Late payments will imprison or impose capital punishment on your rewards

You already know all the good reasons to pay your credit card bills on time, like maintaining or improving your credit score, avoiding ridiculous rate hikes and late fees, not to mention steering clear of unwanted notices and embarrassing phone calls from collection agencies. But there’s another reason you want to pay your bill on time, and that’s the access to your rewards you’ve earned.

Typically, credit card companies will not only restrict use of your card when your account is in past-due status (which prevents you from earning rewards points, let alone access to your credit line). In addition, your issuer will likely prevent you from redeeming the rewards you’ve already earned!

This ruling is often revealed in your card’s terms and conditions or program disclosures with language like the following examples:

Bank of America’s Worldpoints language: “To participate in the Program, you must (a) maintain a Card that is open and has charging privileges, and (b) be an individual (no corporations, partnerships, or other entities)”

Capital One’s language: “Your account must be open and in good standing in order to redeem, which means it isn't past due, overlimit, fraudulent, restricted, part of a consumer credit counseling program or in a bankruptcy settlement”

Citibank’s language: “To be eligible to earn and redeem [rewards], your [card type] account must be open and current and must not be in default. Citibank may revise or terminate the [card type] [Reward] Program at any time with 30 days prior written notice”

Even though these are your rewards that you’ve rightfully earned over months and years of using their product and paying your bill on time, issuers will invariably lock-up 100% of your rewards bank while your account is in past due status.

Here’s another sneaky catch to watch out for: Some card companies, like Capital One, will even revoke the points you earned in the billing cycle where you made a late payment! Their terms and conditions language is: “If a late fee is charged to your account, you will lose any miles applied to your rewards balance during the billing cycle containing the fee”. So, say you have a big charge like a $2,000 car repair that you throw on your card. Then you pay late that month – all of the points you earned on that charge, and all other charges in the month – they take away from you!

The moral of the story is, if you’re racking up points at a good clip or you’re planning to cash-in your rewards any time soon, make sure you keep your account in good standing (you should be doing this anyway)!

Note that there ARE a few exceptions to this rule. For programs like airline mile and hotel credit cards whereby points accumulated on a monthly basis are subsequently deposited into your airline or hotel loyalty program account, you will be able to access these rewards because they no longer reside with your credit card company.

Unfortunately, and by design, the credit card companies’ Terms & Conditions legal disclosures are less interesting than watching paint dry or grass grow. The reason the language is usually printed in gray 4 point type and includes paragraphs with no less than scores of lines bunched together is because they don’t really want you to read it, but the law says they have to provide those rules to you when you apply for a card.

To understand the various rules of your different credit cards or the cards you’ll apply for in the future, you need to familiarize yourself with this very important language. Hopefully someday, for everyone’s sake, we’ll all have a resource that can provide the “Cliff’s notes” versions in simple, plain English!

Until then, consider your T&C’s a great cure for insomnia.

CardTuna

More on your FREE annual credit report

Folks,

Your new resource for all things credit, a.k.a. this blog, is way ahead of the curve. Yesterday, this article on free credit reports ran on msn.com, a full nine days later than we ran our post "It's time for your annual checkup".

That said, the msn article has some additional information that you may find useful, so be sure to check it out. And, stay tuned to Card Fish for more insightful posts throughout the year.

Cheers,

CardTuna

Papers please!

Watch those cross-border fees when using MasterCard in 2008.  MasterCard, feeling pressure to continually grow earnings now that it's publicly-held, has increased cross-border transaction fees from 20 to 40 basis points as of January 1st.

This means that your most recent fees update from your bank will show an ability for them to charge more for the "foreign fee" (for transactions outside the U.S.A.) this year and forward.

What does this mean to you if you travel internationally?  Check your credit card T&Cs before you go overseas and find the cards with the lowest "foreign fee."  Consider using travelers checks, at least in countries where it's pretty safe.  

And remember when you're visiting the Great White North that those bar tabs in Toronto are most definitely "foreign" to your bank and MasterCard.

Call your credit card company collect for faster service?

There's an interesting idea from the good folks at the Consumerist yesterday.  They've suggested that, instead of using the 800 number on the back of your card, call them collect via the International number.   The theory is that international collect calls cost the bank a lot more, so they prioritize the calls to avoid keeping you on hold for too long.

The problem with this is that the incremental costs associated with international collect calls are relatively inconsequential in relation to the sum total of a bank's telecom expenses

If it works to get you through faster, billiant!  But can anybody confirm that this really works?

Watch Your Point Values When You Redeem

Do you have a rewards points program with your credit card, maybe something like WorldPoints?

Well, here's a couple of hints to help you burn off all those points you accumulated while burning up your credit lines.

1. Check your points online periodically.  Check your paper statement against the point totals online.  You want to make sure you've been credited properly for all the points you've earned.  You also want to make sure you don't have any points that are going to expire shortly--it'd be a shame to let all that hard work spending to earn the points go to waste!
2. Check the rewards periodically.  The assortment and point totals necessary to redeem for a certain gift might change from time to time.  You might suddenly see a new reward show up, perhaps something you've been considering buying with cash, that you may want to jump on.  You might also see a "good deal" for the points appear.
3. Consider your points from a POV of personal value.  Let's face it, the redemption prices of the products you have access to are going to be lousy.  (After all, the credit card companies have to minimize the costs associated with the points programs!)  So don't worry too much about what's the best dollar value "deal."  Rather, look for items that provide you with a surprise or delight.  Something that feels like a splurge or luxury, yet has a high level of utility to you.

I recently decided to cash in about 36,000 points from BofA's WorldPoints program, as I'd stopped using the card and figured I'd better use the points before I forgot about them.  I found a great "surprise and delight" product on the site in the form of a Phillips surround sound system with DVD player.  It probably doesn't have a huge price tag associated with it.  But it actually works just fine for my bedroom TV, was something that I've avoided paying $200 for over the last 9 years and--this is the key--made me feel great when I was watching the most recent Die Hard DVD the other night.  I loved the feeling of having surround sound while sitting in my bed! 

Now, do I normally advocate points programs?  Nope.  All my new cards provide benefits back to me in the form of cold, hard cash.  But, if you've got a product rewards program, take a few minutes to get the best of those points.  (Before you convert to a cash rewards program!)

Anybody else out there get a cool product from their rewards program?

It's time for your annual checkup!

Just like you go to the doctor each year for a complete physical (you do go, don’t you??), you need to get a pulse on your financial well-being to make sure nothing’s amuck.

Each year, you’re entitled to a completely FREE credit report from each of the three credit bureaus (Experian, Equifax, and Trans Union). And there’s no better time than the new year to check that everything on your credit report is in good order. All you need to do to receive your free credit report is visit www.annualcreditreport.com. This is the ‘real thing’ - There are other sites out there (like www.freecreditreport.com) that are designed to sell you report packages and credit monitoring, and will try to rope you in to paying for something, so make sure you visit the right site, i.e. www.annualcreditreport.com.

When you get your report, carefully check through the list of accounts and make sure you recognize each of them. This can be a tricky process as many of the account listings can look unfamiliar – for example, an instant financing loan that you might have received a card for but never used. The best way is to grab all of your various credit cards, private-label store cards, and loan docs so you can match up your account numbers. If you find an account or other activity like an inquiry that appears suspicious, you can contact the credit bureau that reported the suspicious activity. Links to each of the bureau websites are below:

www.experian.com
www.transunion.com
www.equifax.com

So waste no time and grab your free annual credit report today. It’s usually much more pleasant and less-invasive than visiting your general practitioner!

Cheers,
CardTuna

Increasing Your Credit Line by Doing Nothing at All!

How do you increase your line of credit with an existing card?  The obvious solution is to simply ask the bank to extend the credit limit.  And that works, as long as your payment history is good, have a good FICO score, etc.

However, another way of getting more credit is to just do nothing.  On Dec 31st, for example, I got the word from Bank of America that they were increasing my credit limit to $23,500 from $20,000 on a platinum MasterCard that I've had with them since 1988.

The back story is that I've not been happy with BofA for a while now.  They have been slowly jacking up my rates, even though I've been a long-term customer.  (Although not a "good" customer, as I pay my bill in full every month.)  So I stopped using the card back in September and switched over to an Advanta credit card, which had a much better rate, should I ever need to revolve a balance.

Turns out that BofA quickly noticed I wasn't using their product and they weren't even collecting interchange on me.  So they thought that by increasing my credit limit and sending me a bunch of checks (with a 1.9% balance transfer rate--whew, what a lousy offer!) that I'd mend my ways and come back to Bank of America.  Well, I probably won't go back to using their MasterCard, but I do appreciate the larger line of credit.  You never know when you might need some short-term credit to tide you over.