:

  • Can you afford to pay down the current credit card balance? If you are struggling with credit card debt, your first course of action should be to contact the lender to discuss forbearance and other options.
  • What’s your credit score? Excellent credit usually entitles you to better (lower) interest rates and larger credit limits. This rule applies to low APR, 0% intro APR, and balance transfer credit cards. If you have excellent credit, you can transfer a greater balance than someone with a good credit score.
  • Are you willing to set up automatic payments? Setting your credit cards to autopay can help you avoid missing payments and facing a penalty interest rate for up to a year (or more).
  • Is a balance transfer right for me? A balance transfer might not make sense if the new card has a short 0% intro APR period, no promotional period, or if the balance transfer fees cost more than you expected.

Step 2: Apply for a Balance Transfer Credit Card

Applying for a credit card can take as little time as a few minutes. You’ll need to provide some basic financial and personal information to apply. This information includes your full name, mailing (and email) address, Social Security Number (SSN), and income. 

Applying for a balance transfer credit card will likely result in a hard inquiry on your credit report. This action temporarily affects your credit score, dropping off your credit report after 24 months – or two years. Fortunately, adding a new balance transfer card can also lower credit utilization, raising your credit score.

Expect a quick decision on your balance transfer request. Most banks provide an instant decision on transfer requests. However, banks may delay some decisions due to several factors.

Step 3: Transfer the Credit Card Balance

Transferring a balance is easy once approved: sit back and let your new bank’s customer service team handle the work.

Before finalizing a balance transfer, make payments on old credit cards (including the one from which you are transferring the balance) to ensure you stay current on payments. Missed payments account for 35% of your FICO credit score – so be careful.

Once the new credit card issuer notifies you that the balance transfer is complete, contact your old bank to ensure the correct amount was transferred.

Step 4: Pay Down (or off) the Balance

Once the balance transfers, you must make all your payments as scheduled. If you have a credit card with 0% intro APR, use that promotional period to your advantage to pay the new balance.

Missing payments will lead to forfeiture of any promo APR. Penalty APR is a particular interest rate for missing your monthly payment and grace period. Typically, a penalty interest rate lasts for at least six months to a year and is around 31.99%, but it could be higher.

Benefits of Consolidating Credit Card Debt Through Balance Transfers

When done correctly, consumers can benefit greatly from consolidating credit card debt through balance transfers. Benefits include:

  • Lower interest rates: Lowering your interest rate will result in more of your monthly payment going toward the principal, allowing you to pay down the debt much faster.
  • 0% APR introductory offers: Many balance transfer cards provide introductory 0% APR for a set period of time, such as six months or one year. This gives you time to attack the debt without continuing to grow each month.
  • One simple payment: Consolidating the debt from multiple cards to one card via a series of balance transfers means you only need to make one monthly payment. This makes the debt much easier to track, decreasing the chances of accidentally missing a payment.
  • Higher credit score: Lowering your credit utilization and making on-time payments are more likely when your debt is all in one place. This will increase your overall credit score.
  • Reduced stress: When you have a plan in place to address your credit card debt, you’ll find that your stress levels naturally begin to decrease. You gain confidence and feel more equipped to advance toward financial freedom.

Balance Transfer Mistakes to Avoid

Before you transfer a credit card balance, there are a few common mistakes to avoid. 

Not Taking the Time to Prequalify

When you apply for a balance transfer credit card, the associated financial institution will check your credit. This type of inquiry is a hard credit check, which negatively affects your FICO score. You don’t want to ding your credit score if you don’t even qualify for the card. 

Instead, take the time to prequalify for the card you want to use to consolidate your debt. Prequalification may involve a soft credit check, but this type does not affect your credit score. Only proceed if you get the go-ahead from the prequalification results. 

Not Taking the Time to Compare Cards

Balance transfer cards come in a wide range of terms. It’s essential that you take the time to compare the cards you prequalify for before going with the first card that looks good. For example, if you’re currently paying an APR of 18%, but immediately sign up for a card with a 10% APR while there is a card out there that offers 0% APR for 6 months and 10% APR thereafter, you just missed out on the opportunity to tackle the principle for 6 months without accruing any debt. 

Additionally, some 0% APR cards come with a balance transfer fee. If you qualify for another card that offers the same APR without the fee, you’ll save more money in the long run. 

Not Checking the Credit Limit

Signing up for a card without checking the credit limit may mean you don’t have enough of a limit to cover the debt you need to consolidate. That would defeat the whole purpose of moving all of your debt onto one card. According to Experian, you’ll also need to be aware of the card’s balance transfer limit. Let’s say you need to transfer $10,000 in debt. Your new card has a credit limit of $10,000, but a balance transfer limit of only $7,500. That means you’ll still leave a balance of $2,500 on your old card. 

Not Paying Attention to the Promotional Terms

With most balance transfer cards, promotional offers are subject to a set of terms. In addition to an introductory APR expiring after a set timeframe, consumers must take advantage of the balance transfer by a certain date. This may be as quick as 45 days or as long as 3 months. That means if you don’t consolidate your debt by transferring the balances before the designated date, you’ll end up with a new card and forgo all of the associated benefits.

Continuing to Incur Debt

Once you have successfully consolidated your debt by transferring the balances from your old cards to your new card, you must cease to use them. Remember that your goal is to get out of debt, increase your credit score, and set yourself up for financial success. Using the cards will not only put you further in debt, but it will also increase your credit utilization rate, which results in a lower credit score. 

Missing a Payment During the Promotional Period

It’s common knowledge that missing a payment or making a late payment on any credit card will negatively affect your credit score, as financial institutions report this information to the credit bureaus. What you may not realize, however, is that missing a payment during the promotional period may result in a nullification of the promotional terms. If you were enjoying a 0% introductory APR, a missed payment could trigger the end of that rate and the start of the regular rate. 

Canceling Old Credit Cards

Canceling your old credit cards after transferring their balances to a new card will remove the temptation to use them; however, doing so will reduce your credit score. This is because the credit bureaus take into consideration credit age, as well as your credit utilization rate. Rather than closing out the accounts, leave them open, but don’t use them. If temptation is an issue, consider placing them in a folder in your filing cabinet instead of your wallet. 

Not Creating a Budget to Repay the Debt

When it comes to balance transfer mistakes, not creating a budget to repay the credit card debt is one of the biggest. It’s best to eliminate the debt during introductory APR periods, especially if you’ve secured a 0% APR. So, if you have an interest-free period of 12 months for a credit card balance of $4,000, you’d need to place a monthly payment of $333.33 in your budget in order to clear the debt. 

Successful Strategies for Navigating the Balance Transfer Process

Implement these balance transfer tips, and you’ll be one step closer to financial stability:

  • Do your homework. Take the time to list all of your credit card debts, including balances owed and current interest rates. Research and compare the offers of several balance transfer cards before choosing the one that best fits your needs. Ensure you read the fine print and fully understand all the terms and conditions.  
  • Request the transfer. Some financial institutions will allow you to request balance transfers online or over the phone. Others provide balance transfer checks. If you can’t cover your entire debt with your new card, transfer balances from the cards with the highest interest rates first.
  • Take advantage of the introductory period. Pay as much as you can, if not all, during the introductory period. This is when you’ll save the most money. 
  • Set up automated payments if possible. Using auto-pay is a great way to avoid missing or making a payment late. 
  • Check balances monthly to monitor your progress. Watching your balances go down will give you the motivation to continue. 

Conclusion

Consolidating credit card debt through balance transfers can be a prudent financial decision, offering a means to streamline payments and save on interest. However, it’s crucial to be well-informed about the process and potential pitfalls. By understanding the balance transfer process and avoiding common mistakes, individuals can confidently navigate this financial tool to their advantage.

When done correctly, balance transfers offer numerous benefits, including lower interest rates, introductory 0% APR offers, simplified payments, potential credit score improvements, and reduced stress. However, it’s essential to steer clear of common mistakes such as not prequalifying for cards, failing to compare terms, disregarding credit limits and promotional terms, continuing to accumulate debt, missing payments, canceling old credit cards, and neglecting to create a repayment budget.

Successful strategies for navigating the balance transfer process include thorough research, prioritizing balance transfers, maximizing the introductory period, and setting up automated payments where possible. By following these strategies and being mindful of potential missteps, individuals can make the most of balance transfers to address and manage their credit card debt effectively.

Related Article: 10 Habits to Avoid for a Better Credit Score

Credit Card Myths You Need Debunked

by Jeannyn Gomez
Credit Card Myths You Need Debunked

Last updated on February 6th, 2024

Credit cards play a huge role in your credit scores. Because of that, you should never take your credit card knowledge for granted. Plenty of resources exist to help you learn about credit cards, but often, these sites fall into the trap of common credit card myths. Let’s break down those myths and help you live your best credit life.

Truth or Lie: Credit Card Edition

The credit card might seem like a very modern tool, but credit cards have been around since the 1950s. Because of that, the popular payment option has added time to pick up a few myths here and there.

However, credit cards have come a long way since their conception. We have numerous credit cards that fit consumer needs and offer lucrative reward-earning potential. However, the evolution of the modern credit card has left us with a few myths in need of debunking. After all, faulty information can negatively affect your credit score.

Let’s break some of the most common credit card myths:

Applying for a New Credit Card Will Drastically Hurt Your Score

Perhaps the most prevalent credit card myth relates to your credit score when you apply for a new card. Will applying for a new credit card severely impact your credit score? The short answer is no, but you should expect a small “ding” to your credit score.

When you apply for a new credit card, lenders perform a hard inquiry on your report to pull your credit history. The hard pull may knock off a few points on your credit score, but it is nothing major to worry about.

Each hard inquiry can stay on your credit report for up to two years but shouldn’t affect your score for more than one year. In most cases, the effect on your score will roll off in a few months. Getting a new credit card can improve your credit score. This is because it increases your available credit and improves your credit utilization ratio.

That is, of course, if you continue to use all your credit cards responsibly. Credit usage accounts for 30% of your FICO score. In contrast, hard inquiries or new credit applications only account for 10% of your score.

Carrying a Credit Card Balance Will Improve Your Credit

Another common myth states that carrying a balance is good for your financial health. Again, there is some truth to this rumor, but, you don’t need to carry a balance on my credit card to build credit.

Having a balance on your credit card doesn’t directly affect your credit building, despite what people think. This myth often leads people to believe that they need to maintain a revolving balance to show creditworthiness. However, carrying a balance only results in unnecessary interest charges.

To build credit effectively, making regular payments in full and on time is essential. This demonstrates financial responsibility and shows lenders that you can manage credit responsibly. Paying off your credit card balance in full each month is the best practice to avoid interest and maintain a healthy credit score.

Experts recommend keeping a low credit utilization ratio – under 30%. It shows lenders you’re responsible with your available credit. When you carry a credit card balance, it lowers your available credit and increases your debt.

This action negatively affects your credit utilization ratio and lowers your credit score. Hence, this is why carrying a balance is not the best strategy to boost your score.

Having Multiple Credit Cards is Harmful to Your Credit Score

Having more than one credit card is okay if you use them responsibly. But don’t go overboard.

Remember, if you don’t use your credit card, the issuer may close it, impacting your credit score. Apply only for what you need and what you can manage responsibly. It might get dicey if you apply for multiple credit cards within a short period. Spacing out your credit card applications for best credit practices is best.

Missing Your Payment Will Automatically Harm Your Credit Score

Missing a credit card payment is not a good habit. However, a missed credit card payment will not always instantly affect your credit score. Credit card issuers typically will not report the missed payment if it is less than 30 days late.

You should always check with your credit card company on their processes for late payments. Although they may agree not to report the late payment within a certain period, you might still get a late fee. Card issuers often waive the late fee if it’s your first time missing a payment.

Credit Cards are for Emergencies Only

One of the most prevalent myths about credit cards is that they are only good for emergencies. Some people overlook the everyday benefits of credit cards and think they should only use them in emergencies. While credit cards can certainly be helpful during unforeseen circumstances, they offer much more than just emergency funds.

Credit cards provide convenience and protection for online purchases, travel bookings, and rental car reservations. They often come with added benefits such as purchase protection, extended warranties, and fraud liability protection. Use credit cards for daily expenses, pay them off quickly, and enjoy benefits while establishing good credit.

Why Exposing Credit Card Myths Helps Your Finances

Credit cards are powerful financial tools that, when used responsibly, can provide convenience, security, and valuable rewards. Popular misconceptions about credit cards may obstruct your focus on the things that do matter. Knowing credit card facts helps you make informed decisions about your finances and how they impact your life.

To handle your credit cards well, pay on time, use less credit, and pick the right card for your needs. By doing this, you can confidently use credit cards. You can also build a good credit history. Additionally, you can access better financial opportunities and credit card offers, including rewards, statement credits, and 0% intro APR offers.

Related Article:  How To Choose The Best Travel Credit Card

Featured image by BestCards and pixelshot/ Canva

Decoding Store Credit Cards: Pros and Cons for Shoppers

by Jeannyn Gomez
Decoding Store Credit Cards Pros and Cons for Shoppers

A good deal on a shopping spree is always a sweet find. With store credit cards, consumers typically are promised savings for shopping at their favorite retail stores, but are they always a good idea? Here are the pros and cons of shopping with a store card.

What Are Store Cards

Retail credit cards, also known as store credit cards, hold many benefits for people who shop frequently at specific stores. Store cards are linked to a specific store or retail chain, often co-branded with major networks like Visa or Mastercard. They offer discounts, rewards, and financing options for purchases at the affiliated store. Top of Form

The Pros of Store Credit Cards

Store credit cards offer a range of benefits that can enhance your shopping experience.

Discounts and Rewards

It is no secret that retail credit cards could get rewards and discounts at your favorite stores – this is part of their allure. Frequent shoppers at department stores, grocery stores, or even box stores like Target, Walmart, or Costco can greatly use rewards and discounts to maximize their savings.

If you’re a frequent shopper at “Store X,” for example, you could earn an unlimited 5% discount at that store, both in-store and online. You could also earn rewards outside of Store X on eligible purchases, say gas, groceries, and travel, if it features the Visa, Mastercard, or American Express network logo.

If you truly frequent the store, stacking up the rewards will come naturally, and in the long run, you can earn additional savings. Moreover, most store cards will offer cardholders exclusive access to sales, cardmember events, and more.

Introductory Discounts

Similar to traditional credit cards, some retail cards have introductory offers usually related to discounted first purchases. In contrast, traditional credit cards might earn you bonus cash back for reaching a spending goal on new accounts or introductory low rates. For example, a retail credit card may offer new account holders a bonus statement credit after using the card to make a qualifying purchase that meets the spending limit.

Special Financing

Another advantage of store credit cards is the possibility of special financing options. Some retailers offer 0% intro APR financing or deferred payment plans for select purchases made with their credit cards.

If you’re making a high-dollar purchase, special financing can help make your payments manageable, which would otherwise be a large lump sum.

Special financing can help manage more expensive purchases, such as home makeovers, repairs, appliances, hobbies, and more. For instance, furniture credit cards may provide special financing for a year or more on select sofa or mattress purchases.

Furniture can cost hundreds of dollars, and if home makeovers are your thing, then a furniture store retail credit card can help finance your purchases. If you’re a homeowner, you may find a home improvement store card is more practical, with offerings from Lowe’s, Home Depot, Tractor Supply Company, and more.

Build Credit With Retail Credit Cards

Another benefit of having a store credit card is the opportunity to build credit. Retail cards still hold the same credit-building power as traditional credit cards. Therefore, responsible use is crucial to ensure your credit score grows. Otherwise, irresponsible use of a retail credit card can damage your credit score if you often have an unbalanced credit utilization ratio.

The Cons of Store Credit Cards

High-Interest Charges

There are a few less-than-appealing angles to store credit cards. For example, many store cards typically have higher APRs. If you carry a balance or make only minimum payments, the interest fees can quickly outweigh the initial discounts or rewards earned.

Overspending

Store cards tend to have lower credit limits than other credit card offers. And because of these lower credit lines, getting carried away on a shopping spree and using your retail card to make several purchases or one large transaction can be easy.

It gets dicey when you’re dealing with a smaller credit limit. For instance, if you have a $500 credit limit on a store card and spend $300 on one shopping trip, you have now used more than 50% of your available credit. As a result, your credit utilization ratio is negatively impacted. It may cause a significant in your credit score should your overall credit limit across all your cards be relatively low.

Limited Use

Another disadvantage of store and retail cards is their limited usability. Unlike regular credit cards, which can be used at various merchants (called “open-looped credit cards”), some store credit cards are only accepted within the specific retailer’s network. This can be inconvenient if you prefer to shop at different stores or if the retailer does not offer a wide range of products that meet your needs.

Offers Too Good to Pass Up

A final downside to retail credit cards is the attractive store credit offers. The next time you catch yourself at the payment counter of a retail store, could you pay notice to the cashier? Did they offer you a discount for signing up for a store credit card? This scenario is common. For example, the offer may include 20% off your purchase for applying – a tempting proposition. However, you should think about your needs. Do you need another credit card? Can you manage responsibility for the new card if you apply and get approved?

The immediate reward may be a 20% discount. Still, you should factor in the long-term consequences, like the impact on your credit score, the potential for overspending, and the responsibility of making timely payments to avoid late fees and negative impacts on your credit score and report.

The Bottom Line

Regardless of the potential negatives behind retail credit cards, they have numerous strengths like credit building, discounts, rewards, and more. Depending on your financial needs and spending habits, a store credit card can be a useful shopping tool in your wallet. However, a crucial question is whether you will frequently use the retail card. If the answer is no, we recommend alternative credit cards or even holding off from a new credit card altogether.

Related Article: Ultimate Guide to Retail Credit Cards

Featured image by BestCards

Chase, United Celebrate Black History Month w/ Miles Offer

by Cory Santos
chase-united-celebrate-black-history-month-w-miles-offer

February is the annual commemoration of the history, the culture, the contributions, and the sacrifices of African Americans. Chase and  United Airlines are celebrating Black History Month by rewarding United MileagePlus cardmembers with 10X miles on donations to select non-profits dedicated to offering Black students and supporting civil rights opportunities.

United and Chase Celebrate Black History Month with 10X Miles on Donations Offer

In honor of Black History Month, United Airlines, Chase and Visa are once again teaming up to inspire United MileagePlus Cardmembers to donate to select non-profit organizations that provide access to educational opportunities for Black students and support civil rights policies. Between February 1 and March 31, 2024, United MileagePlus® Visa Cardmembers will earn ten (10) total miles for every dollar (up to $1,500) donated to the following organizations:

  • The Thurgood Marshall College Fund is a non-profit organization established in 1987 as the nation’s largest organization exclusively representing the Black College Community. TMCF’s member schools include 47 publicly supported Historically Black colleges and Universities that enroll nearly 300,000 students.
  • The NAACP Legal Defense and Educational Fund is a premier legal organization fighting for racial justice through litigation, advocacy, and public education.
  • United Negro College Fund – a non-profit that supports under-represented students looking to continue their education.

To make giving (and earning) even easier, United has set up a dedicated Black History Month 2024 page. This page provides direct links to the donations pages for eligible charities and non-profit organizations. 

Eligible Chase United MileagePlus Credit Cards

The limited-time 5X miles on select non-profits promotion extends to the following Chase United MileagePlus credit cards:

Supporting Organizations that Advance Civil Rights

This is the fourth year that Chase and United Airlines have teamed to offer enhanced miles for every dollar donated to select charities supporting civil rights and education. The brands were quick to highlight the importance of the new promotion – and the impacts it can have on Black lives – in a press release announcing the launch:

“This Black History Month, United is proud to celebrate the Black community and continue our ongoing commitment to fight racial inequality by supporting organizations that advance civil rights and provide more opportunities for economic, educational and personal development,” said Jessica Kimbrough, chief diversity, equity and inclusion officer at United. “Through our partnership with Chase and Visa, we look forward to giving our valued Cardmembers a unique way to make meaningful contributions to these organizations and be rewarded for their support.”

“At JPMorgan Chase we are on a mission to help close the racial wealth gap and drive economic inclusion for Black communities,” said Ed Olebe, president of co-brand cards at JPMorgan Chase. “Providing more access to educational opportunities for Black students and increasing civil rights is foundational to our long term success. We are partnering with United and Visa during Black History Month again this year to reward our customers when they take action to support organizations that are truly making a difference in these critical areas.”

Related Article: New United MileagePlus Welcome Offers

Featured image by ArtsyBee/PixaBay

What Is the Average Credit Card APR?

by Cory Santos
what is the average credit card apr

Last updated on April 3rd, 2024

When it comes to credit cards, one of the most important terms you need to understand is APR, which stands for Annual Percentage Rate. Your APR is usually a direct result of your credit profile, but rewards and banks also play a critical role. Have you ever wondered what the average interest rate on a credit card? Here are the average credit card APRs for different types of credit cards and different credit scores.

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How Credit Card Interest Works

Credit card interest is more than a monthly line item in your statement or a number printed on the credit card issuer envelopes you still receive via snail mail. Quite simply, it is the fee that you pay for the ability to borrow money. This interest rate is known as an annual percentage rate or APR.

Credit card issuers make a significant portion of their profits through interest payments. Suppose you carry a balance on your credit card. In that case, you can anticipate paying extra in addition to your overall purchase prices.

Credit card issuers calculate the interest you owe by multiplying the daily interest rate and adding it to your balance. This daily interest rate is your annual APR divided by the number of days in the year (365 in most cases).

Here is a quick example to demonstrate how to calculate your daily interest rate:

  • Credit card APR: 15%
  • Current balance: $500

Let’s say your current credit card balance is $500, and that card features a 15% APR on purchases. If you divide that 15% by 365, you’ll get a daily interest rate of 0.041%. This means that an outstanding balance of $500 would accrue $0.20 in interest every day. Should the balance remain the same for the whole billing period, you would owe $6.15 in interest at the end of the month, for a grand total of $506.15 owed.

What's the Average APR?

According to the United States Federal Reserve, the average credit card interest rate currently hovers around 23%. But interest rates can vary significantly depending on the card type, rewards, the bank, and your credit health.

By Credit Score

Those with better credit scores can expect lower interest rates. This statement holds up in almost every aspect, but statistics show that those with average (or fair) credit scores pay higher interest than those with bad credit or no credit. But why?

The reason for the higher APR for fair credit vs. bad credit has to do with the type of interest rates these cards offer. “Bad credit” cards usually have a fixed-rate APR. This static rate means issuers can offer a set rate for a wide range of credit scores at the same time. Those with no credit or a poor credit score often get secured cards. Cards that require a deposit feature a fixed APR.

People with fair credit scores have better access to quality cards. Because of this, they usually receive cards with a variable APR. But, since their credit score is subprime, they still receive worse offers than those with good or excellent credit.

Score APR
Excellent Credit 24.49%
Good Credit 27.49%
Average Credit 29.24%
Bad Credit 31.74%
No Credit 29%

By Deposit Types

The difference between unsecured cards and secured cards is similar to the variations by credit score. Better credit scores receive variable interest rates, with better scores getting a lower interest rate. Secured cards typically offer fixed rates, on the other hand. Secured cards also provide collateral, making banks more willing to offer lower rates.

Unsecured

29.24%

Secured

22.99%

By Credit Card Type

Student cards offer highly competitive APRs because they provide smaller credit limits. Credit unions, on the other hand, provide exceptional value since they are member-owned and operated. Where larger banks use profits to satisfy shareholders through dividends or other investments, credit unions are not-for-profit companies. This status means that profits return to members – providing them with unbeatable APRs.

0% APR

27.24%

Balance Transfer

27.49%

Business

28.49%

Credit Union

26.24%

Low APR

26.49%

Student

27.99%

By Rewards

Rewards credit cards offer higher interest rates versus balance transfer cards or low APR cards. Higher rates are due to the value of the points or miles on offer. Because of the larger APRs, these cards are poor choices for carrying a balance. Without a 0% rate intro offer on purchases or balances, applicants should be wary about carrying a balance. Instead, pay the full monthly statement balance and avoid interest building up.

Airline

28.74%

Auto

29.24%

Cash Back

28.24%

Crypto

28.24%

Dining

28.74%

Dining

28.49%

Hotel

28.74%

Retail

29.74%

Travel

28.24%

What Is APR?

What exactly does  “APR” mean? APR stands for annual percentage rate. APR is a basic formula that combines the U.S. Prime Rate and the issuing bank’s interest margin to show a cardholder how much they’ll owe if they don’t pay their statement balance in full each month.

Understanding APR is important because it allows you to compare different credit card offers and select the one that suits your financial needs and goals. By knowing the APR, you can evaluate the cost of carrying a balance on your credit card and make informed decisions regarding your spending habits.

What's the Current Prime Rate?

As mentioned, APR is directly impacted by the Prime Rate. The Prime Rate is the interest rate the Federal Reserve charges top clients for borrowing money. The Wall Street Journal publishes this rate, which the Fed updates regularly. Banks then extend credit lines to consumers and attach their own interest rates, known as a margin. Combining these two figures allows people to reach the APR. 

CURRENT PRIME RATE:

8.5%

Different Types of APR

The above figures cover the purchase APR. This figure is the interest rate cardholders pay when they have a statement balance. There are other types of APR, however, including:

How Is APR Calculated?

Calculating credit card APR may seem complex, but it follows a standard intuitive method. Most credit card issuers use the average daily balance method to calculate interest charges. Here’s how the average daily balance meethod works:

  • The outstanding balance on your credit card is recorded at the end of each day.
  • The daily balances are added and divided by the number of days in the billing cycle to calculate the average daily balance.
  • The average daily balance is multiplied by the APR and divided by 365 to determine the daily interest charge.
  • Finally, the daily interest charges are calculated to provide you with the total interest you owe.

It is important to note that the method of calculating APR may vary slightly among credit card issuers, so reviewing the terms and conditions specific to your credit card is always advisable.

Factors That Impact Credit Card Interest Rates

Okay, so I can check out all the latest interest rate calculations here – so what?

Keeping up-to-date on the latest APR trends can help you when shopping for your next credit card. Knowing what the average interest rates are on different card types can let you better gauge if the offer your bank gives you is fair, what other applicants with a similar credit profile to yours are getting, and if it’s time to ditch your current issuer for an exciting new offer elsewhere.

Several factors influence the credit card APR you are offered. One of the primary factors is your creditworthiness, which is determined by your credit score. Lenders consider your credit score to indicate your ability to repay the borrowed amount. The higher your credit score, the lower the risk you pose to the lender, resulting in a more favorable APR.

Another factor that affects credit card APR is your choice of credit card. Credit cards come with varying interest rates based on their features and benefits. Credit cards with rewards programs or premium perks often have higher APRs than basic cards.

Furthermore, the current economic conditions and the overall interest rate environment can impact credit card APR. When interest rates set by the central bank rise, credit card APR also tends to increase. Keeping track of these external factors is essential to anticipate any changes in your credit card’s APR.

The Impact of High Credit Card APR

Having a high APR on your credit card can have significant, dangerous implications for your personal finances. The biggest consequence of high interest rates is the increased cost of borrowing. With a high APR, the interest charges on your credit card or loan balance accumulate much more rapidly, potentially leading to a more significant debt burden over time.

High APRs can also make it challenging to pay down your credit card balance in quickly. High interest charges may take up a substantial portion of your monthly payment will go towards interest charges rather than reducing the principal amount owed. This can prolong your debt repayment journey and result in a long-term financial burden.

Credit Card Payoff Calculator

Our helpful credit card repayment calculator can help figure out how long it’ll take to pay off your debt and how much you’ll pay in interest: 

Tips for Handling High Credit Card Interest Rates and APR

Getting a high-interest rate on your credit card doesn’t have to be the end of the world. There are several strategies you can employ to manage your credit card APR effectively, including:

Maintain good credit health A strong credit score can help you secure lower APRs. Make sure to pay your bills on time, keep your credit utilization low, and avoid applying for multiple credit cards within a short period.
Pay in full By paying your credit card balance in full each month, you can avoid paying any interest charges altogether. This not only saves you money but also helps improve your credit score.
Avoid cash advances Cash advances on credit cards often come with higher APRs and additional fees. It is best to avoid using your credit card for cash withdrawals unless absolutely necessary.
Negotiate a lower rate If you have a good payment history and credit score, you may be able to negotiate a lower APR with your credit card issuer. It’s worth contacting customer service and explaining your situation to see if they can offer you a better rate.

FAQs About APR

  • Each issuer has a differing repayment model, but generally you can expect your minimum payment to be heavily influenced by your APR, total balance, and any fees.  It therefore follows that if you want a lower monthly payment, you should try lowering your APR by boosting your credit score. 
  • APR is the cost of borrowing on your credit card. The term refers to the yearly interest rate you’d pay if you carry a balance, and it often varies from card to card. That is the easiest way to view your APR.
  • The cash advance APR is the interest rate an issuer charges when you use the card to withdraw cash – in much the same way you would at an ATM.  Cash advance APRs tend to be higher than purchase or balance transfer rates.
  • Balance transfer APR refers to the interest rate charged when transferring other card balances to another credit card. Balance transfers often charge a fee of $5 or 3% of the transaction, whichever is greater, and feature an APR the same (or nearly the same) as purchase APR.
  • A high interest rate is simply any credit card with an APR higher than the averages listed above. A low interest credit card – or low APR credit card – is any card with an APR lower than the average rates above.
  • Your APR may increase if you do not make your regular payments. Additionally, missing payments will result in negative comments on your credit file, in turn lowering your credit score. Missing payments can lead to fees, account closure, wage garnishing, and more.
  • No. APR refers to Annual Percentage Rate, or the repayment rate of your credit card., APY refers to Annual Percentage Yield and refers to the yearly return on savings or checking accounts. Credit cards do not pay interest, so APY does not apply. Instead, they charge interest, so require APR.
  • For more information about building credit and lowering your APR, check out our handy resources here.
  • A high APR can lead to further debt without careful money management. High APR means higher minimum payments and the chance of missing payments.
  • The highest credit card APR is the PREMIER Bankcard®, with a fixed APR of 3^.

What’s Next: The Easiest Credit Cards to Get with Bad Credit

10 Habits to Avoid for a Better Credit Score

by Jeannyn Gomez
Avoid These 10 Habits for a Better Credit Score

Last updated on February 12th, 2024

Forming good habits for the body, mind, and soul is a positive action to take in life. However, never forget to focus on the practices you should have in place for your finances, such as your credit score. Here are ten of the worst habits you need to avoid to get a better credit score:

1. Avoid Paying Your Credit Card Bill Late

Stop! It’s crucial you don’t forget and make that credit card payment that’s due soon.

Your payment history and credit utilization ratio influence your credit score. Your payment history keeps track of revolving and installment credit/loans.

Missing or making a late payment can seriously affect your credit score. It shows creditors how responsible you are with your money. Banks check your credit score to decide if they will give you loans or credit for things like cars and houses.

2. Closing Credit Card Accounts

Believe it or not, closing a credit card account may harm your credit score. Make it a habit to keep your unused credit card accounts open and active. Closing a credit card lowers your credit utilization ratio as you lose access to that additional credit line.

For example, if you have two credit cards, each with a $2,000 credit limit, your total credit available is $4,000. If you use $1,000 on one of your credit cards, your credit utilization ratio would be 25%.

Experts recommend no more than 30%. If you close the second credit card, your available credit will decrease from $4k to $2k. You have already used half of it, so your credit utilization ratio will be 50%. Way above the recommended 30%.

Another reason to not close credit card accounts is that it impacts your credit history record. Credit history is another major factor that determines your credit score. Closing out an older credit card account erases the credit you have built over time. And a mature credit history makes for better credit.

Related Article: Should You Close Old Credit Card Accounts?

3. Not Using Your Credit Card

If you have a credit card sitting in your wallet without using it, it’s time to break that habit. You can achieve a better credit score by using your credit cards responsibly to build a positive credit history. It’s okay to keep your credit card debt to a minimum if that’s what you feel comfortable with.

Use credit cards for necessary monthly expenses like bills, groceries, and gas that you have to pay anyway. If you don’t use your credit cards, the credit bureaus won’t automatically report on-time payments to boost your credit score. Using your credit cards and paying off the balance each month can improve your credit score. It also demonstrates that you are a reliable borrower.

4. Using the Wrong Credit Card for Major Purchases

Don’t just pull out any old credit card for your major purchases. To avoid damaging your credit score, stop the habit of maxing out a credit card by mistake. Be aware of the ticket price and your credit limits. Maxing out your credit card can harm your credit score by raising your credit utilization ratio.

If your car breaks down and the mechanic costs reach $1,000, you may prefer to cover the expense with a credit card. In this scenario, we recommend picking a credit card with a higher credit limit because using a credit card with an exact $1,000 credit limit will max out your card.

A higher spending limit will help manage your credit utilization ratio. A $1,000 purchase on a $10k credit limit will be less of an impact on your credit score than it would on a card with a $1,000 limit.

5. Dodge Co-signing on Debt

Do yourself a favor and don’t co-sign any debts to ensure your credit stays at its best. Much risk exists in co-signing debt for friends and family, especially the risk of them missing a payment or making late payments.

These actions will definitely impact you as a co-signer because you agreed to be responsible for their debt. As a co-signer, these actions will definitely affect you because you agreed to be responsible for their debt. This can harm your credit score and impact your ability to get loans for things like a house or a car.

6. Avoid Leaving Credit Report Errors Unfixed

You shouldn’t sweep credit report errors under the rug. Any mistakes on your report are potentially affecting your credit score negatively.

If you spot an error on your credit report, act. The credit bureaus will investigate the mistake and remove it if applicable. Once you fix the errors on your report, your credit score should look much better.

7. Letting Debt Go to Collections

Don’t let any debts go into collections. Once your debt goes into collections, your credit score certainly takes a hit.

If your credit card debt goes to collections, you should reach out to the collections agency. You can arrange a payment plan with them to ensure that you mark your debt as paid and closed. Your credit will still take a blow. However, the chances of the inquiry rolling off in fewer years are much more probable.

8. Applying for Credit Cards Often

If your credit score has improved, you might want to apply for popular credit cards. However, we do not recommend going on a credit card application rampage. With every credit card application, your credit score takes a minor hit.

Banks may refuse to give you a loan or credit if they see many applications on your card. They may think something is wrong. This can happen when you need a loan or credit.

9. Not Having a Credit Card

This one might seem like an obvious tip, but to build adequate credit, you should get a credit card. A credit card is the easiest and one of the fastest ways to build or better your credit. If you use the credit card responsibly, you will be on your way to a prime credit score.

Credit card options exist for all sorts of credit scores. If your credit is not at its best, you may consider a secured credit card with upgrade potential. Some secured credit cards offer a chance to graduate from a secured card to an unsecured credit card.

10. Never Checking Your Credit Score

Finally, if you’re not checking your credit report often, you’re not off to a good start. Something as simple as checking your credit score regularly helps guide you on your way to better credit.

Knowing where you stand with your score is a tell for when you may need to change up your credit-building strategy. It’s also a smart way to spot errors or mistakes on your report as soon as they impact your score. Checking your credit score often helps you improve how you handle building credit.

Conclusion

In a world where habits can make or break us, it’s vital to recognize the impact of our financial habits, especially on our credit score. As you strive to build a solid financial future, avoiding detrimental habits is key. By steering clear of these 10 common pitfalls, you can set yourself on the path to a healthier credit score and improved financial well-being.

Remember, every financial decision matters, and small changes can lead to significant improvements in your credit health. Start by breaking free from these habits, and watch your credit score soar.

Related Article: Credit Card Myths You Need Debunked

Featured image by Africa images/Canva

Never Put These Transactions On Your Business Card

by Cory Santos
Smart Business Spending: Transactions to Avoid on Your Business Credit Card

Last updated on February 12th, 2024

Savvy business people understand the importance of managing business finances effectively. One crucial aspect is knowing which transactions you should (and which transactions you shouldn’t) put on a business credit card. Here are five expenses and transactions to avoid putting on your business credit card account:

The Benefits of Business Cards

Small business credit cards help companies of different sizes with cash flow and give them access to more money. And if your company plans to issue multiple cards to employees, the benefits can increase exponentially. That’s because many business cards provide access to lucrative rewards, such as cash back, points, or airline miles.

But business credit cards offer far more than rewards. They typically provide a suite of financial management and accounting software integrations, including for popular programs like QuickBooks.

These expense management tools also include employee spending controls. These controls allow managers to limit spending on cards. Employees who need money can use them, while those who don’t cannot.

Why Managing Business Expenses Is Critical

Managing business expenses is a critical aspect of running a successful enterprise. It means making wise money choices and ensuring that every expense helps your business grow and make money.

One tool that many entrepreneurs rely on for financial transactions is the business card. Business cards are helpful but use them wisely to prevent money issues. Avoid putting the following transactions on your card to maintain a stable business.

Transactions You Should Never Put On a Business Credit Card

Credit cards are useful for managing expenses, but some transactions are better with other payment methods. Here are some of the most critical transactions to avoid placing on a business card:

Personal Expenses

Maintaining a clear separation between your personal and business finances is essential. Combining personal and business expenses can cause confusion, complicate accounting, and create tax problems. Always avoid using your business card for personal expenses like groceries, vacations, or shopping. Keep your financial records accurate and make bookkeeping easier.

Cash Advances

Avoid using your business credit card for cash advances, even though it offers the convenience of cash. Cash advances often come with higher interest rates and additional fees, making them expensive. Additionally, using your credit card for cash withdrawals can negatively impact your credit utilization ratio, potentially damaging your credit score. Instead, explore alternative means of accessing cash for your business needs, such as a business line of credit or a small business loan.

High-Risk Investments

Investing in “volatile assets” with credit can be financially risky and potentially lead to substantial losses. Using your business credit card for high-risk investments, such as speculative stocks or cryptocurrencies, is generally not advisable. Using personal money or special investment options is best for these projects. This helps manage risks and keeps personal and business finances separate.

Balance Transfers

Using your business card for a balance transfer is fine – but not your personal debts. Balance transfers can be useful for consolidating debt or taking advantage of lower interest rates. However, it’s generally wise to avoid transferring personal debts onto your business credit card. Doing so can blur the line between your personal and business finances, making tracking and managing expenses harder.

Unapproved Employee Expenses

Allowing employees to use your business credit card can streamline expense management. Still, it’s essential to establish clear guidelines and approval processes. Ensure that employees are aware of the types of transactions they are approved for, and those they are not. Discourage unauthorized or personal expenses on the business credit card, promoting responsible spending practices and avoiding potential disputes or misuse.

Legal and Ethical Considerations

Besides money, there are legal and moral things to think about when using your business card. Using your business card for personal expenses can break company rules and result in punishment.

Mixing personal and business expenses can result in penalties or fines if audited by tax authorities. Follow the rules and ethics when using your business card to safeguard your business’s reputation and finances.

Alternative Payment Methods for Non-Business Expenses

Don’t use your business card for personal expenses. Look into other ways to pay for non-business things.

One option is to have a separate personal credit card or bank account dedicated to personal expenses. This allows you to manage your personal finances separately from your business finances while still maintaining convenience and flexibility. By using your own money for personal expenses, you can avoid unnecessary debt and maintain stability. This is better than borrowing or risking your business’s finances.

Best Practices for Using Business Cards

To ensure responsible financial management for your business, here are some best practices for using business cards:

  1. Set clear policies and guidelines: Establish clear policies for the use of business cards within your organization. Communicate these guidelines to your employees, ensuring they understand the purpose and limitations of their business cards.
  2. Regularly review expenses: Regularly review and analyze your business card expenses to identify any discrepancies or potentially problematic transactions. This will help you stay on top of your financial situation and address any issues promptly.
  3. Educate employees on responsible use: Provide training and education to your employees on the responsible use of business cards. Emphasize the importance of separating personal and business expenses and the potential consequences of misuse.

Conclusion

Effectively managing your business credit card transactions is vital for maintaining accurate financial records, simplifying accounting processes, and maximizing the benefits of your card. To be financially efficient and have good business practices, it is important to avoid certain actions. These actions include personal expenses, cash advances, risky investments, balance transfers, paying yourself, and unauthorized employee expenses. Use a business credit card only for real business costs to keep personal and work finances separate

.Related Article: Who Owns Business Credit Card Rewards?

Featured image by Sarah Pflug/ Burst

Limited Time Offer for World of Hyatt Credit Cards

by Cory Santos
limited-time-offer-hyatt-credit-cards/

The World of Hyatt credit cards  are among the more intriguing cards on the market today, thanks to  generous points on Hyatt stays, equally impressive rewards on purchases made in critical categories, and a slew of travel (and comfort) perks from the World of Hyatt loyalty program. Now, Hyatt is making travel even more lucrative thanks to a new, limited-time World of Hyatt credit card welcome offer:

World of Hyatt Limited Time Offer Details

The World of Hyatt Credit Card and the World of Hyatt Business Card – and its issuer, Chase – is known for generous welcome offers. The latest is a limited-time offer available to new credit card members and provides enhanced value versus the typical welcome offers with the cards:

  • World of Hyatt Credit Card: New accounts can earn up to 65,000 World of Hyatt Bonus Points; Earn 35,000 points after spending $3,000 within the first three months from account opening, plus another up to 30,000 points after spending $15,000 thanks to a 2X points multiplier for the first six months of account ownership.
  • World of Hyatt Business Credit Card: New business accounts can earn up to 75,ooo World of Hyatt Bonus Points. Earn 60,000 Bonus Points after spending $5,000 within the first three months from account opening, plus 15,000 Bonus Points after spending $12,000 in the first six months.

This up to 75,000 Bonus Point offer runs until March 6, 2024.

Reimagined Milestone Rewards Chart

World of Hyatt also recently announced a reimagined Milestone Rewards chart, offering more milestones, more choices, and more ways for members to gift benefits to loved ones. At almost every milestone, members can choose three awards and select those that are valuable to them or choose eligible awards they can gift to someone special. Available award choices include options to:

  • Earn points for future stays across the globe.
  • Enhance their next stay with benefits like suite upgrades.
  • Enjoy experiences designed to support and complement their well-being.

Milestone rewards provide a wealth of options for members, including bonus points, additional discounts, free nights, and more. Here are some of the new Milestone Rewards:
new Milestone Rewards, including:

  • 2K Next Stay: Earn 2,000 Bonus Points on their next stay at a Hyatt Place, Hyatt House, Caption by Hyatt or UrCove hotel.
  • FIND Experience Credit: Select FIND credit to use on any FIND experience around the globe.
  • Guest of Honor Award: Give someone they care about – including themselves – Globalist benefits on either award or eligible paid stays, starting at 40 qualifying nights in a year.
  • Miraval Extra Night: Stay one night at a Miraval resort to receive a complimentary second night.
  • The Ultimate Free Night Award: Enjoy one free night in any participating Category 1-8 hotel, Category A-F all-inclusive resort or participating Miraval resort.
  • Earn on Group Stays: Eligible meeting and event planners, travel advisors and small business administrators will earn two qualifying night credits towards tier status per $5,000 in eligible spending (up to 60 qualifying night credits per year) booked to a group master account.

Same Great Features

The newest updates to the World of Hyatt Business Card are in addition to all the great existing benefits like purchase protection, complimentary employee business cards, extended warranty protection, and more. Here’s a quick rundown of some of the excellent perks you can expect from the Hyatt Business Card:

Benefit Explained
Hyatt Discoverist status The World of Hyatt Business Card provides instant elite-tier status upgrades for the primary account holder and up to five employees. Discoverist status allows you to enjoy a higher level of service and comfort around the world and usually requires ten qualifying nights each year.
Hyatt credits Cardholders get up to $100 in Hyatt statement credits after spending $50 or more at any Hyatt property, plus in $50 statement credits up to two times each anniversary year.
Hyatt Leverage access World of Hyatt Business cardholders enjoy access to Hyatt Leverage, the brand's global business travel program. Leverage provides special offers for qualifying small-to-medium-sized enterprises at Hyatt properties. This benefit has an annual value of around $300+ on stays versus outside the program.
5 annual Qualifying Night credits Cardholders earn five (5) annual Qualifying Night credits for every $10,000 spent in a calendar year to use toward reaching top-tier elite status and Milestone Rewards faster.
Get 10% back Companies that spend $50,000 in a calendar year get 10% of their redeemed points back for the rest of the year, on up to 200,000 points redeemed.

Businesses can cash in their hard-won points towards award nights with participating properties, spa credits at participating Hyatt properties worldwide, dining credits with brand restaurants, car rentals with partners, or transfer them to roughly 30 transfer partners, including major names like Air France, British Airways, Delta Air Lines, Etihad, Southwest Airlines, United, and more.

Related Article: The Ultimate World of Hyatt Program Guide

Featured image by Gregor Ciecior/ PixaBay

Unlocking the Power of Credit Card Car Rental Insurance: Your Complete Guide to Benefits, Coverage, and More for Your Next Trip!

by Cory Santos
what-is-credit-card-rental-car-insurance

Last updated on February 9th, 2024

Auto Rental Collision Damage Waiver often pops up on credit card reviews and benefit guides. But what is the car rental insurance provided by your credit card and how does it work? Here is everything you need to know about credit card rental car insurance – and if it’s worth it when you travel:

Table of Contents

At a Glance

  • Auto Rental Collision Damage Waiver (CDW) with a credit card is a benefit that provides coverage for damage due to collision or theft when you rent a car using that credit card.
  • CDW covers the cost of repairs, the actual cash value of the rented vehicle, and loss-of-use charges imposed by the car rental company.
  • It typically doesn’t cover injury to you or your passengers, damage to other vehicles or property, or any liability you may have due to the accident.
  • Not all credit cards provide CDW, so it’s important to check with your credit card issuer to see if your card offers this protection when renting a car.

How Does Credit Card Rental Car Insurance Work?

Renting a vehicle comes with the inherent risk of an accident. Car rental insurance, available at the rental counter, can help offset these fears by providing coverage in the event of an accident, vehicle theft, or another incident.

Car rental companies offer four types of vehicle insurance: liability insurance, collision damage waiver, personal accident insurance, and personal effects insurance. Credit cards typically provide collision damage waivers when the cardholder uses their associated credit card to pay the costs of renting a car and waive the additional coverage at the rental counter.

What Does Car Rental Insurance from Your Credit Card Cover?

Credit card car rental insurance is one of the most underrated benefits of a travel credit card. As mentioned, the rental car insurance from your credit card typically covers collision damage. The Auto Rental Collision Damage Waiver (CDW) frequently seen with credit cards is the same thing as collision protection. This charge is usually the most expensive item when you can opt for additional coverage at the rental counter, so getting it with your credit card is a great feature.

Some of the other items covered through CDW with your credit card include:

  • Towing expenses
  • Loss of use while a rental car is out of service.
  • Some administrative fees

Keep in mind that not all credit cards offer the same services with their CDW protection programs. Always consult your cardmember agreement and the guide to benefits, which is usually attached.

What Doesn’t Credit Card Rental Insurance Cover?

Car rental insurance through credit card networks doesn’t cover all types of rental vehicles. The following vehicle rental types are ineligible for Visa or Mastercard CDW auto rental collision damage protections:

Visa Mastercard
Antiques* ❌ ❌
Expensive/Exotic** ❌ ❌
Full-size vans ❌ ❌
Limousines ❌ ✔️
Motorcyicles/Mopeds ❌ ❌
SUVs ✔️ ❌
Trucks ❌ ❌
* An antique car is defined as a vehicle that is over twenty (20) years old or one that has not been manufactured for ten (10) years or more.
** Visa allows some luxury models for makers like Audi, BMW, Cadillac, Land Rover, Lexus, and more. Mastercard defines an “expensive” rental as any vehicle with an MSRP of $95,000 or more.

It’s worth noting that some types of vans qualify for auto rental collision damage waiver. Vans are designed as small-group vehicles, seating up to nine (9) people, including the driver, and are covered by Visa.

Rentals in specific international locations might also be excluded. Both Mastercard and Visa, for example, do not cover vehicle rentals made in Ireland, Israel, or Jamaica. Similarly, American Express  will not cover vehicle rentals in Australia, Italy, or New Zealand.

Does Auto Rental Collision Damage Waiver Work with Other Insurance?

Car rental insurance through your credit card only covers collision damage and should not be considered a substitute for your primary coverage. Instead, Auto Rental Collision Damage Waiver should be considered secondary coverage, as it will not help with the following incidents, accidents, or costs:

Damage to any property beyond the rental vehicle Injuries to other people Lawsuits stemming from damage or injuries to others Theft/loss of personal belongings
Medical costs associated with accidents Special vehicle rentals, including exotic cars, antique cars, supercars, motorcycles, large box vans, or certain trucks Many credit card auto insurance programs do not offer insurance for longer rental periods, such as more than a month Some credit card rental car insurance won’t cover car rentals made in select foreign countries

Personal automobile insurance or other insurance that covers theft or damage, the collision damage waiver reimburses for:

  • The deductible portion of car insurance or other insurance
  • Any unreimbursed portion of administrative and loss-of-use charges imposed by the rental company
  • Reasonable towing charges while the car was under the renter’s responsibility

How to File a Claim

So, how can you file a claim for an incident with your rental card? Typically, the process is as follows:

① Rent a vehicle using your credit card with rental car coverage.
② Use the same card when checking in at the rental counter.
③ Decline the additional collision damage waiver offered by the rental car company.
④ Pay the full cost of the vehicle rental using the same credit card.
⑤ File a claim with the car rental agency should an accident occur.

Filing a claim for rental damage varies based on the card issuer. Typically, you will need to provide specific information, which will include:

Accident report Vehicle rental agreement Police report
Repair estimates Photographs (if applicable) Witness testimony (if applicable)

Claim Filing Limitations and Key Dates

The time frame for filing a claim also varies based on the card type. Visa, for example, requires a claim to be submitted by either 15 days or 31 days after the incident (depending on the Visa product), and claim documentation must be submitted within 90 days. Visa also sets a claim limit of $50,000 on their credit cards.

Mastercard requires eligible cardholders to claim within 15 days of an accident and requires documentation within 180 days of the claim. American Express offers a 30-day window to make a claim and requires the same 180 days to submit claim documentation as Mastercard. Amex also offers extended rental car insurance for up to $24.95 per rental period, which is a great option for those planning on renting a car for a week or more.

Discover does not currently offer car rental insurance on its U.S. consumer or business credit cards.

Conclusion

The Auto Rental Collision Damage Waiver coverage offered by credit card issuers provides a convenient and potentially cost-saving option for individuals renting vehicles, as it can protect expenses related to collision damage and theft during the rental period. However, it is crucial for cardholders to thoroughly understand the specific terms, limitations, and exclusions associated with this benefit. While the coverage can mitigate the financial burden of repairing or replacing a rental car, it typically does not extend to personal injury or damage to other vehicles or property. Individuals should carefully review their credit card policy details and consider supplemental insurance options to ensure comprehensive protection while renting a vehicle.

Related Article: Credit Card Purchase Protection: Everything You Need to Know

Featured image by Tumisu / PixaBay

How To Choose The Best Travel Credit Card

by Jeannyn Gomez
How To Choose The Best Travel Credit Card

There is an overwhelming amount of travel credit cards to choose from so how do you know what to look for? Here is how to choose the best travel credit card for your travel needs.

What to Look For In a Travel Credit Card

Travel cards are fun to think about, mainly because they tend to carry the potential of earning paid-for-flights, free hotel stays, and more. And exactly how do you choose a travel credit card? Well, there are several factors you should consider when seeking out the best travel credit card for your needs. Here’s how.

Choose the Best Type of Travel Credit Card

Start by deciding on what type of credit card you want. If you weren’t aware of it, you should know that there are two types of travel credit cards: co-branded credit cards and general credit cards (or transferable rewards cards.) Each has its perks but one of the more obvious differences is that co-branded travel cards typically benefit cardholders that frequently use brand-specific services. In contrast, a general travel credit card carries flexibility for the cardholder in terms of earning rewards and redeeming options. Both travel cards may earn rewards in points or miles.

Co-branded credit cards can be airline, hotel, and retail credit cards. For example, the JetBlue Card from Barclays Bank is a co-branded airline credit card. The Hilton Honors American Express Aspire Card would be an example of a co-branded hotel credit card. Both cards are affiliated with a specific brand and both offer brand-specific benefits and reward redemption options.

A general travel credit card is issued by a bank or credit union and it is not affiliated with one specific brand. However, it does offer flexible travel benefits and rewards. For example, the Capital One Venture Rewards Credit Card is not affiliated with any airline or hotel brand but it is a travel credit card. It earns unlimited 2x miles on every purchase. The Venture Rewards credit card also offers other travel benefits like travel credit, airport lounge access, and more.

Seek a Rewarding Travel Credit Card

After you have made your decision on the type of credit card you should get, consider the travel rewards. Look for fruitful rewards and convenient bonuses. Make sure that the rewards are worth your while. Do this by choosing a travel credit card that corresponds with your spending habits to help maximize rewards.

For example, if you’re big on grocery shopping look for a travel credit card that will reward you for your grocery store purchases. Or if gas is one of your bigger money-guzzler purchases consider a credit card that can earn you points or miles for gas station purchases.

Don’t Be Fooled By the Welcome Bonus

Keep an eye out for card bonuses. A credit card bonus is typically an introductory offer for new cardholders. Although sometimes it’s just a bonus. A top-tier welcome bonus can be worth as high as $1,000 or more. They usually have a spending requirement within a specified period.

Spending requirements may range anywhere from $500 to more than $15,000. The spending requirement usually has to be done within a specified time frame and that can range anywhere between three months to six months. These kinds of bonuses only make sense if you have plans on spending the required amount within the specified time frame. If you don’t plan on spending big with your credit card you can also look for a noble bonus with a low spending requirement.

Find Travel Perks That Speak To You

In addition to picking out the type of travel card you want and perusing the different reward offers and card bonuses, you should also pay attention to the perks. The nice-to-haves are the juiciest parts of a travel credit card. The perks are the benefits of a travel credit card that would justify an annual fee. For example, The Platinum Card® from American Express has a $695 annual fee. However, the benefits of the card are valued at more than $1,000.

While the benefits balance out the $695 annual fee, you still have to decide if the perks are benefits you will use. For instance, the Amex Platinum Card offers an annual $300 credit with Equinox but if you don’t use this service then the $300 is useless to you. On the other hand, the Platinum card also offers a $200 hotel credit and a $200 airline fee credit. These kinds of perks might help in justifying the high annual fee if you are a frequent traveler.

There are other benefits you want to notice when searching for the best travel credit card to fit your needs. Make sure you are sitting down and being honest with yourself about your finances and your travel needs so that you can make the wisest decision when picking a travel credit card.

Complimentary hotel stays Annual travel credits Expedited airport security
Airport lounge membership Airline benefits Airline Elite Status
No foreign transaction fees travel insurance car rental insurance

Related Article: The Best Travel Credit Cards

Featured image by mimagephotography/Canva

The Ultimate Credit Card Concierge Services Guide

by Cory Santos
ultimate-guide-to-credit-card-concierge

Last updated on April 9th, 2024

Concierge services are something you may think of when you imagine five-star hotels, luxury boutiques, or the rich and famous. Concierges are personal assistants that can help with a massive array of requests. What you might not know, however, is that the credit card in your wallet could be your gateway to personal assistance services of your own.

Many credit cards offer concierge services to holders – for no additional charge. These services typically come with premium credit cards that charge an annual fee or bear the name of a premium product, such as Visa Infinite or World Elite Mastercard.

What Does Credit Card Concierge Offer?

Concierges offer exceptional service and highly knowledgeable insights at a moment’s notice. These unique services assist with a vast number of tasks, including travel arrangements, dining reservations, flower purchases, and more.

Some of the more common credit card concierge requests include:

Booking flights Planning a cruise Hotel reservations Dinner reservations
Buying last-minute gifts Researching prices Buying tickets Tough-to-get concerts
Assistance Customer support 24/7 access Emergency card support

How Does the Service Work?

Credit card concierge is a 24-hour, 7-day a week service with premium credit cards and charge cards from several issuers. Visa and Mastercard both offer Concierge as a standard feature for specific offerings within their credit card lineup.

Does It Cost Money?

Concierge services don’t cost any money to use. Since they are part of premium credit cards’ luxury appeal, there is no direct charge for using a concierge team or customer service representative for advice, assistance, or other services.

While there is no cost for using a credit card’s concierge service, any charges – including purchases, shipping costs, fees, etc. – are the credit cardholder’s responsibility. These charges are automatically placed on the card account associated with the service.

Credit Card Concierge from Major Issuers

Most major issuers provide a concierge service for select card members. Here’s what you can expect from these programs:

Visa Concierge

What Visa credit cards provide access to Visa Concierge?
Visa Platinum Visa Signature Visa Infinite
❌ ✔️ ✔️

Visa Signature credit cards and Visa Infinite cards feature complimentary access to Visa Concierge services.

Visa Signature Concierge is a free service for anyone with a Visa Signature credit card. Signature Concierge provides 24/7 toll-free access to Visa representatives anywhere in the world. Concierge representatives can assist with various concerns, including travel advice and bookings, dining reservations and tips, entertainment tickets and tips, and more.

Visa Infinite Concierge is the premium, personalized Concierge service available to Visa Infinite cardholders. Visa Infinite is top-tier in the Visa lineup, with notable Infinite cards including the Chase Sapphire Reserve, UBS Visa Infinite, and the U.S. Bank Altitude Reserve. Infinite Concierge is the pinnacle of Visa customer service. The service offers many of the same features of the Visa Signature Concierge service, but with a more personalized feel.

What Services Does Visa Concierge Offer?

As mentioned, Visa’s Concierge provides a variety of helpful services to eligible cardholders. These services include:

Travel Making travel arrangements is one of the best ways to use Visa Concierge. Visa’s team can assist with everything from booking plane tickets, cruises, or hotels, to arranging a taxi pickup at airports.
Dining The Visa service can also help book tables at popular restaurants, offer advice on the best places to eat abroad, or even get a reservation at an overbooked restaurant (in some cases).
Events Like dinner reservations, Visa concierge also offers access to sports and concert tickets – including exclusive presales.
Shopping Visa’s Concierge staff have finely tuned skills to help a cardholder pick out gifts, help locate lost luggage, and more.

How to Access the Service

Accessing the Visa Signature or Infinite Concierge service is easy and straightforward. Simply dial the Visa Concierge toll-free number: 1-800-953-7392 (outside the U.S., dial 1- 630-350-4551). Also, you can visit the global website (visa.com/digitalconcierge) and log in to your account with your email and password.

Mastercard Concierge

What Mastercard credit cards provide access to Mastercard Concierge?
Mastercard World Mastercard World Elite Mastercard
❌ ✔️ ✔️

Mastercard also offers a concierge service for holders of their premium credit card products. Both World Mastercard and World Elite Mastercard holders have access to Mastercard Concierge.

Mastercard’s concierge service is like Visa’s – as is the timeframe for service results. Cardholders can expect results anywhere from instantly to several weeks, depending on the type of request and the question or service’s difficulty.

What Services Does Mastercard Concierge Offer?

Travel Travel arrangements are one of the most popular uses for concierge services, and Mastercard Concierge is no different. The in-house service can assist with various travel arrangement options, including booking flights or hotels, arranging for a taxi pickup at the airport, or even planning a cruise. Mastercard associates also provide travel advice and tips on everything from directions to local hot spots abroad.
Events Booking concert or sports tickets is another popular option for those with eligible Mastercard products. One of the best aspects of concierge services is that they can sometimes provide access to events or concert tickets when they aren’t available for sale to the general public, such as a presale.
Dining Restaurant reservations are another popular concierge service. Like ticketing, sometimes Concierge can help land a table at an overbooked restaurant, though this isn’t always the case.
Shopping An underutilized concierge service is research, but it’s something Mastercard Concierge can offer. Since concierge staff spend their working time helping book tickets, find reservations, and offer advice, they have finely-tuned skills that can help a cardholder pick out gifts, help locate lost luggage, or even find the best restaurants in a foreign city.

How to Access the Service

Accessing the Mastercard Concierge service can be done through the following:

  • Dial the Mastercard Concierge toll-free number: 1-855-802-1387
  • Download the Concierge mobile app in your app store (Apple App Store, Google Play Store)
  • Visit the global website (mastercard.com) and log in to your account with your email and the last six digits of your eligible Mastercard.

American Express Concierge

What American Express cards provide access to Amex Concierge?
The Platinum Card® The Business Platinum Card® The Platinum Card® for Schwab

American Express is another issuer that offers a concierge service. Unlike Mastercard and Visa, however, Amex does not provide concierge services for the majority of credit cardholders. Instead, the Amex Concierge service is only available to Platinum Cardholders or Amex Centurion Cardholders (also known as the vaunted Black Card). These cards are charge cards – and not credit cards.

The American Express Concierge service provides 24/7 access to cardholders anywhere globally, though Centurion cardholders can anticipate an unrivaled level of service. This enhanced service for Centurion cardholders includes a personal concierge assistant assigned to each account.

What Services Does Amex Concierge Offer?

Travel Like both Visa and Mastercard, American Express Concierge staff can assist with travel plans, including (but not limited to) booking flight tickets or hotels, planning cruises, helping with taxi or airport pickup services, and more.
Events Helping Amex cardholders score tickets to hard-to-access events or concerts.
Dining Booking tables at exclusive restaurants – including getting seats where others struggle. According to many reports, some dedicated American Express concierges are on a first-name basis with many hosts at some of the world’s finest restaurants.
Other Amex staff can also assist with various other requests and services, such as researching gifts or purchases, offering tips and advice, and more.

Amex Centurion Concierge is renowned for its impressive service levels and the ability to furnish even the most unusual of requests. Some notable examples include a businessman arranging for afterschool pickup for his children, a cardholder wanting to know if the price of a luxury watch on his cruise was fair, and a woman seeking help in purchasing a pair of earrings she saw in a film.

How to Access the Service

Access to American Express’ Concierge is available via the following methods:

  • Dial the Amex Concierge toll-free number: 1-800-525-3355 (outside the U.S., dial 1-617-622-6756).
  • Email American Express at [email protected]

Citi Concierge

Which Citi credit cards offer Citi Concierge access?
Citi Prestige

Citi Concierge is a unique service provided to Citi Prestige cardholders. Citi Concierge offers the following benefits to users:

Travel Entertainment Sports tickets
Gifts Account help Price checks

How to Access the Service

Access to Citi Concierge is available via the following methods:

  • Dial the Citi Concierge toll-free number: 1-800-508-8930
  • Email [email protected] with your account info and request

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Top Credit Cards

Who Can Apply for a U.S. Credit Card?

by Cory Santos
who-can-apply-for-a-us-credit-card

Last updated on April 2nd, 2024

Credit card applications can come with various obstacles and hurdles. Beyond the credit score requirements, many issuers place other limits on potential applicants, including geographic restrictions. Are you wondering who can apply for a U.S. credit card? Here is everything you need to know:

What Information Do You Need to Apply for a Credit Card?

Before discussing geographic restrictions on specific credit cards, it’s essential to mention what information most credit card applications require. Typically, you’ll need to provide the following when applying for a U.S. credit card:

Info Explained
① Full legal name and contact information You'll need your full legal name, contact address, phone number, and e-mail address to apply for pretty much every credit card.
② Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) Most credit card issuers require applicants to have a U.S. Social Security number to apply for a credit card. Since foreign citizens likely lack an SNN, they may receive an Individual Taxpayer Identification Number (ITIN) instead. An ITIN is an ID number the IRS issues to anyone who needs to file income tax returns in the United States but doesn’t qualify for an SSN. Be ready to provide either of these items when applying for a personal credit card.

The following banks accept foreign national applicants with an ITIN number, according to Experian:

  • American Express
  • Bank of America
  • Capital One
  • Chase
  • Citibank
  • OpenSky
  • Wells Fargo

Currently, only two major card issuers don’t allow applicants with an ITIN:

  • Barclays
  • Discover
③ Income You'll need to provide income information when applying for a credit card. Banks like to see that you aren't too stretched financially, and part of this process is by evaluating how much income you have from things like your job, investments, and other sources.
④ Expenses Your monthly expenses are the second part of the puzzle when it comes to gauging your risk as an applicant. Your monthly housing costs (rent, mortgage) current utilities, and other relevant info might be asked when you apply.
⑤ Credit Score The final piece of informational lender needs to judge a credit card application is your credit score. Much of the information in your credit report is supplied by creditors and lenders, and potential lenders will use these details as a point of reference when considering you for a loan or line of credit. Your credit report is prepared and sold to prospective lenders and creditors by three credit reporting agencies – or bureaus, as they’re also known. They are Equifax, Experian, and TransUnion.

Can Puerto Ricans Apply for U.S. Credit Cards?

One of the most asked questions is whether Puerto Rican nationals can apply for credit cards from the mainland United States. Because Puerto Ricans are U.S. citizens and possess Social Security numbers (SSNs), for many major issuers, the answer is “yes.”

Banks like Wells Fargo, American Express, and Discover welcome applicants from Puerto Rico for all their credit card products. Amex also welcomes Puerto Rican applicants for its charge cards, including the Platinum Card, the Gold Card, and the Green Card. Other U.S. issuers, like Citibank, make most of their credit cards available but exclude some. The Citi Custom Cash℠ Card, Citi® Double Cash Card, and even some co-branded cards like the Costco Anywhere Visa®  are available to all applicants, while PR residents are excluded from the AAdvantage credit cards from American Airlines. Other issues have restrictions on who can apply for their credit cards. These limitations include age restrictions for Puerto Rican applicants – as seen with Chase and Bank of America.

Major Issuers with Specific Rules for Puerto Rican Applicants

The following credit card issuers allow applications from Puerto Rican nationals, but specify rules that differ from other U.S. citizens:

Issuer Available in PR? Eligible cards
American Express Yes All American Express credit cards and charge cards are available to Puerto Rico residents.
Bank of America Yes All Bank of America credit cards are available to Puerto Rico residents over the age of 21.
Barclays No N/A
Capital One Yes Puerto Ricans may only apply for the Capital One Walmart Rewards Mastercard.
Chase Yes All Chase credit cards are available to Puerto Rico residents over the age of 21.
Citi Yes Citi allows Purto Rican residents to apply for all Citi credit cards, except for the following  American Airlines cards:
Discover Yes All Discover cards are available to Puerto Rican residents
Wells Fargo Yes All Wells Fargo credit cards (including the co-branded Bilt Mastercard) are available to residents of Puerto Rico.

Credit Card Issuers Which Don’t Allow Applications from Puerto Ricans

Currently, the only major credit card issuer that does not allow Puerto Rican nationals to apply for their U.S. credit cards is Barclays. Many smaller issuers may also reject Puerto Rico applications, though these banks also limit who can apply depending on the U.S. states they reside in.

Related Article: New JetBlue Credit Cards for Puerto Rico Market

Can Foreign Nationals Apply for a U.S. Credit Card?

Like Puerto Ricans, foreign nationals also face setbacks when applying for a U.S. credit card. Some of the limitations foreign citizens might experience include:

Not Having an SSN

Most credit card issuers require applicants to have a U.S. Social Security number. Since foreign citizens likely lack an SNN, they may receive an Individual Taxpayer Identification Number (ITIN) instead. An ITIN is an ID number the IRS issues to anyone who needs to file income tax returns in the United States but doesn’t qualify for an SSN.

Which U.S. Credit Card Issuers Accept an ITIN When Applying?

The following banks accept foreign national applicants with an ITIN number, according to Experian:

American Express Bank of America Capital One Chase
Citibank OpenSky Wells Fargo

Which U.S. Credit Card Issuers Don’t Accept an ITIN When Applying?

Currently, only two major card issuers don’t allow applicants with an ITIN:

Barclays Discover

No U.S. Credit History

Another major hurdle for non-U.S. citizens is having no credit history in the United States. For those without a credit score in the U.S., getting a credit card can be challenging – if not impossible. Opting for an international bank or issuer like HSBC  might make the processes easier in these situations.

Related Article: Kids’ Cards: Pros & Cons of Debit vs Credit Education

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