Citi Double Cash card review: What makes it different?

Cards without annual fees that let you earn more than 1 percent cash back on every single purchase across the board are pretty uncommon. But Citi just launched a new product that promises to give you 1 percent when you buy something — and another 1 percent when you pay for it.

The Citi Double Cash card offers a unique way to earn “double” cash back on all purchases. Here’s how it works and how it compares to the competition.

How you earn the extra cash back

With most cards, you earn rewards as you make the purchase. Say you have a card that gets you 2 percent back on dining. You eat at a restaurant, pay with your card and, as soon as that purchase is posted to your account, those rewards are yours.

Citi’s Double Cash card works a bit differently. When you pay with your card (for any purchase), you get 1 percent back right away. Want those extra rewards the card offers? You need to pay your card balance on time. Once you make a payment (whether you pay in full, or just the minimum), you get an additional 1 percent back on the amount you pay.

So, it’s not always accurate to call this a 2-percent-cash-back card. For one thing, you’re sacrificing that second round of cash back if you fail to pay on time. Plus, if you redeem your rewards for a statement credit, it will reduce the amount you owe by 1 percent and, thus, the amount you can earn rewards on when you pay the rest of the bill. Still, the card gives you the chance to earn more on your “everything else” purchases than any other no-annual-fee cards offer. Before this card, the Capital One Quicksilver offered the highest rate of cash back on all purchases among no-annual-fee cards — 1.5 percent.

You can redeem your rewards for a statement credit, cash back (check) or gift card (for a minimum of $25).

Benefits

EMV chip: As an added perk, this card has an EMV chip. It seems like every new card these days is sporting one, but no-annual-fee cards that have an EMV chip are still in the minority.

The EMV chip will allow you to use your card overseas in many cases where magnetic stripe cards aren’t accepted. However, the card unfortunately has a 3 percent foreign transaction fee, meaning it might not be the best choice for purchases abroad. With the U.S. migrating to EMV, though, the card should be increasingly handy state-side over the next few years.

Citi Price Rewind: This benefit (offered on several other card’s in Citi’s portfolio) allows you to monitor price fluctuations after you buy an item. If the price drops within 60 days, you might be eligible for a refund of the difference (up to $300 per item and up to $1,200 per year).

Purchase protection: If an item you bought was stolen or damaged within 120 days of purchase (or 90 days if you’re a New York resident), you can be refunded for up to $1,000 per item.

Extended warranty: If you turned down the extended warranty when you purchased an item, you might regret that decision if the item breaks. This card adds up to an extra year on warranties of five years or less for no additional cost.

Travel protections: You get secondary car rental insurance, trip cancellation and interruption insurance (up to $1,500 per year), and travel accident insurance (up to $250,000).

Citi Private Pass: The Double Cash card gets you access to preferred and presale tickets, as well as access to special events.

What to watch out for

If you carry a balance on the card, that extra 1 percent you get when you pay will be cancelled out by interest. So, while you can earn extra rewards by paying only the minimum, you’re still coming out behind. To get the full potential double cash back reward, you will have to pay your balance in full every month before the due date.

But that’s really no different any rewards card; paying interest cancels out your rewards, across the board, plain and simple. The plus side of this card is that, because you don’t get the extra 1 percent until you pay, there’s an added incentive to pay – and possibly make larger payments or pay in full. If you’re the type to do that anyway, you might not care. But tying rewards to desired behavior could help those who require a little extra motivation.

The competition — what else is out there?

If you want to earn a full 2 percent cash back, there are ways to do that. The Barclaycard Arrival Plus World Elite MasterCard, for example, offers 2.2 percent back on all purchases – but for an annual fee of $89. The only other card without an annual fee that gives 2 percent back on absolutely everything is the Fidelity card from American Express (a CreditCardForum advertising partner). However, you have to have a Fidelity account to get the card.

Also keep in mind there are other no-annual-fee cards that offer 5 percent cash back in certain categories (the Discover it and the Chase Freedom. Depending on your spending, those cards might net you more rewards overall. However, you need to enroll in quarterly categories to get 5 percent back — and those categories have spending caps. The ideal strategy, therefore, might be to combine the Double Cash card with a card that offers elevated category spending. That way, you can get extra cash back within the categories and use the Double Cash for all other spending (and for category spending after you hit your limit on the 5 percent card).

The bottom line: The Citi Double Cash card is likely the easiest way to get a steady higher-than-usual rate of cash back on absolutely everything with no cover charge. It would work well on its own (if you don’t want to mess with chasing rotating categories) — or as a good sidekick to a rotating-category card. Still, keep in mind that things do change, and Citi has, in the past, offered especially lucrative rewards on a card and then pared them back, as some of our forum members are pointing out, citing the Dividend Platinum Select as an example. In addition, during the cards first days, Citi cardholders have been reporting problems product-changing to the Double Cash.

This review was written or last updated on Aug. 28, 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

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.

American Express gift cards – good for givers and recipients?

The offers for the gift cards mentioned below are currently unavailable. This information is for reference purposes only.

Gift cards are a great way to reward employees, give your kid some birthday money, please a hard-to-shop-for person who has everything, and help brand-new parents who need everything.

All the card networks, some banks and many retailers offer prepaid gift cards. Yet American Express (a CreditCardForum advertising partner) has some of the most customizable, high-limit and easy-to-order options out there. Read on to find out why – and to compare AmEx’s offers with competitors.

Types of American Express gift cards

American Express’s gift cards come in three main flavors:

1. Personal gift cards

Anyone can buy these for $3.95 each, and they come in a variety of designs. You can buy these in person at participating retailers, although you’ll be limited to the denominations and designs in stock.

If you’re ordering online, the denominations you can get depend on the design you choose. In general, however, you can get a card loaded with between $25 and $3,000 and can order up to $5,000 in cards at a time.

These cards also have a personalization option, which allows you to emboss the recipient’s name on the card.
2. Business gift cards

These cards are meant for businesses looking to reward employees and customers, as per these terms and conditions:

American Express Gift Cards Business Purchase Terms and Conditions 2014-07-22 13-54-54

The cost per card is $3.95, and these cards can be purchased only online. For the recipient, there’s no difference between the personal cards and business cards. But, from the purchaser’s perspective, the per-order max is much larger ($75,000 vs. $5,000 for the personal cards).

Plus, the business cards allow for a custom message to be added. So, if you want to give 200 employees (or clients) $50 gift cards that all say “Happy Holidays,” ordering AmEx business gift cards allows you to do that.

3. eGift cards

Only current AmEx cardmembers can order these, and you must purchase them online. The cost per card is $2.95, and you can put up to $100 on each “card” (essentially an email with a card number that allows the recipient to make online purchases). With eGift cards, you’re limited to $250 worth of cards per seven-day period.

Use our chart to quickly compare your three options:

Compare American Express gift cards
Who can purchaseCost per cardMax per cardMax per orderPurchasing with Membership RewardsPersonalization/customization options
AmEx personal gift cardsAny consumer$3.95$3,000$5,000Redemption value = half a cent per point (5,000 points = $25 card). Can pay for part or all of order with MR points (1,000-point minimum required).Can emboss recipient's first name, middle initial and last name (up to 21 characters).
AmEx business gift cardsCompanies, businesses or other corporate entities$3.95$3,000$75,000Can emboss 2-line custom message. Form message ("Congratulations," "Thank you," etc.) on first line and up to 21 characters on second line.
eGift cardsAmerican Express cardmembers$2.95$100$250 per 7-day periodup to 350 characters) to email containing eGift card.

Important terms

  • The cards are not reloadable.
  • You can’t use them at ATMs.
  • AmEx gift cards are not available to residents of Vermont and Hawaii.
  • You can use Membership Rewards points to pay for the entire or partial cost of the gift cards.
  • Shipping charges will apply if you’re ordering physical cards. Currently, shipping costs range from $5.95 to $15.95, depending on how fast you need the cards.
  • Besides the purchase fee, there are no other fees for inactivity, purchases, etc.
  • All cards have a “good thru” date, but you can request a free replacement if that date passes by calling 1-877-287-4438 for personal and eGift cards and 1-800-297-7327 for business gift cards.
  • If your card is lost or stolen, you’ll be refunded for any funds used after you report the theft – but not before:

Lost stolen gift card

The competition

Visa, MasterCard, Discover, and various banks and retailers offer gift cards. Because it’s always smart to check out the competition, here’s a run-down of what’s out there:

Vanilla Visa gift cards: You can find these at checkout in many drugstores and supermarkets. You can get them in $25, $50 and $100 denominations, and the activation fee is between $4.95 and $7.95. There are no after-purchase fees, such as inactivity fees.

Discover gift cards: Next to American Express, Discover presents the most gift card options. However, ONLY Discover cardholders can purchase them. Discover has business gift cards, personal gift cards and eGift cards. The per-order maximum is 20 cards (up to $3,000) per 7-day period, and the per-card maximum is $500. The cards cost $3.95 each, and a maintenance fee of $2.50 is deducted from the balance after 12 months of non-use. If you’re OK with standard shipping, it’s free. You can also customize cards with a personal message (four lines, up to 160 characters) and name.

U.S. Bank gift cards: Each Visa gift card costs $3.95 at branches and $6.95 online. You can load up to $500 on each card. If the recipient doesn’t use the card for 12 consecutive months after issue, a $2.50 inactivity fee will be deducted from the balance.

Visa and MasterCard gift cards: These can be purchased at certain bank branches and partner bank websites. Visa has a list of its vendors here, and MasterCard has one here. Check with the vendor for purchase costs and fees.

Are American Express gift cards a good option?

American Express’s gift cards have some of the lowest purchase fees out there – and, unlike some other gift cards, you won’t have to worry about the recipient getting hit with an inactivity fee down the road. The only other cost to worry about is the shipping fee if you’re ordering physical cards — and these costs can be pretty high for a single card. Yet, because the shipping fee is per order (not per card), it’s still pretty cost-effective if you’re buying in bulk.

The customization options are a nice touch as well and can make gift cards (often called an “impersonal” gift) a little more personal.

With these gift cards, American Express is catering to those who need to make big online orders, whether that’s a single card with a big balance (up to $3,000) or hundreds of cards with smaller balances. Other gift card providers cut you off with a relatively low per-card maximum or restrict the number of cars you can get at once, meaning large corporate orders are out of the question. Amex gift card payment options

Perhaps the biggest advantage of these cards, however, is that practically everyone can get them (see your online payment options to the right). Only the eGift cards are restricted to AmEx cardmembers. The physical cards can be purchased online with Visa, MasterCard, AmEx and Discover, and there’s no need to visit a branch, go to the store or be an American Express cardmember.

If you’re wondering how American Express is making money on these cards while keeping costs low for purchasers, it’s the swipe fees – the amount merchants pay whenever one of these cards is used. If a company places a huge order and gives out 500 of these cards to all its employees, American Express makes money when those lucky recipients go shopping.

It’s true that some merchants may not accept American Express. But so many do nowadays, that givers can rest assured they’re giving a nice, usable gift.

The bottom line…

While there are plenty of gift card options out there, American Express’s gift cards are relatively low-cost, easy to get online and convenient for large orders.


-----
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.

Discover it chrome 2% card nixes rotating categories

Are you considering the Discover it card, but don’t think you’ll get much out of the rotating 5 percent categories? Discover recently started offering another version of the ‘it’ card – the Discover it chrome. Like the original ‘it,’ the chrome has no annual fee.

picture of Discover it chromeJust as with the original ‘it’ card, there are two iterations of the chrome: A regular version and a student version. The rewards are the same. The major differences between the regular and student chrome cards are different 0% intro period offers and a different APR range.

Here’s what the cards are offering for new members:

Discover it chrome:

Discover it chrome for students:

According to Discover’s media relations department, cardholders can convert from the original 5 percent card to the chrome version (or vice versa) by calling customer service. Read on to learn if the Discover it chrome is a good fit for you – or a good replacement for the original version if you already have it.

New (probably simpler) rewards

The chrome card offers a permanent 2 percent cash back on spending at gas stations and restaurants and 1 percent on everything else. You get the 2 percent rate for the first $1,000 in combined restaurant and gas purchases each quarter. If you exceed that amount, you’ll earn 1 percent for the rest of the quarter.

The original ‘it’ card, meanwhile, offers 5 percent cash back in rotating categories, which change each quarter. You get the 5 percent back rate for the first $1,500 in category purchases each quarter (and 1 percent after that).ShopDiscover June 2014

As with the original ‘it’ card, you can boost your rewards earnings by utilizing the ShopDiscover.com shopping portal. There, you’ll get an unlimited 5 percent to 20 percent back when you make purchases with Discover’s partner retailers, including Expedia, Land’s End, Kmart, Advance Auto Parts and Target.

However you earn rewards, you can redeem them for cash back (statement credit or direct deposit), gift cards or charitable donations. Or, you can use them to pay for your purchases at Discover’s partner retailers (including Amazon.com).

Same Discover benefits

Discover is known for its generous consumer protection perks. Just like the ‘it’ card, the chrome card offers:

  • Your TransUnion FICO score – free every month
  • Purchase protection: Eligible purchases made on your Discover card are protected for the first 90 days (for up to $500) if stolen or damaged.
  • Extended warranty: You get an extra year on warranties of 36 months or less.
  • Return protection: If you’re unhappy with a purchase and the store won’t take it back, Discover might be able to help. Within 90 days of the purchase, Discover will refund qualifying purchases, up to $500.
  • Price protection: If you purchase something on your Discover card and find a lower price within 90 days, you’re eligible for reimbursement for the difference, up to $500.
  • And more

Which version is better?

The best option for you depends on your spending patterns. Start by reviewing the 5 percent categories for the Discover it card. These are subject to change each year, but, they generally follow the same template. Here are the 2014 categories to use as a reference (in the past, the “Holiday Shopping” category has included certain department stores and retailer websites):

Discover 5 percent Cashback Bonus Calendar

As you might notice, there’s some overlap between the ‘it’ card’s 5 percent bonus categories and the chrome card’s 2 percent categories: gas and restaurants. That means these cards might work best as a team. In fact, you don’t necessarily have to choose between them, according to Discover’s media relations department — you can apply for each card separately, and, assuming you qualify, you can have both. If you do, you can switch your spending over to the chrome as soon as you max out the 5 percent cash-back earnings for gas and dining on the regular ‘it.’ As some of our forum users have pointed out, however, there are some complexities in having multiple Discover cards.

Assuming you don’t want two Discover cards, you’ll need to do some math. Your results will vary, but, generally speaking, low spenders who don’t make use of the other categories may come out ahead with the chrome card. But many people (especially those who can make even a little use of the quarterly categories) will come out ahead with the regular ‘it’ card.

Here’s how the numbers might work out:

Scenario No. 1

… let’s assume you spend:

  • $700 per quarter at restaurants
  • $300 per quarter on gas
  • $0 on home improvements during the second quarter and $0 at retailers that qualify for the ‘it’ card’s holiday shopping category

In this scenario, you’re not taking advantage of the ‘it’ card’s quarterly categories and spending so little that you don’t hit the spending ceiling for either card:

It Vs. It Chrome: Scenario No. 1
QuarterIt card cash backIt chrome card cash back
Q1 (5% on restaurants and movies on 'it' card)$38$20
Q2 (5% on home improvement on 'it' card)$10$20
Q3 (5% at gas stations on 'it' card)$22$20
Q4 (5% on holiday shopping on 'it') card$10$20
Grand total$80$80
WINNER: It's a draw

Scenario No. 2
… now let’s assume you spend quite a bit more due to a long commute and lots of dining out — and that you make use of the 5 percent categories.

  • $1,500 per quarter on restaurants
  • $1,000 on a big home improvement project during Q2
  • $600 per quarter on gas and an additional $600 in Q3 for a summer road trip
  • $200 on holiday gifts that qualify for the 5 percent bonus on the ‘it’ card in Q4

In this scenario, you’ll be surpassing the $1,000 quarterly spending limit that the chrome card imposes on bonus spending.

It Vs. It Chrome Scenario No. 2
QuarterIt card cash backIt chrome card cash back
Q1 (5% on restaurants and movies on 'it' card)$81$31
Q2 (5% on home improvement on 'it' card)$71$41
Q3 (5% at gas stations on 'it' card)$75$37
Q4 (5% on holiday shopping on 'it') card$31$22
Grand total$258$131
WINNER: 'IT' CARD (by $127 a year)

As you can see, if you can make even a little effort to use the categories, the original ‘it’ can help you come out way ahead. However, the chrome might still appeal to those who don’t want to worry about maximizing categories and signing up for a new one each quarter.

Again, your results will deviate from the above scenarios. Few people spend the exact same amount of money each month, and your rewards will fluctuate, depending on how well your spending lines up with the ‘it’ card’s rotating categories. If you happen to take a road trip in the fall instead of the summer, for example, having the chrome card, which gives you a little extra on gas every quarter, might be advantageous.

How does it fit into your reward strategy?

There’s still one more thing to consider: How the chrome card would fit into your overall reward strategy. If you prefer cards that get you steady cash-back rate year round instead of rotating categories, you’ll want to consider filling the rewards “holes” the chrome card leaves in the grocery and travel categories. Assuming you’re trying to avoid annual fees, the Blue Cash Everyday card from American Express (a CreditCardForum advertising partner) gives 3 percent back on groceries, while the Barclaycard Arrival World MasterCard gives 2 percent back on travel.


-----
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.

American Express Bluebird Review: Still a Good Choice?

The offer for this card is currently unavailable. The information below is for reference purposes.

The Bluebird Card from American Express, a CreditCardForum advertising partner, has been the darling of rewards chasers since it was launched by AmEx and Wal-Mart in 2013. Because the account could be topped off via Vanilla Reloads, those chasing a sign-up bonus spending requirement could purchase reloads with a credit card, transfer those funds to Bluebird and then use Bluebird to pay bills.

That’s next to impossible these days, now that nearly all retailers that carry Vanilla Reloads have banned purchasing them with credit cards (including the last major holdout, CVS).

So does the Bluebird still have anything to offer? Yes – if you’re looking for an easy-to-use alternative for a checking account from a traditional bank or credit union. Like all prepaid debit cards it can function as a mobile transaction account, but without paper checks and bank branches. Here are some of the perks of this unique financial product – and some drawbacks to keep in mind:

Perk No. 1: It’s not just a prepaid card.

Bluebird is commonly referred to as the “Bluebird card,” but it’s really more of a debit card/checking account hybrid. You can get one by signing up for free online. Or, you can get a starter kit for $5 at Wal-Mart that allows you to load up to $500 (and then activate the card online to get all the Bluebird features).

The Bluebird card (which can be used at any merchant that accepts American Express) is tied to an account that you can fill via direct deposit from a paycheck, a transfer from a checking or savings account, a check (via the Bluebird mobile app or mail), cash at a Wal-Mart register or a Vanilla Reload.

In addition to using your card to make purchases, you can use the account to pay bills online (just as you would with any checking account) or with the Bluebird checks that come with the account. If you’re using a check, you just need to preauthorize it with the mobile app or online before you write it, to make sure you have the funds to cover it.

Perk No. 2: Features for families and budgeting

Once your Bluebird account is set up, you can create up to four sub-accounts for others (family members, for example). Each sub-account holder then gets a card (in their name) – but you, as the primary account holder get to control how much money gets transferred into the sub accounts, how much the sub-account holder can spend each day and whether the sub-account holder can withdraw money at ATMs.

Bluebird also has a feature called SetAside, which mimics a savings account. You can move funds from your primary account into your SetAside account anytime (or set up automatic recurring transfers). The money in your SetAside account can’t be spent until you move it back into your main account, preventing it from trickling away through everyday spending.
You can also send money for free to anyone with a Bluebird account – or request money from any Bluebird-account holder.

Perk No. 3: Minimal fees

Bluebird does have fees. However, compared to other non-bank alternatives out there, the fees aren’t so bad. And many of the fees that do exist are avoidable if you use the card a certain way. Use this chart to compare the Bluebird’s fees to the fees charged by prepaid cards and other checking-account alternatives in the industry:

American Express Bluebird Fee Comparison
BluebirdOther similar products
Set-up feeFree online; $5 for Wal-Mart starter kit$0 to $9.95
Monthly fee$0$0 to $9.95
Fee to add money$0 (third-party fees apply when using Vanilla Reloads)$0 to $2.50 (not counting third-party fees)
Customer service fee$0$0 to $2 per call
ATM withdrawal fees$0 if you use a MoneyPass ATM and have received a direct deposit in the last 30 days – otherwise $2$1.95 to $2.50 (usually free within the card's ATM network)
Check order fee (50 checks)$0 for the first order with direct deposit. After that, $26 (waived until 6/1/2014)N/A
Foreign transaction fee$02% to 3.5%

As you can see, Bluebird waives some of the fees that often make alternative financial products so expensive – set-up fees and monthly maintenance fees.

Perk No. 4: Additional protections

Checking accounts generally don’t give you purchase protections and travel assistance. Those things are usually credit card territory. But Bluebird throws a few of these benefits in for free. You get:

  • Purchase protection: If an eligible purchase is stolen or damaged within 90 days, Bluebird can reimburse you (up to $1,000 per occurrence and $50,000 per year)
  • Global Assist: If you run into trouble more than 100 miles from home, you can call a number and get legal and medical assistance. This can be very useful if you’re in a place where you don’t understand the language. Of course you’ll have to pay for the help you receive, but AmEx will help you find it.
  • Roadside assistance: Call AmEx, and it will arrange for certain emergency services, including towing, winching, jump starts and tire changes. Again, you’ll have to pay for those services.

Now, here are a couple drawbacks to consider:

Drawback No. 1: ATM fees

Avoiding ATM fees may require extra effort – even in-network ATM withdrawals will cost you $2 each if you’re not signed up for direct deposit. If you don’t have a paycheck to deposit (or if you prefer to receive your paycheck another way), the costs of Bluebird can add up. Direct deposit is free, though, so if you can sign up for it, it makes Bluebird basically free.

Drawback No. 2: Small gap in FDIC insurance

When you deposit money in a bank, you do so with the confidence that, if the bank goes under, FDIC insurance protects your money. With Bluebird, it’s a bit more complicated because American Express is not a bank and therefore not FDIC insured.

You really don’t have much to worry about, though. AmEx places your money in a custodial account with FDIC-insured partner banks within one business day after you add money to your Bluebird account. During that brief window between when you deposit your funds and when AmEx moves your money, you’re vulnerable – but the chance that AmEx will implode at all, let alone during that short limbo, isn’t very likely.

However, if you’re using the temporary card you got from Wal-Mart and haven’t registered it online yet, American Express will NOT place your funds with FDIC-insured partner banks.

Is Bluebird still a good option in 2014?

Although rewards chasers may not find Bluebird as useful, those using it for its original intent (an alternative to a checking account) have a lot to gain with this product. It’s easy to sign up for online, nearly free to maintain and comes with perks that make it a useful bill-paying and savings tool.

Just remember this if you’re trying to build credit: Activity on your Bluebird account is not reported to the credit bureaus. While it will allow you the convenience of plastic and the ability to pay bills and shop online, it will not help you build credit. If credit building is what you’re after, consider a secured card:


-----
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.