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Card-linked Offer Programs You Can Sign Up For in 2014

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Tired of scrounging for savings with coupons or daily deals? The expanding field of card-linked offers (see table below) promises a solution – the ability to link deals and coupons to the cards in your wallet and get cash back or other rewards automatically.credit card with hundred dollar bills

Card-linked offers aren’t exactly new. Card-linked airline dining programs have been around for years, and issuers have been experimenting with them since 2010. But there’s been a lot of flux in the field. New players keep entering – most recently Coupons.com, which allows consumers to register Visa, MasterCard or American Express cards (with the exception of a few store-specific cards) and load certain coupons onto them.  Both consumers and merchants were requesting such a feature, says Bruce Sattley, senior vice president of product management at Coupons.com.

“The concept is just emerging, and I expect more and more consumers and merchants are going to learn about and use card linked offers,” Sattley says.

Want in on the easy money card-linked offers programs promise? Before you sign up, here’s what to know:

How card-linked offers work

Different programs have their own unique twists, but, basically, card-linked offers work like this: You link deals to your debit or credit card and get cash back credited to your card automatically, simply by using the card at checkout. Other programs (airlines’ dining programs, for example), automatically deposit loyalty points into the rewards account linked to your card. All you need is the card registered with the deals program – no printing out coupons, saving discount codes, loading up your key chain with loyalty cards or fumbling with your phone to show a QR code to the cashier.

Deals vary from a percentage cash back, to a certain dollar amount earned if your purchases ring up to a certain total.

Types of card-linked offers

Card-linked offers can be divided into two categories: programs offered by issuers (which require you to have one of their cards) or open programs that you can sign up for with a variety of different cards.

The issuer-run programs generally function the same way – you search for deals via your bank or card issuer’s website or mobile app and then shop (online or offline) at the participating merchant by the deadline indicated by the deal. This screen shot from Bank of America’s BankAmerideals shows what the interface might look like after a deal has been activated:

card-linked offers

As for open, non-issuer programs, “the possibilities are endless,” says Dom Morea, senior vice president of advanced solutions and innovation for global payment processing company First Data. “Websites, mobile apps, social media sites, location-based services, online and mobile gaming, as well as hotel and airline programs have been very successful with card-linked offer programs.”

Overcoming adoption barriers

If you haven’t signed up for a card-linked program and are ignoring your bank’s deals, you’re not alone. In fact, card-linked programs from Ally, Capital One and Chase have all fallen by the wayside in the past couple years. One possible reason: Banks may not be the first place consumers turn to hunt for deals, says Morea.

“There isn’t always the natural connection in consumers’ minds and behaviors between online banking and shopping deals,” he says.

When it comes to non-issuer programs, there are different reasons consumers might not sign up: While banks already have their customers’ card numbers, other companies offering card-linked offers don’t, meaning consumers have to give their information to yet another entity.

“Keying in your card can simply be too cumbersome or time consuming for some participants,” Morea says.

So what could make card-linked offers more palatable? The system is already pretty seamless, but certain things could make it more so. With some programs, you have to log in, select deals, shop and then wait for a few days for a confirmation that you claimed the deal correctly. Morea predicts real-time notifications of deals on consumers’ mobile devices, faster statement credits and immediate confirmation that the deal was successful (either as a text or a notation on the receipt) could make card-linked offers more attractive.

And then there are the types of deals available. A few card-linked offer programs offer local deals, but many are saturated with deals from national retailers and restaurant chains that may not even be in a consumer’s area. Sattley says more card-linked offers for local businesses are a possibility for Coupons.com.

“And geo-targeting of those offers would be the plan, so consumers only see discounts relevant to their location,” he says.

What about privacy?

The Heartbleed bug and the avalanche of retailer data breaches over the past year might have customers holding their card numbers close.

First Data’s OfferWise program (which is used by a variety of merchants and non-issuing card-linked offer publishers) protects cardholder information so that the merchants and companies using Offerwise can’t see it, Morea says. Coupons.com also doesn’t share account numbers with third parties, and the card information it keeps itself is maintained with PCI compliance (the security standards that govern the payment industry), Sattley says.

None of that makes your information impervious to breaches (just ask any company that’s been hacked). What you can do is limit the card-related information you give out.

“I also mention to people that card-linked offer programs should only ask for their card number – not expiration, billing ZIP or CVV number,” Morea says. ”The card number itself is all that’s needed as a unique identifier for the consumer.  Consumers should be skeptical of any program that asks for additional card-related information.”

Card-linked offer programs you can sign up for (Updated April 2014)

Want to start getting card-linked offers? The chart below shows some of the programs available to consumers. They are divided into the two types mentioned above — those offered by issuers (which generally require you to have a card with that issuer) and those you can join on your own with practically any card.

We’ll be updating this chart with program changes, but be sure to check with the card-linked offers provider you choose for terms and conditions.


Current Card-Linked Offer Programs
ProgramHow it works
Issuer-based programs
BankAmericard RewardsEligible Bank of America credit or debit cardIf you have a BofA card, you're automatically signed up. View card-linked offers via online banking. Activate the deals you want, and make a purchase at the designated merchant by the time the deal expires. Cash back is automatically credited to your debit or credit card.
AmEx OffersAmerican Express cardConnect an AmEx card to the program and search for deals, either by logging in to your American Express account, AmEx's iPhone app, or via a variety of social media channels. Activate the deals you want, use your card to pay and get an automatic statement credit.
Fifth Third Bank PrewardsFifth Third Bank credit or debit cardRegister your debit or credit card, choose your deals in online banking, and use them at the correct retailer. You'll get a notification that your Preward has been redeemed, and your card will automatically be credited.
PNC Purchase PaybackEligible PNC check card or credit cardYou're automatically enrolled if you have an eligible card. You'll see available offers when logged into online banking. Activate the offers you want, and shop at the retailer designated by those offers. With this program, instead of cash-back statement credits, you earn points (in addition to any points you're already earning with the card). Points can be redeemed for merchandise, travel, cash and gift cards.
Regions Bank Cashback RewardsRegions Visa CheckCard or Regions Now CardYou're automatically enrolled, as long as you have online or mobile banking. Browse offers in online banking or mobile banking, activate them, shop with your card at the designated retailer and get cash back directly into your checking account.
U.S. Bank FreeMoneeSome U.S. Bank credit or check cardsThis is more of an elusive program. You don't sign up, and U.S. Bank will send you deals based on your shopping patterns. How often? It's completely random. Shop at the store indicated by your FreeMonee gift, and use your card. The amount of the FreeMonee gift will then be credited back to you.
Open programs
MyLinkablesAny U.S.-issued Visa, MasterCard or American Express debit or credit card. Also works with PayPal.Enroll a card (or PayPal account) in the program online. You can then link offers to your card by clicking on them on the website, or, if the offer is in print media, by scanning a QR code or sending a text to the number printed in the ad. Shop with the correct merchant, and your card (or PayPal account) will be automatically credited.
Coupons.comVisa, MasterCard and American Express (with the exception of a few store-specific cards)Register a card with Coupons.com via the website or mobile app. Select coupons to load onto card. Use your registered card at checkout, and the savings will be credited back to your account automatically.
Bing Offers Card-LinkedVisa, MasterCard (website says support for AmEx is coming soon)This program is still in beta – and, at the time of this writing, offered only in Seattle. You can register any Visa or MasterCard debit or credit card, activate offers and shop at the designated merchants.
MojeAny debit or credit cardAvailable only in select cities. Register any credit or debit card (AmEx, Visa, MasterCard, Discover) through the iPhone app. The app will then generate deals near you. You don't have to activate the deals – just shop at the merchants, and the cash back will be credited to your card account.
MOGLAny debit and credit card Available only in some cities. Shop at any partner restaurant and get 10 percent cash back. Choose to get it credited back to your card, or donate it to a local food bank.
vPromosAny debit or credit cardEnroll at the register, by paying with a card, providing the merchant with their mobile phone number and responding "Y" to the text you immediately receive. You then earn points each time that card is used. After enough rewards are earned, you earn a discount, which is automatically deducted from the total at the register when the customer claims that reward.

Points + Cash Redemption Options: Calculating the Value

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Maybe it’s because you’re a low spender who doesn’t travel much. Or maybe you’re just spreading your spending among several reward cards. Whatever the reason, the balance in your rewards account is never quite enough to get a free flight, hotel stay or gadget.

If the rewards program affiliated with your card has a “cash + points” option, though (see table below), you still might be able to put your points to good use. This feature, which goes by a variety of names, is most common with hotel rewards cards. For example, check out the options with the Starwood Preferred Guest Cash & Points program:

Starwood Hotels Cash plus points

Whatever the program, a cash + points option will work like this: Instead of waiting until you have enough for a reward, you pay a lower amount of points toward a reward and then cover the rest with cash.

Is it worth it? Do the math

When you mix points and cash, it can be difficult to determine the value you’re getting. Are these programs letting you put your points to good use? Or are they causing you to throw both points AND money out the window?

For merchandise, each rewards point generally has a fixed cash-back value, and you simply pay for the remaining balance with cash. With travel, however, things can be more complicated.

As an example, let’s take a closer look at the Starwood Preferred Cash & Points program – and do the math for a hypothetical Thursday at Aloft Orlando Downtown. This hotel is Starwood Category 3, meaning you’d normally need 7,000 points for a free night. However, because you’re using the Cash & Points feature, you’re spending 3,500 points and $55.

Keep in mind, your numbers will vary, based on your particular rewards program.

Step 1: Calculate the full cost of the hotel room, including taxes. For the Aloft Orlando Downtown, that’s $190 per night.

Step 2: Calculate the value of the points, if you were to redeem for a free night. Divide $190 by 7,000 to get $0.027. In other words, your points are worth 2.7 cents, when redeemed this way.

Step 3: Calculate the amount you’re paying out of pocket. When you book with Cash & Points, room taxes are NOT included, as they are when you book a free night, completely with rewards:

SPG room taxes on cash plus points night

 

Here’s the tax break-down for the room:

SPG room tax breakdown

When you book with Cash & Points, you pay taxes only on the cash portion. So, you’ll be paying 12.5 percent in taxes ($6.60) on the $55 you spent. That’s $61.60 out of pocket.

Step 4: Calculate the value you’re getting for your points when using the Cash & Points feature. Normally, this room would cost you about $190. Instead, it’s costing you $61.60 plus 3,500 points. Subtract the amount you’re paying out of pocket from $190, and you’re left with $128.40. That’s the amount you’re covering with the 3,500 points. Divide $128.40 by 3,500 to get the point value: $0.036. In other words, your points are worth 3.6 cents when you use the Cash & Points feature – nearly 1 cent more than if you were to redeem for a free night.

Step 5: Find out how much value you’re getting for the money you spend out of pocket. The value of your points is only half of the equation. You also need to see how much bang for your buck you’re getting on the $61.60 you’re shelling out. Because the room would normally cost 7,000 points, and you’ve already spent 3,500 points, that $61.60 is covering the other 3,500 points. Essentially, you’re paying $61.60 for 3,500 Starpoints. That means you’re buying them for about 1.8 cents each. If you buy Starpoints through the program’s website, they cost 3.5 cents each. So you can look at Cash & Points as a way to get Starpoints on the cheap.

Conclusion: Using Cash & Points yields a great value for this particular property, both for the points and the money you’re spending.  The value of the points you redeem actually increases, compared to redeeming for a free rewards night. And the amount you spend in cash amounts to getting a discount over buying Starpoints outright.

Be careful, though…

Using points plus cash won’t always be so clear cut. For example, take a look at the Points & Cash option with the IHG Rewards Club, for the Holiday Inn Express & Suites in Berkeley, Calif.:

IHG Points and cash

 

Follow the steps above, and you’ll find that the room costs $192.64, once tax is factored in. Your points are worth 0.64 cents each when you redeem for the free night – but only 0.57 cents when you redeem using IHG’s Points & Cash. Meanwhile, you’re paying $78.64 once tax is factored in to buy 10,000 points. You’re getting a big discount there, at least, as it would normally cost you $135 to buy that many points from IHG. So, while you sacrifice some point value, you’re still essentially getting points at a discount.  If you need to get rid of some points, that might still be worth it to you.

In short: It pays to do the math before parting with your money or points.

Other things to consider

If you’re considering taking advantage of your program’s cash + points option, remember that some properties may charge resort fees (in addition to taxes). You might be able to get these waived (travelers on various discussion forums say they have) — and some hotel chains waive them automatically for rewards stays. Be sure to call the property ahead of time to see what you could be charged.

Another thing to check is whether you’ll earn points on points + cash stays. This varies by program, and some treat points + cash stays like rewards stays – and don’t allow you to earn points.

Chart: Compare points + cash reward programs

Want the ability to book with cash and points? This chart contains a round-up of the reward programs that allow you to do so – and the cards that let you rack up points for them. We’ll be updating it as terms change, but be sure to check your reward program’s terms and conditions for the most up-to-date information.


Reward programs with points + cash options
ProgramAffiliated cardsHow it works
Starwood Preferred Guest (Cash & Points)Starwood Preferred Guest Credit CardBook nights in a standard room or suite for roughly half the number points you'd otherwise need, plus $30 to $675, depending on the hotel category and room type.
IHG Rewards Club (Points & Cash)IHG Rewards Club VisaWorks for both merchandise and hotel stays. For merchandise, shop the online catalog that lets you pay a smaller number of points plus cash for electronics. For hotel stays, you get a 5,000-point discount if you pay $40, and a 10,000-point discount if you pay $70.
Hyatt Gold Passport (Points + Cash)The Hyatt Credit CardBook reward nights using half the points you'd otherwise need, plus between $50 and $300, depending on the hotel category.
Marriott Rewards (Cash + Points)Marriott Rewards Premier Credit CardAvailable for stays of 2 nights or more – pay for part of your stay in points, and then tack on nights paid for with cash. Individual nights must be paid for all in points, or all in cash -- you can't combine points and cash for a single night.
Hilton HHonors (Points & Money)Citi and AmEx Hilton HHonors cardsFor standard rooms at select properties, you can book a rewards night for as few as 2,000 points (reward nights normally start at 5,000 points), plus as little as $30.
Club Carlson Rewards (Points + Cash)Club Carlson VisaBook rooms starting at 5,000 points (reward nights usually start at 9,000 points) to 20,000 points, plus a cash amount determined at the time of reservation.
Delta (Pay with Miles)Delta SkyMiles cardsAvailable only to SkyMiles cardholders. Depending on the original fare price, you can redeem a sliding scale of miles for a discount (10,000 miles for a $100 discount, for example).
Alaska Airlines (Money and Miles)Alaska Airlines VisaUse 10,000 or 20,000 miles to get a 50 percent discount, up to $100 or $200, respectively, off a ticket.
JetBlue (Cash + TrueBlue Points)JetBlue American ExpressOnly for vacations packages. Number of points and amount of cash required revealed at booking.
American Airlines AAdvantage programAAdvantage credit cardsOnly available for card rentals and hotels booked through American Airlines.
Discover (Pay with Cashback Bonus)Discover itYou can use some or all of your cash-back rewards to pay for part of an online purchase with Discover's partner retailers. Pay cash for the rest.
American Express Membership Rewards (Shop with Points)Any card that earns Membership Rewards pointsUse points toward the partial cost of a purchase on Amazon.com or the Membership Rewards online mall, and pay for the remaining balance with your card.

Chase Freedom vs. Discover it: Which is the best 5 percent card?

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If you’re looking for a no-annual-fee card that gives 5 percent cash back on purchases, two of the most popular options are:

  • Chase Freedom
  • Discover it

Both are common features in reward-chasers’ arsenals, and both are very similar in their rewards structures — but which is the best? We’ve got a head-to-head comparison:

Chase Freedomchase-freedom-vs-chase-sapphire

Rewards:

  • 5% in categories that change quarterly (including gas stations, movie theaters, home improvement stores, restaurants and Amazon.com). You have to enroll each quarter to earn 5 percent on category spending.
  • 5% to 15% via “Cash Back Boost,” a feature that gives you bonus cash back if you shop at certain online retailers that partner with Chase
  • 1% on other spending

What you can get: In addition to cash back (via a statement credit or direct deposit ), you can redeem for a lot of things via Chase Ultimate Rewards, including gift cards, merchandise, travel and experiences.

Limitations: Your 5 percent earnings are capped; only $1,500 in category spending each quarter qualifies for 5 percent cash back. Once you reach the limit, you’ll earn 1 percent on all category purchases. Also, you must have at least $20 worth of rewards piled up before you can redeem for cash back.

Discover itDiscover it card

Rewards:

  • 5% cash back in rotating categories (including restaurants, movie theaters, home improvement stores and online shopping) that change every quarter. You have to enroll every quarter.
  • 5% to 20% back on purchases made with partner retailers via Discover’s online shopping portal (ShopDiscover.com)
  • 1% on other spending

What you can get: You can redeem rewards for cash back (via statement credit or direct deposit), gift cards, online purchases and charity donations.

Limitations: You can earn 5 percent on only $1,500 in category spending each quarter (after that, you’ll earn 1 percent). You must also redeem at least $50 at a time if you want cash back.

Which is best?
You probably noticed that these cards are very similar. In fact, they’re almost identical, when it comes to the quarterly rewards structure, the boosts they give for shopping with partner retailers and the limitations on 5 percent earnings. Chase has a slight edge if you’re redeeming for cash back, as it lets you cash out sooner (once you’ve earned $20 in rewards, as opposed to $50 with Discover). However, if you’re keeping the card for the long term (and you easily can because neither carries an annual fee), that might not be very important —  you’ll have plenty of time to reach both those thresholds and not have to worry about cancelling the card before an annual fee kicks in and leaving money on the table.

So, which card should you pick? That’s actually a trick question: Your best rewards tactic is to get both, if you can.

Here’s why:

You’ll cover more ground:  For cards with no annual fee, 5 percent is currently the highest cash-back rate in the rewards card industry. However, the fact that you have to spend in certain categories limits your options. By having two cards, each with different categories, you’re maximizing your chances to earn 5 percent cash back.

For example, if you don’t spend much on movies or restaurants, those categories would probably be duds for you. But if you have a long commute and have another  card in your wallet offering 5 percent on gas stations that same quarter, you’d still be earning 5 percent on something.

You raise the 5 percent ceiling:  With both cards, your 5 percent earnings dry up as soon as you hit the $1,500 mark each quarter. That puts you at a disadvantage when it comes to the big-ticket categories, such as home improvement stores. If you’re doing a major renovations project, you could burn through that in a single trip to The Home Depot or Lowe’s.

Both the Chase Freedom and the Discover it offer a home improvement category (usually they overlap in the spring, which is what has happened this year). If you have both cards, you get to earn 5 percent on up to $3,000: That’s $150.

Want to get even more strategic?
If you don’t mind having an annual-fee card, consider pairing the Chase Freedom card with the Chase Sapphire. By transferring those 5 percent rewards you earned with the Freedom to the Sapphire, you have the opportunity to convert them to points with 10 frequent flier and hotel loyalty programs on a 1-for-1 basis.

Does Pay for Delete Really Work?

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You’re ready to apply for a loan, but there’s one problem: A collection account is tarnishing your credit report. Although this blemish will fall off naturally in several years, you don’t want to wait.

One loophole touted across debt advice forums and websites is the “pay for delete” method. The concept: You offer the collector immediate payment. In exchange, the collector gets the account deleted from your credit report.

But does that really work?calculator saying help

“Depending on who you ask, they’ll either tell you pay for delete doesn’t exist, or they’ll tell you, ‘Not only does it exist, but it’s worked for me,’ ” says credit expert John Ulzheimer. “But anyone who suggests it’s a strategy that’s going to work every single time is absolutely incorrect.”

Although it’s not illegal, we don’t endorse pay for delete, nor do the experts interviewed for this article. But, since it happens, here’s what to know.

It will work only in certain circumstances

If you’re thinking of calling up your bank or original creditor and asking it to delete a charged off account from your credit reports, it won’t work.

“Pay for delete is something that is only relevant in the world of third-party collection,” Ulzheimer says.

So, for credit card debt, it’s not the bank that issued your card (Citi, Wells Fargo, Bank of America, etc.) that you’ll be dealing with, but the third-party collector who bought your debt.

The credit bureaus frown upon it

The standards that govern the credit industry, as well as the agreements between collectors and the bureaus are clear, Ulzheimer says: Accurate information (such as debts you really owe) must not be removed from credit reports until the Fair Credit Reporting Act (FCRA) says it’s time. For collection accounts, that’s after seven years (beginning 180 days after the first delinquency that led to the original creditor charging off the account).

And there’s a good reason for that – if accurate information is removed, the value of credit reports as a risk-assessment tool disintegrates.

“It’s absolutely not something that the credit industry acknowledges as a valid process,” Ulzheimer says.

If the bureaus learn a collection agency is doing pay for deletes, they could revoke its access to credit reports.

You have to negotiate

So how does pay for delete happen, if the credit bureaus don’t want it to? It happens if the collection agency agrees to give the bureaus the impression that information about your account is inaccurate — because inaccurate accounts must be removed (according to the FCRA).

Jared Strauss, a former debt collector and now the owner of debt settlement company Debt Relief A’ La Carte, outlines the inner workings of the pay-for-delete process:

1. Financial preparation

Pay for delete generally works only for those ready to pay immediately.

“If you’re not in a position to execute your payment immediately, wait to make your approach until you are,” Strauss says.

2. A verbal request

Although there are many “pay-for-delete request” sample letters available online, Strauss says a phone call is more effective.

“Psychologically, the way collectors look at letters is, if you took that much time to formally approach them, they know you really care, that you really desire resolution” he says.  “Their job is to collect as much money as possible from you, so they’re going to take advantage of that psychology.”

Calling can also utilize the collector’s desire to settle things quickly, Strauss says. Collectors work in a fast-paced environment. If they can put a caller on hold and ask their manager for authority to say yes to a request because that caller is going to pay immediately, success is more likely.

3. A suggestion and a counter offer

Once the debtor and collector agree on a payment amount, the debtor asks if it would be possible, after the payment is made, to have the record deleted from their credit reports

Many collectors will say such an arrangement is against their policy.

“The reason they take that position is that they’re afraid they’ll jeopardize their credibility with the credit bureaus,” he says.

This is where a debtor can float the idea of deleting an account within the context of a dispute.

According to Strauss, that might entail saying something like “I understand that you normally don’t delete information, but what if I’m disputing the debt with you? Would that give you good cause to remove it from my credit report if I agree to just take care it?”

After the debtor pays, the collector can then contact the bureaus and say the account must be deleted, based on it being inaccurate.

“If [the deletion] is not tied to payment, but to a dispute, that gives the collector an out. Integrity is no longer an issue,” Strauss says.

4. The written agreement

Even though the negotiation started by phone, a written agreement is necessary.

The collector will generally push you to let them fax or email the letter, so they can close the deal on the same call, Strauss says.

5. Another way

“For some agencies, there’s nothing you can say that will make them budge,” Strauss says.

In such cases, a more indirect variation of pay for delete could come into play. If the debtor sees any piece of information about the account’s trade line that could be considered inaccurate, they can pay off or settle the account, wait a couple months (so that the collector can rest assured that the payment has gone through) and then dispute that aspect of the account with the bureaus. The bureaus will then attempt to verify the account with the collector. If the account is paid, the debt collector has less of an interest in researching the matter and responding to the bureaus.

“The collector’s rationale is, ‘Do I want to spend time, money, resources, put employees on this for something I really don’t care about because I’ve already been paid?’” Strauss says.

Debt that has not been verified as accurate has to come off the reports, making this technique a roundabout pay for delete.

Credit scars might remain

Even if the collection account gets deleted, all the damage might not be undone. When consumer debt, such as credit card debt, goes into collections, it often results in two notations on a credit report – one from the original creditor when it charges off the debt from its books and a second from the collector when the collection account is opened. Collectors have no control over the former, meaning pay for delete won’t scrub it from your report.

That’s why pay for delete works best for things that don’t get reported by an original lender, Strauss says: utility bills, cellphone bills, leases and medical bills.

Still, pay for delete has its advantages with card debt, Strauss says: If the collection account gets deleted, at least it won’t be weighted into credit scoring algorithms.

You’re in a tough spot if the collector doesn’t follow through

If you get a pay-for-delete agreement in writing from a collector, and the collector doesn’t get the account removed, you may have recourse.

“But it’s heavy lifting,” Ulzheimer says.

Collection agencies are bound by the Fair Debt Collection Practices Act, which prevents them from lying to consumers or using deceptive practices to collect. So if a collector makes a pay-for-delete offer knowing they’re not going to follow through or knowing they can’t follow through, but still collects money, that could be considered an FDCPA violation, especially if you have a written agreement.

“Then you’ve got two choices,” Ulzheimer says. “You can live with it. Or you could pursue it in court under the FDCPA. A lot of people might not have the stomach for something like that.”

While that might not be much comfort, at the end of the day, you’ve paid off your debt. It will eventually disappear from your reports, and, in the meantime, a paid-off debt looks better to lenders than an unpaid collection account.

“You’ve put yourself in the best position you can,” Ulzheimer says. “You’ve made the best of a bad situation.”

Capital One’s Credit Tracker – Is it Useful?

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Capital One just launched a new tool for its customers. Called Credit Tracker, it’s a free online credit-tracking service (and mobile app) that lets cardholders view one of their credit scores, the factors affecting it and the consequences of their future credit behaviors.

The tool is available to all U.S. customers with Capital One-branded consumer credit cards.  It’s live now for those using Capital One’s mobile app, and soon cardholders will be able to access it via Capital One’s online servicing site.

What it does

Credit Tracker has no limits on how often you can access its features – and it has quite a few of them, including:

  • The ability to view an educational credit score from TransUnion (range 300 to 850)
  • Updates about changes to your TransUnion credit report that could affect your credit or even indicate ID theft (such as delinquent accounts, inquiries and new accounts opened in your name):Web_Alerts
  • A credit dashboard with a report card feature that grades you on the key factors influencing your credit score. It also shows a bureau summary from TransUnion that has your balances, monthly payments, number of accounts and number of inquiries. Check out this example:

Web_Credit Summary

How it compares

Capital One isn’t the first to offer free credit scores or credit tracking. A few issuers provide free FICOs, and several free online services allow you to monitor your credit. So how does Capital One’s service stack up?

One thing to keep in mind is that the score provided by Credit Tracker is not a FICO score. It’s an educational score provided by data from your TransUnion credit reports. Such educational scores (all three credit bureaus provide them) aren’t used by lenders in making decisions, but are provided to consumers. Read more about educational credit scores at the Consumer Financial Protection Bureau’s website.

It’s your FICO scores (you have three, one each from TransUnion, Equifax and Experian) that lenders see. A couple major issuers do offer free FICOs (both Barclaycard and Discover give cardholders free access to their TransUnion FICOs). Sukhi Sahni, spokesperson for Capital One explained to us that offering the educational score allows increased functionality and additional features in Credit Tracker. Services providing free FICOs are limited to revealing only the Top 2 factors influencing your score – Credit Tracker shows six. Credit Tracker is also permitted to provide additional insights that issuers providing free FICOs don’t  – the future impact of credit decisions via a simulator, for example.

So, for consumers, it’s a trade-off: You’re not getting a real-deal FICO, but you’re privy to some extra insider information on your credit.

What about other free credit-tracking services, such as Credit Karma and Credit Sesame, that don’t require you to be a Capital One Customer? Capital One’s service is very similar.

It’s more detailed than Credit Sesame’s free service (which stops short of grading you on each factor affecting your score and doesn’t offer a simulator). Credit Tracker is far more similar, in both the functionality and wealth of information, to Credit Karma. In fact, it should look rather familiar to Credit Karma users, especially when it comes to the report card feature. One difference is that, in addition to offering a TransUnion score, Credit Karma offers your Vantage Score as well.

Is it useful?

That depends on how you use the service.

If you’re shopping for a major loan (such as a mortgage), you’ll want your FICO scores because those are what the lenders will see. Credit Tracker won’t give you those – but hard numbers aren’t necessarily what you should use it (or any free educational credit tracker for that matter) for. Such services are more useful for those who want to see what’s boosting (or dragging down) their credit and estimate what certain actions will do to their credit health.

It’s a bit like leading a healthy lifestyle. It’s not always about the number on the scale, but about knowing which behaviors might eventually lead to better health – which can gradually improve the number on the scale. Credit Tracker will warn you about your unhealthily high credit utilization or about the risks of going on an application spree, for example. Using that advice over time (and tracking your progress) will ultimately translate into a better FICO score.

“It’s all about using your credit wisely and leading a healthy financial life,” wrote Sahni in an email to CreditCardForum.

The service, with its free alerts, could also give you a heads up if a new account is fraudulently opened in your name (a service you’d otherwise have to pay for via the credit bureaus), but there’s an important caveat: Credit Tracker monitors only your TransUnion report. You should still check your credit reports from Equifax and Experian regularly.

Want to know more? Learn more about the service (and check out some preview screen shots) here.