What do you value in your cards?

For just about anything you want to get off your chest about credit cards.
takeshi
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Postby takeshi » Tue Nov 11, 2014 10:18 am

Brad Bishop wrote:No annual fee. I just don't want to be bothered with it. I'll let it slide if the AF is made up for by something I'd otherwise purchase (like free bags on flights or a free night or two in a hotel). My Delta Gold Amex has a $95/year fee. It irks me.

Certainly your call to make but I always recommend considering total cost/benefit versus just avoiding AF's. The majority of my rewards come from cards with AF's and I'd get a lot less if I was just simply dodging AF's.

CarefulBuilder14 wrote:Merchants are legally allowed to charge extra to accept credit cards

Not in all states. In Texas they cannot charge more if a credit card is used as a payment method. However, they can offer a cash discount.

https://www.texasattorneygeneral.gov/consumer/credit_cards.shtml

However, even here many retailers have the same pricing for cash or credit. I get what Brad's saying but you can either choose to get the % back or not get it. I prefer to get it when possible.


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Vattené
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Postby Vattené » Tue Nov 11, 2014 10:19 am

The rewards are much higher for me. If it weren't for the rewards, I wouldn't even use credit cards.

I get what you are saying, Brad. Credit card companies charge a lot for each transaction and merchants have to raise prices in order to pay for these costs. For simplicity say they get 2% of a transaction and you wind up getting 1% back in rewards. Giving people a cut of what they get lets them earn money off of transactors as well as the revolvers that are carrying balances and paying them interest. Cutting in transactors like myself who always PIF gets us to use their cards and generate more discount revenue for them.

If there were a way to just pay 2% less upfront, it would certainly be better than getting 1% back later on. There just isn't a way to do this. The vast majority of the time, the cash price is the same as the credit card price and the costs of those credit card processing fees are built in either way (as CarefulBuilder pointed out). My thinking is I might as well use the credit card for cash back or else I am just paying for everyone else to. It isn't the best action collectively but it is the most rational thing to do for me as an individual.
-Vattené
FICO-8:
EX - 805 (2/17) | TU - 787 (2/17)
Primary Cards:
American Express EveryDay - $20,000 (10/14)
Discover it - $23,000 (2/14)
AU on Barclay Sallie Mae - $10,000 (8/15)
plus several store accounts of varying usefulness now

Brad Bishop
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Postby Brad Bishop » Tue Nov 11, 2014 12:20 pm

I think part of the problem is that people don't understand who, ultimately, pays the fees (or taxes, for that matter).

Let's use a simple tax example:

Your town wants to buy a new bus. There are two ways to do this:
1) The town could just buy a bus
2) The town could send a bunch of money to D.C., far more than the cost of the bus, and hope to have D.C. buy a bus for their town through some program.

Either way the town is buying a bus. The second way is more far more expensive but the people of the town feel like they're getting something free back.

A simple way of looking at that is: They're taking all that tax, anyway, why shouldn't we get our free stuff from it?

The problem is that there's a thought that 1) it's free and 2) your taxes could be less (granted, another argument) if you stopped asking for and expecting free stuff. Ultimately, it's cheapest for everyone in town to just pony up and pay for the bus, straight.


For credit cards society has essentially said, "Yeah, we like the convenience of credit cards and will pay the fee no matter what." So everything costs slightly more because everyone likes the convenience of using credit cards. The merchants spread this cost to all of their products and, generally, it's not worth the hassle of them working cash-only deals, though some of them do so.

This wasn't always the case. Go back 40 years and credit was used to pay for large items like a washing machine, expensive car repair, or a new mattress. It's only fairly recently (last 10-15 years) that paying for a $5 meal at McDonalds with a Visa has become commonplace. That convenience is there but it's not free. Everything costs more because of such a large portion of the population liking the convenience of paying with credit cards.

A person paying with cash is paying an slightly higher price to compensate (in a way subsidize) credit card transactions. The same can be said for a person paying with Visa which charges 2-3% from what I understand subsidizing a person paying with American Express which, again, from what I understand, is 4-5%. It all gets aggregated into the total cost of said item.

All of that is fine and there's not much you can do about it. What I'm saying is that the 1-5% cash back games just add to that overall cost and, while you think you're getting something "free" back, you're allowing someone to lift that plus some from your pocket to give you your "free" stuff and pay for the cost of handling the "free" stuff. It's not free.

It's not a lot different from taxes and then saying, "Well, they're taking it from us, anyway, why shouldn't we get something back??" The problem is two fold in that 1) you're right in a way and 2) you exasperate the problem by contributing to it. (Why shouldn't every town get a free bus?)

I'm not trying to bust anyone's chops for getting cash back or other perks. I'm just saying that it's a kind of shell game that's always bugged me.


Regarding paying more for a card in terms annual fees or interest rates to get cash back: I suppose, in a very pure sense, if you PIF every month forever then it's a deal depending on how long it takes you to cross the AF mark.

You can do the math on a 1% cash back card with no AF vs a 2% cash back card @ $100/yr AF.
At $10,000/yr in spending:
- 1% back puts $100 in your pocket
- 2% back puts $200 in your pocket - $100 AF = $100 in your pocket.

In that situation I'd take the 1% card as I don't have to make up the difference. I start out ahead of the game. The $100 AF card, to me, is a discount I have to buy into in two ways:
1) I have to buy into the $100AF card
2) I have to commit to spending $10K/yr on that card in order to break even.

The 1% no AF card I don't have to do anything. Right out of the gate I'm getting 1% back.

The interest rate is important to. Again, in a pure sense, if you're PIF every month and NEVER carrying a balance ever, then you can be all about the cash rewards. If you do carry a balance from time to time, maybe you need to buy a new laptop or you've taken a trip and it'll take you several months to pay it off, then the 15% card with any sizable balance, wipes out that cash back rather quickly whereas the lower interest rate card means that the money you bought, which is essentially what you're doing, costs you far less:

For example you take a trip and it puts you $5000 in the hole. You pay it off in 6 months at 15%APR:
$5000 @ 15%APR for 6 months is going to cost you $221 in interest.
Let's say you do it on a lower interest rate card at 10%:
$5000 @ 10%APR for 6 months is going to cost you $146 in interest.

That's $75 difference which kills off a good bit of cash back or other rewards.

So, to me, going in with no AF and a low interest rate easily trumps some 1-5% cash back deal. I know going in that I'm already ahead of the game and I don't have to make up anything to try to come out even next year in terms of cost of ownership for the card.

whit
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Postby whit » Tue Nov 11, 2014 8:41 pm

I'm with you on the bus analogy but a lot of folks just don't think that way.

I also see some of their points, if they spend xxx,xxx-xx,xxx a year in purchases, than I guess it would pay off for them even after accounting the AF. Like trying to choose between mutual funds that are taxable and municipal bonds (since we are on the whole g.o talk with the town funding bus)

If the mutual funds, after taking into consideration taxes you'll pay based on your marginal bracket, is still higher than the yield on a municipal bond, even though that is exempt of federal tax and often state/local as well, you're still better off with the MF that's taxed.

Myself, my biggest splurge this year, besides trips oversea, is a bracelet for about 1.5k..I just shopped for clothes this morning and stocked up at sephora. Surprise surprise, both at 20-40% off minimum, plus 2,4 and 8% cash back, on top of my cc cashback and THAT was considered quite a work out for my cc, a bit under 1k after everything considered, probably pennies to some of the folks here

Heh :D my spending is more on mini trips, everyday 10-20$ lunches/dinners and, for fun I like to play stocks alongside saving for retirement in 401k, Ira, pension, etc

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CarefulBuilder14
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Postby CarefulBuilder14 » Tue Nov 11, 2014 11:25 pm

takeshi wrote:Not in all states. In Texas they cannot charge more if a credit card is used as a payment method. However, they can offer a cash discount. However, even here many retailers have the same pricing for cash or credit.


I didn't realize the rules varied so much from one state to another.

This is from April 2013 and shows some differences between states:

http://www.ncsl.org/research/financial-services-and-commerce/credit-or-debit-card-surcharges-statutes.aspx

Some of it must be out of date by now, but it seems some states don't regulate CC surcharges at all.
Keeping indefinitely: IHG, SchwabPlat, CSP, Discover, Freedom, ED, BCE, Hyatt
May close or PC: Prestige, Arrival, BrooksBros
AA Platinum converting into Costco

Might add: Proper business card, CSR, Ritz, Delta Gold, First Tech
Letting new accounts cool off since May

Berk
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Postby Berk » Thu Nov 13, 2014 9:29 am

The biggest by far for me is rewards - specifically, travel rewards. Then cash back. The annual fees I pay are offset by the rewards/first bag checked for free benefit of having the cards I do. Then comes customer service. APR isn't much of an issue for me as I rarely carry a balance. Other than that, the only reason for me to use credit cards is convenience.
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Cre
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Postby Cre » Thu Nov 13, 2014 10:26 am

Travel status with an airline to board a plane earlier and not have to deal with nuisance bag fees was the only "value" that I saw in my latest card acquisition.

Unfortunately, as with many things that are new to me, my first exposure to this credit card spend/reward ratio was the advertising for the card. You know what they say about first impressions. They tend to last. A little bit too long. Despite every element of contradictory evidence that emerges after the fact.

So far, to "save" an estimated $800 in nuisance bag fees, I'm going to end up spending $450 in an annual fee, and another $350 in swipe fees. That's $800. The swipe fees are the 2.5% "convenience" fees assessed for using a credit card instead of writing a check. The agencies I had intended to pay with AmEx are passing those fees to me. I don't blame them. They add up. I'm debating whether to go back to writing a check, but if I do that, I'll lose all of the "benefits" of the card.

This might be due to morning after disappointment, but I'm not so sure I value much of anything about any credit card at this point. Trying to keep up with minimum spends to receive rewards feels like being on a treadmill where the machine is driving the belt, not one's own legs.
Current Cards:
AmEx Platinum Charge: NPSL, $450 AF
AmEx Reserve Credit: $30K limit, $450 AF
Chase Slate Visa Credit: $32K limit, No AF
Future Strategy:
Near Term: Need a good MasterCard for places that won't accept AmEx or Visa
Long Term: Will downsize out of one or both current AmEx cards to reduce AFs

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lobbythis
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Postby lobbythis » Thu Nov 13, 2014 12:22 pm

Cre wrote:
This might be due to morning after disappointment, but I'm not so sure I value much of anything about any credit card at this point. Trying to keep up with minimum spends to receive rewards feels like being on a treadmill where the machine is driving the belt, not one's own legs.


This is why it's important to find the cards that are right for you and why in so many discussions people always say, YMMV and each card affects everyone differently.

I have 11 cards and have no issues with keeping up with all of them and their rewards because they all work for me and I know how to maximize them.

If you don't need an Amex Platinum, then get something you can actually use. Simple as that. No need to defame all credit cards as being totally useless.

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CarefulBuilder14
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Postby CarefulBuilder14 » Thu Nov 13, 2014 1:59 pm

Regarding minimum spend:

I'm starting to feel the same way. I'd like to occasionally pick up cards for short-term use for really nice bonuses, but those would absorb so much of my spending. Permanent cards with annual fees would just sit there, getting occasional small swipes.
Keeping indefinitely: IHG, SchwabPlat, CSP, Discover, Freedom, ED, BCE, Hyatt
May close or PC: Prestige, Arrival, BrooksBros
AA Platinum converting into Costco

Might add: Proper business card, CSR, Ritz, Delta Gold, First Tech
Letting new accounts cool off since May

Cre
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Postby Cre » Sun Nov 16, 2014 12:28 pm

Minimum spend is a slippery slope. Just to meet a minimum spend threshold by the end of the year, I'm now contemplating buying things that I've wanted for a long time, but have done without just fine for an equally long time. Even though I could have quite easily paid cash for these things I've wanted all along, I continually have made the thrifty choice not to buy them, as I can get by without. But now suddenly this minimum spending limit deadline is pending, all to get some "reward" that I refuse to pay directly for. Like I said, it is a slippery slope.
Current Cards:
AmEx Platinum Charge: NPSL, $450 AF
AmEx Reserve Credit: $30K limit, $450 AF
Chase Slate Visa Credit: $32K limit, No AF
Future Strategy:
Near Term: Need a good MasterCard for places that won't accept AmEx or Visa
Long Term: Will downsize out of one or both current AmEx cards to reduce AFs



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