MyCardBlog

Here is a promotion from Citibank. I am not sure this is targeted offer or not. The rule is: 1) register your Citibank Debit MasterCard through this link; 2) make 3 signature-based purchases for $30 more/each during Oct and Nov. So the cashback is about 10% based on making $100 (at least 3*$30) purchase. You must enroll to participate in this promotion.

On this blog, I believe you have seen mentions of lots of credit card sign-up bonus. Of course, credit card companies won’t offer bonuses as charities do. They want to make money from you. Once you have taken advantage of it, they want to take advantage of you too. Here is how credit card companies earn revenues.

Interchange fees (Discount rate)
Interchange fees are charged by the merchant’s acquirer to a card-accepting merchant as component of the so-called merchant discount rate (also referred to as “merchant service fee”). The merchant pays a merchant discount fee that is typically 2 to 3 percent (this is negotiated, but will vary not only from merchant to merchant, but also from card to card, with business cards and rewards cards generally costing the merchants more to process), which is why some merchants prefer cash or debit cards. And when you give them a card, they will ask you whether this is a credit card or debit card. The majority of this fee, called the interchange fee, goes to the issuing bank, but parts of it go to the processing network, the card association (American Express, Visa, MasterCard, Discover, etc) andhe merchant’s acquirer. With a corporate card, the interchange is also often shared by the company in whose name the card is issued as an incentive to use that issuer’s card instead of someone else’s.

The interchange fee that applies to a particular merchant is a function of many variables including the type of merchant, the merchant’s average transaction amount, whether the cards are physically present, if the card’s magnetic stripe is read or if the transaction is hand-keyed or entered on a website, the specific type of card, when the transaction is settled, the authorized and settled transaction amounts, etc. For a typical credit card issuer, interchange fee revenues may represent about fifteen percent of total revenues, but this will vary greatly with the type of customers represented in their portfolio. Customers who carry high balances may generate low interchange revenue due to credit line limitations, while customers who use their cards for business and spend hundreds of thousands of dollars a year on their cards while paying off balances every month will have very healthy interchange revenues.

Interest on outstanding balances
Interest charges vary widely from card issuer to card issuer. Often, there are “teaser” rates in effect for initial periods of time (as low as zero percent for, say, six months), whereas regular rates can be as high as 40 percent. In the U.S. there’s no federal limit on the interest or late fees credit card issuers can charge; the interest rates are set by the states, with some states, like South Dakota, having no ceiling on interest rates and fees, inviting some banks to establish their credit card operations there. Other states, like Delaware, have very weak usury laws. The teaser rate no longer applies if the customer doesn’t pay his bills on time, and is replaced by a penalty interest rate (for example, 24.99%) that applies retroactively. So customers should be wary of these offers that usually contain some traps. Cash withdrawals will never carry the teaser rate, for example.
Fees charged to customers
The major fees are for:

Late payment fees Charges that result in exceeding the credit limit on the card (whether done deliberately or by mistake), called overlimit fees
Returned check fees or payment processing fees (e.g. phone payment fee)
Cash advances and convenience checks (often 3% of the amount). Transactions in a foreign currency (as much as 3% of the amount). A few financial institutions do not charge a fee for this.
Membership fees (annual or monthly), sometimes a percentage of the credit limit. Issuers love monthly fees as it allows them to charge substantial amounts without the customer realizing how expensive the charge really is (a monthly amount is perceived as half the price of the equivalent annual fee)

Other service revenues
A lot of credit card companies are trying to sell their payment protection plans, or other financial related services. E.g. the Chase Payment Protector, Chase Fraud Detector, Credit Secure from American Express, IdentityMonitor from Citi etc.

Industry jargon for customer categories
Customers who do not pay in full the amount owed on their monthly statement (the “balance”) by the due date (that is, at the end of the “grace period”) and are not in a promotional period owe interest (“finance charges”) are known in the industry as “revolvers.” Those who pay in full (pay the entire balance) are known in the industry as “transactors,” “convenience users,” or “deadbeats.” Those that shift usage of their credit cards or transfer balances frequently are known in the industry as “rate surfers”, “rate tarts” or “gamers.” So which category are you in?

Sander left a comment on Citi Chairman Card. So I gathered some information about the American Express Centurion Card. Let’s learn something about the most mysterious card in the world. The Centurion Card is so exclusive that you can’t find any details of it on the American Express website.

This card was launched in October 1999, which was available to selected holders of its Platinum Card. It was said the first holder of this card is Italian Princess Dionne Leslie. At that time, the annual fee was $1,000. However, in 2007, in the United States, the requirements include minimum annual spending of $250,000. Also there is a $5,000 one-time invitation fee for new card holders, plus the $2,500 annual fee.
This famous Black American Express card was initially made by plastics. From 2006, a new centurion card crafted from anodized titanium was issued to replace all of the plastic cards. So there is no plastic Centurion Card now.
Card Benefits:
Gold Status for Delta, Continental and US Airways and Gold Elite Status with Virgin Atlantic Airways
Cardholders can also access Continental’s Presidents Lounge, Delta Crown Room Club and NorthWest Airlines World Club when you are flying on their airlines. You also get access to Priority Pass Lounges regardless of which airlines you fly. Priority Pass has over 450 airport lounges worldwide.

Elite Hotel Status
The elite status available to centurion members has been the latest controversy among cardholders. When the centurion card was first marketed, cardholders automatically qualified as Diamond (Elite) status for Hyatt, Gold Status (mid-tier) for Hilton HHonors program, Platinum status for Starwood Preferred Guest Program, and also elite status for Intercontinental Hotels and Resorts. The perk that was coveted by centurion members was the Platinum Status of the Starwood Preferred Guest program. That was because Starwood has probably the best hotel frequent guest program with no blackout dates and suite upgrades for platinum members. Centurion cardholders often sited the room upgrades from Starwood Hotels essentially cover the cost of the card. Starwood also allows members to transfer points into airmiles at very favorable terms.

Fine Resorts and Hotel Program
Centurion has over 550 hotel partners around the world. When you make reservations through centurion travel service, you will receive room upgrades at check-in when available, continental breakfast for two, guaranteed 4pm late checkout and complimentary amenities depending on the hotel property.
But the most important benefit under this program comes from the Mandarin Oriental and Ritz Carlton. When you book a room at the Ritz Carlton, you will get a room upgrade at the time of your reservations and you will also get a $50 spending credit. For any reservations at the Mandarin Oriental, you will get a room upgrade upon reservation and also another room upgrade at check-in (that’s 2 upgrades). You will also receive from centurion a “Buy One Get One Free Night” coupon for each and every Mandarin Oriental Properties (except Mandarin NY). If you are a business man, and want to save a lot of money on it. This card is a good deal.

Baggage Insurance
If you book your travel tickets using your centurion card, you have up to $1,250 in baggage insurance for your carry-on luggage and $500 in checked-in luggage in addition to the insurance provided by the carrier.

Centurion and Departure Magazines
Since the inception of the card, members have received a copy of Departures magazine, which is also sent to all Platinum cardholders. However, in 2004, American Express Centurion members began to receive an exclusive “no name” magazine which was not available by any other means. Starting with the spring 2007 edition, this magazine has been officially entitled “Black Ink.” arture magazine, which is a magazine on luxury lifestyle.

Other by Invitation Only Events
As a centurion card member, you will be getting lots of mails and invitations to exclusive events.

Who have this card?
There are about 10,000 card holders worldwide (rumor?), including Paris Hilton, Jessica Simpson, Lindsay Lohan……….
The famous black card has also appeared on the TV shows:

In season 1 of the ABC show Traveler, Tyler Fog’s father tells his son to use the black card given to him for emergencies to withdraw as much money as possible from an ATM to run for authorities.

In season 2 of the Fox show The O.C., Julie Cooper-Nicol mentions she is going to pay for a pony with her real estate baron husband’s Black Card.

In the Discovery Channel Show Build It Bigger in the episode about racing boats, after a jet engine is destroyed, John Haggin is asked how they will pay for the new part. After pulling out his wallet, he reaches in and pulls out a Balck Card, displaying it to camera.

We are expecting more returns by swiping Credit Cards. Although I believe credit card issuers gain a lot of profits from their card holders, we should also consider the costs of credit card issuers. The high returns come with high risks. Let’s see the costs of the credit card issuers. (in part adapted from Wiki)
Credit card issuers (banks) have several types of costs:
Operating costs
This is the cost of running the credit card portfolio, including everything from paying the executives who run the company to printing the plastics, to mailing the statements, to running the computers that keep track of every cardholder’s balance, to taking the many phone calls which cardholders place to their issuer, to protecting the customers from fraud rings. Depending on the issuer, marketing programs are also a significant portion of expenses.

Interest expenses
Banks generally borrow the money they then lend to their customers. When we use our credit cards, we borrow the money from card issuers for about 1 month. However, credit card companies have to put the money in the merchants’ accounts in their banks. (A huge cost!) As they receive very low-interest loans from other firms, they may borrow as much as their customers require, while lending their capital to other borrowers at higher rates. If the card issuer charges 15% on money lent to users, and it costs 5% to borrow the money to lend, and the balance sits with the cardholder for a year, the issuer earns 10% on the loan. This 5% difference is the “interest expense” and the 10% is the “net interest margin”. This is especially true for American Express. Don’t like Chase and Citi, they don’t have a chance to get money out of their own bank.

Rewards
Many credit card customers receive rewards, such as frequent flier points, gift certificates, or cash back as an incentive to use the card. Rewards are generally tied to purchasing an item or service on the card, which may or may not include balance transfers, cash advances, or other special uses. Depending on the type of card, rewards will generally cost the issuer between 0.25% and 2.0% of the spend. Networks like Visa or MasterCard have increased their fees to allow issuers to fund their rewards system. However, most rewards points are accrued as a liability on a company’s balance sheet and expensed at the time of reward redemption. As a result, some issuers discourage redemption by forcing the cardholder to call customer service for rewards. On their servicing website, redeeming awards is usually a feature that is very well hidden by the issuers. Others encourage redemption for lower cost merchandise; instead of an airline ticket, which is very expensive to an issuer, the cardholder may be encouraged to redeem for a gift certificate instead. With a fractured and competitive environment, rewards points cut dramatically into an issuer’s bottom line, and rewards points and related incentives must be carefully managed to ensure a profitable portfolio. There is a case to be made that rewards not redeemed should follow the same path as gift cards that are not used: in certain states the gift card breakage goes to the state’s treasury. The same could happen to the value of points or cash not redeemed. Also don’t forget the sign-up bonus from credit card companies. Usually we can get $50 to $250 cash or gift certificate as a bonus for being a new card holder.

Fraud
Where a card is stolen, or an unauthorized duplicate made, most card issuers will refund some or all of the charges that the customer has received for things they did not buy. These refunds will, in some cases, be at the expense of the merchant, especially in mail order cases where the merchant cannot claim sight of the card. In several countries, merchants will lose the money if no ID card was asked for, therefore merchants usually require ID card in these countries.
The cost of fraud is high; in the UK in 2004 it was over £500 million. Credit card companies generally guarantee the merchant will be paid on legitimate transactions regardless of whether the consumer pays their credit card bill. “Soft fraud” is fraud committed by the customer himself: getting a card and using it with no intention ever to repay the balance. Such customers are called “diabolicals” by the credit card companies, which try to avoid them at all cost.

Charge offs
When a consumer becomes severely delinquent on a debt (often at the point of six months without payment), the creditor may declare the debt to be a charge-off. It will then be listed as such on the debtor’s credit bureau reports (Equifax, for instance, lists “R9″ in the “status” column to denote a charge-off.) It is one of the worst possible items to have on your file. The item will include relevant dates, and the amount of the bad debt. A charge-off is considered to be “written off as uncollectible.” To banks, bad debts and even fraud are simply part of the cost of doing business. However, the debt is still legally valid, and the creditor can attempt to collect the full amount. This includes contacts from internal collections staff, or more likely, an outside collection agency. If the amount is large (generally over $1500 – $2000), there is the possibility of a lawsuit or arbitration. In the US, as the charge off number climbs or becomes erratic, officials from the Federal Reserve take a close look at the finances of the bank and may impose various operating strictures on the bank, and in the most extreme cases, may close the bank entirely. (Several days ago, I heard that somebody transferred $30,000 from Citi and then went back to China. Citi won’t go to China and sue him. This is a reason why some credit card issuers state that you must be a US Citizen.)

American Express sent out an email to me this afternoon. The title is “Tell Us What You Think & Get an $20 Amazon Gift Card”. Contents follows:
Dear David:
As one of our most valued Cardmembers you’ve been invited to try out the Beta version of the OPEN B2B Supplier Directory. Visit the directory, search for wholesale vendors, and take a brief survey about your experience. While supplies last, you’ll receive a $20 Amazon.com Giftcard for your thoughts.
The B2B Directory allows you to find wholesale vendors who accept the American Express Card for your essential business expense……….

The link to the survey is here. Use whatever key words you want to search. And then click “Do A Search, Take A Survey, Receive A Giftcard” logo as showed at the beginning of this post. I know some friends want to take more than one survey. However, don’t expect to take more than one survey on a computer, they will record your IP. At last you will have to fill in your email address. I’m waiting for my $20 free money now. This is a special notice to my friends, please don’t post to other forums. Earn more free money by yourself!!! Because there is a notice “while supplies last”. Hurry up!
“Giftcards for survey completion are no longer available.“ Sorry, this deal has been expired. “Please allow 45 days to receive your giftcard.” hurry!

I noticed the promotion several days ago. “Use your Chase Check Card for all your everyday purchases and you could get a $50 cash reward.” To qualify for this offer, you have to make 15 signature based purchases from Oct 1st to Dec 15, 2007. Remember you can’t enter PIN when you check out, that won’t be considered as signature based purchase. (Click here to register your check card.) You have to get 7 digit promotion code from your mail. If you don’t have the code, please call 800-935-9935 to request one. I didn’t call the number yet. The customer service told me that “ Regarding the get $50.00 promotion, you can find your code on the mail you received about this special offer. This offer is for customers across the country who are getting special offers that reward them for using their Chase Visa Check Cards. The only customers getting these offers are those who haven’t used their check card to make a non-PIN purchase in the last three months.” It seems that most of us will not qualify for this offer. But I will try to call them up and see what will happen.

This is a kind remind for all of you. Citi is still offering the CashReturns Card which will give you 5% cash back on everything at the first 3 months. As the Thanksgiving and Christmas holidays are coming, it’s really a good time to save lots of money (or get the most from what you spent). Some friends will also be planning go out for a vacation. Then this card will save a lot of money for you. Of course, you should have a high credit limit. If you can’t get a huge line of credit, please try to transfer credit limit from other cards. As usual, if you don’t want to keep this card after 3 months, you can call them up and consolidate the credit limit with other cards. At the same time, you can take advantage of the 0% APR on balance transfer offer (3% fee with no cap!). It’s really a good time to get this card and save money during the shopping season. See my previous post bout hot cards from Citi.

Here are some hot deals for those who are planning for a trip by using your credit cards.
I saw this deal from USA today this morning. You can get $50 off at Travelocity.com, if you use MasterCard to book a 3+ night stay. You must have to book your hotel before Oct 31 and enter coupon code: HOTELSALE.

You can get 25% off car rentals at AVIS.com and a $25 American Express rewards card, if you use American Express card to book a rental 3 days or more. Please mention promo code: AWD D837228. Discount valid on rentals checked out before 12/31/2007. See here for details.

Another deal is from Starwood Preferred Guest Card. Through this link, you can get triple reward points for each one night stay from Oct 1 to Dec 31. If you get a 50% off coupon with your new card, don’t forget to use 50% coupon.
See what I got from that link: ^® promotion. You can now earn triple Starpoints^® on all your stays between October 1 and December 31, 2007

Do you know a credit card with $500 annual fee? If you don’t know, please read the following introductions.

Citi has finally decided to relaunch its chairman credit card with limited promotions. The credit card is American Express Black Card which has already attracted lots of attenstion from media. As Citi stated, the card is designed to meet the specific needs of a unique group of people, including Smith Barney and Citi Private Bank clients who expect excellent service and benefits. There will be a special trained team to serve the card memebers. So what you can get from this card?

No foreign transaction fees.

Personal concierge service. Cardholders have the access to high level of concierge representatives for assistance with dinning arrangements, gift service, travel planning and so on. Of course, you can use the service for 24/7. Complimentary airport lounge access.

Rewards program. You can get 3 thankyou points for every dollar spent on purchases made at supermarkets, drug stores, gas stations, commuter transportation and parking merchants (so does every other card). Get 1 Purchase Point for every dollar spent on all other purchases. Get points for shopping with participating retailers (It’s new?).

Anything more? NO! Can you let them make a wake up calls? Can you let them handle your laundry?

Well, I just don’t understand why they put $500 annual fee on this card. You can get most of the benefits from a common card like Citi PremierPass card and CitiPremier Elite Level card. I pormise I won’t apply for this card even though I am a millionaire.