Oops, I regret my card choice

Call it card regret: You applied for a credit card, got approved and, soon after, realized it was the wrong choice.

Even if your regret is immediate, there’s no turning back the clock – you’re stuck with the credit inquiry. So we asked a couple experts how to make the most of your situation. And no, the answer isn’t always “cancel the card.”best-credit-card-for-first-time-users

Reasons for card regret

Why would someone end up with a buyer’s remorse over a piece of plastic? We’ve seen many reasons pop up in our forum over the years, including:

  1. Not enough research: A sales pitch at the airport convinced you to sign up for an airline card. Then you went online to research your card and found people raving about a card with the same annual fee that lets you transfer points into several frequent flier programs.
  2. Bad timing: Your new card is now useless, thanks to an abrupt change in circumstances.

    “Let’s say I just got the Citi AAdvantage Executive card,” says Jason Steele, credit card expert and contributor at Comparecards.com. “And next week, my boss says I no longer need to travel. I just paid $450 for a card I’m not going to use.”

  3. Silly mistake: Perhaps you accidentally applied for a similarly-named card. Or you applied for the version of a card with a higher annual fee.

    We asked the anonymous blogger behind Chasing the Points if he’d ever made any such mistakes in his many card applications. He has.

    “I wasn’t paying enough attention and applied for a general travel rewards credit card instead of an airline credit card,” he says. “I should have known I applied for the wrong card because in the application it didn’t ask for my frequent flier account number.”

What to do with an unwanted card

Whether you cancel or keep an unwanted card, it won’t necessarily destroy your credit. But it’s important to understand your options – and their possible credit consequences.

Option 1 — Go for a product change

A product change involves switching to another card product from the same bank without an additional credit pull. If the card you really want is from the same issuer as the one you don’t, this can be a wise choice, considering credit pulls ding your credit, albeit temporarily.

Not all issuers will allow this, however, and some won’t do it after you’ve spent money on the original card, says the Chasing the Points blogger, who was denied a product change after his card mistake. You might have greater success if you visit a bank branch in person, rather than relying on phone agents.

“The banker can make notes for the underwriter, advising them that the original card was opened inadvertently and this second application is to replace the first card,” he says.

Option 2 — Just keep the card and get the one you want as well

“I tell people don’t worry about it,” Steele says. “Go ahead and get that other card in addition to the [unwanted] one.”

Steele notes that there are advantages to having more lines of credit open. If you have more available credit, it becomes easier to keep your credit utilization low. Plus, if you keep those accounts over the years, they’ll raise your average age of accounts (another factor in credit scores). You don’t have to regularly use the unwanted card – just put it in a safe place, like the literal or figurative sock drawer.

However, this strategy works only if more open credit won’t lead you into debt. It also assumes the unwanted card doesn’t have a prohibitively large annual fee. If the card waives the fee the first year, Steele recommends keeping it open until a few months before the annual fee is due. At that point, he recommends calling the issuer and asking if it can waive the fee. It may do so – or agree to switch you to another product without a fee.

“Issuers want you to be satisfied,” Steele says.

Option 3 — Close the card and get the one you really want
Maybe too much open credit will tempt you into debt, or you just don’t like the mental and physical clutter of a sock drawer full of unneeded cards.

Or perhaps the card charges a hefty annual fee on the first statement. “That’s the rare case, where I’d say go ahead and cancel,” Steele says, noting that issuers will generally refund the fee if you cancel a card before a deadline (often 60 days after approval).

If an annual fee isn’t the issue, consider waiting until after you’ve been approved for the new card before you cancel the unwanted one – especially if you have a thin credit history. That way, if you’re rejected for the new card, you can build credit with the old one.

How to avoid card regret in the first place

“Newbies need to plan what they want from the card and what they’ll use it for,” says the Chasing the Points blogger. If you travel and dine out a lot, for example, you might pick a card that rewards you for those things.

Other things to research before hitting “apply” include:

  • The terms: “You want to be familiar with all the terms and conditions so nothing surprises you,” Steele says. “You don’t want to end up going, ‘Oh I didn’t realize this had an annual fee. ‘”
  • The benefits: Rewards, no matter how great, are worthless if you can’t use them. If a travel rewards card seems enticing, first consider whether you travel enough to make it worthwhile.
  • The offer: The same card can have multiple sign-up bonuses (including bonus points or promotional financing). Check your mailbox, look for limited-time offers online, or use a tool that soft-pulls your credit (meaning no credit damage) and shows you what you’re qualified for.

    “Even if you’re sure it’s the right card, you want to make sure it’s the right offer,” Steele says. “You wouldn’t want to apply for a 25,000-point offer if there’s a 50,000-point offer available.”

    If you overlooked the best offer, you may be able to convince the issuer to apply it to the card you just got, Steele says. But success is not guaranteed.

Sometimes, all the research in the world can’t save you from card regret. For example, an issuer might give you an unfairly (in your eyes) low limit or approve you for the card but not the tantalizing sign-up bonus that got you to apply. But, as Steele says, even these setbacks shouldn’t be a huge setback.

“We’re really lucky to have such an extremely competitive market for credit cards,” he says. “If you don’t like it, you can close your card or you can just put it in the sock drawer and use another card. … Vote with your wallet.”

Credit cards are designed for convenience, but they don’t cross boarders seamlessly. In addition to EMV compatibility issues and false fraud alerts, there may be some extra costs to use the card. To prevent your trip from being more expensive than it already is, be mindful of these two costs you might encounter. Caution: the second one is often disguised as a convenience.dynamic currency conversion

1. Foreign transaction fees

If your transaction is processed by a foreign bank, your bank may charge you a foreign transaction fee, although an increasing number of cards these days are waiving the fee entirely. If your card does charge a fee, it will range from 1 to 3 percent, depending on the issuer.

Whether a card charges a foreign transaction fee and how much it charges are easy to find out – the information will be disclosed on the card’s application page and in your terms, and if you use your card abroad, those fees will be itemized on your statement. It wasn’t always so straightforward, though, says Eric Grover, payments industry expert and principal at consulting company Intrepid Ventures. Until a class action lawsuit and resulting $336 settlement in 2006 prompted transparency, the fees (then commonly called “currency conversion” fees) charged on foreign transactions were poorly disclosed.

“They simply buried it in the charges on your statements,” Grover says.

Now that issuers are more up front with foreign transaction fees, informed consumers have driven competition — and most major issuers are waiving foreign transaction fees on at least some of their cards to appeal to globetrotters.

“Disclosure has introduced some element of competition for consumers for whom it’s relevant,” Grover says.

2. Dynamic currency conversion

If a merchant or hotel clerk overseas asked you if you’d like to pay for a transaction in dollars instead of the local currency, would you say “Yes”? That answer will cost you money.

This seemingly helpful offer is actually a service called dynamic currency conversion (DCC), which is extended to merchants through their acquirers (the banks they use to process transactions). While having the transaction processed in your familiar home currency may seem like a convenience, the merchant is actually marking up the cost by using an exchange rate that is far less favorable to you than the close-to-wholesale exchange rate your issuer would use.

According to Grover, that markup may be up to 5 percent of the transaction. And here’s the kicker – because the payment was processed by a foreign bank, your issuer will levy its foreign transaction fee as well. If your card’s foreign transaction fee is 3 percent, that could mean a grand total of 8 percent over the original cost.

“There is no one in the payments industry who would recommend his mother use DCC,” Grover says. “I think it’s unconscionable.”

Merchants are supposed to follow some rules set by card networks (Visa, MasterCard, etc.) when offering DCC. According to a Visa spokeswoman, the merchant must explain DCC, and the cardholder must consent to it before the payment is processed.

“But it’s not a meaningful disclosure,” Grover says. It’s not as if consumers are being presented with a clear comparison of the costs of running the transaction in their home currency vs. the local currency, he says. Instead, they’re being offered the ability to see their total in dollars, which might be a comfort in an unfamiliar place – or something they might automatically agree to when a line is forming behind them.

“The consumer has no basis of making an informed decision,” Grover says. “There’s almost nobody on the planet who would knowingly pay 4 or 5 percent extra for the comfort of seeing their home currency.”

Plus, a merchant (or perhaps just untrained cashier) may process the transaction in the cardholder’s home currency without asking – or insist DCC is required for foreign cards. It’s happened to Grover in Warsaw, London, Hong Kong and Paris.

“I insisted I wanted the transaction done in the domestic currency, and the clerk either made a mistake or in some cases said they had no choice because it’s a U.S.-issued card,” he says.

Here’s how travelers can avoid the inflated costs of DCC:

  1. Just say no. If the clerk asks if you want the payment processed in dollars, say, “No, thank you” and ask the that charge be processed in the local currency.
  2. Look at the receipt. If the cashier used DCC anyway, this is where you’ll notice it – the total will be in dollars.

    At that point, politely tell the cashier there’s been a mistake and ask that the transaction be reversed. However, the cashier may not know how to reverse the transaction or say it can’t be done. You may also be contending with a language barrier.

    “At that point, your recourse is to complain to the issuer,” Grover says.

  3. Dispute the transaction with your issuer. If the merchant won’t reverse the transaction, go through your issuer’s charge-back process. Explain that you didn’t choose DCC and are therefore disputing the transaction. Grover has done this successfully.

    “Very often, they’ll credit you for the whole transaction,” he says.

In a little over a week (Aug. 1, 2015), Discover will drop the following benefits from its cards:

  • 24/7 Travel Assistance
  • Baggage delay insurance
  • Emergency roadside assistance

In a statement, the issuer explained it intends to “simplify the suite of cardmember benefits that it provides by eliminating certain benefits in order to provide a better customer experience.” discover benefits

For those reading along between the lines, however, it seems Discover is cutting benefits to save money. After all, the issuer has to pay third parties to provide these benefits: AXA Assistance for the 24/7 travel assistance, Virginia Surety Company for baggage delay coverage and Road America Motor Club for roadside assistance.

So, should you close your card – or hesitate to apply for a Discover product? Consider the following before making your decision.

1. You probably weren’t going to use these benefits often anyway

A 2013 survey by J.D. Power found that roughly one-third of consumers are unaware of their card’s benefits. Even if you know your benefits guide front to back, these three benefits aren’t ones you’re likely to use often. For one thing, they come in handy only when something goes wrong – you’re stranded on the road, you lost your passport or your baggage is delayed.

Even if you have the opportunity to use these benefits, you still might not:

  • If you have a AAA membership, you’re probably not going to reach for your Discover card (which will charge you $69.95 per call) over a flat tire or lock-out.
  • When things go haywire with travel, you may turn to your airline, rental car company or the nearest embassy before you think to call Discover’s hotline.
  • As for baggage delay coverage, the fine print can be pretty restricting. You must charge the trip to your card to be covered, for example. So if your Discover card is only part of a multi-card strategy, chances are you charged the trip on your designated travel card (which may not be your Discover card). You also have to file a claim for reimbursement after you’ve purchased your delayed travel essentials, a step you might not be willing to go through (or forget to go through) when you return home from a trip. And, of course, there’s a deadline – 180 days after the incident.

Credit cards are loaded with benefits that look good on paper but that you probably won’t use as much as you thought you would. Meanwhile, your card’s rewards are probably something you’re going to benefit from more frequently – and Discover’s rewards aren’t changing at all.

2. The card is still comparable to no-annual-fee rewards cards

It’s not as if dropping these benefits puts Discover miles behind its competitors. The chart below shows other no-annual-fee rewards cards that offer the perks Discover is dropping.

Compare coverage on other no-annual-fee cards
24/7 Travel AssistanceBaggage delay insuranceEmergency roadside assistance
Barclaycard Arrival (World MasterCard)YESUp to $100/day for 3 daysNo
Capital One Quicksilver (Visa Signature)YESNoYes, for $59.95 per service call
EveryDay card from American Express (a CreditCardForum advertising partner)YESNOYes. Free hotline, you pay cost of service
Chase Freedom (Visa Signature)NONOYes, for $59.95 per service call

As you can see, none of these cards offers all three. Of course, offering none of them might appear to put Discover in last place. But Discover also offers other unique perks that may be more important to you. Its Freeze It feature, for example, allows you to temporarily turn off your card if it’s misplaced. Its Cash at Checkout perk allows you to use the card to withdraw a limited amount of cash at the register at approved stores without paying cash-advance fees.

So look at the whole picture before picking a card. For you, Discover’s rewards and other benefits might outweigh the importance of the jettisoned perks.

The bottom line

The perks Discover is ditching probably aren’t make-or-break benefits for most cardholders. And no single card will provide all the perks you want.

So rather than closing your card, a better strategy might be to think about what role it will now play in your card strategy. If you’re taking a trip for which a delayed bag would be disastrous, use a card that provides baggage delay coverage. If you want your card to provide roadside assistance, make sure you have one in your wallet that does. Plenty of other cards also provide 24/7 travel assistance.

What’s most important is that Discover isn’t downgrading its rewards – and even has a recent history of boosting them. That means its suite of cards is still a good fit for earning cash back on everyday purchases.

Credit cards that give free credit scores

If you got a card to build credit, monitoring your progress is essential. Luckily, a growing number of cards promise cardholders a free peek at their credit scores. Free fico score

Citi and Chase are some of the most recent major issuers to start offering cardholders free access to their FICO scores. Other issuers have been extending this benefit in some form for a couple years.

Not all cards offering “free credit scores” give you access to a real-deal FICO score, however. Read on for some important caveats – and check out the chart below to see what your issuer provides.

Some give you FICO, some give you FAKO

“FAKO” is a term used to describe credit scores that aren’t FICO scores. There’s nothing false or misleading about these scores – they simply use different scoring algorithms. Most lenders use FICO, though, so it’s probably wise to obtain your FICO scores before applying for a major loan, if your card gives you, say, a VantageScore. In some cases, however, cards give you access only to an “educational score.” These types of scores aren’t used in lending decisions at all.

To find out whether your card gives you free access to a FICO score or some other type of score, check your terms. If it’s not FICO, that doesn’t mean the free score is useless to you. Monitoring your score (whatever type it is) over time will let you track your credit’s improvement – and alert you to actions that are damaging your credit. When it’s time to take out a major loan, you can always pull and pay for your FICO scores.

Even access to your FICO score won’t give you the full picture

FICO offers a variety of scores tailored to various industries. Even its popular “base” score will have three different versions – one for each of the major credit bureaus (Experian, Equifax and TransUnion). As you’ll notice from the chart below, issuers offering free FICO scores provide only one score from one bureau (often the one it uses to make lending decisions). Another lender might use a FICO score from a different bureau. Because the credit-reporting system is imperfect, some of your credit information (and therefore score) might vary between bureaus, meaning you may want to pull the other bureaus’ FICO scores (for about $20 each) before applying for a major loan.

Not everyone gets access

If someone added you as an authorized user to a card that gives free access to credit scores, don’t get too excited – most cards with this perk extend it only to the primary cardholder. Joint accounts may be excluded as well.

If you’re the primary cardholder and still can’t see your score, keep in mind that some issuers delay access until your account has been open a certain length of time. Others require your account have recent activity, so you may lose access to your score if you sock-drawer your card.

You can still do it on your own

You don’t need a card that gives you free credit-score access to monitor your credit. You can get your credit reports from each of the three bureaus once a year from AnnualCreditReport.com and plug the information from those reports into FICO’s free score estimator. You can also get access to educational scores from all three bureaus by using free services like Credit Karma, Quizzle and Credit Sesame.

Yet, while you can cobble together a pretty accurate credit picture using other methods, having access to an actual FICO score lets you see your credit standing from a lender’s perspective. Convenience is another factor – the ability to simply click over to your score while paying off your card online or verifying transactions on your monthly statement seamlessly incorporates keeping tabs on your credit into your personal finance routine.

Card issuers that provide free credit-score access
Card issuerType of scoreOther details
DiscoverFICO score (TransUnion)Accessible via statements and online. For primary cardmembers only.
BarclaycardFICO score (TransUnion)Accessible via online banking. Account must have activity within past 150 days.
Wal-Mart cards (Synchrony Bank)FICO score (TransUnion)For access, enroll in electronic statements.
American Express (a CreditCardForum advertising partner)Rolling out free FICO scores to some cardmembers on a trial basis.

Other cardholders can use AmEx's CreditSecure product (for monthly access to Experian, Equifax and TransUnion reports, as well as PLUS scores).
CreditSecure: $1 for first 30 days, then $14.99/month thereafter
CitiFICO score (Equifax)Accessible via online banking. Not available for authorized users and joint account holders.
ChaseFICO score (Experian)Slate card only. Accessible via Credit Dashboard online.
Capital OneTransUnion educational scoreAvailable online via Credit Tracker
USAAVantageScoreAccessible via online banking and app. Primary and secondary cardholders eligible.
PenFedFICO NextGen scoreAccessible via online banking. Also available with checking accounts and installment loans
Commerce BankFICO score (from bureau used for lending decisions – will be disclosed with score)On monthly statement. Not available on joint accounts.
First National BankFICO Bankcard Score 8 (weighs credit card history more heavily)Accessible via online banking.

Just how big a deal are the Barclaycard Arrival changes?

Cards tweak their terms from time to time – but when those changes involve the value of the rewards, we take notice. Barclaycard Arrival PLUS

And that’s the case with the changes Barclaycard has rolled out on its Arrival (no annual fee) and Arrival Plus ($89 annual fee) cards. The changes are already in effect for new cardholders. For existing cardholders, when the changes will hit depends on how long you’ve had your account (expect a notification from Barclaycard explaining this).

The changes include:

  • Lower redemption bonus: You used get 10 percent of your miles back whenever you redeemed rewards. Now you get 5 percent.
  • Redemption bonus extended to non-travel redemptions: In the past, only those redeeming for statement credits against travel got the redemption bonus. Now, those redeeming for cash back, gift cards and merchandise will get 5 percent of their miles back. Please note, however, that redeeming for travel fetches the highest per-point value with this card; even with the extension of the redemption bonus, redeeming for anything other than travel yields a poor value.
  • Higher redemption threshold: You’ll need to redeem at least $100 (10,000 miles) when redeeming for travel. The threshold used to be $25 (2,500 miles). For cash back and gift cards, the redemption minimum is 5,000 miles for $25).
  • “Tourist attractions” removed from the travel category: This subsection of the travel category was never well defined when it got added in 2014. Now it’s gone.
  • No more TripIt Pro: The Arrival Plus card used to include a complimentary subscription to TripIt Pro, a $49-per-year value. The service allows you to organize your travel plans by storing your itinerary, providing travel updates and helping you track points.

Time to ditch the card?

This depends greatly on which version of the card you have – the one with no annual fee, or the one that costs $89 a year.

No-annual-fee Arrival card: This card is arguably still worth getting and keeping if you’re a big travel and dining spender.

Here are a few things to think about:

  1. The perk that once made this card a slam-dunk among that no-annual-fee set – the 10 percent redemption bonus – is getting halved. This means that other no-AF cards on the market might now be stronger competitors. The Citi Double Cash, for example, gives you 1 percent back on spending and another 1 percent when you pay it off.

    The Double Cash card, however, hasn’t had a history of generous sign-up bonuses. Therefore, the Arrival may still be a good choice if you collect the sign-up bonus and then use the card on dining and travel only. But now that the Arrival’s redemption bonus is lessened, you might ask yourself if a mere 0.5 percent edge on travel and dining is worth keeping the card in the long term – or if you’d be better served by consolidating all your spending into the Double Cash eventually.
    2. Rewards are getting harder to redeem. You have to have a minimum of 10,000 miles ($100).

  2. Rewards are getting harder to redeem. You have to have a minimum of 10,000 miles ($100). That’s high, compared to other cards’ minimum redemption amounts. One of the advantages this card had over other travel cards was the fact that it provided quick wins – you could redeem for a $25 cab ride or baggage fee. The increased redemption threshold, therefore, is bad news for low spenders – and those using the Arrival as part of a multi-card rewards strategy.
  3. The card may be less attractive to families. Inclusion of “tourist attractions” in the travel category made the card a good fit for families who may not have flown, but who dropped a lot of money on Disney or Six Flags tickets. Those expenditures, in addition to other family vacation staples like museums, will no longer be up for travel redemptions.

Bottom line: Caveats aside, this card offers 2X miles on dining and travel. If these categories represent big outlays for you, it could still be a valuable player in your wallet. Even if it gets fewer swipes going forward, with no annual fee, you don’t have to worry as much about a diluted redemption bonus and longer waits between redemptions.

$89-per-year Arrival Plus card: The annual fee on this card just got harder to justify. Look at those three points above and remind yourself that you not only have to put up with them, but you have to pay $89 a year. With the reduced redemption bonus, this card basically amounts to a 2 percent back card in a world where the no-annual-fee Citi Double Cash and the Capital One Venture (which gives 2X miles on all purchases for a $59 annual fee) exist.

Other cards in the same annual-fee ballpark justify their fees with perks that add value. Airline cards, for example, throw in waived baggage fees. Hotel cards often throw in an anniversary stay. The Chase Sapphire Preferred lets you boost your points’ value by letting you transfer them directly into airline programs. Other travel cards give yearly statement credits that can be used toward travel.

Bottom line: The only upgrade among the changes is the redemption bonus on cash back and gift cards – but this is hardly a consolation to shrewd rewards-chasers, who would never use the card for cash back anyway, given the poor redemption value.

Cards change their benefits all the time, and some have recently raised their annual fees. However, those increased fees often accompany new benefits. While the Arrival Plus’s annual fee hasn’t budged, its benefits have slipped. Most of the changes seem to save the issuer money, but don’t add any value for cardholders, making this all feel like a clear-cut devaluation.