Q: I was going to apply for one the SunTrust credit card offers since I bank with them. Their Visa Platinum and Visa Signature come with rewards but the application isn’t clear about the point value. I then go to the section of their website to browse rewards and the point conversion looks mostly bad ($5 and $10 gift cards for high number of points). Should I reconsider getting their card?

A:  Both of the SunTrust Visa credit cards give you the following:

• 1 point per dollar on regular purchases
• 2 points per dollar on gas, grocery, and drugstore purchases

If you look at the first page of the gift cards, indeed the value is quite bad…

With these $5 and $10 gift cards you mention, each point is only worth about 1/2 of one penny. However you might have only noticed the first page because if you look at pages 2-6 you will see gift cards which are much better deals.

Most of the $25 gift cards can be had for 3,000 points. That’s a value of $0.0083 per point… which is better but still less than the gold standard 1 cent per point. Fortunately if you save up enough for $50 and $100 gift cards, SunTrust seems to usually dole out a full penny per point.

In defense of the SunTrust Visa credit cards, you should know that most banks operate their rewards programs in a similar manner, where you have to redeem for $25 to $100 cards to get the most bang for your buck.

If you opt for cash back/statement credits unfortunately the minimum amount required to get full value is quite high. To get full value, you have to redeem 25,000 points for a $250 statement credit. Go below that amount and you will be getting anywhere from 0.715 to 0.875 cents per point. So if you are after cash back, then the application would actually be a bad idea.

For merchandise there are plenty of options, for everything from fashion to electronics, but these are almost always a bad deal. Not just for the Suntrust credit card, but almost any credit card rewards program. Simply put, you usually get a better price buying the merchandise on your own.

Visa Platinum vs. Signature?

Even though the rewards are the same with both cards, their benefits will vary slightly.

The SunTrust Visa Platinum card comes with your basic run-of-the-mill benefits you can expect to find on any platinum-level Visa or MasterCard. These include things like secondary collision damage waiver for car rentals paid for with the card, travel accident insurance (common carrier only), and lost card reporting.

The SunTrust Visa Signature card offers a couple extra bells and whistles. Most notably the concierge phone support, lost luggage reimbursement, and purchase security (covers eligible purchase which are stolen/damaged during first 90 days). You will find these benefits (or ones comparable) on other Visa Signature cards, MasterCard Worlds, and American Express cards.

Neither the Visa Platinum or Signature credit cards from SunTrust come with an annual fee. So the reasons to choose over the other would be:

• The Platinum has a preset limit, while the Signature does not. Generally speaking, having preset limits can sometimes be more helpful for your credit score than no preset limits.
• The credit score requirements for approval will be higher on the Visa Signature. That being said, from customer reviews/comments I have gotten, neither appears to be too hard to qualify for as long as you have good credit.

Verdict?

My guess is that the reader must have only been looking at the first page of gift cards (the $5 and $10 ones) which indeed are a bad value. However as demonstrated above, the $50 and $100 options are generally a 1 point = 1 cent conversion, which is good.

Some of the closest competitors to the SunTrust credit card rewards program are the following:

• AmEx Blue Cash (2 versions avail) – 3-6% at supermarkets, 2-3% on gas, 2-3% at department stores, and 1% on everything else. The nice thing about these is that you get straight up cash back, so you don’t have to fool around with points. Best of all, one of the versions has no annual fee.
• BankAmericard Cash Rewards – 3% on gas, 2% on grocery, and 1% elsewhere. There’s no annual fee however the main drawback with this one is that there is a limit to how much you can earn.
• Capital One Cash Rewards card – a total of 1.5% cash back on everything. No annual fee.

Written or last updated Jan ’12

When your credit is shot, these days you don’t have much choice when it comes to rebuilding credit. If you’ve had delinquencies or a bankruptcy, you will probably have to start from the ground up – a secured credit card.

Now I’m not going to lie… obviously there are many drawbacks with these types of cards (like the security deposit, lack of benefits, and fees).

However the major benefit is that almost anyone can get approved, regardless of how jacked up their credit history is. But is the Bank of America secured credit card the best way to go?

Maybe… but maybe not. Make sure you read this review.

The BofA secured Visa card in a nutshell

• This is now a fully secured card, so every $1 of your deposit = $1 worth of credit limit. In the past Bank of America used to offer partially secured (a $500 limit for a $99 deposit) but they stopped this during the recession and it never came back.
• The amount of the security deposit can range from $300 to $4,900 (don’t ask me why they do $4,900 instead of an even $5k, but that’s how it is). They used to allow you to do a higher deposit of up to $10,000 (which meant a $10k credit limit) but sometime back in 2010 or 2011 they chopped that down to the $4,900 maximum.
• The annual fee is $39.00. This is actually pretty good when compared to many other secured offers on the market.
• There’s a 20.24% APR at time of this review and according to the application, everyone is given the same rate (no better, no worse).

The compliments and complaints?

Pro: Possible conversion of secured to unsecured
Con: You may have to wait a very long time!

The credit card’s application says this:

Sounds good, right? Well the main complaint about this is that whether or not you’re eligible for a conversion might not be entirely based on how well you manage the secured credit card from Bank of America.

Instead – if you look above that term – you will see your credit limit is based on “income, ability to pay, and security deposit.”

So even if you maintain a perfect history with your secured account, it might not be enough to score an unsecured conversion. This is by far the #1 complaint I see about this card.

I have read reviews from customers on the forums who say they have had this credit card for 2 or almost 3 years and still don’t qualify for the conversion! The reason? Their credit report doesn’t show enough other accounts to qualify.

For example one poster said that BofA refused to upgrade him because his only other line of active credit was a car loan he had through BofA. Even though the loan was almost 3 years old and the secured credit card over 2 years old, they wouldn’t do it because they wanted to see even more active credit accounts on file.

Conclusion? In order to qualify for the unsecured upgrade, you will probably have to build up a credit history. And by that time you might as well just apply for any ol’ unsecured card elsewhere, so what’s the point?!

PRO: The annual fee is low.
CON: You don’t get much in return… just a basic Visa with few benefits.

$39 is pretty low. It’s comparable to HSBC’s Orchard Bank, but BofA still will cost you a bit more than Capital One’s secured credit card.

PRO: Bank of America is huge with branches coast to coast.
CON: On the entry and mid-tier credit cards, customer service complaints are common… especially for this one!

However in my personal opinion, the subpar phone support department isn’t a maker or breaker because let’s be honest… most cards in the secured category will be the same.

I think the biggest drawback is that you can’t get much help from Bank of America branches for your credit card. In the past I’ve gone in and asked for help dealing with an issue (and this is for an unsecured card) but all they tell me is to call customer support because the branches don’t handle credit card support.

So logic would tell you that getting a card from BofA might make sense since you would have a local branch to go to. But in actuality since their local branches don’t deal with the cards, it’s basically no different than dealing with a card issuer a thousand miles away.

Worth it or not?

In all fairness, the Bank of America secured credit card isn’t a “bad” offer, as long as you don’t apply for it with the assumption it will automatically become unsecured. Instead, I think the best way to look at it is a fully secured card (which it is) with a $39 annual fee.

Check out these reviews of the best secured credit cards to see how BofA stacks up against the competition.

What is Experian PLUS Score and how accurate is it? You may be surprised…

Contrary to popular belief, when you check your credit score you probably are not getting your FICO. Instead, chances are you receive a competing model. The PLUS Score from Experian is one such example.

The heavily advertised FreeCreditScore.com actually uses the PLUS Score (not FICO) but you might have to look in the fine print to realize that:

Before we talk about its accuracy and usefulness, here’s a lowdown on the basics:

Scale: The Experian PLUS Score range is 330 to 830. This is close – but different – than FICO’s range of 300 to 850.

Source: MyFICO.com

Formula: Fair Isaac (creators of FICO) gives us quite a few clues as to the components which go into their formula and how much each (as a group) will impact your score.

Unfortunately, Experian doesn’t provide a neat breakdown like this for their PLUS Score formula. On their website they do say it uses a “similar formula to those used by lenders” but it’s really anyone’s guess as to how their model weighs the pieces of information.

Distribution: The PLUS Score vs. FICO score is not an apples to apples comparison since each is a different model and scale. But to give you an idea of how their distributions compare, I created this bar graph:

That’s based on the most recently released distribution information from FICO as of the start of 2012.

Experian doesn’t give us the distribution in such a convenient manner, but by deciphering their percentile statistics, I was able to come up with the data to create this bar graph for the PLUS Score:

Good vs. Bad: So that brings us to the question, what is a good Experian Plus Score? And what is a bad one?

Well the median is exactly half way in the middle (50% higher and 50% lower). They say that 50% of the US popular is below a 724 PLUS Score.

I’m sure it’s no coincidence they structured it that was, being that the median for FICO is almost exactly the same at 723 (or at least, that’s what it was when FICO last reported the median publicly).

So in the simplest terms, you could say that 724 and above is “good” on the PLUS Score by Experian. For “great” or “excellent” I would probably peg that at around the top 30% which is 757 and above.

Contrast that to FICO, in which I consider 780 and above to be excellent (have explained my reasoning for that number in previous posts).

Accuracy: Is PLUS Score accurate? Well, if you are trying to use this number interchangeably with your FICO… forget about it!

Unfortunately most of the forum reviews I have seen are quite negative because the two numbers can be so different, sometimes a drastic difference. One poster alleged their PLUS was 711 and their FICO was 658. That being said, I have seen others who have reported much closer similarities, like 542 and 536.

Conclusion? Don’t try and convert an Experian PLUS Score to FICO. Conversion is not going to work and anyone who tells you they have a formula to do so is lying.

But at the end of the day, should you even care?

Going back to the FreeCreditScore.com example, in the fine print it says:

Yes that’s right… the PLUS Score isn’t even used by creditors/lenders! It’s for “educational purposes” and used for credit score offers marketed to consumers.

It will probably give an approximation of the general type of credit you have (like good vs. great) but beyond that, this scoring model is of very little use. I wouldn’t care too much about it and even if you know your PLUS, you definitely still need to know your FICO since that is what creditors actually use.

Q: Hey there’s a good promotional offer on this credit card I’ve had my eye on for a while now. Haven’t applied for a new card in years and recently I heard that opening a new credit card will hurt your score. Is that true?

A: Will applying for a new credit card lower your score? Probably. But by how much? Well that depends…

There are 2 types of credit checks – soft and hard (hmm… easy opportunity for a joke here but I’ll leave that out). The latter – hard credit inquiries – are the type that might negatively impact your score.

Anytime you apply for credit – whether it be a card, loan, or even a new phone account – a credit check is performed. This is almost always a hard credit check and yes, it will show up on your credit report for 24 months. Fortunately, the FICO scoring model will only count them during the first 12 months, with their greatest impact is during the first 6 months.

So how much does applying for a credit card affect your credit score? Well, the higher it is, the more likely it will be hurt.

• If you have an extremely high FICO score of say 810, one credit inquiry may knock that down by as much as 10 points (based on experience and consumer feedback).
• However for “many people” the impact of applying for a new credit card will be “less than 5 points” or it “may not affect their FICO score at all” (source: MyFICO).
• For those with below-average or bad credit, the chances of it negatively impacting your score are lower, in comparison to someone with good to excellent credit (source: consumer feedback).

When you shouldn’t – and should – be worried

If you plan on applying for a mortgage or home loan within the next 6 months, then it’s probably best to not apply for any new credit cards right now. Even though the FICO score impact will probably be minimal, it’s better to be as squeaky clean as possible with major loans such as these.

But if a mortgage or home loan is not happening within the next 6 months, then I wouldn’t worry about possibly getting hurt with a [slightly] lower score. Remember 12 months from now that inquiry won’t affect your score whatsoever.

Actually if you don’ have plans to finance a home in the near future, then right now is actually the best time to apply for credit cards. Why? Because the average age of your credit accounts is part of your credit score. So if you’re going to get new card(s) you might as well do it now, so they have time to age. That way by the time you do apply for a mortgage or major loan, those new credit card accounts will be year(s) old and that should help boost your credit worthiness, assuming you manage your accounts responsibly.

Does using a temporary online credit card really make sense?

Over a decade ago during the early days of Paypal, I remember when they launched the feature to generate temporary credit card numbers for online shopping (well technically they were debit cards numbers, but you catch my drift).

One time I used this virtual number for a purchase from shady merchant and lo and behold, they ended up pounding me with unauthorized charges afterward. As far as protection goes, it was essentially worthless because the disputed charges still wiped out my Paypal account balance.

This is the problem with temporary credit card numbers… ultimately they do nothing to stop fraud. As long as the virtual account number is active, crooks can charge to their heart’s content – using up your credit limit or shrinking the available spending power on your debit card.

There’s really only one advantage

Now if the aforementioned happened, obviously you can dispute the charges and get your money back if they were unauthorized. But that offers no advantage over disputing charges made on your regular debit/credit card numbers: both involve the same dispute process and both will distort your account balance (at least until the charges are reported and reversed).

At the end of the day, the only advantage of using a temporary card number is that if it’s abused, you only have to cancel that number instead of your main account number.

Some are more dangerous than others

You can create temporary credit card numbers for Chase, Citi, Bank of America, Discover and most other major issuers (excluding American Express). But not all are created equal…

• The “use everywhere” type – Some only give you one virtual account number. You can then use it whenever you want for online transactions. The problem with this type is that over time you will be using it at multiple merchants. This is how Paypal does it.
• The one-time use type – With this kind, the temporary number is generated for one-merchant only. That way if the number is compromised, no one else can use it. Citi offers this as a free feature on their credit cards, including their popular Forward card. Bank of America’s “ShopSafe” is similar but with fewer features.

Between the two types, in theory, the first is more dangerous, since you can’t restrict using it to a specific merchant. So I you insist on using these, go with the ones that gives you a unique number on a per-merchant basis.

But never, ever use a debit account

The problem with a Paypal virtual credit card number (and all debit cards) is that if your account gets hit with fraudulent charges, your balance will be affected. Even if that’s only temporary and you are able to reverse the charges, there will still be a period of time where the money isn’t there and that could cause checks to bounce if it happened with your checking account. This is why debit cards are so risky to use.