Credit Cards: Now that Citi's 5% card is moribund, what's the next best?

[RossMAN]

Originally posted by: OS
can CC cos even make money giving 5% back for users that don't carry a balance?

Nope.

But they make plenty of $ from interest others pay, late fees and over the limit fees.

 

[chowderhead]

Originally posted by: OS
can CC cos even make money giving 5% back for users that don't carry a balance?

it was only for gas/gocery/drugstores. The CC were interested in getting people to use their credit cards to make everyday/small purchases. Now that people and the business are used to using credit cards at these places, they have dropped the incentives down. I think I will continue to stay with them but look for something better. 5% back on gas was really great while it lasted.

 

[Lucky]

"5% back on gas was really great while it lasted. "

It's not like there's not a card that still offers this. Use another company.

 

[acemcmac]

Originally posted by: Lucky
"5% back on gas was really great while it lasted. "

It's not like there's not a card that still offers this. Use another company.

Last I heard, Discover was cutting back their program 5% program (I think someone posted the updated specs above) and chase was going to do the same to the PerfectCard. It's already impossible to apply or transfer into most of the good alternative cards. Since I live in Wawa land, I went ahead and scored the Wawa Chase card (2% intro and 1% thereafter on every day purchaces and 10% => 4% on wawa purchaces :beer and an Amex Blue Cash. I put enough on CC's for the Amex Blue Cash to beat the new Citicard terms, so it'll probably be my new primary card with the Wawa for where AMEX doesen't work.

 

[mugs]

Originally posted by: RossMAN

Originally posted by: OS
can CC cos even make money giving 5% back for users that don't carry a balance?

Nope.

But they make plenty of $ from interest others pay, late fees and over the limit fees.

And most of us use the card for more than just the 5% back stuff. The 1% you get for other purchases is about as much as you'll get from any other card on those purchases.

 

[dullard]

Originally posted by: SP33Demon
Citi lowered my credit limit b/c it was within 70% of its max and it's been a couple months and I haven't paid it off. Losers, you would think they would be happy to be making money off me.

When will this myth end? They don't make money off of interest. Sure, on a case-by-case basis, they may make money off of you. But they don't make their buisness plans on a case-by-case basis. Overall, the interest that they receive just about balances the costs for them to finance your purchases and to pay for bad debts of people who never pay the bill. Citi doesn't care that they MIGHT earn money on you. Citi cares that they MIGHT lose a lot more money on you than they ever could gain from interest. If you look at the overall picture, you too would want to limit people who charge up money and then "haven't paid it off".

 

[mugs]

Originally posted by: dullard

Originally posted by: SP33Demon
Citi lowered my credit limit b/c it was within 70% of its max and it's been a couple months and I haven't paid it off. Losers, you would think they would be happy to be making money off me.

When will this myth end? They don't make money off of interest. Sure, on a case-by-case basis, they may make money off of you. But they don't make their buisness plans on a case-by-case basis. Overall, the interest that they receive just about balances the costs for them to finance your purchases and to pay for bad debts of people who never pay the bill. Citi doesn't care that they MIGHT earn money on you. Citi cares that they MIGHT lose a lot more money on you than they ever could gain from interest. If you look at the overall picture, you too would want to limit people who charge up money and then "haven't paid it off".

Do you have any data to back this up? I find it unlikely that they don't make much money off interest. Yeah they have bad debt expenses, but that's the whole point of credit scores - to predict that so they can compensate with lower credit limits and higher rates.

Chart from wikipedia:
Experian score, expected annual loss rate (as % of loan balance)
760+ low risk, 0.2
720-759, 0.9
680-719, 1.8
640-679, 3.3
600-639, 6.2
540-599, 11.1
<540 high risk, 19.1
No credit rating, no data (the lender is on its own)

The majority of people fit in the top 3-4 of those brackets and are paying much more than 3% interest. Add on the cost for the bank to borrow the money and I think they'd still have to come out on top by 2-3%.

 

[Schfifty Five]

Originally posted by: Dacalo
Not sure about others, but I am using Amex Blue Cash. $6,500 is easy to surpass for me.

Yeah but you have to remember it's a tier system, so all the $6,500 is in the lower cash back %, anything above it will get you the higher.

 

[SP33Demon]

Originally posted by: mugs

Originally posted by: dullard

Originally posted by: SP33Demon
Citi lowered my credit limit b/c it was within 70% of its max and it's been a couple months and I haven't paid it off. Losers, you would think they would be happy to be making money off me.

When will this myth end? They don't make money off of interest. Sure, on a case-by-case basis, they may make money off of you. But they don't make their buisness plans on a case-by-case basis. Overall, the interest that they receive just about balances the costs for them to finance your purchases and to pay for bad debts of people who never pay the bill. Citi doesn't care that they MIGHT earn money on you. Citi cares that they MIGHT lose a lot more money on you than they ever could gain from interest. If you look at the overall picture, you too would want to limit people who charge up money and then "haven't paid it off".

Do you have any data to back this up? I find it unlikely that they don't make much money off interest. Yeah they have bad debt expenses, but that's the whole point of credit scores - to predict that so they can compensate with lower credit limits and higher rates.

Chart from wikipedia:
Experian score, expected annual loss rate (as % of loan balance)
760+ low risk, 0.2
720-759, 0.9
680-719, 1.8
640-679, 3.3
600-639, 6.2
540-599, 11.1
<540 high risk, 19.1
No credit rating, no data (the lender is on its own)

The majority of people fit in the top 3-4 of those brackets and are paying much more than 3% interest. Add on the cost for the bank to borrow the money and I think they'd still have to come out on top by 2-3%.

Yeah, I can't see how they aren't making a ton of $$ off me through interest that is much higher than 3%. And it's not like I'm a risk to default, my FICO is in the 700-725 range (and I haven't missed a car payment ever on my new truck).

Citi said they would restore my credit if I made 6 on time payments, they were scared because I missed a payment on one of my other cards because I was on vacation. Newsflash: if most sites were normal and offered automated CC monthly payments I wouldn't have this problem. It's a PITA managing 4 cards, especially the ones I can't automate payments for online, I didn't have internet access while on vacation. F***ing sue me!

 

[dullard]

Originally posted by: mugs
Do you have any data to back this up? I find it unlikely that they don't make much money off interest. Yeah they have bad debt expenses, but that's the whole point of credit scores - to predict that so they can compensate with lower credit limits and higher rates.

I only speak when I have data to back me up. Your whole post on credit scores makes me think you misunderstood my point. Yes, if someone with a 760+ credit score uses a CC for a few month loan, they probably do make money on the interest. But CC companies do not make their sweeping policies on just one case (or one subset of cases like people with 760+ credit scores). Instead, they make their business models based upon ALL customers. Yes, they may make a fortune in interest from one customer or SOME customers. But when you look at ALL customers, that really isn't the case anymore.

Individual banks often don't put the data online that we need. The only clear online source that I know of is Discover. Discover must put financial information in the public eye because it is a publically owned company. Since Discover is focussed basically only on credit cards, the result is quite useful to this discussion and isn't cluttered with other income activities. Their financial statements answer the question directly. So that is my reason for choosing Discover. You can argue that Discover is a minor player. That is true. But unless you can prove that Discover is so different from all other CC companies, my point stands.

2005 Discover Bank Financial Statement
2003 Discover Bank Financial Statement

Year / Interest received / Interest expense / Loan losses (Unpaid cards) / Net interest Income / % of total income from interest before tax
2005 / 1,958M / 654M / 815M / 489M / 54.7%.
2004 / 1,679M / 542M / 893M / 243M / 20.3%.
2003 / 1,863M / 666M / 1,219M / -22M / Lossed money on interest.
2002 / 2,125M / 771M / 1,280M / 74M / 6.1%

I could go back in years, but that'll be a Google nightmare to give you the link. The results are similar to 2002 and 2003 for earlier years if you can trust me. Some years were losses, others were minimal gains (low percent of income was from this activity). Only in 2005 was there an exception that half of their income was from interest activity.

2002 was a very typical year if you look at many years. Interest received was $2,125M. But it cost Discover $771M to loan out this money, during that time. And it cost Discover $1,280M in bad debts that no one ever paid. So the net profit from people who owe money to Discover was close to zero. The expenses roughly balance out the income in most years. 2005 was an exception though, I'll give you that. But even then, it was only half of Discover's income.

 

[lozina]

Originally posted by: PaulNEPats

Originally posted by: Squisher

Originally posted by: PaulNEPats
Get the Chase Cash Plus Rewards card, I just picked it up, you can still find a link to apply if you search in my old Citi Dividend thread.

It says "unavailable" when you look for this card.


This looks very interesting. 5% cash back on gas with a possible 10% if you redeem for gift cards at certain retailers.

EDIT: hmm, maybe not so great because,

"Earn unlimited cash rewards on all purchases. Earn a full 5% Cashback Bonus on your first $1,200 in annual gas and auto maintenance purchases........."

$1200 probably won't last me more than 3 months!

Chase Cash Plus Rewards

I don't get it - this card looks exactly like the one RossMAN linked above but his says 3% cashback and this one says 5%... too much confusion!

 

[BigJ]

Originally posted by: SP33Demon
Citi said they would restore my credit if I made 6 on time payments, they were scared because I missed a payment on one of my other cards because I was on vacation. Newsflash: if most sites were normal and offered automated CC monthly payments I wouldn't have this problem. It's a PITA managing 4 cards, especially the ones I can't automate payments for online, I didn't have internet access while on vacation. F***ing sue me!

Personally, I find that a poor excuse to miss CC payments. I have 4 cards, and all of them have bills with due dates around the same day. So if I have an outstanding balance on any of them, I make the payment for all of them a few days before the earliest is due. If I know I'm going to be without access to a computer for awhile, I do it before that occurs.

I'm sure you could contact your CC companies and they'd be more than willing to move the due dates on the bills so they almost synch.

 

[SP33Demon]

Originally posted by: BigJ

Originally posted by: SP33Demon
Citi said they would restore my credit if I made 6 on time payments, they were scared because I missed a payment on one of my other cards because I was on vacation. Newsflash: if most sites were normal and offered automated CC monthly payments I wouldn't have this problem. It's a PITA managing 4 cards, especially the ones I can't automate payments for online, I didn't have internet access while on vacation. F***ing sue me!

Personally, I find that a poor excuse to miss CC payments. I have 4 cards, and all of them have bills with due dates around the same day. So if I have an outstanding balance on any of them, I make the payment for all of them a few days before the earliest is due. If I know I'm going to be without access to a computer for awhile, I do it before that occurs.

I'm sure you could contact your CC companies and they'd be more than willing to move the due dates on the bills so they almost synch.

That's a good idea, I'll check it out. However, I don't see why 80% of companies can offer automated monthly payments online and other prominent companies (such as Citi, Cap One, and Wash Mutual) cannot. I do 99% of my bill paying online so it's highly inconvenient and it's not like the intARw3b was created yesterday. Also, missing one payment on a card shouldn't warrant a big cut in credit IMO. But I'm glad that people are recognizing crap financial companies like Citi and CapOne.

 

[bondboy]

Here's a good alternative once Citi stops its 5% cashback:

http://www.directrewardscard.com/

Credit goes to FW, and this is actually a HSBC card.

 

[Brainonska511]

Originally posted by: SP33Demon

Originally posted by: BigJ

Originally posted by: SP33Demon
Citi said they would restore my credit if I made 6 on time payments, they were scared because I missed a payment on one of my other cards because I was on vacation. Newsflash: if most sites were normal and offered automated CC monthly payments I wouldn't have this problem. It's a PITA managing 4 cards, especially the ones I can't automate payments for online, I didn't have internet access while on vacation. F***ing sue me!

Personally, I find that a poor excuse to miss CC payments. I have 4 cards, and all of them have bills with due dates around the same day. So if I have an outstanding balance on any of them, I make the payment for all of them a few days before the earliest is due. If I know I'm going to be without access to a computer for awhile, I do it before that occurs.

I'm sure you could contact your CC companies and they'd be more than willing to move the due dates on the bills so they almost synch.

That's a good idea, I'll check it out. However, I don't see why 80% of companies can offer automated monthly payments online and other prominent companies (such as Citi, Cap One, and Wash Mutual) cannot. I do 99% of my bill paying online so it's highly inconvenient and it's not like the intARw3b was created yesterday. Also, missing one payment on a card shouldn't warrant a big cut in credit IMO. But I'm glad that people are recognizing crap financial companies like Citi and CapOne.

I don't know about you, but I can schedule my payments with my Citi card. May not be automatic, but I can tell it what day to pull the money from my account when I want to pay my bill.

 

[Ime]

Originally posted by: BigJ

Originally posted by: SP33Demon
Citi said they would restore my credit if I made 6 on time payments, they were scared because I missed a payment on one of my other cards because I was on vacation. Newsflash: if most sites were normal and offered automated CC monthly payments I wouldn't have this problem. It's a PITA managing 4 cards, especially the ones I can't automate payments for online, I didn't have internet access while on vacation. F***ing sue me!

Personally, I find that a poor excuse to miss CC payments. I have 4 cards, and all of them have bills with due dates around the same day. So if I have an outstanding balance on any of them, I make the payment for all of them a few days before the earliest is due. If I know I'm going to be without access to a computer for awhile, I do it before that occurs.

I'm sure you could contact your CC companies and they'd be more than willing to move the due dates on the bills so they almost synch.

You know, one month I just plain forgot to pay my CapitalOne card. They actually called me and asked me if I had forgotten. I said "oops, sure did, can I pay you now over the phone with an electronic draft?". They took the money and didn't give me any neg impact on my credit report or score. I checked.

From what the lady told me. The CC company makes assumptions based on your payment history and credit rating. People with good history like myself they just assume you forget one month and just call to give you a chance to pay without a penalty. If your credit is fair or poor, they don't call you. They charge you and then reduce your credit and increase your interest rate, and slap you around with fees.

It was really very informative. She did tell me that even people with good credit only get forgiven every so often. You can't "forget" all the time and expect to be let off the hook.

 

[StageLeft]

Originally posted by: Lucky
fatwallet has a good thread on 5% cards. I don't know what's better that my chase 5% on groceries/drugstore/gas station though. Between walmart, where 100% of purchases are classified as grocery, walgreens, and gas stations, where I can even buy our 6 cartons/month of cigarettes and get 5% back, there isn't much (except online) that I don't earn 5% on. Drawback is I'm probably approaching the yearly limit after 4-5 months.

Wow, the card considers walmart--everything, including tires and televisions, to be part of the grocery section? I am pretty sure the citicard doesn't do that. Are you positive? That is a major bonus to get 5% off on Walmart, if it's possible.

 

[GTaudiophile]

OMFG! He Lives!

I have the Citi Dividen Platinum Select MasterCard and have received NO statement or notice regarding any changes.

 

[StageLeft]

Originally posted by: GTaudiophile
OMFG! He Lives!

I have the Citi Dividen Platinum Select MasterCard and have received NO statement or notice regarding any changes.

I think that is the one I have, but I throw all the junk they send me anyway. They could send an enevelope of $1k bills and it'd get trashed. A guy at work I pointed to this card a year ago is who alerted me to it...

 

[GTaudiophile]

Originally posted by: Skoorb

Originally posted by: GTaudiophile
OMFG! He Lives!

I have the Citi Dividen Platinum Select MasterCard and have received NO statement or notice regarding any changes.

I think that is the one I have, but I throw all the junk they send me anyway. They could send an enevelope of $1k bills and it'd get trashed. A guy at work I pointed to this card a year ago is who alerted me to it...

Well, I read everything they send me...which is a lot.

Has anyone called them on this issue? Heard it from the horse's mouth?

 

[StageLeft]

Originally posted by: GTaudiophile

Originally posted by: Skoorb

Originally posted by: GTaudiophile
OMFG! He Lives!

I have the Citi Dividen Platinum Select MasterCard and have received NO statement or notice regarding any changes.

I think that is the one I have, but I throw all the junk they send me anyway. They could send an enevelope of $1k bills and it'd get trashed. A guy at work I pointed to this card a year ago is who alerted me to it...

Well, I read everything they send me...which is a lot.

Has anyone called them on this issue? Heard it from the horse's mouth?

Nope. I assumed that if it was nonsense, somebody would have mentioned it already in this thread. It still may be, though (nonsense, I mean) I am using the thing a lot these days and I think I'll have hit that silly $300 limit soon anyway, so even if it is not true, I need a second high-reward card.

 

[GTaudiophile]

As usual, I defer this issue to the Grand Nagis. I'm sure he'll find the best card and report back to us in time. I trusted him with the original decision after all.

 

[Reckoner]

GET THE CHASE CASH PLUS REWARDS!

 

[DaWhim]

Originally posted by: PaulNEPats

Originally posted by: DaWhim
I will be using citi diamond preferred. I will still get 5% back, but in reward points.

points are so much better than cashback, if and only if you know how to use it.

for example. american express has wsj 6 months subscription for 1,800 points. the value is about $18. if you know how much wsj subscription cost, you will know what I am talking about.

citi's thankyou networkd got good rewards too, you just need to know what you are arming for.

Amazon GC's

nope. I can get 5% on amazon.com purchase with my citi mtvutm card, since they classified amazon as a bookstore.

 

[Brainonska511]

Originally posted by: DaWhim

Originally posted by: PaulNEPats

Originally posted by: DaWhim
I will be using citi diamond preferred. I will still get 5% back, but in reward points.

points are so much better than cashback, if and only if you know how to use it.

for example. american express has wsj 6 months subscription for 1,800 points. the value is about $18. if you know how much wsj subscription cost, you will know what I am talking about.

citi's thankyou networkd got good rewards too, you just need to know what you are arming for.

Amazon GC's

nope. I can get 5% on amazon.com purchase with my citi mtvutm card, since they classified amazon as a bookstore.

If only I knew all this before signing up for my Student Dividend card in July. Maybe I'll get another card in a year or see if I can change my Dividend card over the the MTVU card (but at the moment, I have no knowledge as to if the rewards program will be chaning for me).