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Joint accounts, authorized users, guarantors: 3 ways to share credit card accounts

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Want to to share a card account with a spouse, help your college student build credit, or provide a card for a contractor or baby sitter?

Lucky for you, credit card issuers provide a lot of opportunities to share credit with another person (or sometimes a few other people). Yet these options differ widely, as does the terminology issuers use to describe them. Read on for the various forms shared accounts take – and a chart showing what major issuers offer.

Types of shared accounts

While the terminology varies across issuers, your options for sharing an account boil down to these:sharing credit card

1. Joint accounts
Some issuers also call these “co-signed” accounts. Not all issuers surveyed for this story offer this option.

How it works:
Two parties apply for a card together. Both have charging privileges, and both have full responsibility for the balance.

Pros: In addition to being a way for two people (a married couple, for example) to share expenses and gang up to earn more rewards, this can be a good way for an applicants with less-than-perfect credit to get a card. Because the bank will review both applicants’ credit history, someone with good credit can prop up the other applicant’s bad credit.

Risks: If the account balance doesn’t get paid, collectors will come after both parties, no matter who made the charges – and both parties will be dealt a credit-damage blow. In divorce, things can get especially messy.

Credit report/score implications: For the most part, these accounts behave just like any other revolving account on your credit reports and show up on both individuals’ credit files, according to Meredith Griffanti (senior director of public relations for Equifax) and Rod Griffin (director of public education for Experian).

On your Experian report, the only difference is the “account association,” experian joint co-signed account on credit reportGriffin says. Because every account lists your relationship to it, expect a notation of “joint,” “signer” or “joint with” plus the name of the other account holder. (For example, the photo at the right shows how a co-signed/joint account appears on my own Experian credit report.)

When the account is closed, it also behaves like an account you hold on your own, Griffin and Griffanti say – that means, if it’s paid as agreed, it will stay on your report for 10 years form the date of last activity. If it wasn’t, it will remain for seven years from the date of last activity.

As for your FICO score, joint accounts factor into it the same way an individual account does, says FICO spokesman Anthony Sprauve. And if the account becomes delinquent or goes into collections, Sprauve says, “both joint account holders are penalized equally” by FICO’s scoring algorithm.

2. Authorized users
All the major issuers surveyed for this story offer this as an option.

How it works: An existing account holder can add authorized users (how many depends on the issuer) to the account. These users can make charges, but they have no responsibility for paying the balance. Because additional users can generally be easily removed without closing the account, an authorized-user arrangement can be a good way to provide a card to your college student, contractor or nanny.

Pros: This arrangement has advantages for primary account holders and users alike.

For main account holders, authorized-user relationships can offer the perks of sharing credit with some additional controls. For example, American Express (a CreditCardForum advertising partner), allows the main account holder to set custom spending limits for each additional card, says Elizabeth Crosta, vice president of public affairs for American Express.

While all the additional cards on an American Express account are tied to the main account, the main account holder still gets privacy.

“The main account holder can see every transaction on that account,” Crosta says. “If the child or the nanny or the contractor registers the card online, they can see their own transactions, but they can’t see the main account holder’s transactions.”

Plus, if cards are issued in the user’s name with a unique card number, there’s less hassle if someone on the account loses their card.

“I lost three cards last month, and my husband’s account wasn’t impacted, and neither was my nanny’s,” Crosta

The authorized users, meanwhile, get charging privileges as well as credit-boosting benefits. The account appears on the authorized users’ credit reports, and, assuming the main account holder pays the balance on time, the users will get a credit boost. That’s a boon for anyone with thin credit history, including young people (the under-21 crowd has extra hoops to jump through to qualify for a card on their own).

“Nowadays, when it’s so hard as a young person to get credit, this is a great way as a parent to give your child the opportunity to start building a credit history once they’re 18,” Crosta says.

Risks: Main account holders risk having the authorized user run up unexpected charges and leaving them with the bill (since authorized users have no responsibility for paying the balance). Authorized users, meanwhile, risk credit damage if the main account holder is irresponsible with the account.

Credit report/score implications: Authorized user accounts, unlike joint accounts, don’t behave exactly like individual accounts when it comes to credit reports and credit scoring. In addition to contributing less to FICO scores, the time they fall off an authorized user’s credit reports (after the user is removed) differs. We provide a detailed breakdown of all these credit-scoring and credit-reporting implications of authorized user accounts here.

3. Guarantor accounts
This is a rare variation, and only one bank surveyed for this story offers it.

How it works: This arrangement is most similar to getting a co-signer on a loan. You’re basically asking someone to vouch for you if you fail to pay, without getting any privileges in return. Guarantors submit to a credit check along with the account holder, become responsible for the account if it becomes delinquent but do not have charging privileges.

Pros: Helps those who wouldn’t normally qualify for credit to get a card. Can be a way for parents to help young-adult children get a card while they’re under 21.

Risks: Because the guarantor has no charging privileges, it can be easy to forget to track purchases on the account, even if they do have the ability to view transactions. The first time the guarantor hears something is wrong might be when the account goes into collections and starts messing up their credit.

Credit report/score implications: Accounts with a guarantor are weighted the same in FICO’s scoring algorithm as accounts without one, according to Sprauve. As for such accounts’ appearance on your credit reports, Experian’s Griffin and Equifax’s Griffanti say such an account would appear on both parties’ credit reports as a co-borrower arrangement, regardless of whether the account is in good standing or delinquent.

Compare credit-sharing options

We reached out to several major issuers to find out which credit card account-sharing options they offer. More issuers will be added to the table as we hear from them.

Compare credit card-sharing options
Options offeredWho has charging privileges?Who's responsible for the balance?Application process/underwritingEnding the relationship
American ExpressAuthorized user (called "additional card with custom spending limits")All cardholdersPrimary account holderNo credit check for authorized users (must provide Social Security number and full name). Additional cardholders must be at least 15. Ask American Express to remove user.
Bank of AmericaCo-signer/joint account holder


Authorized user
Co-signer/joing account holder: Both cardholders

Guarantor: Cardholder only

Authorized user: Both parties
Co-signer/joint account holder: Both parties

Guarantor: Both parties

Authorized user: Primary account holder only
Credit checks for all parties involved, except authorized usersCo-signer/joint account holder: Close account, or remaining account holder must undergo credit check.

Guarantor: If guarantor wants to be removed, remaining account holder must undergo credit check.

Authorized user: Ask bank to remove authorized user.
ChaseAuthorized userAll cardholdersPrimary account holderNo credit check for authorized users.Primary account holder must ask Chase to remove authorized user.
CitiJoint account

Authorized user
All cardholdersJoint account holder: Both parties

Authorized user: Primary account holder only
Credit checks for primary account holder and joint account holders; not for authorized users.Joint account: Close account, or remaining account holder must undergo credit check.

Authorized user: User or primary account holder can ask Citi to remove authorized user.
Wells FargoJoint account

Authorized user
All cardholders Joint account holder: Both parties

Authorized user: Primary account holder only
Credit checks for primary account holder and joint account holders; not for authorized users.Joint account: Any parties wishing to remain a cardholder must re-apply for a new card.

Authorized user: Ask bank to remove authorized user, or close account and request new card (no additional underwriting process necessary).

Editorial Disclosure: The editorial content on this page is not provided by any bank, credit card issuer, airline or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Should you use frequent flier miles to get home for the holidays?

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If you’ve started hunting for flights home over Thanksgiving and the holidays, the sticker shock might have you eyeing that pile of rewards miles you’ve been saving up.

Sure, you originally slated that 50,000-mile credit card sign-up bonus for that bucket-list trip to Paris … someday. But that flight home to spend Thanksgiving with family is more than $500, and you need to buy it soon. Should you raid your hard-earned miles? credit card travel insurance

“Ultimately, I feel like the best use of miles is the one that makes the person happy,” says Tiffany Funk of PointsPros, a company that helps clients book reward travel. “For many people, being able to book a flight between Chicago and Phoenix to take their family to visit Grandma is worth more to them than a trip to Europe. It’s a little hard to assign a value judgment.”

Still, there are still some things to keep in mind before cashing in your points to get home for the holidays.

The type of miles you have makes a difference

The terms “miles” and “points” refer to rewards currency, but they don’t always mean the same thing. There are two main types, and which type you have can make a difference when you book domestic reward travel over the holidays:

  1. Legacy carriers (American, United, Delta, US Airways) set fixed redemption amounts for reward seats — usually 25,000 miles round trip for the lowest-level economy domestic tickets and increasing amounts for the next levels. See American Airlines’ redemption chart for one-way travel with in the continental U.S. as an example:
  2. American Airlines award chart cropped

  3. Budget carriers (JetBlue, Southwest, Virgin America) base the number of rewards you need for a free flight on the ticket’s cash price. Each point is worth a fixed amount toward a ticket. Southwest’s points are always worth 1.4 cents toward its Wanna Get Away fares, for example. You might also include “miles” from general-purpose travel rewards cards like the Barclaycard Arrival Plus in this category, since they’re always worth the same amount.

Now, here’s why the type of miles you have can make a big difference:

Legacy carrier miles can be worth far more (or far less), depending on how you redeem them. Your best bet is to get a ticket with a high cash price for the lowest redemption level. Problem is, airlines know their planes will fly full over the holidays, so they won’t unlock as many reward seats at those low redemption levels.

“There probably won’t be ‘saver’ seats over Thanksgiving,” Funk says. “So you’re not getting that 25,000-mile round trip.”

Instead, you’re looking at 40,000 miles or more round trip for economy — or 50,000 or more for business/first class, if no economy reward seats are available.

Those 50,000 legacy-carrier miles can be worth much more down the road, especially on international premium-cabin trips. Those fixed-value budget-airline points on the other hand? They’re going to be worth the same amount year round. So you might as well use them to get to Cincinnati for the holidays.

“Fifty thousand Southwest points are never going to get you more than $700 worth of travel,” Funk says. “But 50,000 American miles are enough for business class to Europe, one way.”

That said, not everyone is going to fly to Europe in business class, and there might be value in using legacy-carrier miles for a holiday trip home. Just do the math first.

“It’s really a cost analysis whether it’s a good deal to use miles during the holidays or save them for later,” says Rand Shoaf, founder of the Well Traveled Mile, a website that shares his travel-hacking tips.

For example, he says, if you’re booking a 50,000-mile reward ticket from Dallas to Chicago on a legacy carrier, and a paid ticket would be just $300, you’re getting less than 1 cent for each mile.

“Then it’s not a good deal,” Shoaf says. “But if that same ticket will cost $900 to buy, then it may be worth it.”

Flexibility is key

You wouldn’t expect to buy a dirt-cheap flight with no layovers at your ideal departure time during the holidays. The same applies to getting good reward seats.

“Your biggest friend when using airline miles for award flights will be flexibility,” Shoaf says.

That means, to snag a seat for the lowest number of miles possible, sacrifices may have to be made.

“It’s that red-eye flight with a connection, or the one that gets in at 6 p.m. on Thanksgiving day,” Funk says.”Holiday rewards flights pull quote Shoaf

Start looking early and keep looking

“In general it’s never going to hurt to look sooner rather than later to book a reward flight over the holidays,” Shoaf says.

Airlines generally make flights available for bookings nearly a year in advance. However, because airlines aren’t transparent about how many seats (reward or otherwise) are available, you’re largely flying blind.

“Airlines release a certain number of award seats which are mostly unknown to the public, and the same goes for the timeline of when they are released,” Shoaf says.

So if you don’t find a good reward seat at first, keep watching.

“Another traveler may cancel their reservation and a seat may open up,” Shoaf says. “For these reasons it can pay off to check often to see if new award seat availability has opened up.”

Just don’t wait too long. Six to 10 weeks before departure is generally a no-go zone, Funk warns.

“In fact, that’s the worst time to try to use your miles anywhere, any time of year,” Funk says. “Because that’s when people are actively shopping and airlines are actively trying to sell things.”

The airlines might post some saver reward space a week before departure, Funk says, but of course, there’s a huge risk in waiting that long: not getting to spend the holidays with your loved ones.

Consider booking, then re-booking

This one’s easy if you’re flying Southwest, which doesn’t charge you for changing your flight, Funk points out. Because the number of reward miles needed fluctuates with the ticket’s cash price, you can book early, monitor ticket prices and then rebook for fewer miles if the price drops.

Even if you’re flying a legacy carrier, this strategy could make sense, especially for families who have dates they need to lock in early. You book the high-mile reward tickets and then eat the change fee and get half your miles refunded if saver space opens up later.

“Or if a parent has elite status with the airline, they can get those change fees waived,” Funk says. “In some cases, that change fee might be over $100 a person, but if you’re saving half your miles, it’s a trade-off. Again, miles redemption is very personal.”

Holiday international travel has its own rules

If you don’t care about spending time with family, the holidays can be a great time to book rewards travel abroad – especially Thanksgiving.Holiday rewards flights pull quote Funk

“Thanksgiving is great for international travel because it’s not Thanksgiving anywhere else in the world, and U.S. business travelers aren’t traveling,” Funk says. “You can get almost whatever you want over Thanksgiving”

It can get a little tougher for families who want to go abroad between Christmas and New Year’s Day, to take advantage of school holidays. It depends on when those holidays fall, but, in general, Funk says, you’d “be surprised at how many options there are” if you avoid leaving the day after Christmas and avoid coming back the weekend right after New Year’s Day. Being willing to make connections on an international flight instead of flying direct can help as well.

“You can cross oceans for a lot fewer miles if you just have a little flexibility,” says Funk.

So is using miles to get home for the holidays a waste?

Funk recalls some acquaintances who, combined, used a couple hundred thousand miles on a domestic flight for Thanksgiving. While she thought to herself, “You could have gone to Paris!” she emphasizes that reward redemption value is a personal matter, and can often boil down to saving money rather than exotic travel aspirations.

Shoaf agrees.

“Each person will value their miles differently and the best use of your miles is for the travel experiences that you want,” he says. “At the end of the day, like with most things in life, if it makes you happy just do it and don’t worry about the rest of it.”

Editorial Disclosure: The editorial content on this page is not provided by any bank, credit card issuer, airline or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Auto rewards credit cards: Are the perks worth it?

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Whether you’re saving up for your dream car or you already have it, a credit card from your favorite automaker can get you perks regular rewards cards can’t: extra cash back at dealerships and service centers, discounts on merchandise, freebies on your lease and, of course, the chance to show off your affiliation every time you take out your card to pay.

Thinking about getting a card that matches your wheels (or the wheels you want)? Read on for five popular options – and some common-sense tips that will cut through the intoxicating power of new car smell.

1. GM BuyPower card (no annual fee)

This card lets you accumulate cash back toward a new GM (Chevrolet, Buick, GMC or Cadillac) vehicle. You’ll earn:

5 percent back on the first $5,000 you spend on the card every year. That’s hard to beat. Cash-back cards that give you 5 percent often require you to shop within certain categories (that change each quarter). This card gives you 5 percent on the first $5,000 spent each year, no matter what you buy.

2 percent back on the rest of your purchases each year. This is also a relatively high cash-back rate, since 2 percent cash-back cards are pretty rare.

Your rewards don’t expire and, when you cash them in, there are no redemption limits. This means that all the rewards can be applied toward a new car.

The card is a World Elite MasterCard (and a no-annual-fee one, at that), meaning it offers robust travel benefits (including upgrades at some hotel properties), VIP experiences via MasterCard’s “Priceless Cities” program and insurance and purchase protections (including extended warranty, trip cancellation insurance and travel accident insurance).

2. American Express Mercedes-Benz credit cards

mercedes benz american expressYou have two options if you want an AmEx that sports the Mercedes-Benz logo. Both allow you to earn points for the American Express Membership Rewards program, as well as some unique rewards if you are buying or leasing Mercedes-Benz vehicles. American Express is a CreditCardForum advertising partner.

1. Mercedes-Benz credit card from American Express ($95 annual fee):

  • $500 certificate toward the purchase or lease of a new Mercedes-Benz every year you charge $5,000 on the card
  • If you are leasing a car through Mercedes-Benz Financial Services, you get 1,000 excess miles waived at lease end. Generally, if you exceed the mileage on your lease, you get stuck paying a per-mile fee. In the case of Mercedes-Benz, that per-mile cost is $0.25. So this benefit could save you $250.
  • $50 certificate after account renewal, usable for Genuine Mercedes-Benz Accessories

2. Mercedes-Benz Platinum Card ($475 annual fee): This is a version of the American Express Platinum card. It costs $25 more than the regular platinum, and that small extra cost gets you:

  • $1,000 certificate toward the purchase or lease of a new Mercedes-Benz every year you charge $5,000 on the card
  • Up to 2,000 excess miles waived at the end of your lease, which could save you $500
  • $100 certificate after account renewal, usable for Genuine Mercedes-Benz Accessories

These cards come with the standard suite of American Express benefits, including extended warranty, car rental loss and damage insurance and purchase protection. The Platinum Mercedes-Benz card has the same extras the regular Platinum does, including Premium Roadside Assistance, which lets you get towing up to 10 miles, winching, jump starts, flat tire changes (if you have spare), lockout services and fuel delivery up to 2 gallons four times per calendar year.

3. Toyota Rewards Visa (no annual fee)

Toyota rewards cardThis card rewards you more for Toyota-related purchases. You will earn:

  • 5 points for each $1 spent at participating Toyota dealers
  • 1 point for every $1 spent elsewhere

Your points are redeemable toward Toyota service, parts and accessories; toward the purchase or lease of an eligible Toyota vehicle; and toward rentals from Toyota Rent a Car. When it comes to redeeming for a vehicle, the vehicle must be new or Toyota Certified Used (those are cars that have gone through Toyota’s certification process and are no more than six years old with 85,000 miles or fewer).

Points are worth 1 cent each at redemption. That means 5,000 points is worth $50.

There is a rewards cap of 200,000 points per year earned at Toyota dealers and a cap of 5,000 points per billing cycle earned elsewhere. Points expire five years from the billing cycle in which you earned them. There is no limit to the points you can redeem.

4. Chrysler MasterCard (no annual fee)

chrysler-rewards-cardThe Chrysler MasterCard lets you use your rewards toward Chrysler purchases (the purchase or lease of a new car, new tires, service — including oil changes — and parts). You can also redeem for gift cards, merchandise via an online catalog, charitable donations, travel experiences and cash back.

Here’s how you earn points:

  • 3 points per $1 on qualifying purchases (parts, repairs, maintenance and accessories) made at Chrysler dealerships
  • 2 points per $1 on travel (including airfare, cruises, travel agencies and lodging)
  • 1 point per $1 everywhere else

When you redeem for Chrysler purchases, your points are worth 1 cent each. Among the other redemption options, the value of your points varies.

While there are no limits to the number of points you can earn or redeem, your points do expire seven years after you earned them.

5. BMW Visa credit cards

BMW VisaBMW offers three rewards card options. For all three, your points are good toward a variety of BMW-related rewards (more on that in a moment).

1. BMW Card (no annual fee): This is the most basic option, offering 3 BMW points for every dollar spent at BMW centers and 1 BMW point for every dollar spent elsewhere.

2. BMW Signature Card ($75 annual fee): You’ll earn 4 BMW points for every dollar spent at BMW centers, 2 points for every dollar spent on gas and 1 point for every dollar spent elsewhere.

3. BMW Ultimate Card ($75 annual fee): You’ll earn 5 points for every dollar spent at BMW centers, 3 points per dollar on gas and 1 point per dollar spent elsewhere.

Points earned with your BMW card expire after five years — and they’ll be lost if you ever become three months past due on your card.

Here’s what you can redeem for

  • Leases and loans: Redeem 10,000 BMW points for $100 off a lease or a loan (up to $5,000).
  • Extra lease miles and excess wear and use: Redeem 20,000 points for 1,000 additional miles on your lease (up to 5,000 miles). Or, use your points to pay for extra wear and use charges at the end of your lease. You can get up to $200 off (for 20,000 points).
  • Service and accessories: Use your points for a check good towards service at BMW centers and BMW accessories. For services, every 10,000 points gets you $100 check (up to $300). Same goes for merchandise (up to $200).

Should I get an automaker’s reward card?

Comparing vehicle-related rewards cards is a bit different from comparing other rewards cards. It’s not about picking a card that gets you the most cash back on groceries and mundane everyday purchases. Choosing the car you drive (and, by extension, its affinity card) can boil down to nostalgia, quality, history, advertising, personal preference, lifestyle, brand loyalty and innumerable other factors.

That said, here are some common-sense tips:

  • Be careful of expiration dates: Otherwise, your spending could all be for nothing – a waste, considering you could have been putting your spending on other rewards cards that don’t allow rewards to expire (for the record, that’s most cash-back cards on the market).
  • Be wary of dealership service prices: Auto manufacturer credit cards often give accelerated rewards for service and repairs – but only if you visit the dealership. Because dealership services tend to be pricier than the same services at other mechanics, this incentive may cause you to spend more.
  • Check the annual fee: Make sure the perks you get (or at last the privilege of displaying your affinity for the brand) are worth the annual fee, if your card has one.
  • Weigh your other options: If you can set your brand loyalty aside, (at least when it comes to your credit cards), there are a plenty of cash-back cards on the market that can get you a bigger return on every-day spending than some of the cards listed above. You could save those earnings and put them toward a car. You’d have more flexibility too, since you wouldn’t be tied to a certain make, or be limited to new or certified used.

Written August 14, 2014

Editorial Disclosure: The editorial content on this page is not provided by any bank, credit card issuer, airline or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

BuyPower Card Review: Important 2014 Update

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The BuyPower Card (formerly known as the GM Card) used to have some red tape that made it a less-than-stellar offer. But, after being taken over by Capital One (which bought HSBC’s U.S. credit card business in 2012), the card underwent some major changes in late-2013 that make it a better option for 2014.

So what’s changed?

The card still has no annual fee and allows you to earn back a percentage of your spending, which you can then put toward an eligible new GM vehicle (retail purchase or lease).

In 2014, you can earn:

  • 5 percent back on the first $5,000 in purchases every year
  • 2 percent back on all purchases the rest of the year without limit

Here are the major differences between the old GM Card and BuyPower Card:

Now, it’s a World Elite MasterCard: That means it offers an array of additional benefits and protections beyond the perks offered by the issuer. Many of the World Elite MasterCard benefits are designed for travelers, and that’s fitting because the card (just like all Capital One cards) has no foreign transaction fees.

Here’s a run-down of some of them:World Elite MasterCard

  • Trip cancellation insurance: This coverage refunds any non-refundable purchases you’ve made for a trip (hotels, flights) if you have to cancel or end your trip early for a covered reason.
  • Luxury Hotel & Resorts program: For hotels in MasterCard’s portfolio, get complimentary room upgrades, late check-out, early check-in and free breakfast (availability permitting)
  • Discounts on limos: Get between 15 and 25 percent off on limo and chauffeured car services from participating companies.
  • Flight upgrades: You get discounts for certain airlines and itineraries and, sometimes, even complimentary seat upgrades.
  • Concierge service: Available 24/7, this service will help you with tasks and chores like finding hard-to-find items, plan travel and make reservations.

No more redemption limits: In the past, the GM Card had what were called “redemption allowances.” Only a certain amount of the rewards you earned could be used toward your car purchase. That ceiling was as low as $500 for some vehicles and went up to $3,000 for others.

The BuyPower Card has no such limits. You can redeem as many rewards as you earn.

Rewards don’t expire: Previously, rewards expired seven years after they were earned. Coupled with the redemption allowances, this was a double whammy for cardholders; if you maxed out your redemption allowance, you’d have to buy a new vehicle within seven years to take advantage of remaining rewards.

Now, however, rewards earned via the BuyPower Card never expire. So, even if you don’t plan on getting a new car for a while, you can simply bank your rewards as long as needed.BuyPower Card from Capital One

Cool new design: The previous traditional horizontal design of the original GM card has been rotated 90 degrees with a distinctive vertical design. The only other cards on the market featuring this design ethic are the Chase Slate card and the Virgin America cards. The cobalt blue background is truly eye-catching and the silver MasterCard logo indicates that this is a special piece of plastic. Of course, you should choose a card based on more than good looks ? but this luckily this card has looks and substance.

Other GM cards

In addition to the BuyPower credit card, Capital One offers one more option for consumers: The GM Extended Family Card. With the regular card, you can’t redeem you rewards in combination with an employee or supplier discount. The Extended Family card allows you to do that, although it also decreases the rewards earnings ? you get a steady 1 percent back on all your purchases. The card does have a unique perk, though: If you don’t want to cash your rewards in for a car, you can get them as cash back in $50 increments.

For business owners, there’s another option: The GM Business Card. It gives 5 percent back on GM parts, accessories and service at GM dealers; 3 percent back at gas stations, restaurants and office supply stores and 1 percent back on everything else. It also offers a $100 statement credit if you spend $500 in the first three months. Rewards are good toward a new GM vehicle.

Is it a good deal for 2014?

There are a few other cards out there that have a 5 percent rate of return on spending (the Chase Freedom and Discover it among them). In theory, you could get one of them and save up the cash back toward a new car. Yet, that 5 percent back is often tied to very specific and rotating categories, and the cash-back rate often falls to 1 percent after that. With the BuyPower card, you get 5 percent back on the first $5,000 you spend each year (on absolutely anything) and 2 percent after that.

The card’s biggest potential drawback is that, as with many loyalty cards, the redemption options are pretty limited. The card is clearly meant for customers who are brand loyal. Unless you have the Extended Family Card (which gives you the option for cash back), your points must be redeemed for anew GM vehicle. Change your mind about buying or leasing with GM? Your points are useless.

If you aren’t a fan of GM, you probably wouldn’t have this card in the first place, but make sure your budget can handle a new GM vehicle. Even if you spend $10,000 on the card per year, you’d have just about $1,750 after five years. That’s not enough to entirely cover the cost of a new vehicle. So, if cost is a concern, you can certainly save money by forgoing the card altogether and buying a used car.

The bottom line: If you intend to buy a GM vehicle and nothing else will do, the BuyPower card is a wise choice, given the user-friendly changes to the program and a simple rewards structure that lets you stockpile cash back on all your purchases. With no more redemption ceilings and expiration dates on rewards, you can rack up enough points to get a significant discount on your dream car and wait until the right time to buy it. However, if you don’t anticipate sticking with GM for years to come, there are lots more flexible rewards cards on the market that will get you a nice return on your spending over the long term.

[Commercial] Capital One BuyPower Card TV Spot – Something Great from Avant Artists on Vimeo.

Updated August 2014

Editorial Disclosure: The editorial content on this page is not provided by any bank, credit card issuer, airline or hotel chain, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

FICO 9: A more forgiving FICO score?

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About five years after its last upgrade, FICO has announced the latest iteration of its scoring system: FICO 9.

The new credit scoring system, which will be commercially available to lenders this fall, makes some significant changes in the way FICO handles accounts in collection — and certain consumers will likely find it more forgiving. fico-score-logo

What’s changing?

The current version of the FICO score (FICO 8) doesn’t differentiate between collection accounts. That means all collection debts, no matter what type they are – and whether they’re paid or unpaid – cause equal damage to your score.

Once FICO 9 launches, however, two big things are going to change:

1. Paid-off collection accounts will no longer hurt you: Under FICO 9, if you pay off a collection account so that it shows a zero balance on your credit reports, it won’t hurt your FICO score. Currently, the original sin of letting an account go into collections will punish your score as long as that account remains on your credit reports. But FICO 9 forgives you once you make things right.

2. Medial debts won’t weigh down your score as much: Right now, FICO sees all collection accounts as equal – whether they’re from an unexpected illness that saddled you with crushing medical debt or a shopping spree. FICO 9, however, will give you somewhat of a break when it comes to the former.

Unlike paid-off collection accounts, the new FICO score won’t ignore medical debt. But it will discount it. That means medical collection accounts will drag down your FICO score less than other unpaid collection accounts will.

Why has FICO changed its tune regarding medical debt? John Ulzheimer, credit expert with Credit Sesame and president of The Ulzheimer Group, suspects the Consumer Financial Protection Bureau’s May 2014 report regarding medical debt may have something to do with it. The report found that those with medical debt (as opposed to other consumer debts) are more creditworthy than scoring models suggest. Medical debt is usually related to circumstances outside the consumer’s control and doesn’t necessarily mean someone won’t pay their other bills, the CFPB argued in its findings.

According to FICO’s press release, the new score will also be “the most consistent” across all three credit bureaus, meaning less fluctuation between your TransUnion, Equifax and Experian FICO scores.

What does it mean for consumers?

FICO 9 becomes available this fall (no date has been announced yet), but that doesn’t mean all lenders will adopt it simultaneously. They’ll covert to the new score “in their own time frame,” Ulzheimer wrote in an email, with adoption reaching critical mass only after repeated testing determines the new score accurately assesses borrower risk better than other scores. Some confusion might linger in the mortgage industry, however, as Fannie Mae and Freddie Mac use older FICO models, Ulzheimer says. If they don’t update, that could mean consumers won’t get a break on medial debts and paid-off collections when they apply for a mortgage.

As FICO 9 achieves dominance, however, it will give some consumers’ scores a lift. In its press release, FICO estimates that the median scores of consumers “whose only major derogatory references are unpaid medical debts” will get a 25-point lift.

Still, as Ulzheimer points out, consumers won’t be invincible against credit denials. Lenders don’t just check your score and call it a day – they’ll peruse your credit reports as well. Collection accounts (medical and paid-off ones) will still be on your credit reports for lenders to see, and they might decide they make you too much of a risk.

Why the new model?

FICO isn’t making these changes to be nice and give consumers a break. The company’s success relies on its ability to accurately determine borrower risk better than other credit scores out there. So it frequently tweaks the criteria that go into its industry-leading three-digit number. The last major update was in 2009, with FICO 8 (which, among other things, changed the way FICO weighs high-balance card accounts). Its changes for the FICO 9 model indicate that it has found that paid collection accounts and medical bills aren’t as much of a risk indicator. So, although consumers might breathe a sigh of relief, it’s lenders that FICO is trying to win over with a more accurate score.

VantageScore, a credit scoring model developed by the Big 3 credit bureaus, made similar changes in March 2013 with its VantageScore 3.0 model, when it announced it would begin ignoring collection accounts with zero balances.

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