Is an ARCO credit card really a good deal or just questionable marketing? As a resident of Southern California, there are quite a few ARCO gas stations around here. Their motto is “straight up gas” and they claim to be an average of 5 to 10 cents cheaper per gallon than other stations. But my review which follows shows why it’s not always the best deal. Despite what some people claim, this credit card is NOT a scam (Arco is not doing anything illegal). That being said, it’s not a good way to save money, here’s why…

Paper, Not Plastic
Now this is a huge inconvenience for many. They do not accept Visa, MasterCard, Discover, or American Express credit cards for payment. Besides cash, you can pay with a debit card. But the kicker is that they charge a “convenience fee” of 45 cents to do so.

So let’s do the math. Let’s say they truly are 5-10 cents less for every gallon (they’re not always but I’ll discuss that in a moment). If you bought 10 gallons and saved 5 cents per gallon, that would equal 50 cents total. Now if you paid with your debit, that would mean hypothetically you only saved 5 cents. If you have an ARCO gas credit card though, they do waive this fee.

Is It The Same Formula Of Gas?
First of all, I need to be careful what I’m about to say so I don’t get sued by ARCO. I am in no way claiming their fuel is lower quality. Rather, I am merely mentioning a unsubstantiated rumors I have heard and read from various sources.

A car dealer informed me not to use their gas in my car, which is a German sports car. He alleged that if I’m going to use it, I should put an octane booster in right before filling up the tank. Is this true or not? I have no clue, but that is what I was told.

What he was referring to, I believe, is what I read elsewhere about ethanol. I read a post about how ethanol is commonly added to gas – the blogger suspected the gas ARCO uses  might have above-average ethanol concentrations – still meeting the legal requirements, but more than the average amount added. Again, I need to mention this is what he said and he did not present any proof of this claim. These rumors may very well not be true at all. Also, if ARCO sees this and would like to set the record straight, they can email me and I will gladly update this post if needed. Because these rumors about quality are just that – rumors – I would NOT rely on them when choosing where to buy gas.

“Regular” Stations
So how much more do the “other” stations cost? Well I’ve kept an eye on the discrepancies constantly over the years. There are “name brand” stations around me such as Shell, 76, and Chevron and I would say on average they only run 5 to 7 cents more. Being that there are cards that save 3 to 5% (notice that’s percent, not cents) per gallon, that would mean if it were $3 gal., I would be saving 9 to 15 cents. That’s much more than what I would be saving at ARCO even if I paid with cash there.

Last but not least, something else to consider is that ARCO is BP company… are they a company we really want to support right now? I don’t think so.

Ad: So is an ARCO credit card going to save you money? It doesn’t look like it. You can save 5% at every gas station using a good cashback credit card card instead.

Do you have an American Express card? Then there’s a good chance you recently got a letter in the mail from Amex raising the interest rate on your variable APR card. In fact, I received this letter in the mail myself for my Blue card. The changes go into effect during the first billing period that starts in October.

First of all I would like to say I’m actually a huge fan of Amex and I think they’re a great company. But I was a little bit disappointed with the way they handled this situation. The three bullet points on my letter (and I imagine yours too) basically say this:

• Interest rate is being raised on cash advances and purchases
• If you have a “penalty rate” on your account because of a late payment, the interest rates are going up
• The late fee is being increased

Finally, under these bullets, they say they are “pleased to let you know” they will no longer be charging you an over-limit fee (BTW I discussed this in my last blog post).

Amex, I must say although I remain a huge fan, I am a bit disappointed with this particular situation. I don’t even carry a balance so this doesn’t effect me, but having my APR go to 13.99% + the prime rate on top of that seems awfully high in my opinion. Why this bothers me so much is because I feel bad for the other equally responsible cardholders out there who have been hit with this big hike. I understand that the recent credit card reform legislation as well as the recent losses from defaults is making it a bit more expensive to do business for now, but I don’t feel accounts with perfect histories should be given this much of an increase – a 1-3% increase seems more reasonable to me.

I’ve been an American Express holder for 7 years (multiple cards). I’ve never had a single late payment, not only on my Amex cards, but on any credit card or bill in my entire life. My FICO is close to 800. A few years ago when I was in a coma and knocking at death’s door, one of the first things I said to my mother when I awoke from it was to make sure my bills were paid so they wouldn’t be late. That’s the kind of customer I am – more concerned with my obligations to paying bills and my credit history, than the fact that I was crushed in an accident and was told I was about to die. Should responsible customers like myself and others like me be rewarded with such drastic APR hikes like this?

This site has financial ties (affiliate advertising) with Amex, Discover, and most other major banks, but as you see we still strive to give you our honest opinions. My card from Discover has 5% cashback and no annual fee… and they’ve manage to not raise my APR. This has been my favorite card as of lately and you find out about it in my Discover More review!

A chart from Consumerist showing average late fees from '94 through '05. Today they average about $35.

Fees for going over your credit limit are a huge money maker for the industry. In fact, they are estimated to bring in around $3.7 billion in revenue this year alone. The recent credit card reform (which doesn’t kick in for another half year) will help protect against these fees: creditors won’t be able to charge you a fee for going over your limit, unless you have specified that you want to be able to spend beyond the limit.

American Express has recently announced they will soon no longer charge customers fees if they exceed their limit. Discover has stated they also will be doing the same. However, give with one hand and take with the other… Amex is raising interest rates for a huge number cardholders by an average of 4%. In fact, this past week I received notice in the mail for this, and so did a few friends and family members I spoke to whom also have Amex cards. I have a FICO score of 810 and although I don’t know the scores of the others, I do know they use their credit responsibly.

So they may be socking it to you even if you have exceptional credit. Although the press release I am basing this off of doesn’t say this increase is across the board, when I called up customer service, the rep told me it was an “across the board increase on all accounts.”

But back to those late fees… did you know you should never exceed 30% of your credit limit anyway?

Last week we reported that credit card debt is declining in America. The numbers for July have recently been released and show continued improvement in the number of unpaid accounts. The latest figures for net loss are as follows:

American Express: 10.18% down to 8.92%
Bank of America: 13.86% to 13.81%
Capital One: 8.82% to 8.78%
Chase: 8.04% to 7.92%
Citibank: 10.51% to 10.03%
Discover: 8.75% to 8.43%

However it’s important to note that while the above numbers reflect the net loss, the number of accounts which were 30-59 days late did go up slightly for some issuers. Also these were based off figures from a Credit Suisse report. There have been other reports (such as Capital One’s regulatory filing on the 17th) which differ.

What do you think… are things improving or is it just accounting tricks?

The restaurant chain of Dave & Busters is one of the companies which was reportedly hacked.

Right now on the US version of the CNN homepage, the main story is about a suspect who allegedly has set the all-time record for the number of credit card numbers stolen – more than 130,000,000! Furthermore, the previous record was also allegedly set by him; stealing 40,000,000 account numbers.

Who is this suspect? Well his name is Albert Gonzalez, a 28 year-old from Miami. Fortunately, he’s already in jail awaiting trial for various hacking charges. However this latest charge lays out the numbers for the estimated number of accounts that were compromised in a different series of attacks. Gonzalez, along with his Russian cohorts, reportedly hacked the computers of major corporate retailers to get this information. Officials from the Justice Department said they have no idea exactly what the losses have been from these attacks.

Good news and credit card debt… those are two phrases you don’t often hear together.

Fortunately, we can say them in this story. Americans have been paying off their credit card debt for the fifth staight month in a row. This goes against what many had predicted: that debt would be rasing because of unemployment.

True, for many that are without a job, unfortunately they are resorting to their charge cards to pay the bills. But overall, more and more Americans are paying down that balance every month rather than adding to it. It looks like the economy finally made some people realize the gravy train isn’t always permanent, and they can’t just keep living on debt to finance their lifestyles forever… so they need to start paying it off.

Let’s hope this trend continues.

Have a startup company or know someone that does? Or maybe you’re thinking about starting up an entrepreneurial venture? Well, you may want to think twice before you plan on whipping out your platinum cards to cover startup expenses. That is, if you can’t pay your bill off in full at the end of the month.

According to a recent study done by the Kauffman Foundation, they say that taking on credit card debt is a significant contributor to reasons of why a company may fail. According to their findings, for every one thousand in debt the company or founders take on to fund it, the odds of failure increase by 2.2%. The majority of the startups in the study had no employees, it was the founder(s) that ran everything.

However with VC and angel capital in short supply due to the economy, it’s understandable why people are using their charge cards to finance their dreams. The founders of Google are rumored to have funded their venture in the early days with credit cards, but remember, there were a thousand dot-bomb failures for every Google-like success story.

Credit card debt consolidation seems to be the buzzword in financial circles these days, given the fact that the economic crisis only seems to be getting worse. You see the ads on TV, radio, and the net. We keep hearing about the virtues of debt consolidation and how these programs not only help consolidate your debt, but also offer to reduce it. Seems too good to be true? Well, as a matter of fact, it often is. Read on to find out the truth behind credit card debt consolidation and reduction.

The Offer
Here is the rosy picture that is painted in front of a vulnerable customer who is unable to make the minimum payments on his credit cards by a credit card debt consolidation program. The customer is asked to stop making any payments whatsoever and start saving the money that they would otherwise have paid to credit card companies. Once the saving becomes large enough, it can then be used to settle debts with credit card companies. Credit card companies are willing to settle for less than the total amount owed, if paid in lump sum. Presto! You are out of debt, and without having to pay the entire amount either thanks to credit card debt reduction measures.

The Truth Behind the Offer
While the program sounds great on paper, it does not actually work so well in real life. A person who is unable to make minimum payments on his credit card dues is unlikely to be able to save a large lump sum in a short amount of time. Without this lump sum amount, he is unable to settle his debt and risks getting chased by third party collection agencies. This concept of credit card debt consolidation simply does not work. On the other hand, the debt keeps getting bigger since the customer has stopped making any payments. Late fees, non-payment charges as well as interest keep accruing until a settlement is reached. So in reality, this concept of credit card debt reduction also does not work. Plus if you think your credit was bad before, it will be really shot now that you haven’t been making any payments at all.

The Scam
The main reason this credit card debt consolidation scam is working is because people are desperate to get out of the situation they find themselves in. More and more people are finding that they are unable to pay back their debts and are looking for options to resolve the situation. These credit card debt reduction companies prey on such vulnerable people and on their ignorance of how the system really works. Moreover, they make a huge profit as their services are not free. In some cases, you may actually end up paying these companies over 20% or more of your outstanding debt just to use their services.

How to Reduce Credit Card Debt?
In reality, there is only one simple way to actually implement credit card debt consolidation. Get a 0% APR credit card and consolidate as much of your debt on it as possible. Just keep making your minimum payments or more, in a timely fashion. However if you don’t have the credit score necessary to open a card, you should talk to your credit card company to see if you can work out a payment plan with reduced payments. Remember, there’s nothing a debt settlement company can do that you can’t do on your own. We wrote a recent post on here about the “talk to your credit card company” free service which was recently launched by the major banks and issuers.

Whenever you get a lump sum amount, use it to clear as much of your debt as possible. Over time, you will find yourself debt-free. But most important of all, you will also have paid off your debt with a clean credit report.

Like they say, there’s an ap for that… including processing credit cards.

Right now there is already an ap out that allows merchants to manually enter a customer’s credit card data and charge there card. But now, a card reader called Square has been developed that can actually read the card. It’s a small cube that plugs into the headphone jack on the top of the phone. Now here’s the cool part – the customer signs the screen and for the receipt, they enter their email address and it is instantly sent to them, along with a map of where the transaction took place.

When I was at the U.S. Open of Surfing a week ago at Huntington Beach, an iPhone would have been a great way for the booths and sellers on the beach to process credit cards. This seems like it would be the perfect solution for conventions, flea markets, farmers markets, fairs, and other locations like that which need simple wireless processing.